Kosovo Youth Employment 2008 WORLDBANK

7/27/2019 Kosovo Youth Employment 2008 WORLDBANK

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September 2, 2008

Document of the World Bank

Report No. 43596-XK

KosovoYouth in JeopardyBeing Young, Unemployed, and Poor in Kosovo

Human Development Sector UnitEurope and Central Asia

A Report on Youth Employment in Kosovo


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KOSOVOYouth Employment in Kosovo

CONTENTSACKNOWLEDGEMENTS................................................................................................................................ iEXECUTIVEUMMARY ................................................................................................................................ i1

THE CHALLENGEOF YOUTH EMPLOYMENT IN KOSOVO............................. 1GENERALBACKGROUND ............................................................................................................................. 1MAINFocusOF THEREPORT..................................................................................................................... 7

WHAT DO WE KNOW ABOUT YOUTH EMPLOYMENT IN KOSOVO?.....12YOUTH LABORARKET INDICATORS AND TRENDS................................................................................. 14UNEMPLOYMENT DURATIONAND JOB SEARCH ........................................................................................ 24WAGES AND RETURNS TO EDUCATION.................................................................................................... 26

YOUTH LABOR POLICY AND INSTITUTIONS IN KOSOVO........................ 34

CHAPTER I

REPORT'SCOPE....................................................................................................................................... 11CHAPTER I1

QUALITY OF YOUTH EMPLOYMENT......................................................................................................... 19YOUTH IN JEOPARDY................................................................................................................................ 28

CHAPTER I11REVIEW F EXISTING POLICIES AND PROGRAMS ...................................................................................... 34REFERENCES............................................................................................................................................ 43

BoxesB o xI1:Does a Large Y outh P opulation Cause Co nflict? .............................................................. 8B o x 11.1:A bri ef description of the data used in the report ........................................................... 13B o x 11.2: The E duc ation Sector in Kosovo .................................................................................... 18B ox 11.3: Y outh Inform ality ........................................................................................................... 20B o x 11.4: Voices o f Vulnerable You th ........................................................................................... 32B o x 111.1: Characteristics o f Successful Labo r Ma rke t Programs (LMPs) ................................... 4 1

FiguresFigureI1: Kos ovo displays the highest youth unemployment rate in he EC A reg ion ..................9Figure 11.1:Young females participate very lit tle in he labor forc e compared to young males. andFigu re 11.2: Un emplo ymen t rates are slightly hig her among h ighe r-ski lled youth. in par t becauselow-s killed youth are likel y to be employed in subsistence agriculture ....................................... 16Figu re 11.3: I t akes about 10 years for young males to transition fr om school to work. asmeasured by the tim e i t akes to s h i f t 50 percent o f this populat ion fr om being enrol led in schoolto having em ployment .................................................................................................................. 17Figu re 11.4: W hi le m ore frequent among male youth, unpa id employm ent decreases more rap idlyamong males, especially once they reach adulthood ..................................................................... 19Fig ure 11.5: The share o f workers in full-time obs increases wit h age: fr om 60 percent at age 15to about 85 percent at age 45, and decreases thereafter until retirement age................................. 2 1Figure 11.6: Underemployment s more frequent among uns killed you ng males.......................... 22

the few participants are lik el y to be unemployed.......................................................................... 15


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Figure 11.7: The main reasons why youth migrate from Kosovo are to pursue better economicopportunities and a better quality o f i f e . ................................................................................. 23Figure 11.8: Long-term Unemployment, by Age Group, in Kosovo ............................................. 24Figure 11.9: Most inactive females (both young and adult) never have work experience .............. 25Figure 11-10:Percent Decrease in Poverty and Extreme Poverty-Random Compared to TargetedAllocation o f Youth Safety Nets ................................................................................................... 29Figure 11.11 Youth in eopardy drop out o f school earlier than youth liv ing in richer households....................................................................................................................................................... 30Figure 11.12: Young women and youth in rural areas constitute the majority o f all youth who arepoor and unemployed simultaneously........................................................................................... 3 1Figure 11.13: Youth who have attained only primary education display a great risk being poor andunemployed at the same time ....................................................................................................... 33Figure 111.1: Summary of he KYEAP: objectives, outcomes, and investments 2007-2009 .........35Figure 111.2: Budget planned under the KYEAP vs. budget actually spent according to LMPsinventory [Kosovo, 20071 ............................................................................................................. 40

TablesTable I1 Economic Growth Has Stalled since 2003 ..................................................................... 2Table 1.2. In 2006, the employment rate in Kosovo was at 29 percent (roughly half o f hat in theEU- at 65 percent) .......................................................................................................................... 5Table 1.3. Dynamics o f he unemployed registered at the PES in 2007: 12-month cumulative .... 6Table 1.4. While less than 10 percent o f a l l households benefit from youth wages, for those whodo, youth wages constitute a significant share o f household wage income .................................. 10Table 11.1. Main Employment Indicators Included in this Chapter ............................................... 12Table 11.2. Youth account for 38.4 percent o f he unemployed n Kosovo ................................... 14Table 11.3. Approximately 8 out o f 10 young individuals in the KOSOVOSabor force areunemployed.................................................................................................................................. 14Table 11.4. Mitrovica i s the region displaying the worst youth employment outcomes ............... 8Table 11.5. Self-employment and firm ownership account for less than 25 percent o f a l lemployment, at a l l age groups....................................................................................................... 20Table 11.6. Most temporary workers are so due to a lack o f permanent vacancies........................ 21Table 11.7. About 23 percent o f a l l young female workers work on a part-time basis because o ftheir role as caregivers; this share increases as they enter adulthood ........................................... 21Table 11.8. On Average, young workers earn about 200 per month; which only about 20 percentless than what adult workers make on average.............................................................................. 27Table 11.9. Statistics on Youth in Jeopardy .................................................................................. 28Table 11.10. Sample Size and Program Coverage Used in Micro-simulations .............................. 29Table 11.11 Regional Disparities in Vulnerability among Kosovo Youth .................................... 32Table 11.12. Incidenceo f Youth i n Jeopardy by Educationo f the Household Head ..................... 33Table 111.1, Employment Programs Targeted to Youth in Kosovo (For program details, seeAppendix) ...................................................................................................................................... 39Appendix: Inventory of ALMPs in Kosovo .............................................................. 47


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ACKNOWLEDGEMENTSThis report was prepared by a team comprising Diego F. Angel-Urdinola (EconomistECSHD, Task Team Leader), Arvo Kuddo (Senior Economist, ESCHD), SangeethaMa laiya nd i (Junior Professional Associate, ECS HD), Flo ra Kelmendi (ETC, ECSHD),Sara Bin Mahfooz (Consultant, ECSHD), L ejl a Sadiku (Consultant, ECSHD), M ariaFlorencia Dim (Consultant, ECSHD), and Diane Stamm (Consultant, ECSHD). Specialacknowledgements are given to the European Training Foundation (ETF) team for i t sclose interaction wit h the World Bank team: fo r help ful discussions and brainstorming inTorino, for their contribution with a background paper on Governance and Capacity o fEmp loyment Institutions in Kosovo, and for their valuable help dur ing a jo in t Mis sio n toKosovo in mid-January 2008. Muriel Dunbar (Director, ETF; fo r her support andguidance), Xavier Matheu de Cortada (Head M&E, ETF; fo r his hospitality andguidance), Lida K i t a (Country Manager fo r Kosovo, ETF; fo r her inputs, motivation, andenormous contribution), Agniesz ka-Ma jcher-Teleon (Operations Department, ETF; fo rher useful comments), and Siria Taurell i (Operations Department, ETF; who was ourcontact point wit h ETF).Helpfulguidance, comments, and discussions with the team were also provided b y TamarM. Atinc (Sector Director, ECSH D; who made possible our interaction w ith ETF), ArupBanerji (former Sector Manager, ECSHD), Gordon Betcherman (Sector Manager andLead Economist, ECSHD, who provided mentoring and guidance), Ranjit Nayak(Country Manager, ECCKO), Mic hele Gragnolati (Senior Economist, E CSHD), Bru ce J.Courtney (Senior Country Economist, ECCU4), , Andrew Dabalen (Senior Economist,ECSPE), and Elena Bardasi (Senior Economist, PRMGE). From our counterparts, wethank A vn i Kastrati (Director, Statistical Office o f Kosovo [SO K]) and Bash kim Bel laqa(Director Social Statistics, SOK) for sharing their data unsparingly. Ylber Shabani(Former Director, Department o f Labor and Employment, Min istry o f Labor and SocialWelfare-MLSW), Shpetim Kal ludra (MLSW), Haf iz L e k a (Act ing Director ofDepartment of Labor and Employment, M L SW), Sal ih Morina (Acting PermanentSecretary; Department of Youth, Mi ni str y of Yo uth Culture and Sports [MYC S]), BurimLeci (MYCS), Safet Fa zliu (Director, Agency fo r Small and Medium Enterprises,Min istry of Trade and Industry [MTI]), for providing informat ion and guidance for ourresearch, Valli Corbanese (International Labour Organization [ILO]), Sokol Elshani(ILO), Fatmir Burjani (ILO), Levent Koro (UNDP), Jean-Luc Camilleri (Lux-Development), Majlinda Bajraktari (Swisscontact), Erich Gutman (KOSVET), BirgitThomm an (Project Manager, GTZ), Albana Kosh i (GTZ) fo r their insights and expertise.We also thank Sophie Beaumont (ECLO), Be lm a Ba jra m i (Business Start-up Center),Alban Ibrahimi (Director, Care International), Ilir Hoxha (WB PIU), Shaqir Arapi(International Organization for Migration), Gerold Schwartz (IOM), PanagiotaVoidonikola (IOM ), N ico le Farnsworth (Kosovo Womens Ne twork), Lulje ta Vuniqi(Kosovo Gender Studies Center), Veprore Shehu (Medica), Catherine Rothenberg(Mission Director, Mercy Corps), and Ardita Jahja Hoxha (Program Manager, MercyCorps) for sharing valuable information, which has helped in mak ing our report morecomplete.

