Europe and Central Asia Knowledge Brief

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This is a regular series of notes highlighting recent analyses, good practices, and lessons learned from the development work program of the World Bank’s Europe and Central Asia Region.

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Tajikistan : Reinvigorating Growth in Khatlon Oblast

2014-06, Carneiro, Francisco

This report supports a joint World Bank-IFC initiative to review and evaluate economic growth prospects for Khatlon oblast in order to develop a private sector-driven strategy for accelerating the region's growth over the medium term.

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Employment-Related Mitigation Measures in ECA Countries

2010-02, Kuddo, Arvo

There are growing constraints on public finances in many countries due to the actual and projected build-up of public debt, which limits the scope of labor market interventions. Only a few Europe and Central Asia (ECA) countries (most notably Estonia, Kazakhstan and Russia) had set aside resources that can now be used to cushion an externally driven economic slowdown. Currently, the labor market situation in many ECA countries can be characterized as lack of demand for labor. Overall, in 27 ECA countries for which data are available for June 2008 to June 2009, registered unemployment increased from 8.460 million to 11.354 million, or around 34 percent. The number of registered unemployed increased the most in three Baltic States, Turkey and Moldova. Nevertheless, most governments in ECA have responded to the global economic crisis by making additional resources available for labor market and social policies, and with discretionary policy measures to cushion the negative effects of the crisis on workers and low-income households. Spending on unemployment benefits has increased automatically as job losses have mounted, and many governments have moved promptly to scale-up resources for active labor market programs.

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Employment Recovery Stalls in Europe and Central Asia

2013-04, Koettl, Johannes, Saiovici, Gady, Santos, Indhira

Employment recovery stalls in Europe and Central Asia (ECA) and Gross Domestic Product (GDP) continues to recover in most ECA countries, but the recovery remains fragile. Growth prospects remain poor in a number of countries where GDP continues to decline. This slowdown in the economic recovery is also evident at the sub-regional level. Unemployment has stabilized, with an average unemployment rate of 12 percent across the ECA region. Since the start of the crisis, men have been disproportionally hit by unemployment. The recent pace of job creation has not been sufficient to absorb the large pool of unemployed, resulting in growing long-term unemployment. Despite the rise in long-term unemployment, activity rates have increased or remained constant in most countries since 2008. ECA labor markets adjusted to the crisis not only through higher unemployment, but also through fewer work hours. Given the already low levels of employment in the region and a bleak demographic outlook, avoiding labor market detachment among the long-term unemployed, the inactive, and youth is the main challenge for policy makers in the near term.

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Enhancing the Employment Chances of Roma

2009-03, Bodewig, Christian

Roma communities in central and southeastern Europe have a history of being excluded from the labor market and still face severe barriers to employment. Besides being marginalized socially, Roma were typically the first to lose their jobs at the outset of the post-communist transition. Many in their next generation grew up in unemployed households, with low educational attainments and limited job skills. The labor market exclusion of Roma persisted even through the years of buoyant economic growth and increasing employment levels prior to the economic slowdown triggered by the global financial crisis in 2008. Many governments in central and southeastern Europe are trying to address the unemployment problem of Roma and other disadvantaged groups by introducing measures to restrict or cut welfare benefit entitlements, so as to strengthen incentives to work. However, research by the World Bank and others shows that simply cutting benefits is unlikely to result in higher employment the labor market exclusion and social marginalization of Roma is a multifaceted issue, and their communities face multidimensional barriers to employment. A more effective way to promote employment among Roma (and other disadvantaged groups) is the employment activation approach increasingly being introduced across many countries in the European Union and the Organization for Economic Co-operation and Development (OECD). This approach balances the mutual obligations of jobseekers and state employment offices in order to secure the successful integration of the most disadvantaged workers.

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Active Labor Market Programs : How, Why, When, and To What Extent are they Effective?

2012-12, Brown, Alessio J.G., Koettl, Johannes

Active labor market programs (ALMPs) aim to keep workers employed, bring them into employment, increase their productivity and earnings, and improve the functioning of labor markets. ALMPs to retain employment, for example, work-sharing schemes, should be used only for short periods during severe recessions. More cost-effective and useful during recoveries are ALMPs to create employment, which strengthen outsiders labor market attachment and support the outflow out of unemployment. Training programs are especially effective over the long term, particularly the more they target disadvantaged outsiders. ALMPs that improve labor market matching are highly beneficial, but effective only in the short run. ALMPs in general might be more cost effective over the long term (3-10 years) and some may even be self-financing, suggesting that long-term evaluations are needed to better ascertain the impact of individual policies.

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Social Protection Responses to the Global Economic Crisis in ECA

2009-03, Lindert, Kathy, Schwarz, Anita

Besides affecting the private sector, the current global economic downturn will likely have a far-reaching impact on government revenues around the world. As country budgets are squeezed tight, social programs which directly help poor and vulnerable people will become pressure points for reducing government spending. In many countries in Eastern Europe and Central Asia (ECA), two years of rising food prices, high energy costs and the global economic downturn have combined with other shocks like natural disasters and political instability. The impacts of these crises could reduce government revenues and affect social spending and pension systems, even as the need for unemployment and benefits increases. In the short run, ECA countries may call on the World Bank to provide financial or technical support to help with the immediate impacts of the crises. Rapid support could include: (a) helping countries finance temporary scaling-up of well-targeted safety nets, either in beneficiary coverage or with a topping-up of benefits values; and (b) supporting actions to protect the budgets of well-targeted programs and other crucial spending on education and health. Governments and the Bank need to be prepared to respond more adeptly in the future; safety nets are important not only in times of crises but, in the long-run, they help to protect the poor and allow governments to avoid other, more costly or inefficient policies.