Tackling Jobs Constraints in Kosovo

October 31, 2012

Tackling Jobs Constraints in Kosovo

World Bank Group

Lundrim Aliu, Communications Officer, World Bank Office in Kosovo offers this story.

By improving Kosovo's investment climate and maintaining macroeconomic stability, Kosovo's government has shielded the country from the sharp economic slowdown plaguing the rest of Europe. Yet, although Kosovo's economy has grown, its unemployment rate is over 40 percent and around a third of the people are poor.

To help boost job creation and build a solid long term economic foundation, the World Bank, together with ten other donors, injected 61 million Euros into Kosovo's budget, mostly grant money. The Sustainable Employment Development Policy Program (SEDPP) funds were disbursed from the end of 2011 to the middle of 2012 and had a widespread effect on many sectors, supporting reforms and improving transparency.

Positive effects are already visible, says Bedri Hamza, Kosovo's Finance Minister: "First of all, it is important for the macro-fiscal stability of Kosovo, as it involves significant amount of funds. They were distributed among several projects, which will have a long-term effect," he adds. "Thanks to the World Bank, Kosovo has prosperity and economic growth, which is estimated at around 5% for 2011," he says. However he says: "Kosovo needs still bigger economic growth".

Taking down business start-up barriers
One constraint to bigger economic growth and to creating jobs was Kosovo's unfavorable investment climate. To remove that barrier, the government has taken steps to speed up and ease business registration to encourage private investments, which can create jobs and in turn, incomes for families. Twenty-six one-stop-shops for registering businesses have been established in municipalities across Kosovo. In the past, there was only one, in the capital.

"Before, due to bureaucracy there was no will to register the business, today bureaucracy is reduced at a minimum," says Muhamet Doblibora, the Director of the Kamila chocolate production company, recently re-registered its business in Prizren, Kosovo's second largest city. "There is no time loss or long waiting, you can register the business in a short time," he adds.

" Before, due to bureaucracy there was no will to register the business, today bureaucracy is reduced at a minimum "

Muhamet Doblibora

Director of the Kamila chocolate production company

Reforms making it easier to do business are already paying off – in the first 9 months of 2012, new businesses registration has risen by 24 percent as compared to all of 2011. Furthermore, Kosovo's reform efforts have outpaced those of neighboring countries according to the Doing Business 2013 report, improving its relative ranking by 28 places to 98 of 185 countries surveyed. Since it is easier to start a business, there is also more incentive for businesses to employ workers formally and pay pension contributions.

Digitizing records makes management easier
Kosovo's vast numbers of job seekers have overwhelmed public employment centers that are tasked with helping job seekers find suitable jobs with employers. In November 2011, there were 336,000 paper records of registered unemployed people—far too many for employment office staff to manage efficiently. The heavy workload in turn often led to missed opportunities to match employers with eager job seekers.

The recent switch to computer-based records, a reform supported by the program, has made it easier for public employment centers to focus their attention on people who want a job.

Hake Gegaj, Employment Advisor says: "We can now very easily check if someone is an active or passive job-seeker." This move, together with search capabilities, has made employment advisors' caseloads more manageable.

Bringing the long term unemployed back to work
A glimmer of hope in the form of a public works program exists for those who've been out of work for a long time. The program offers them and social assistance beneficiaries temporary jobs—a place in the workforce and much needed income to support their families.

Kadri Hyseni, a 53-year old father of five, got a job after 24 years, cleaning a riverbed. The public works program has created almost 3,500 temporary jobs: 2,000 for poor and long-term unemployed people.

Reforms also aim to improve quality and relevance of education
Despite high unemployment, firms in Kosovo have difficulty recruiting qualified workers, as too few are equipped with marketable skills. Kosovo needs to better align higher education to the labor market and is reforming education to do so. To more closely align education to labor markets, Kosovo is accrediting higher education institutions, including vocational education schools, and establishing quality assurance standards in line with European standards.

The largest joint donor financing in Kosovo
The World Bank's budget support program coordinated ten multi- and bilateral donors, and is the largest joint financing activity in Kosovo. In addition to the World Bank, donors included the European Union, United States, Czech Republic, Denmark, Estonia, Finland, Italy, Norway, Sweden and Switzerland. Coordination helped the new government avoid high costs of interacting with multiple donors, and the budget support gave the government the freedom to implement its own policy priorities.