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EXECUTIVEUMMARY

1. T h e m a i n o b j e c t i v e o f t h e r e p o r t i s t o p rov ide d iagnos is on you themp loymen t , wh i ch c an p rov ide t he basis f o r f u tu re po l i cy des ign . In recent years, thetopic of youth employment in Kos ovo has been studied extensively.' There are reportsproduced by Provisional Institutions for Self-Government (PISG) and internationalorganizations and donors which compile information about youth employment trends,s k i l l s mismatches, employme nt promotion, and labor demand constraints for this segmento f the population. Nevertheless, studies fall short on addressing issues related to youthemployment quality, regional differences in youth employment outcomes, andrelationships between youth employment and household poverty. This report usesavailable micro-data (the Lab or Force Survey, LFS; and the Household Budget Survey,H B S ) and develops a more in-dep th analysis of youth em ployment outcomes, trends, anddeterminants, focusing o n the aforementioned inform ation gaps. Ou r d efinition o f youthincludes individua ls aged 15 to 24.2. The Prov is iona l Ins t i tu t ions fo r Se l f -Government deve loped the 2007-2010K o so v o Y o u t h E m p l o y m e n t A c t i o n Plan (KYEAP), which includes a broad set ofpo licy options to imp rove youth employment in the territory. The Minist ry of Labor hasexpressed an interest in obtaining analysis on youth labor market outcomes that couldfacilitate design, implementation, and priorit iza tion of this action plan. This endeavourwil l benefi t from the diagnosis provided in this report. W hile this report does discussgeneral policy issues -- specifically pertaining to active labor market programs -- basedon the analysis undertaken, i t does not provide specific p ol ic y recommendations.OVERVIEW3. Because of a very young popu la t ion , Kosovo faces the impera t ive o fi n teg ra t i ng l a rge you th coho r t s i n to t he l abo r marke t in the years to come. Thisheightens the overall challenge of youth unemployment. Kosovo has the youngestpopulation in Europe. According to 2005 Labor Force Survey (LFS) estimates,individuals aged 15 to 24 account for about 30 percent o f the working-age population,and 20 percent o f total po pulation (vs. 14 percent in Europe on average). Ko so vo has thelargest youth share of total population in Europe. I t i s expected that roughly 200,000young people w i l l reach working age in the next five years, while the number o f peoplereaching retirement age will be approximately 60,000. These combined phenomena wi l lcontribute to make more di f f icul t the labor market situation faced by youth in the years tocome.4. High l evel s o f unemp loymen t ov e ral l r ema in a m ajo r chal lenge in t h e l a b o rmarke t . Historically, Kosovo was one of the regions with the highest unemploymentrates in the former Yugoslavia. H ig h rates of unemployment in Kos ovo have become amatter of serious concern, especially because o f their negative social and economicrepercussions.Under United Nations Security Council Resolution 1244 (1999)

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5. Kosovo has the h ighest unemployment ra te in E u r o p e and C e n t r a l Asia( E C A ) a t 45 percent ; fol lowed by Macedonia (36 percent), Montenegro (31 percent),and Bosnia and Herzegovina (30 percent). Lab or force pa rticipation in Kosovo (at 53percent) i s substantially bel ow the E C A average (at 65 percent) and the second lowe st inthe E C A region after Turkey (5 1percent). Since 2003, emp loymen t indicators in Kosovohave impro ved slightly. Estimates based on data fr om the Labor F orce Survey suggest adecline in over all une mploym ent rates and an increase in employ ment rates between 2003and 2006, wh ile labor force participation remained rough ly unchanged in the period o fstudy:.

20032006*

Working Age Populat ion ( 15-64)Employment Unemployment Labor ForceRate Rate Participation25.3 52.3 53.029.0 44.6 52.3

6. There a re severa l s t ruc tu ra l , mu l t isec to r and in te r re la ted const ra in ts toemp loymen t in Kosovo, including stagnant economic and labor demand growth, excesssupply of labor, s k i l l mismatches, and polit ica l uncertainty; al l o f whic h havesubstantially affected the labor marke t in recent years:

Sluggish labor demand: While many labor supply problems coexist in Kosovo,the mai n binding constraint t o employm ent p ol icy remains stagnant labo r demand.The best way for the labor market to absorb workers i s by strengthening thedynamism of the demand for labor in general. Doing so requires a solidmacroeconomy, and cross-sectoral efforts, including favorable legislation, a goodinvestment climate, and politi cal stability. As such, increasing labor demand inKosovo w i l l l ik ely be a slow and far-reaching process.A Dut ch Disease?: Inflow s of foreign aid and UNMIK administration have beenimp orta nt sources o f jobs fo r hotels, restaurants, translators, house keepers,nannies, drivers, independent consultants, consulting f i rms, and NGOs. There i sanecdotic evidence suggesting that the expatriate comm unity has contributed toincreasi ng reservation wages in Kosovo. To the extent this i s true, this would becontributing t o employment problems.L o w levels o f investment: Delays in privatization, po liti cal uncertainty, and poorinfrastructure are all barriers t o investment in Kosovo. Ev en after current po liti caluncertainties are overcome, new uncertainties will appear as investors test thecre dib ilit y a nd assess the capacity o f the gove rnment t o secure their investment.Education: During the period o f confl ict, K osovo re lied on an informal (and ratherlow quality) education system. During this t ime, massive layoffs o f individualsfrom the public sector and long unemployment spells contributed to a rapiddepreciation (and a slow renewal) of s k i l l s demanded by the emerging labormarket.

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THEYOUTHLABORARKETN K o s o v o7. A n im por tan t fea tu re o f the d i f fi cu l t ove ra ll l abo r m arke t s i tuat ion i s thevery unfavorab le labor m ark et ou tcomes for young peop le. There are a number ofreasons to focus on you th employment, includ ing: (a) y outh i s a crucial time o f l i fe, (b)high and rising unemployment levels among youth are associated with higher crime andsocial instability, (c) pow erf ul demographic forces are work ing to expand the labor force,creating problems of unemployment among youth, (d) youth are partic ularly vulnerableto unemployment and poverty, and (e) youth account for 40 percent of the pool ofunemployed in Kosovo. The majority of unemployed youth in Kosovo could becategorized as lon g-t erm unemployed. La ck o f experience i s a comm on feature especiallyaffecting young women. Y ou th in Kos ovo display a very dif f icu lt transition from schoolto employment. Moreover, youth who are employed are so in jobs that display lowquality, lo w returns, and high levels o f informali ty.8. Kosovo has the highest youth unemp loym ent rate in the EC A reg ion . Recentimprovements in employment outcomes in Kosovo did no t benefit youth. Estimates usingLFS data indicate that unemployme nt, employment, and participation rates among youthremained roughly unchanged in the 2003-2006 period at 76 percent, 11 percent, and 46percent respectively (more details in Chapter 11). Indeed, youth employment outcomes inKosovo are alarming compared to ECA standards. The youth unemployment rate inKosovo s s t i l l almost 5 times higher than the average for the European Un ion .

