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Albania

The Best School for Entrepreneurship is on the Job, Not in the Classroom

Wolfgang Fengler's picture

This has been a very engaging debate and I want to thank Omar as well as the organizers and contributors. In this concluding statement, I’d like to highlight both those areas where we agree and those where we still end up with different perspectives.

We can agree on the following:
 

Skills Gaps and Jobs Strategies

Omar Arias's picture
Working at a call center in Romania The blog I posted to debate with my Bank colleague Wolfgang Fengler the chicken-and-egg question of which comes first, skills or jobs, generated a rich exchange and contributions. While the question was framed around tackling the problem of unemployment in the Western Balkan countries, it naturally applies to almost any country. I want to thank all of those who took the time to write, whether or not they agreed with my main thesis: that countries should invest and strive to develop the basic skills that lay the foundation for the technical or job-specific skills that should be in turn acquired a la par with the changing needs of labor markets.
 

How to Break the Curse of Unemployment: Jobs First or Skills First?

Omar Arias's picture

Some Skills should Come Before Jobs, Others Develop with the Job
 
Students work on an engine at Sisli Vocational High School To be clear from the onset: I will not oversimplify the unemployment (or inactivity) problem in the Western Balkan countries as solely due to a lack of skills in the population. Low employment rates result from both insufficient creation of jobs by enterprises and too-high a fraction of the workforce that is ill-equipped to take on the jobs that a modern economy creates. Both issues are intertwined. Solutions, therefore, require efforts on several fronts to enable a more vibrant private sector –including improvements in the business environment, enterprise restructuring, integration in global markets and promoting entrepreneurship— as well as to prepare workers for new job opportunities.

Why Jobs Need to Come Before Skills

Wolfgang Fengler's picture

The Western Balkans Case

When I travel to the Balkans for work, the journey typically begins with a cab ride to the airport from my home in Vienna. The taxi company I use is run and operated by Serbs living in Austria. It’s a great company: very reliable, clean cars and friendly drivers who are always keen to discuss the politics and economics of the Balkans. When I arrive in Belgrade, I’m picked up by drivers who have very similar skills to those of their compatriots in Vienna. However, the former have better salaries and opportunities simply because the company they work for operates in an environment that is much more conducive to nurturing and growing a business. In Austria, unlike in Serbia, a company can operate efficiently, is subject to a relatively fair tax treatment and knows the industry standards it needs to comply with. In turn, this explains to a large extent why workers, at any given levels of skills, are more productive in Austria – a basic intuition which William Lewis develops in his book The Power of Productivity, projecting the gains that Mexican construction workers make when moving to the USA.

Working in Urban Water? IBNET Can Help.

Alexander Danilenko's picture

If you are working on an urban water project, what information do you need?  You likely want to know what your project’s water utility knows. How else can you start talking to each other to have a productive discussion, using the same language and standards?

The Balkans: Not Enough Skills or Not Enough Work?

Wolfgang Fengler's picture

City bus arrives at a station World BankIn many economies of the Balkans high formal unemployment is often blamed on insufficient skills in the labor force. But this intuitive diagnosis glosses over two fundamental questions, namely: why are workers not training themselves to find jobs, and why aren’t firms investing in upgrading the skills of their employees? In other words, the market seems to be failing by not allocating resources where high returns can be found. In this blog post, we cast doubt on the diagnosis and look beyond the skills gap explanation to high unemployment in the Western Balkans. But this is not unique to the Balkans. Take the US construction industry, which is among the most productive in the world even though it employs many relatively low skilled workers, often immigrants from Mexico and other Latin American countries, who improved their individual productivity several fold by migrating – not upgrading skills.

There is no doubt about the problem as throughout the region unemployment – particularly formal – remains unacceptably high. Serbia is a case in point: Out of a population of 7.2 million people and a workforce of 4.5 million, only 710,000 Serbians have a formal, private sector job. If you add some 380,000 ‘sole proprietors’ – basically people who run mini-shops – you get to around 1.1 million people in the formal private sector. That means that the livelihood of the whole country is built around this 15 percent of the population. Can it really be that firms are still not able to find sufficiently skilled employees in the large remaining pool, especially given that Serbia has decent education results? If finding skilled workers in Serbia is like looking for needles in a haystack, there are surely a lot of needles to be found.
 

Albania - On the Path Toward Economic Growth and Development

Laura Tuck's picture

Laura Tuck, Vice President for the Europe and Central Asia region of the World Bank, discusses her recent trip to Albania, during which she had broad ranging discussions with the government and other partners on the country's growth and development.

Overcoming the Middle Income Trap

Wolfgang Fengler's picture

The Western Balkans Case

ZM-SE003 World Bank The Western Balkans have a lot going for them: ideal location next to the world’s largest economic bloc, a well-educated workforce, relatively low wages and decent infrastructure. FDI and investors should be rushing in … but are they?

Southeast Europe is the next frontier of EU expansion and includes six countries: Albania, Bosnia & Herzegovina, Kosovo, Macedonia, Montenegro and Serbia. These countries have a lot in common and an equal amount of differences. They are all relatively small open economies, with a growth strategy premised on deeper international integration. Some, especially Macedonia, are more advanced in attracting international investors but as a whole, the region seems to be stuck in a classical Middle Income Trap: they are too rich to compete on low-cost manufacturing but are too poor to be global innovators. After a strong recovery following war and conflicts in the 1990s, the growth momentum has stalled over the last five years and the region has been particularly vulnerable to external shocks.

Albania’s Story: Reaching the poor in social protection systems

Erion Veliaj's picture
Albania's Story: Reaching the poor through social protection systems
At this year’s south-south forum on labor and social protection systems, organized by the World Bank and the government of Brazil this week in Rio de Janeiro, Brazil, I had the opportunity to present Albania’s story on modernizing the country’s “Ndihma Ekonomike” cash transfer program.  The term “Ndihma Ekonomike” refers to providing support to vulnerable groups or families in need. But how do we determine who are eligible?

Why Women Don't Work in the Western Balkans

Ellen Goldstein's picture
Finding and keeping a job, and even participating in the labor market, is harder if you are a woman than if you are a man living in the Western Balkans. This is a conclusion I can draw from my first year as Country Director for the Western Balkans, reminding us that gender inequality persists in many forms while another International Women’s Day passes. 

Only half of the working age population participates in the labor force in the Western Balkans. This is low by both European and global standards - but participation among women is even worse. This rate was only about 42% in Bosnia and Herzegovina, and a mere 18% in Kosovo in 2012 - the lowest in all of Europe and Central Asia. This participation gap persists throughout a woman’s life, contributing to low employment rates, and widens during child bearing years. In Bosnia and Herzegovina, the gap between male and female employment rates has reached a whopping 44 percentage points for those aged 25 to 49 years with a young child living at home.

Failure to address these labor market inequalities is a missed opportunity for faster economic growth, poverty reduction and increased shared prosperity in a region struggling to recover from the neighborhood effects of the Eurozone crisis.

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