1 LABOR MARKETS, GROWTH AND POVERTY REDUCTION STRATEGIES -EDUCATION- M. Sci. Azemina Vukovic, Head of EPPU - Office for Monitoring and Implementation of B&H MTDS (PRSP) Thessaloniki, of May 2005

2 KEY DIRECTIONS OF ECONOMIC DEVELOPMENT OF B&H Key directions of economic development of Bosnia and Herzegovina have been defined in Mid-Term Development Strategy of Bosnia and Herzegovina for period (PRSP) Goals of the B&H MTDS: 1.Create conditions for sustainable and balanced economic development 2.Reduce poverty 3.Accelerate EU integrations

3 MONITORED AREAS Poverty monitoring Mid-Term Macro-Economic Framework Fiscal reform Private sector growth and structural reforms - Business climate and foreign investment attracting - Privatization - Financial sector - Labor market - Fight against corruption - Foreign trade and export support - Public administration reform - Statistics

4 SECTORAL PRIORITIES Social protection Education Health Agriculture Forestry Water management Environment Energy Road and railway infrastructure Industry De-mining IT and communications

5 I. REFORM OF THE LABOR MARKET 1.Goals defined in B&H Mid-term Development Strategy (PRSP): 1.1. Increase mobility of labor force as important factor for strengthening of common market in B&H 1.2. Reduce black labor market, 1.3. Re-organize employment brokerage system

6 I.1 LABOR MARKET - PRIORITY ACTIVITIES AND MEASURES FROM MTDS B&H (PRSP) Strengthen the single economic space: reduce market fragmentation in BiH Implement education reform: promote continuing education Eliminate all forms of discrimination in employment: women participating in the labor force is among lowest the region Reduce the rigidity of the wage-setting system, increase youth employment Stimulate workforce mobility: the labor market is static Strengthen the monitoring of use of unemployment benefits: the present system stimulates expansion of the informal sector Promote the activities and strengthen the efficiency of employment agencies: the current system of funding employment stimulation programs is inefficient and nontransparent Strengthen the institutional framework and oversight of employment agency operations Expand and ease requirements for acquiring the right to unemployment benefits Strengthen the activities aimed at reduction of the informal sector Strengthen the existing system of social assistance to ensure more adequate support for those losing jobs due to acceleration of reforms

7 I.2 BASIC INDICATORS OF BIH LABOR MARKET In December 31st 2004 there were 484,307 unemployed persons registered in BiH, which is an increase by 7.28% in comparison with the situation as of December 31st The number of registered employed persons has the tendency of decline and as of December 31st 2004 it amounted to 626,463, which, in comparison with 2003 (634,046) presents a decrease by 7,583 (1.20%). Of the overall number of registered unemployed persons, 238,265 (49.20%) are persons who are seeking employment for the very first time, and the majority of them are the young. The rate of unemployment at the level of Bosnia and Herzegovina, as of December 31st 2004, amounts to 43.58%. 1 Source: The Republic of Srpska Employment Institute, Federal Employment Institute and Employment Institute of Brcko District of BiH

8 I.3 BASIC INFORMATION OF QUALIFICATION STRUCTURE OF UNEMPLOYED PERSONS Qualification structure of the unemployment persons - the majority of registered unemployed persons are persons with a low level of education (non-qualified workers – 162,331 or 33.52% and qualified workers 179,025 or 36.97%), followed by persons with high school level of education – 107,542 or 22.21%. The lowest number of registered unemployed persons corresponds to persons with university level or junior college level professional qualifications - 13,797 or 2.85% for BiH as a whole The obvious conclusion is that more than two thirds of the overall number of registered unemployed persons in Bosnia and Herzegovina has a very low level of education, and therefore the possibilities for employment for those persons are limited.

9.Qualification structure of unemployed persons as of December 31st 2004 #Application - Total% Federation % Republic%Brčko% characteristics BiH of Srpska District BIH 1NQtotal % % % % women % % % % 2SQtotal % % % % women % % % % 3Qtotal % % % % women % % % % 4HQtotal % % %830.46% women % % %80.09% 5NHStotal % % %10.01% women % % %10.01% 6HStotal % % % % women % % % % 7CDtotal % % % % women % % % % 8UDtotal % % % % women % % %860.97% 9Total:total % % % % women % % % %

10 Unemployment by gender, age and level of education Application - characteristics2004% Overall number of registered unemployed Men % Women % 15 – 18 years of age % years of age % years of age % 45 years of age and above % With primary education % With secondary education % With college and university education %

11 II. EDUCATION G eneral approach from B&H Mid - term Development Strategy (PRSP) Our educational system is crucial for the development of the our countrys intelligent capital. Our young people must be confident that they can receive quality education that they require to open the door to the future here at home and our goals are: Modernize and improve the quality of education on all levels, with special emphasis on information technology and the environment, Eliminate discrimination in education Reform primary education, ensure total inclusion, change the structure of and develop curriculum for secondary education that would allow student access to tertiary education and ensure harmonization with the European model Implement institutional and teaching staff reforms in tertiary education in order to ensure international recognition of university diplomas from BiH, Create conditions and capacities for easy retraining, as well as continuous modernization and update of knowledge, and adopt a lifetime learning approach Develop scientific research as a prerequisite to quality education and economic development of the country