Youth Unemploy ment RateF&te (%)

4 M K D50.0

R O M20.010.0

0 1000 2000 3000 4000 5000 6000 7000GDP per capita

Source: World Development Indicators (2005). Data for Kosovo from World Bank Estimates using 2005LFS.9. Fou r out o f every 10 youth who are unemployed have been so f o r m o r e t h anone year. Lon g-ter m unemployment, as defined as beingunemployed for a period longerthan 1 year, i s common Kosovo. While this phenomenon generally affects adults, long-te rm unemployment i s also affecting youth. Indeed, about 44 percent of all unemployedyouth in Koso vo co uld be categorized as long-term unemployed.

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Long Term Unemploym ent by Age Group in Kosovo100% -90% -80 % -70% -

E 60% -g50% -40 % -c

20%30% 1 1 57.8t I ye.,15.24 25-34 35.54 55.M

Source: Wo rld Ba nk calculations using 2005 LFS data. Estimates exclude first-time job seekers.10. Al though the i r s i tua t ion i s steadi ly improving, young women display theworst employment outcomes in the labor market . Em ploym ent outcomes fo r femalesare less favorable than those for males, especially among youth. For females,employment and participation rates are very low . However, while labor marketindicators for young males have been stable (roughly unchanged) since 2003, labormarket indicators among females (albeit worse than among males) improved between2003 and 2006.11. Y o u th in Kosovo have a lon g t rans it ion f ro m schoo l to employment . I t takesabout 10 years fo r y oung males to transition f ro m school to w ork, as measured b y thetime i t takes from when 50 percent of the population i s enrolled in school to when 50percent o f the population i s employed. In Macedonia, a country that also faces significantchallenges in the labor market, using a s im i l a r defini t ion i t takes four to five years foryoung males to transition from school to employment. In developed countries, i t takeseven less time for new young entrants to get a stable ob .12. Young worke rs in Kosovo are typical ly employed in very low-qual i ty jobs.Rapid inf lows of new young participants into the labor market an d high unemploymentrates are not the on ly problems faced b y youth. In 2005, about 20 percent o f a ll employedyouth did no t have an employment contract; 37 percent were n ot entitled to paid leave; 55percent were not entitled to p aid sick leave; and 73 percent were n ot registered in SocialSecurity. Moreover, in 2004 around 21 percent of all young workers claimed to haveworked for more than 50 hours a week. L o w qual i ty o f obs i s l ike ly to affect youth frompoor and vulnerable groups, mainly in agriculture-related activity, who generally accept(due to necessity) the conditions offered b y existing jobs, albeit precarious:

About one-third of all voung individuals engage in unpaid work. However, theshare of unpaid employment drops quickly and steadily with age as youngindividuals reach adulthood. Unpaid work among youth i s more frequent amongmales than am ong females.

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Over one-third of all young workers are employed on a part-time or temporarybasis. About 30 percent of all youth are employed on a temporary basis, withcontracts o ffering duration o f less than 6 m onths. Also, 7 0 percent of all youngworkers who are employed work on a part-time basis. While part-time work i scommo n among youth as they combine work w ith study, this seems not to be thecase in Kosovo. Indeed, 72 percent o f a ll you th wo rkin g on a temporary/part timebasis do so because they can no t find permanentlfull time jobs.About one-third of all young workers are looking for a second iob or want towo rk m ore hours. About 4 0 percent o f al l young male workers claim to want towork more hours or to be searching for an additional job. Underemploymentamong young females i s lower than among young males at 20 percent.Underemployment i s more frequent among urban youth than among rura l youth.Returns to education among: you th are posit ive but very low. Young workers w ithpost-secondary education have an adjusted wage premium of only 13 percent,compared to otherwise s i m i l a r young workers who have attained at most primaryeducation. These rates of return are extremely lo w b y regional standards (vary ingbetween 30 to 80 percent elsewhere).

13. Many young workers re ly on work in the informal economy to cope with therisk of unemployment and l o w earnings. The degree o f youth infor ma lity, as measuredaccording to whether social contributions were paid on their behalf, i s 67 percent. Thishigh incidence of informality occurs primarily because of limited opportunities in theformal sector and i s coupled with poor enforcement and lo w awareness o f the labor law.B y getting info rm al obs, however, youth do acquire labor market experience, which maycontribute to eventually getting a form al job.14. Migration i s another important coping mechanism for youth to mitigateunemployment risks. There are about 500,000 individuals who were born in Kosovowho now live abroad. Migration flows have been significant in Kosovo in recent years.Yo uth are more li ke ly to emigrate because the costs o f leaving their ho me countries arelower than the economic and social gains of do ing so. A recent survey conducted byUNDP foun d that 44 percent of al l youth intend to migrate from Kosovo. Since most ofthe legal emigration routes to Europe from Kos ovo are no w closed, a large portio n o f i t scurrent youth emigration i s illegal. Nevertheless, poverty and high unemployment ratescontinue to m ake migratio n an attractive opt ion for man y people, especially the young.YOUTHINEOPARDY15. Within the broader problem of youth labor market outcomes, this reportpays particular attention to Youth in Jeopardy (Le. extreme poor and unemployedyouth). The traditional focus for discussion of youth employment problems has been onunemployment. In addition, this report raises awareness o f a group o f vulnerable youth(or youth in eopardy). T he government w i ll need to focus and priorit ize i t s youth pol ic yagenda. Currently, there are 163,000 young individuals who are unemployed. As such,

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the government may consider the poss ibility to target interventions and lim ite d resourcesto those who need them the most throug h the creation of safety-nets fo r vulnerable groupsof the population. Y ou th in eopardy constitute an important group at risk and one that i sless l ike ly than others to benefit fro m future improvements in abor demand. B y ocusingon those in need, K os ov o can avo id creating an underclass o f excluded groups, po vertytraps, and intergenerational transmission o f poverty:

Twe nty percent of al l unemployed youth in Kosovo are extreme Door, defined asthose liv in g in households in the f i rst [poorest] consumption quintile. This groupi s at high risk to face social exclusion, long-term poverty, and lack of secondchances. The majori ty of youth in eopardy are women and low-educated youth.Youth in the M itrov ica region display a higher risk o f facing extreme poverty andunemployment at the same time.

0 Resources for youth policv are scarce: While youth in jeopardy i s a narrowpopulation, i t i s s t i l l larger that the total youth population that the government i scurren tly able to serve through labor market policies, give n the current fiscal a ndinstitutional capacity (Chapter 111).O f course, this does rul e out m ore investmentsand budget support for youth policy in the near future, which would enable todevelop a broader scope and coverage o f youth-related policies.Youth in extreme poverty display the worst employment outcomes: Theunemployment rate for youth in the poorest consumption quintile i s at 86 percent,whi le for youth in the richest consumption quintile, i t i s at 68 percent (HBS2005106 estimates). Emp loyme nt rates fo r youth aged 20 to 24 are tw ice as h ighamong those l iv in g in households in the highest quintile compared to those liv in gin households in the poorest quintile (26 percent compared to 12 percent).You th "paid" employment i s a important safety net for households in extremepoverty: While on ly a small share of al l households have "paid" emp loyed youth,youth wages among households in the poorest quintile account (on average) for61 percent of overall household wage income for those households with at leastone employe d youth.

16. Safety-nets targeted to youth in j eopa rdy can have an i m p o r t a n t i m p ac t inreduc ing ex t reme pover ty . Using micro-simulation techniques, analysis in this reportquantifies the impact o n poverty o f targeted interventions that provide households ha vingyouth in eopardy w ith a transfer equivalent to the youth med ian monthly wage vs. thesame transfer randomly allocated among households having unemployed youth. Thetransfer can be thoug ht o f as incom e assistance throug h a targeted incom e transfer and/ortargeted employment assistance. Simulation estimates indicate reaching less than 20percent of all youth in jeopardy (about 6,000 thousand individuals) can contribute todecrease extreme poverty b y mu ch more than a rand om allocation.

