Key Challenges and Opportunities Niall O’Higgins, Senior Research Specialist, Youth Employment Programme, ILO, Geneva CREATING JOBS FOR EQUITY AND PROSPERITY, REGIONAL CONFERENCE ON EMPLOYMENT AND SOCIAL INCLUSION, 16-17 APRIL 2015, SKOPJE

Today’s presentation Challenges What to do? Economic and Financial crisis Employment and Unemployment Specific disadvantaged groups What to do? Economic policies to promote economic growth (Active) Labour Market Policy

The Financial Crisis hit growth in the region but primarily in the NMS

But the recession was clearly associated with a productivity slowdown

Employment (and Participation) rates are low and (often) worsening

….And Unemployment rates are high and (often) increasing

…and even more problematic is long-term unemployment

There is also the issue of job quality: for example, in terms of informal employment…

…and more generally vulnerable employment

Youth Unemployment is a major challenge

Ratio of youth (15-24) unemployment rate to prime age adult (25-49) unemployment rate

Ethnic Minorities: Roma are much more likely to be unemployed than non-Roma

Things have improved relatively since 2004, but mainly because of a worsening of the non-Roma situation

In addition… The ILO Global Wage Database shows that during the crisis real wages declined in many non-EU Central and South-Eastern European countries There is also a significant gender wage gap; in the Western Balkan countries male wages exceed female wages on average by 23 per cent Poverty is increasing as is Income inequality Skills mismatch: around 1/4 of all workers are overqualified &/or inapropriately skilled for jobs

Challenges: Summary Problems are often structural in nature – the slowdown didn’t help but not the main cause of problems Improvement evident in the last decade or so, but much more needs to be done

What to do? Stimulate Economic Growth Institutions & Infrastructure Financial & Goods Market Efficiency Efforts to diversify National production and export bases need to be strengthened further National Economic Policies need to include Employment as a central goal Augment Labour Market Policy with a view to, above-all, improve operational efficiency of the labour market Employment services Active labour market programmes - ALMP expenditure is low by EU standards Ensure Labour Market (and other) Institutions are complementary Bear in mind real changes rather than semantic ones

Active Labour Market Policy and Programmes Employment services: Move from passive to active employment services: From Registration to Mediation (and Activation) Improves job matching in the labour market Increases efficiency of search May increase vacancies since its less costly for firms to hire

Active Labour Market Policy and Programmes Active Labour Market Programmes: Targetted programmes can be especially effective: e.g. Self-employment/business formalisation programme in Macedonia targetting the long-term unemployed, youth… Promotes movement from informal to formal economy Increase in tax revenue Activates the long-term unemployed Increase in employment/business income But, danger of displacement and substitution Also need to be careful about targetting ALMPs which focus on marginal groups can be especially effective Raise employability activate the unemployed and increase labour force participation But, can depress wages (and income inequality is rising in the region) Will not resolve major structural difficulties with the economy

Active Labour Market Policy and Programmes Impact Evaluation Impact evaluation – supports the modificaiton of key design issues in ALMPs – supports improvement of programmes: What Works (and Why?) Complementarity Between the state of the Economy and ‘best’ ALMPs – e.g. income support measures may be relatively more effective in a recession Between different labour market programmes Need to tailor interventions to individual needs Between different labour market institutions Business start-up and firm regulations Minimum wages and unemployment benefits

Thank You & Best of Luck