With Montenegro's recent decision to separate from Serbia, the break-up of the former Yugoslavia has probably come to an end. After years of steep economic decline, political turmoil and armed conflict in the West Balkan countries, growth rates picked up in the second half of the 1990s although this economic dynamism did not translate into lower unemployment levels. Nicola Liebert from the ILO's Berlin office met with ministers and workers' and employers' representatives from the region at the International Labour Conference where they discussed new policy approaches for the West Balkan countries.
GENEVA (ILO online) - The relatively robust economic development in the West Balkans which even accelerated after the turn of the millennium has not been accompanied by similar improvements on the labour market. On the contrary, unemployment rates in the West Balkans have continued to rise after the year 2000.
"The dynamic economic growth has so far been jobless. Massive open unemployment occurred and persisted in the West Balkan countries", says the ILO's deputy regional director for Europe and Central Asia, Alena Nesporova.
Between 2000 and 2004, of all the countries in the region only Croatia managed to increase employment, even if only by a meagre 0.7 per cent. But in Bosnia-Herzegovina, for instance, the employment level fell by 1 per cent despite an annual growth rate of 4.2 per cent and the Former Yugoslav Republic of Macedonia even saw a 4 per cent decline in spite of the economy having grown 1.3 per cent per year. By 2004 unemployment rates thus reached 14 per cent in Croatia, 28 per cent in Serbia and Montenegro and a whopping 45 per cent in Bosnia-Herzegovina.
So what needs to be done to make sure the economic dynamism translates into lower unemployment rates? During the International Labour Conference in Geneva ministers and workers' and employers' representatives from the West Balkans and from a European Union troika consisting of Austria, Germany and Finland got together to try and find the answers to these issues.
The starting point for the discussion was the concept of flexicurity, which is at the heart of the EU's social and labour market strategy and of the ILO's Global Employment Agenda. The goal was to contribute to a strengthening of national labour market institutions in the region and thus support the countries' aspirations for future EU membership.
Flexicurity as a political strategy aims at achieving the highest possible security for workers in an era of increased competition due to globalization and the resulting need for structural adjustment. As EU Commissioner Vladimir Spidla put it, "Flexicurity doesn't mean job security but security of the individual through various stages of employment. The objective is not to avoid redundancies but to make sure that those who lose their job find another as quickly as possible and receive income support in the meantime. This requires ongoing investment in education and training and active support for job seekers. Such an approach is also in the interest of enterprises, since they need a workforce that is both flexible and skilled".
The flexicurity approach acknowledges the need for greater labour market flexibility - for example the possibility to hire staff on a fixed-term basis or to lay off workers in times of contracting demand - in order to remain globally competitive. But in Central and Eastern Europe the widespread policy of flexibilization and deregulation has not improved labour market efficiency, an ILO study (Note 1) has shown. And the workers' representative from Croatia, Luka Benko, reported that the country's competitiveness decreased in international rankings after laws were passed to make the labour market more flexible. Why, he asked, should the governments in the region lower their social protection even below the level of the EU, which the West Balkan countries after all want to join eventually, if the flexibilization has not even had the desired effects?
Therefore a new approach is needed where flexibilization is complemented by increased employability, security and active labour market policy. Not taking care of the workers' need for security would not only have a negative impact on the individual but it would also lead to shrinking demand and therefore have adverse effects on the economy as a whole.
It became very clear during the discussion here in Geneva that there should not be a one-size-fits-all flexicurity model. Nevertheless, several essential ingredients for a successful flexicurity policy could be identified: appropriate laws to regulate labour relationships, funds devoted to active labour market policy, investment in education, vocational training and lifelong learning, strong social protection and finally state as well as social partners that support the process and engage in dialogue.
Representatives from the West Balkan states also listed a number of serious problems that are specific to the region and could be obstacles to a flexicurity policy. Large and sometimes even growing informal sectors where workers enjoy no security whatsoever were deplored by almost all speakers. Studies have shown, however, that more protection and stricter enforcement could in fact reduce the informal sector.
Other problems include the relatively poor qualification of the workforce and lacking funds for education and training measures, an underdeveloped tradition of social dialogue and state institutions that might be to too weak to supply effective employment services. Thus the Serbian trade unionist Branislav Canak stated that the flexicurity model requires flexibility of the workers and security of the state - "but what if the state budget is not flexible to accommodate the needs?"
The Bosnian Minister of Civil Affairs, Safet Halilovic, welcomed the EU concept of flexicurity but also pointed out that it requires reforms not only of labour legislation but also of social insurance and of education and vocational training. "In developed economies with strong institutions this might be easier than in the countries of the West Balkans", he said. "So what can we do? We must have the involvement of the social partners and a strong commitment by the state to adopt and implement the necessary measures. But we cannot do this alone. The assistance of the ILO and the EU is critical in this process." In fact, the EU is offering its help to the West Balkans under its Stabilization and Association Process, Commissioner Spidla emphasized.
Austria is one of the countries that already have made flexicurity the basis of its labour market policy. The Austrian Minister of Economics and Labour, Martin Bartenstein, ended the conference with an encouraging note. Investment in social protection pays off in the end, was his message. In the EU the countries with the highest level of protection are at the same time the most competitive ones. He also called for patience. "Models of social protection, social partnership and flexicurity cannot develop over night and in the Western European countries also took a long time to become established", he said.
Note 1 - Sandrine Cazes and Alena Nesporova, Labour markets in transition: Balancing flexibility and security in Central and Eastern Europe, International Labour Office, Geneva, 2003.
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