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YOUTHLABOROLICY IN K o s o v o17. Wh i le the m ain constrain t to youth employment i s the low demand for labor ,labor po l i cy can potent ia l l y he lp improv ing labor market ou tcomes. Signif icantimprovements in the economic situation and in the dynamism of the private sectorrequires a long-term and multi-sectoral strategy that largely falls outside of the labormarket - e.g. maintain ing macroeconomic stability, and im pr ov in g the investmentclimate. Nevertheless, la bor market p ol ic y can also contribute to a better environme nt fo rjo b creation. A potential ly important issue to improve labor market outcomes fo r you th i sthe governments capacity to deliver cost-effective active labor market programs(ALMPs).Wh ile employment services and training programs are o f l i mi te d use in a labormarket as slack as KOSOVOSs currently, they can play a useful role in enhancing thefunctioning o f the labor market and imp rovin g the emplo yabil i ty o f ob-seekers and otherdisadvantaged workers, especially as labor demand picks up. Under the current labormarket conditions, there are very strong reasons to consider AL M P s that c ould have moreimmediate impacts in terms o f creating jobs, al leviating unemployment, and prov idingsafety nets fo r extreme poo r unem ploye d youth.18. This repor t p rov ides a new inventory o f ex is t ing Act ive Labor MarketP rog rams (ALMPs) in Kosovo. Prior to this study, there was n o informatio n compiledon youth ALMPs in Kosovo. As such, there was a general lack o f know ledge about howmuch Kosovo was spending on these programs and about the effectiveness of suchspending. The W or ld B an k team preparing this report int erv iew ed several agencies, lin eministries, NGOs, and donors, and compile d infor ma tion scattered in various documentsto produce an updated inven tory o f ALMPs. This inventory provides informa tion on thescope, budget, coverage, a nd lessons learn ed fr o m several ong oin g ALMPs.19. Th e K Y E A P (2007-2010) s the f lagsh ip document fo r youth labor po l i cy . Theplan i s the comprehensive strategy o f the Government to i mpr ove the situation o f youngpeople by involving governmental and non-governmental institut ions in exploring andmeeting the needs of youth and b y finding ways and mechanisms for youth part icipationin the decision-ma king process in Kosovo. The KYEAP has 3 ma in objectives, each wi thi t s ow n budget al location: 1) to promote employment among youn g people (4.4 m i l l i o nper year); 2) to increase decent work opportunities for young people (1.7 mi l l i on peryear); and 3) to prevent social exclusion o f yo uth through targeted labor m arket measures(0.4 mi ll i on per year).20. T h e i m p l em e n ta ti o n o f t he K Y E A P i s fa l l i ng beh ind, main ly due toinst i tut ion al capacity cons tra ints. Althoug h the action plan was form ally approved andbudget was allocated for i t s implementation, the implem entation mechanism was neverestablished. This was ma in ly because the Y outh E mplo ymen t Ac tio n Plan requires stronginstitu tional and administrative capacities (perhaps too a mbitio us give n the leve l o fdevelopment of institutions) to oversee and steer the implementation process. Inparticular, the KYEAP planned for the establishment o f an Inter-ministerial Co mmitteeon Y outh E mploy ment t o oversee impleme ntation and to report back to the respective

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ministries. In practice, the implem entation structures foreseen b y this document have notas yet been established.21. O v er a ll , t h e M i n i s t r y o f L a b o r and Soc ia l Wel fa re (MLSW) faces capac i tyand f inanc ing const ra in ts in imp lemen t ing you th l abo r po l i cy as specif ied in th eKYEAP. The MLSW i s the central institution mandated with employment policies andinstitutional arrangements to ensure their implementation. The MLSW Department ofEmploy ment and Labor and i t s respective Labor Division are in charge of youth pol ic ydesign. The number of staff at the MLSW i s considered to be lo w and, according to theirofficials, there i s an urgent need to increase it . Personnel fro m the MLSW claim that theministry lacks formal rules, guidelines, and procedures for programming ministerialactivities.22. The ro le o f t he ma in imp lemen t ing agency ( t he PES) i s u n d e r m i n ed b yins t i tu t iona l capac i ty const ra in ts . Implementation of the KYEAP requires majorinstitution al changes. This will require a greater emphasis on better coordination andimproved brokerage/information services provided by the PES. Indeed; (a) the staffcaseload of the PES i s too high given i t s capacity; (b) the level of educationalqual i f icat ion of PES staff i s modest; (c) the PES curren tly operates with ou t a legal basis(which implies that a large share o f i t s budget i s financed from donor contributions); and(d) the ma jority o f young workers never registered wit h the PES and, among those whodid, most did not receive assistance.23. L a c k o f d o n o r c o o r d i n at i o n has con t r i bu ted t o t he p ro l i f e ra t i on o f small-sca le employment p rograms ta rge ted to you th . The involvement of internationalorganizations i s substantial in t e rms of the preparation and implementation ofemployment policies and programs. The kind of involvement varies from advisory topolicy desigdimplementation and budget support. Most programs targeted to promoteyouth employment in Kosovo are either f inanced o r implemented by donors. As such,donors play a m ajor role in defining the po lic y agenda. Howe ver, n ot a ll donors seem tohave a comm on agenda in relation to programs a nd policies that should be implemented.Some donors seem to have higher preference towards VE T-related programs w hile othersseem to have higher preference for programs that promote employment (temporary orpermanently), such as apprenticeships and entrepreneurship support. As a result, there i sa prolifera tion of expensive programs wi th l im ited scope and coverage.24. A b o u t 7 mi l l i on a re spen t on you th emp loymen t p rog rams yea r l y , yetp r og ram coverage rema ins l ow . The level o f yearly expenditure on ALMPs in Kosovoin 2007 slightly surpassed that envisioned in the KYEAP. However, in 2007 ALMPsbenefited only 10 thousand youth per year (about 6.3 percent of all the poo l o funemployed individuals in this age group). The youth employment program inventorycompi led for this report collected inform ation on 19 ALMPs that have been implementedsince year 2000, 12 of which s t i l l operate. In terms of cost and coverage, ALMPscurrently being implemented have high unit costs (averaging 700 per beneficiary peryear) and limited participation (10,300 out o f a total poo l of unemployed youth of morethan 160,000).

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25. In 2007, most A L M P s resources were spent on pro mo ting you th employm entth rough VET- re la ted p rog rams (3 million) and promoting/financing new smallbusiness start-ups (2.2 million). Spending on ALMPs to prevent social exclusion in20007 (1.8 millio n) was higher than conceived under the original plan. Mo st ALMPs arefocused on strengthening vocational education and training (10 programs), on providingtemporary employment (3 programs), and on promoting youth entrepreneurship (6programs).26. How ever, the success of VET-re lat ed pr ograms i s be ing undermined b y thesluggish gro wth in l abor demand. Altho ugh most resources for youth ALMPs are spenton VE T-related programs, placement rates o f trainees are very l ow . Indeed, the success o fthese programs i s hea vily constrained b y the general sluggish demand for labor. Whileinvestments in training can provide young labor market entrants with s k i l l s , which canimprove their employability, training programs are not successful i f labor demand i sweak. In 2007, only 40 percent of m ale graduates o f PES training centers, and less than30 percent o f females graduates foun d p aid employment upon tra ining completion. Thisi s much less than placement rates (at 70 percent on average) in most other transitioncountries.27. Fo r the government and donors i t i s imp or t ant to care fu l l y evaluate A L M P sand introduce intervent ions on the basis of what works in Kosovo. Unfortunately,youth em ployment programs implemented in Kosovo have not been care fully evaluated.There are many different types of evaluations: (a) process evaluations focus on how aprogram operates; (b) performance monitoring provides information on the extent towhich specific program objectives are achieved; and (c) impact evaluations focus onwhether a program has i t s intended impact. As such, future programs should try to usethese available techniques in order to collect evidence of what policies work and dontwork in the Kos ovo context.28. The repo r t i s structu red as fo l lows. ChapterI rovides a general back groun d o fmacroeconomic and employment outcomes in Kosovo. The chapter then explains theframework, scope, and limitations of this study (Why youth? Wh y youth in eopardy?).Chapter I1 develops a youth employment pro file using data fro m the 2003-2006 Lab orForce Surveys and the 2006 Household Budget Survey; analysis includes a profile ofyouth in eopardy in Kosovo, employment trends, and assessment o f youth employm entquality and constraints. Chapter I11provides an overview of the current you th programsand policies being implemented in the territory in the context of the Kosovo YouthNational Action Plan (KYNAP).

