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W. Balkans labour market improvements decelerate - WIIW, World Bank

Author Radomir Ralev
W. Balkans labour market improvements decelerate - WIIW, World Bank Source:

BELGRADE (Serbia), March 19 (SeeNews) – Labour market performance in the Western Balkans continued to improve at a slower pace than the previous year despite the stronger economic growth in the region, the Vienna Institute for International Economic Studies (WIIW) and the World Bank said on Tuesday.

About 68,000 new jobs were generated between the second quarter of 2017 and the second quarter of 2018, compared to 231,000 a year earlier, while gross domestic product (GDP) growth in the region increased to 3.9% in 2018 from 2.5% in 2017, the WIIW and the World Bank said in their Western Balkans Labour Market Trends 2019 report.

Albania and Montenegro reported the strongest job growth in the region, of 3.3% each, followed by North Macedonia with a 2.1% increase. The majority of new jobs were created in industry and services. Women continued to be underrepresented in the Western Balkan labour markets, but more than half of the employment increase benefited them. 

On average, regional labour markets recorded improvements in activity rates, up 0.5 of a percentage point to 62.8% and employment rates, up 1 percentage point to 52.9%, but they remained far below European standards, the WIIW and the World Bank said.

Unemployment reached historic lows in most Western Balkan countries, falling from 16.2% to 15.3% over the last year. Country rates ranged from around 12% in Serbia and Albania to 29% in Kosovo. The region also experienced a substantial decrease in long-term unemployment, from a peak of 1.5 million people in 2011 to 776,000 people in the second quarter of 2018. Still, unemployment remained a significant challenge in the Western Balkans, where levels were two to three times higher than in EU peer countries.

"Improvements in labour market performance are encouraging, but the decelerating trend raises some concerns," said Linda Van Gelder, World Bank director for the Western Balkans. "We still need a stronger private sector that generates adequate jobs and public policies that improve employability of the workforce to sustain labor market performance in the future."

The employment situation of youth continued to improve, with the youth unemployment rate falling by 3 percentage points to 34.6%. The majority were long-term unemployed, ranging from almost 70% in Bosnia and Herzegovina to 43% in Montenegro. On average, 50% of young people worked on a temporary contract basis, affecting 8 out of 10 young workers in Kosovo and Montenegro. 

The report finds that the taxation of labour income in the Western Balkans is comparatively high for low wage earners and workers with dependents, given the region’s low progressivity and infrequent use of family allowance in income tax regimes. Low-wage earners are at a particular disadvantage in the formal labor market in terms of their net take home pay and the relative high cost of hiring them compared with medium- or high-wage earners.