PRISTINA, October 24, 2017 — Firms’ poor growth prospects, the high degree of informality, and low levels of labor market participation, are the main constraints to creation of jobs in Kosovo, according to a new World Bank report discussed at a round table with Kosovo government officials, academics, think-tanks, business associations and donor representatives.
In addition to reducing infrastructure bottlenecks, such as energy and connectivity, the Kosovo Jobs Diagnostic report highlights the poor business and regulatory environment, and poor and mismatched skillset of workers and jobs, as constraints that may deter firms from expanding, or discourage informal firms from formalizing.
Most firms in Kosovo are micro (with less than 10 employees), with lower survival rates, limited turnover, low innovation and limited growth prospects. They constitute a large share of formal private employment.
“As new – and larger – cohorts join the labor force, reforms aimed at adopting the right set of rules, and developing the right set of skills, to promote job creation, will help to reduce youth disenfranchisement and productively employ the demographic dividend”, said Monica Robayo Abril, Economist at the Poverty and Equity General Practice of the World Bank Group.
Kosovo enjoys a growing share of working age population, a demographic bonus that offers opportunities. Youth (under 15) are 25.7 percent of the population, while working age (15–64) account for 67.6 percent. Kosovo’s ratio of working age population to dependents is projected to increase. Only 8 percent of Kosovo’s population today are elderly, compared to 19 percent in EU countries.
However, Kosovo’s strong economic growth over the past decade has not been associated with robust job creation. The lack of employment opportunities is reflected in high rates of inactivity rates and unemployment and slim chances of transitioning from unemployment to employment. Unemployment among youth in 2015 was more than 57 percent, while inactivity rate among women was 78.6 percent.
According to the report, the low quality of education and skill mismatches prevent the inactive population from obtaining and retaining good jobs. It also notes that existing systems to provide child and elderly care are not widely available, too expensive, and are embedded with disincentives for female labor force participation.
“Creating more jobs is vital, but it is also important to improve skills and enable youth and women in Kosovo to compete more effectively for new employment opportunities”, said Marco Mantovanelli, World Bank Manager for Kosovo.
The World Bank Group is supporting Kosovo in enhancing the conditions for accelerated private sector–led growth and employment with its Country Partnership Framework for 2017-2021 (link), which aims to assist Kosovo in moving on a path toward more sustainable, export-oriented, and inclusive growth in order to provide its citizens more opportunities for a better life.