Structural Unemployment in the Western Balkans: Challenges for Skills Anticipation and Matching Policies

Abstract

Rapid economic restructuring has led to the emergence of serious skill gaps in many transition economies. Such changes have been especially pronounced in the countries of the Western Balkans due to the break-up of the former Yugoslavia and the subsequent reorientation of previous patterns of economic activity. Structural unemployment has increased to high levels, yet the education and training systems have failed to adapt to the needs for new skills in service sectors and sectors subject to global technological change. This article investigates the use of various skills anticipation methods to inform education and training policy in the region. It argues that the information on skill gaps gathered through these methods are not being used effectively to address skill mismatch, and that existing supply-led matching policies have failed to meet the challenge of high levels of structural unemployment. An alternative demand-led approach is identified, which relies on more decentralized methods to place effective power and influence in the hands of users, whether employers, employees, job-seekers or discouraged workers. It is suggested that this would provide a more appropriate model for the improvement of workforce skills in the Western Balkan countries.

Acknowledgements

Previous versions of this article were presented at a conference of the OECD Investment Compact for South-east Europe on “Boosting Innovation and Skills in South-east Europe” in Paris on 23 November 2010 and at a conference of the Regional Cooperation Council on “New Skills for New Jobs”, in Sarajevo on 27–28 October 2011. The author is grateful to the participants at both conferences for their useful comments, and to Ivana Prica and to an anonymous referee for useful guidance in revising earlier drafts.

Notes

In this article I distinguish a situation of individual mismatch between the education or skill level of an employee and the requirements of the job, and situations of aggregate or sectoral mismatch which give rise to overall skill shortages in which the demand for a particular type of skill exceeds the supply of available people with that skill (or a skill surplus if the supply of a particular type of skill exceeds the demand for people with that skill). The first type of skill mismatch among employees can take place in two-dimensions. The first is vertical mismatch in which the level of education or skills is less than the required level—often referred to as “overeducation”. The second is horizontal mismatch in which an employee is unable to find work in the field in which she or he has been educated or trained.

Sondergaard and Murthi (2011) in a comprehensive study of education systems and skill gaps in transition countries conclude that their findings “point to problems with the limited quality and relevance of education as contributing sources of the skills deficit” (p. 77).

The Western Balkans is a term that has been coined to refer to the EU candidate and potential candidate countries on the territory of the former Yugoslavia (Bosnia-Herzegovina, Croatia, Kosovo, Macedonia, Montenegro and Serbia) together with Albania. Croatia is set to join the EU in June 2013 and will thereafter not be included in this set of countries.

The number of students that participated in tertiary education increased between 2000 and 2009 by more than 180% in Montenegro and by about 130% in Albania. Student numbers in Bosnia and Herzegovina, Croatia and Macedonia increased by between 40% and 80%, all far above the increase in student numbers in EU-27 which grew by just 20% over this period. Only Serbia has a similarly low increase in student numbers in tertiary education (EUROSTAT, 2011, p. 29).

In 2010, there were about 80,000 unemployed war veterans in the Federation of Bosnia and Herzegovina. The government policy is to encourage the less seriously injured to find a job by providing subsidized interest rates for business start-up loans and job subsidies for employers who employ veterans (information provided during an interview at the Ministry of Veterans and War Victims, Sarajevo, June 2010).

The most ambitious analysis is the European skill gap forecast carried out by CEDEFOP (2010) which produces an annual forecast of skill demand and supply in the EU up to 10 years ahead, based in part upon a macroeconomic model.

In 2009, the NES was required to dismiss 10% of its 2000 employees under the government's austerity programme, as a result of which each employment advisor now has about 800 clients, a number which has almost doubled from 442 clients in 2006 (Phillips, 2007). It is also a relatively high number when compared with the experience of other comparable countries in the region where the number of clients of public employment serves was just 245 in Croatia in 2006, and only 113 in Montenegro. In EU countries, PES officials have a lower range of workloads with just 60 clients per employment advisor in the Netherlands to 200 in Germany (Tergeist & Grubb, 2006).

These data were taken from the website of the Ministry of Economy and Regional Development: http://www.merr.gov.rs/arhiva/sektori/zaposljavanje.php?lang=cir.

Interview, expert on VET issues, Belgrade November 2010.