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CHAPTER I. THE CHALLENGE OFYOUTHEMPLOYMENT IN KOSOVOIts time or policymakers now to look beyond the silos,

to begin recognizing that consistent, cost-effectiveinvestment in children and youth can pay for itselJ:Providing young people with the resources they needto compete in todays global economy is not just amoral imperative. It is an economic necessity, too.

-James J. Heckman, Nobel Laureate in EconomicsAbstract

This chapter provides a general background of macroeconomic and employmentoutcomes in Kosovo. The chapter then explains the framework, scope, and limitations othis study (Why youth? Why youth in jeopardy?). This report does not claim to becomprehensive. Indeed, this report focuses on providing a diagnosis of the youth labormarket on which policy design can be based. Analysis suggests that sluggish labordemand, slow growth, and lack o investment are the main constraints to ob creation inKosovo. Although supply side constraints coexists (such as lack of information and skillmismatches),in the medium and long-run, labor policies should focus on promotinggrowth, investment, and expansion in labor demand. In the short-run, there is a need toprovide safety nets for the large pool of unemployed: and especially for those at higherrisk (such as youth in jeopardy). On the analytical side, this report provides a new in-depth analysis of youth employment outcomes, trends, and determinants.GENERAL ACKGROUND1. In recent years , the labo r m ark e t in Kosovo has substan t ia l ly su f fered f r o mslugg ish economic g rowth , lack o f inves tment , evo lv ing demograph ics , po l i t i ca luncer ta in ty , and po l i t i ca l con f l i c t . 2Kosovo is the poorest terri tory in South EastEurope. In 1988, gross domestic product (GDP) per capita in Koso vo was just 67 percento f the average in Yugoslavia as a whole and just 44 percent o f the average o f Slovenia,which i s considered the richest in the region. When Yugoslavia broke apart, Kosovobecame even poorer a nd i t s economy was hardhit b y con f l i ct in the late 1990s and early2000s. During the t ime o f conf lic t , ind iv iduals f r om A lbanian or ig in were massive ly la ido f f f ro m publ ic employment, which contr ibuted to raise unemployment and in formal i ty inKosovo. Economic growth surged in the imm ediate post-confl ict period, buoyed b y alarge in f low of resources for reconstruction. Since then, and especially in the last four

Under Unite d Nations Security Council Resolution 1244 (1999)

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years, growth has stalled (Table 1.1). Industrial output has not fully recovered andagriculture, which contributes a large share of the GDP and where the majori ty o f thepopulation earns their l ivelihood, remains a low-productivity activity. Inflation alsoremains low. Agricultural productivi ty i s significantly below neighboring countries.Kosovo receives l i t t le foreign direct investment and must rely on foreign assistance tohelp cover i t s massive trade deficit, whic h was 51 percent of G DP in 2006 (PISG 2007).

Macroeconomic TrendsNat iona l AccountsReal GDP growthGDP per head (in 2002 euros)Externa l AccountsForeign assistance (% o f GDP)bWorke r remittances (millions of euros)PricesCPI In f la t ion

Current account balance (% GDP)a

Proj.2002e 2003e 2004r 20 05 - 2006r 2007p-0 .1 -0.5 2.5 0.5 3.3 2.31,141 1,147 1,156 1,143 1,161 1,168-50.1 -41.6 -39.5 -40.7 -42 .2 -40.542.7 32.4 25.5 22.6 20.7 16.235 125 215 262 300 3423.6 1.3 -1.4 -1.4 1.5 2.0

2. Th ere a re severa l s t ruc t u ra l and mu l t isecto r const ra in ts to employm ent inKosovo, but the m a i n one seems to be lack o f l abo r demand . While many laborsupply problems coexist in Kosovo, the main binding constraint to employment policyremains to be the stagnant labor demand. The best way for the labor market to absorbworkers i s b y strengthening the dynamism o f the demand for labor in general (Osmani2002; Godfrey 2003). Doing so requires cross-sectoral efforts, a so lid macroeconomy,favorable legislation, a good investment climate, and political stability. As such,increasing labor demand in Kosovo w i l l l i ke ly be a slow and far-reaching process:0 -ish labor demand: (a) growth in demand for labor i s generally l inked toove rall macroeconomic performance and economic growth. A ccor ding to W or ldBank (2007), to reduce the overall unemployment rate by half in the next 10years, assuming an annual labor force p articipation gro wth rate of 1.9 percent andgrow th to productive employment elasticity o f 1.6 percent, Ko sovo w ou ld need togrow at about 6 percent per year. However, real GDP grow th has averaged on ly0.9 percent during 2002-07. (b) A recent study (PEM 2007) finds that wh i le jobcreation in Kosovo has been imp rov ing and about 63 percent o f a random sampleo f f i r m s claimed to have expanded their labor demand in he years 2005 and 2006,

the number o f new vacancies i s not growing at the pace of the inf low of the ne wparticipants. In 2006 the employment service of Kosovo registered only 8,561new vacancies for 326,000 registered unemploye d (95,000 o f wh ich are between15 and 24 years o f age). (c) The private enterprise sector in Kosovo i s very weak.The sector i s dominated b y micro-enterprises, most o f wh ich are organized as soleproprietorships or partnerships employing less than five workers in lo w valueadded, low margin sectors (such as small scale food production, retailing andtrade, restaurants and cafks).2


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A Dutch Decease?: Inflows of foreign aid and UNMIK administration haverecently been important sources of jobs for hotels, restaurants, translators, housekeepers, nannies, drivers, independent consultants, consulting f i rms, and NGOs.There i s anecdotic evidence suggesting that the expatriate community contributedto increase the level o f wages in Kosovo. As UN presence diminishes and foreignaid f lows are reduced (IMF, 2008), labor demand in Kosovo (and wages) mayactually suffer a contraction in these sectors in he short-medium run. 3L o w levels o f investment: Delays in privatization, political uncertainty, and poorinfrastructure are a ll barriers to investment in Kosovo. Despite a great potential tohave a favorable investment climate (given KOSOVOSow labor costs, pr oxim ityto the EU, and availabil ity of natural resources and energy), f lows of foreigndirect investment (FDI) into K osovo have been less than desirable (World Bank2008). This has been mainly due to polit ical uncertainty. Even after theseuncertainties are overcom e, new uncertainties w i l l appear as investors test thecredibility and assess the capacity of the new government to secure theirinvestment. Most o f the recent FDI into Kos ovo has been generated as result ofthe privatization process, wh ich has pick ed up considerable since 2004. Despitei t s proximi ty to the EU, very few m ultin atio na l corporations operate in Kosovo.Labor leaislation: Legislation seems not to be a main constraint to employmentcreation as the ri gi di ty o f the employment index i s one o f the lowest in the region(Kuddo, 2008). The current employment protection framework provides o nly fo rthe basic protection o f workers no t meetingEU standards. The MLSW prepared anew Labor Law (2004), which has not been approved yet by the KosovoAssembly. The proposed new law introduces more protection to workers (throughgenerous severance payments and the introduction of a minimum wage; amongothers) that w ou ld increase ov era ll labor costs. A few examples follo w. The draftLabor L aw restricts f ixed te rm contracts in t ime and by type o f work. Instead ofhealth insurance (due to i t s absence), the burden o f maternity leave payments fo rthe first three months i s put on employers which may lead to discrimination ofyoung females in the labor mark et (especially b y S ME s ) who already have theworst labor market outcomes. Also severance payments of up to ten monthlywages proposed in the draft are the most generous in the region, partially due toabsence of unemployment benefits. There are other restrictive aspects offlexibil ity, such a high wage premiums for overtime, l imitations of work onweekends, and so on. These changes, while im pro vin g the employment quality ofthose with jobs, w ou ld lik ely contribute adversely to labor demand and to expandfurther the info rma l sector.