12 II. 1 THE MAIN CHARACTERISTICS OF THE EDUCATIONAL SECTOR IN BIH the large number of laws regulating education, the highly politicized nature of education, education accounts for a significant portion of the GDP, however there is still insufficient funding for quality education, science and research, as a part of the educational process, are entirely neglected: there is no legal framework regulating this important part of the educational process, a lack of educational standards, curricula that do not comply to European Community requirements, a shortage of teachers with certain educational backgrounds capable of responding to the needs of the labor market quickly and efficiently, the inadequate size of learning institutions, the inadequate student-to-teacher ratio, and too few teaching obligations of teaching staff, especially in the universities, initial teacher training does not meet the actual needs of teaching practices, adult education programs have not been updated in more than a decade, and there is a lack of appropriate infrastructure for adult training, re-training and acquisition of further qualifications, outdated and obsolete equipment.

13 III. THE ROLE OF EDUCATION AND TRAINING FOR THE JOB MARKET Ensuring the competitiveness of the B&H workforce that should be well-trained, highly skilled and productive. Re-establishing broad occupational categories for the vocational education and training system in order to raise quality and reduce costs; Developing a broad, modern, flexible curricula that is consistent with European standards; Ensuring that the curriculum is flexible so it is responsive to the changing labor market and to the social and individual needs of youth and adults; Adequate and relevant education and training measures are critical for reduction of the poverty, sustainable social and economic development and job creation opportunities. The reform of education for labor market should include:

14 THE ROLE OF EDUCATION AND TRAINING FOR THE JOB MARKET Establishing a vocational education and training standards and assessment department within the existing Standard and Assessment Agency; Strengthening specialized post-secondary, labor-market orientated training for adults and youth, including unemployed and displaced persons; establishing a system for initial and in-service training of teachers through both mentor training programs and the teacher training institutions, and ensuring that teachers within vocational education and training institutions have access to high quality training; and Establishing a group of mentors trained in the new curriculum and teaching methodology to provide concrete support and advice to teachers. The creation of a legal and financial framework that will enable schools to engage in commercial activities.

15 In the area of Higher education the following further elaborates on steps to be taken in line with the Bologna Process and Lisbon Recognition Convention: Adoption of Framework Law on Higher Education on the State level giving universities autonomy in decision-making and ensuring accountability to their stakeholders for the quality of their teaching, the welfare of their students, the standard of their research, the professional development of their staff and the cost-effectiveness of their administrative and management operations; improving the quality of university-level teaching and learning, with a view to achieving standards consistent with practices elsewhere in Europe; fostering the ability of students and academics within BiH and abroad to transfer between universities; promoting research that will improve the academic process and support social and economic development.

16 IV. WHO IS RESPONSIBLE FOR THE EDUCATION AND TRAINING REFORM B&H Council of the Ministries - Ministry for Civil Affairs Government of District of Brcko Entity Governments (FBiH, RS) – Ministry for education Cantons (10) in FBiH International community representatives - in July 2002, the OSCE Mission to BiH has assumed responsibility for the co- ordination and facilitation of the work of the International Community in the education sector in Bosnia and Herzegovina. Beside OSCE the main actors in the reform of education are: European Commission Council of Europe World Bank Office of the High Representative UNDP Even though civil society organizations are not officially responsible for implementation of reforms process in area of education, their role is very significant especially in the sense of raising awareness about the needs of reform processes as well as in training activities.

17 WHERE WE ARE NOW? Besides a large number of the actors and decision makers, the reform of education at all levels is very slow, Labor force in the formal sector has grown old, and younger workers have difficulties in access to jobs in the formal sector. There is still a large informal sector. The participation of women in the labor force is amongst the lowest in the region, but the differences in the level of pay between men and women are not high. New employment generation and job reallocation is weak. Mobility and flexibility of labor force are at a low level. The system of wage determination is rigid and it presents a serious obstacle to job generation and labor mobility. High taxes and difficult access to credits, together with administrative barriers, slow down the development of SMEs. Companies fail to report on the full amount of wages.

18 SUCCESS IN IMPLEMENTATION OF MEASURES IN IMPLEMENTATION OF MEASURES FROM MACRO- ECONOMIC FRAMEWORK AND PRIVATE SECTOR GROWTH Source: Report on Implementation of Action Plan of MTDS B&H for period August 2003 – March 2005

19 SUCCESS IN IMPLEMENTATION OF MEASURES IN IMPLEMENTATION OF MEASURES IN THE AREA OF SECTORAL PRIORITIES Source: Report on Implementation of Action Plan of MTDS B&H for period August 2003 – March 2005

20 CONCLUSIONS In general, significant progress in all areas of life and work in the postwar period has been made, which is visible from the annual report on realization of measures from MTDS B&H (PRSP). Reform of the labor market and education has also started and certain results are already visible. The processes are slower than expected due to very complex administrative structure of the country and politicization of certain issues. The role of the international community in the reform processes and provision of security and stability of the country has been significant. Civil society in B&H has matured and its role in raising of awareness of local communities and wider about many important issues was very significant. Apart from all the above mentioned positive movements, it is necessary to accelerate all reform processes related to reform of labor market and education with the goal of establishing a common and flexible labor market, development of human capital and economic growth, the training market, skills development and its consequences to formal and informal labor markets.