Transcript Slide 1

CONFERENCE ON
EMPLOYMENT GROWTHON A ROAD TO RECOVERY
Sarajevo, July 1, 2014
Based on “BACK TO WORK: Growing with jobs in Europe and Central Asia (ECA)” by Omar Arias & Maria Davalos
The World Bank
THE WORLD
BANK
COUNTRY
OFFICE
BOSNIA AND
HERZEGOVINA
70
0
Kazakhstan
Sweden
Russian Fed.
Azerbaijan*
Kyrgyz Republic*
Netherlands
Ukraine
Tajikistan*
Finland
United Kingdom
Denmark
Austria
Germany
Luxembourg
Georgia*
Estonia
Uzbekistan*
Turkmenistan*
Czech Republic
Cyprus
Armenia
Albania*
Latvia
Ireland
Belarus*
France*
Slovakia
Slovenia
Lithuania
Romania
Portugal
Poland
Belgium
Malta
Hungary
Bulgaria
Turkey
Italy
Spain
Montenegro*
FYR Macedonia
Greece
Serbia
Croatia
Moldova
B&H*
Kosovo*
Percentage of the working age population
The jobs challenge is the most daunting in
Bosnia and Herzegovina
Employment Rate (population aged 15+, first quarter 2013)
60
50
40
30
20
10
Notes: *denotes data for 2012. Data is not seasonally adjusted.
Source: ILO and ECA Regional Jobs Report (2013).
Two contextual factors:
(1) Transition legacy and speed of modernization
3
Strongest reform record among middle
income regions…
Doing Business Indicator (Gap to Frontier)
… with significant variation in
implementation speed of reforms
across ECA countries
Transition Index (EBRD 2012)
90.0
85.0
80.0
75.0
70.0
65.0
60.0
55.0
50.0
2006
2007
2008
ECA
EAP
OECD (Non-EU)
Bosnia and Herzegovina
2009
2010
2011
2012
2013
LAC
OECD (EU)
SEE
Notes: ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; EAP = East Asia and Pacific.
Two contextual factors:
(2) Impact of demographics on the labor force
50
ECA Countries: Change in 15+ Population 2010 - 2030 (%)
40
Percent
30
20
10
Older workers
will outnumber
youth due to:
Aging + Low
Fertility + OutMigration
Younger countries
also face
demographic
pressures:
Out-Migration, youth
bulge, and long-run
aging
-10
-20
Bulgaria
Ukraine
Georgia
Moldova, Republic of
Latvia
Lithuania
Belarus
Russian Federation
Croatia
Romania
Estonia
Bosnia and Herzegovina
Hungary
Poland
Serbia
Slovakia
Czech Republic
Slovenia
Macedonia, TFYR
Armenia
Montenegro
Albania
Azerbaijan
Kazakhstan
Turkey
Kyrgyzstan
Turkmenistan
Uzbekistan
Tajikistan
0
Source: Back To Work: Growing with Jobs in Europe and Central Asia (2013).
Meeting the Jobs Challenge in ECA:
Three policy goals
1
2
3
Resuming Sustained Growth:
 Ensure macro fundamentals for economic recovery
and regain the pre-crisis reform momentum
Enabling Private Sector-led Job Creation:
 Enable business creation and expansion, tap on
entrepreneurship
Preparing Workers for Jobs:
 Helping workers acquire skills for the modern
workplace
 Making (formal) work pay by removing disincentives
and eliminating barriers to the labor market
 Removing obstacles to internal labor mobility
Enabling Private Sector-led Job Creation
A small segment of “super star” firms (Gazelles) account for
most job creation almost everywhere
As % of all firms and all jobs created during 2004-08
Share of Enteprises
72
72
5.2
14
10
2.8
73
71
54
22
Share of Jobs Created
1.1
2.6
Bulgaria Czech Estonia Poland
Republic
Advanced
73
66
51
50
13
67
42
18
5.0
B&H
13
4.5
19
1.4
17
-0.3
Croatia Romania Serbia
Intermediate
Notes: The number above each country represents the average growth rate of employment per year
Source: Back To Work: Growing with Jobs in Europe and Central Asia (2013).
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7.7
-1.0
Russia Ukraine
Late
Kyrgyz Republic
Azerbaijan
Kazakhstan
Albania
Montenegro
Bulgaria
Romania
Serbia
Russian Federation
Turkey
Lithuania
Czech Republic
Croatia
Slovak Republic
Slovenia
Latvia
Hungary
Poland
Estonia
Mexico
Chile
Austria
Israel
Luxembourg
Greece
Italy
France
Spain
Germany
United Kingdom
Belgium
Portugal
United States
Sweden
Ireland
Iceland
Switzerland
Denmark
Norway
New Zealand
Netherlands
Preparing Workers for New Jobs - Skills
But inadequate response from education and skills
training systems
90
80
70
Too many youth fall behind in basic cognitive skills
% of 15-year olds who are functionally illiterate, scoring “below level 2”
on PISA reading test 2009
60
50
40
30
20
10
0
ECA
Source: Based on OECD PISA 2009.
OECD, non-ECA
7
Preparing Workers for New Jobs– Incentives and barriers
There is still room to improve work incentives:
Labor taxation remains relatively high in Bosnia and Herzegovina and,
critically, not very progressive
Gap in tax wedge between high and low wage earners, 2012
15
IRL
FRA
BEL
10
LUX
NLD
ESP
FIN
SVN
ISL
PR
GBR
AUT
MLT
DEU
NOR
ITA
CZE
5
SVK
GRC
LTU SWE
USA
MKD MDA
JPN
DNK
POL
EST
HUN
ROU
BiH(Fed)
LVA
SRB
0
ARM
BGR
10
20
MNE
BiH(RS)
30
40
Tax wedge for single at 50% of average wage
Source: World Bank based on OECD Tax and Benefit Models.
50
Key policy directions of a diverse Jobs-centered
policy agenda - sequencing
• Combination of short and long term policies
– Short term:
• Macro/fiscal policy to ensure fundamentals for economic
recovery
– Longer term:
• Growing superstar firms – Eliminate barriers to business
expansion and entrepreneurship
• Making workers more adaptable - Generic skills and marketdriven, life-long learning
• Making (formal) work pay – Removing disincentives and
barriers to work
• Making workers more mobile – Removing impediments to
labor mobility
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What does this mean for
Bosnia and Herzegovina?
• Continue strengthening macro-economic stability and policies that foster
economic growth
• Business climate reforms to facilitate firms’ growth and tap into world
markets:
– Business climate reform for private sector development. Priorities are:
• Make it easier to start a business, including entry into and exit out of
entrepreneurship
• Rationalizing regulations and rethinking the overall structure of taxation
• Improving infrastructure, especially electricity
– Deepening economic integration, regionally, with the EU and globally
• Skills: Equipping workers with market-relevant and adaptable skills
– Ensuring strong generic skills foundations (from ECD to quality basic education)
– Market-driven VET and quality assurance in higher education
– Revamp adult training systems, life-long learning and on-the-job training to make
them market-driven
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What does this mean for
Bosnia and Herzegovina?
• Better balancing worker protection and job creation, with regards to
– Collective agreements, minimum wages and severance costs that can
affect disproportionately women, youth and older workers
– Disincentives stemming from labor taxation and the design of social
benefits, particularly for low-wage earners, to make (formal) work pay
– Barriers to employment that affect women, youth and older workers,
e.g., provision of child and elderly care services and options for flexible
work arrangements
• Strengthening the social dialogue on jobs - government, employers,
trade unions, youth and civil society at large
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