0 Lack o f Budget to Finance LMPs : . Most L M P s in Kosovo are f inanced fromdonor contributions. A draft la w on Promotion of Employmen t and on ProtectionAccording to IMF (2008), foreign assistance in Kosovo s expected to halve between 2007 and 2012 f or mSo far, the process of p rivatization has yielded about 150 mi ll io n (Wo rld Bank, 2008)9 to 4.7 percent of GDP.


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of Unemployed, submitted to the Kosovo Assembly in 2005, establishes thegeneral framework for the design and financing o f passive and active labor marketmeasures (PISG 2006a). The draft Law l i s ts the fo l lowing ALMP measures: jo bcounseling and mediation, labor market training and retraining, wage subsidies,public works programs, and self-employment and entrepreneurship promotionmeasures. In erms o f the costs and coverage, ALMPs suggested b y the d raft L awtend to be geared towards the programs with the highest unit costs and limitednumber of participation. The draft Employmen t Prom otion L aw anticipates thatemployment programs will be financed from the following: (a) employers'contribution equal to one percent of the gross wage for each employee; (b)workers' contribution equal to one percent of the gross wage; (c) 5 percent ofprivatization proceeding. The act has not been promulgated, mainly due to thelack of financial means and because i t relies of contributions from f i r m s andworkers; which would increase labor costs and contribute adversely to labordemand and to further informalizat ion of the economy. The draft law alsoenvisages that n o less than 30 percent o f the funds available shall be disbursed fo rALMPs. Currently, most active labor market measures are f inanced bycontribution fro m donors. A country w ith h igh unemployment o r an undevelopedformal sector w i l l need to depend, at least initially, on central budget support formost i f not a ll employment programs. As the labor market matures, financ ing m aybe split between the central budget and employer/employee contributions. As fullemployment i s reached, al l financing may be shifted to em ployers an d employees.Also in determininghow different programs are financed, particularly in countriesw ith ra pidly gr ow ing unemployment rates, i t i s critic al that a legal and budgetarydistinction be made between the source o f financing for income support and thatfor other employment programs. Without such distinctions, income supportprogram expenditures will "crowd-out'' investments in employment service andother active programs (Kuddo, 2008).Education: During the period of conflict, Kosov o re l ied on an in form al (and ratherlo w quality) education system. Du rin g this time, massive layoffs from the publicsector and long unemployment spells contributed to a rapid depreciation (and aslow renewal) of s k i l l s deemed necessary b y the new labor market. Inadequates k i l l levels are normally associated with education and training policy. Theeducation and train ing systems are currently unable to address the employabi l i tychallenges faced b y the working age population. The increase in the overallquantity o f education and training was n ot m atched b y an increase in quality andrelevance; and most importantly by the creation of new jobs. The coverage oftraining s t i l l remains limited compared to the unemployment dimension. Life lon glearning opportunities and the possibility for early school leavers to return to theeducation and training system are s t i l l limited both in terms of quantity andquality. School drop-out rates after lo wer -prim ary education are large especiallyamong girls an d in rural areas (LFS 2006); although secondary enrollment andcompletion rates remain comparable to ECA standards (Edstats, 2005).Furthermore, the lack o f a qualif ication framework and a perceived lo w qu ality o ftertiary education complicates matters further. The lack o f an acceptedqualification system i s pushing employers to use hig hly experienced workers as a

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pro xy for occupational qualifications, thereby lim itin g employment opportunitiesfo r youn g people (albeit educated) to enter in he labor market.

2003

UNEMPLOYMENTNosovo

Age Group 15-64Employment Unemployment Labor Force

Rate Rate Partic ipation25.3 52.3 53.0

3. High levels o f unemp loymen t r em a in a m ajo r chal lenge in the Kosovo labo rmarke t . Historically, Kosovo was one of the regions with the highest unemploymentrates in the former Y ugoslavia. H ig h rates of unemployment in Kos ovo have become amatter of policy concern, especially because of their negative social and economicrepercussions. Unemployment i s a waste o f human capital and i s often associated w ithcausing social and financ ial distress among individuals, fami l ies, and communities.4. Kosovo has the h ighest unemploy ment ra t e in t he ECA r eg ion at 45 percent ;follow ed b y Macedonia (36 percent), M ontenegro (31 percent), and Bosnia andHerzegobina (30 percent). Labor force participation in Kosov o among the work ing agepopulation (at 53 percent) i s substantially b elo w the E C A average (65 percent) and thesecond lowes t in the E C A region after Turkey (5 1percent) (A nge l-Urd inola and Macias,2008). Since 2003, employment indicators in Kos ovo have impro ved slightly. Estimatesbased on data from the Labor Force Survey (LFS) suggest a decline in overallunemployment from 52 percent in 2003 to 45 percent in 2006 and an increase inemployment rates from 25 percent in 2003 to 29 percent in 2006, while labor forceparticipation remained rou ghly unchanged in he pe riod o f study at 53 percent (Table 1.2).

2006* I 29.0 44.6 52.3Source : Angel-Urdinola and Mala iyand i (2008) using LFS data * Estimates from SO K (2006).5. B y t h e en d o f 2007, t he numb er o f r eg is tered w i t h t he pub l i c emp loymen tserv ices (PES) unemployed reached 334,600 indiv iduals, showing a 2.6 percentincrease compared w ith D ecember 2006. M os t registered unemployed were aged 25-39,(147,400 individuals) and 15-24 (98,700 ind ividuals).6. Publ i c emplo yment serv ices (PES) have q u i t e a l ow tu rnove r o f r eg i s teredunemployed. In 2007, the inf low of n ew ly registered unemployed equaled 7 percent ofthe total registered unemployed, while only 4.4 percent of the unemployed were erasedfrom the records for various reasons in the same period; including only 1.8 percent ofregistered jo b seekers who were placed in obs (Table 1.3). These outflows rates are verylo w fo r intern ational standards. Fo r instance, in Macedonia, which i s the second countryin the region wi th the highest unemployment rate, outflow rates reach up to 3 0 percentper year (Kuddo, 2008a).

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Registered unemployedTota l

FemaleYouth 15-24AlbanianSerbsOther minoritiesUnskil ledSemiskilledSkil ledSecondary schoolHig h schoolUniversity

7.character is t ics (2007):The poo l o f t he r eg i s tered unemp loyed in Kosovo has t he f o l l ow ing main

In f low rate In % Out j low rate In %7.01 4.43 1.806.70 3.81 1.417.66 4.31 2.516.87 4.62 1.8710.74 2.61 0.626.53 2.38 1.546.27 3.36 1.114.81 2.26 1.254.52 2.89 1.178.73 6.38 2.9717.19 21.24 6.5936.48 34.61 21.21

Placement rate In %

0 Alm ost 47 percent o f the registered unemploye d are females, 29 percent o f wh ichare you th aged 15-24;0 Around 91 percent of the registered unemployed are Albanians, 4 percent areSerbs and the rest are fr om other m in or it y groups;0 Seventy three percent o f a ll registered unemployed have attained in complete

secondary education at the most. This group o f less educated individuals displayregistered unemp loymen t rates varying between 67 and 71 percent. On thecontrary, indiv idua ls w ho ha ve attained secondary general and higher educat ionhave unemployment rates o f 6 to 7 percent. This confirms that individuals with alo w level o f education are more affected by unemployment;Abo ut 9 1 percent o f the registered unemplo yed are long-term unemploved. Highlevels o f long-term unemployment (defined as unemployment spells longer than 1year) are particularly detrimental from a social perspective, since the concernedindividuals and their families are particularly threatened by poverty and socialexclusion;

0

8. A t the same t ime, the unemplo ymen t reg is te r i s i n f l a ted b y a high n u m b e r o fpeop le who a re no t ac t i ve l y l ook ing f o r wo rk . The mandatory requirement of theunemployed status fo r obtainin g the status o f social welfare benef iciary i s causing the

Unskilled (SCED 0-2): not completed elementary school; semi-skilled (SCED 3): elementary schoolcompleted, 3-6 months in-service training; skil led (SCED 3A): secondary school not completed, 3-6 monthtechnical training; secondary school (SCED 3C): secondary school completed, 4 years technicalgymnasium; high school (SCED 4): university not completed, engineer graduation; university (SCED 5Aor 6): university graduates or post-graduates.

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registration of persons who do not classify as unemployed according to internationalstandards. Since there i s no obl igat ion to confirm periodical ly their (un)employmentstatus and re-register themselves after in iti al registration, m any jo b seekers stay o n theroster while some of them are de facto working informally, emigrated or areeconomically inactive thus infla ting the actual number of ob seekers.MAINOCUS OF THE REPORT9.rep or t focuses o n youth :

Desp i te alarming employment outcomes for the overa l l popu la t ion, this

Youth i s a crucial t ime o f l i fe. Making a good star t in the wor ld of w ork can makei t easier for many young individuals in Kosovo to become productive in theircommunities. In todays environment, younger generations are shaping society.Unemployment early in a persons w orkin g l i f e has been show n t o increase theprobabi li ty o f future joblessness and lower future wages. The start toward aworking l i fe s considered by m any social scientists as the most important markerof independence - and long spells of inactivity during youth as quite costly(World Bank; WDR 2007). Young people are important components indevelopment and, in many cases, are catalysts for social, economic, and politicalchange.

0 High and rising unemployment levels among youth are associated with highercrime and social instability. This fact i s particularly important in Kosovo, giveni t s recent history o f co nflict and polit ica l change. The evidence on the associationbetween large youth cohorts and violence and conflict i s striking. Countries inwh ich young adults (aged 15-29) made up at least 40 percent or more o f the adultpopulation were more than twice as likely to experience an outbreak of civilconfl ict in the 1990s compared to those with fewer youth populations (Cincotta,Engelman, and Anastasion 2003) (B ox 1.1).Powerful demographic forces are working to expand the labor force, creatingproblems of unemployment, especially among youth. Kosovo has the youngestpopulation in Europe. According to 2005 Labor Force Survey (LFS) estimates,individuals aged 15 and 24 account for about 30.5 percent of the working-agepopulation, and 20 percent of total population (vs. 13.9 percent in Europe onaverage). Kosovo has the largest share of population aged 15 to 25 in Europe(UNDP 2006). I t i s expected that roughly 200,000 young people will reachworking age in the next five years, while the number of people reachingretirement age will be approximately 60,000 (PISG 2006a). Worse than that,many workers over retirement age are continuing to be engaged in the labormarket as available pensions are significantly lower than average wages.6 These

The average pension for retirees i s at 45 per month, while average wages are at 216 per month (seeAngel-Urdinola and Malaiyandi, 2006)

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combined phenomena are contributing to an increasing backlog of unemployedyouth.

B ox 1.1: Does a Larg e Youth Popul a t ion Cause Conf l ic t?Almost all o f he countries with a young adult proportion of 50 percent or more are in either Sub-SaharanAfrica or the Mi dd le East and North Africa. A decline in the birthrate o f 5 births per 1,000 wouldcorrespond o a decline of over 5 percent in the probability o f civ il conflict. Cincotta, Engelman, andAnastasion (2003) ide ntify fi ve stress factors that make states more vulnerable to instab ility and civ ilcon flict: (a) a large youth population, (b) political volatility, (c) rapid urban population growth, (d)comp etition for cropland and fresh water, and (d) proliferation o f HIV/AIDS.A youth bulge i s only onefactor.Researchers have suggested that i t s the presence o f mo re than one factor at the same time that may createthe conditions for conflict. This v iew i s supported by Henrick Urdal(2004), who finds that the risk o fconflict i s heightened b y the combination o f a large youth cohort, poor economic growth, and limitedopportunities for m igration. The studies hig hlig ht several key elements regarding youth: (a) youth issuesare cross-sectoral. The studies demonstrate how unemp loyment, migration, citizenship, and governance areall interdependent with respect to con flicts involv ing youth; (b)youth ar e not inherent ly a threat to becontained, particularly in the presence o f opportunities consistent w ith their expectations and energies; and(c) youth are a potent ial asset,as demonstrated by their preference for econom ic opportunities overviolence, here represented by the mitiga ting effects o f migration on conflict.Sources: Cincotta, Engelman, and Anastasion (2003); Urd al(2 004 ).

You th are particularly vulnerable to unemployment. Recent improvements inemployment outcomes in Kosovo did not benefit the young population (15 to 24).Estimates using LFS data indicate that unemployment, employment, andparticipation rates among youth remained roug hly unchanged in the 2003-2006period at 76 percent, 11 percent, and 46 percent respectively (more details inChapter 11). These are very unfavorable employment outcomes. Indeed, youthemployment outcomes in Koso vo are alarming compared to ECA standards. Theyouth unemployment rate in Kosovo i s s t i l l about 4.8 times hi gher than theaverage fo r the European Union.7 Another statistic o f concern i s that K oso vo hasthe highest percentage o f youth (46.5 percent according to 2005 L F S estimates)that are in neither education nor employment in Sou th East Europe. This i s morethan twice the percentage found in Serbia (22 percent) or Romania (19 percent)and higher than that in Albania, B osnia and Herzegovina, and Bulg aria in thesame year. Kosovo displays by far the highest youth unemployment rate in theE C A region (Figure I.).

ccording to Eurostats, youth unemploym ent (15-24) in EU -27 coun tries was at 16 percent in May 20078


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Figure 1.1: Kosovo displays the highest youth unemployment ra te in he ECA region.

70.0 -60.0 - 6 M K D50.0

6 P O L6 H R V30.0 - * G E o B G R20.0 - M A OM

10.00.0

0 1000 2000 3000 4000 5000 6000 7000GDP per capi taSource: Wo rld Development Indicators (2005). Data for Kosovo f rom Wo rld Bank Estimates using 2005LFS.

0

0

10.Pays

You ng individuals in Ko sov o are poorer than average. Children a nd young peopleunder age 24 are disproportionately l ikely to l ive in extreme poverty.Approximately 45 percent of the PO ulat ion l ives in poverty and 17 percent inextreme poverty (Wo rld Ban k 2007). Individ uals under age 25 comprise about 57percent of people facing extreme poverty, with young people aged 15 to 24com prising 22.4 percent (UNDP 2006).B

Forty percent o f al l unemployed in Kosovo are between 15 and 24 years of age.LFS estimates indicate ab out 30 percent o f the WAP and about 38 percent of a llthe poo l of unemployed in Kosovo s comprised o f youth between 15 and 24 yearso f age.Within t h e b r o a d e r p r o b l e m o f y o u t h l a b o r m a r k e t o u t c o m e s , this r e p o r t

p a r t i c u l a r a t t e n t io n t o Y o u t h in Jeopardy (i.e. extreme poor and unemployedyouth). The traditional focus for discussion of youth employment problems has been onunemployment. In addition, this report raises awareness of a group of vulnerable youth(or youth in eopardy). The government o f Kos ovo w il l need to focus and priori t ize i t syo uth po lic y agenda. Currently, there are 163,000 young individu als in Kosovo who areunemployed. As such, the government ma y consider the possibi l i ty to target interventionsan d limited resources to those wh o need them the most through the creation o f safety-netsfor vulnerable groups of the population. Youth in eopardy constitute an important groupat risk in Kosovo and one that i s less l ikely than others to benefit from futureimprovements in labor demand. B y ocusing on those in need, K oso vo can avoid creatingan underclass o f excluded groups, po verty traps, and intergenerational transmission o fpoverty:* The groups most at risk in terms o f income pove rty include children, the elderly, female-headedhouseholds, the disabled, the unemployed, precarious job holders, residents o f secondary cities, and non -Serb ethnic minorities.

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Twenty percent of all unemployed youth in Kosovo l ive in extreme poverty(approximately 33,000 individuals), defined as l iving in households in the f irs t[poorest] consumption quintile. These individuals (Le. youth in jeopardy) arel i ke ly to be vulnerable to social exclusion, long-term poverty, and lack of secondchances in Kosovo. Youth in eopardy are less l ike ly than the average youth tobenefit from a pick up in the demand of labor and/or to cope w ith unemploymentb y migrating, studying, or receiving fam ily support.

SocioeconomicGroup

PoorestQuintile4 2Q3Q4Richest Quintile

Youth in extreme poverty display the worst employment outcomes. In Kosovo,youth l ivin g in extreme poverty display less-favorable employment outcomes thanaverage (that is , low er employment and higher unemployment rates). One wo uldexpect that poorer youth in Kosovo would have higher employment rates andlower unemployment rates as i t occurs in many other developing countries(Godfrey, 2003) because i) oor youth generally wo rk in subsistence agricultureand ii)hey a less likely to "afford" joblessness. However, this i s not the case inKosovo. The unemployment rate for youth in the poorest consumption quintile i sat 86 percent, while for youth in the richest consumption quin ti le i s at 68 percent( H BS 2005/06 estimates). Em ploym ent rates for youth aged 20 to 24 are twic e ashigh among those living in households in the highest quintile compared to thosel i v ing in households in the poorest quintile (26 percent compared to 12 percent)(Angel-Urdinola and Malaiyandi, 2006). Furthermore, you th who l iv e in extremepoverty and who do have jobs are generally engaged in low-qual i ty unpaidsubsistence agricu lture.

Samp le Size Percent of Households Youth Wage as ShareFamily Wage Incomewith Youth Wage of Total2,506 7.07 613,811 8.89 523,706 8.05 483,600 6.89 456,494 10.01 46

You th "paid" employment i s a important safety net for households in extremepoverty: While only a small share o f a ll households have "paid" employed youth,youth wages represent a significant share o f household overall wages, especiallyamong the poor and extreme poor. H B S calculations indicate that wh ile less than10 percent of a ll households benefit from wage income brought b y their youngmembers, for those who do, youth wages constitute a significant share o fhousehold wage income (Table 1.3). Indeed, youth wages among households inthe poorest quintile account (on average) for 61 percent of overall householdwage income fo r those households wit h at least one employ ed youth.

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0 Providing safety-nets through active labor market policies (ALMP) targeted toyouth in ieopardy can reduce extreme D overty three times as much as a randomallocation, while h avin g a s im i l a r impact on rel ieving unemployment. Micro-simulation techniques indicate that safety-nets targeted to youth in eopardy canplay an important role in reducing extreme pove rty rates (more details in Chapter11).0 Resources for youth policv are scarce: While youth in jeopardy i s a narrowpopulation, i t s s t i l l larger than the total youth population that the government i scurrently being able to serve wit h La bor Ma rke r Policies given the current fiscaland institutional capacity (Chapter 111). Of course, this does r u l e out moreinvestments and budget support for youth policy in the near future, wh ich w ou ldenable to develop a broader scope and coverage o f you th-related policies.

REPORTS SCOPE11. The main ob jec t i ve o f the repor t i s to provide diagnosis on youthemployment on w hich pol ic ies can eventual ly b e designed. In recent years, the topic o fyouth employment in Kosovo has been studied. There are reports produced by PISGinstitutions, international organizations, and donors; which compile information aboutyouth employment trends, s k i l l s mismatches, employment promotion, and labor demandconstraints for this segment of the population. Nevertheless, studies fall short onaddressing issues related to youth employment quality, targeted employment policy,regional differences in youth employment outcomes, and relationships between youthemployment and household poverty. This report uses available micro-data (the LaborForce Survey, LFS; and the Household Budget Survey, H B S ) and develops a more in -depth analysis of yo uth employm ent outcomes, trends, and determinants; focusing o n theaforementioned information gaps. The Provisional Institutions for Self-Government(PISG) developed the 2007-2010 Kosovo You th Employment Act ion Plan (KYEAP),which includes a broad set of policy options to improve youth employment in theterritory. The M in ist ry o f Lab or has expressed an interest in obtaining analysis on youthlabor markets that cou ld facil itate design, implementation, and priorit izatio n o f this actionplan. This endeavour wi l l benefit f rom the analysis and diagnosis provided in this report(more details on the KYEAP in Chapter 111).12. Final ly, this repo r t p rov ides a new inventory o f ex i st ing Ac ti ve Labo r Mar k e tP rog rams (ALMPs) in Kosovo (Chapter 111). Prior to this study, there was notcompiled nformation on ongoing youth ALMPs in Kosovo. As such, there was a generallack of knowledge about how much Kosovo was spending on youth employmentprograms and about the effectiveness o f such spending. The Wor ld Bank team preparingthis report interviewed several agencies, l ine ministr ies, NGOs, and donors; and com piledinform ation scattered in various documents - o produce an updated inventory o f ALMPsin Kosovo. This inventory provides information on the scope, budget, coverage, andlessons learned fr om several ongoing ALMPs. This informat ion wi l l a l low pol icy makersget an idea what se t o f polices works/do not wo rk in the Kos ovo context when designingprograms targeted to unemployed youth.

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CHAPTER 11. WHAT DO WE KNOW ABOUT YOUTH

LABOR MARKETINDICATORSLabo r force part. rate (% )

EMPLOYMENT IN KOSOVO?

Calculation DescriptionLF (U+ E) + WAP Share o f WAP in the labor

AbstractThis chapter contains two ma in sections. The fi rs t section develops an em ploymentpro fi le for youth in Kosovo using 2003 to 2006 LFS data. Results indicate that youthlabor market indicators in Kosovo are discouraging: first, the majority of unemployedyouth in Kosovo could be categorized as long-term unemployed. Second, lack ofexperience is a common feature afecting unemployed youth and young adults, especiallyfemales. Third, Youth in Kosovo display a very dif icu lt transition from school toemployment. Fou rth, young workers in Kosovo are employed in jobs that display lowqua lity, low returns, and high levels of informality. The second section develops a pro fileof youth in jeopardy in Kosovo using 2005/06 HBS data. Estimates indicate thatapproximately 20 out of every 10 0 unemployed youth in Kosovo live i n extreme pove rty.This group is mainly comprised by low -skilled, female, and r ur al youth.1. This chapter p rov ides an e m p lo y m e nt p r o f i l e o f y o u t h in Kosovo using 2003-2006 La bor Force Surveys (LFS) and the 2006 Household Budget Survey (HBS) (Box11.1). Besides low employment, and high and predominantly long -term unemployment,youth in Kosovo are disadvantaged in many other ways: (a) a significant proportion o fyoun g people (especially rural poor youth a nd young women) are in neither education no remployment or training; (b) a significant proportion of young people leave schoolwithout a high-school degree, partly due to low returns to education; (c) the quality ofemployment among young workers i s ess than desirable.

Table 11.1. Main Employment Indicators Included in this Chapter

Employment rate (%)Unemployment rate (%)Inactiv i ty rate (% )Joblessness rate (%)U = Unem ployed population; E = Emp loyed population. WAP = Popu lation aged 15 to 64.LF = Population in he labor force (employed or unemployed).

- Enr olle d excluding students.

U + LF Share of unemployed in heWAP - LF + WAF' Share o f WAP n o t in he labor(U+E) labor force.market.

U + (WAP - LF) + WAP Share o f WAP not working,

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2. Our definition o f youth includes individuals aged 15 to 24. Alt hou gh there arealternative definitions of youth that are linked to certain rights and responsibilitiesprovided by national law, this study uses the same definit ion as used by the U ni tedNations Yout h Program, which covers individuals aged 15 to 24.Box 11.1: A br ief description of the data used in the report

~~ ~ ~

This report presents an employment profi le for youth using data fro m 2003 to 2006 Lab or ForceSurveys (LFS) and fro m the 2006 Household Budget Surveys (HBS). The LFS i s the core survey o fthe Statistical Office of Koso vo (SOK) to mon itor employment outcomes in Kosovo. The LFS wasintroduced by the Statist ical Office o f Kosovo in 2001 in order to collect comparable info rma tion onemployment and unemployment in the terri tory o f Kosovo, and make them available to local andintern ationa l institutio ns. The surveys sample i s stratified and nationally representative. Samplingincludes the selection o f 360-400 enumeration areas, whi ch correspond to about 320 0 households(19,000 in dividuals approximately). The LF S collects information o n demographics, education, andlabor market outcomes for in dividuals aged 15 and above. The H B S provides data to monitor po vertyand inequa lity and collects some (albeit limited inform ation) o n employment. The surveys sample i sstratified and nation ally representative. The ma in advantage o f the H B S i s that al lows comparison o femployme nt outcomes b y socio-economic groups.The major caveat concerning these two data sources i s related to representativeness o f the samples.Kosovo has not had a reliable census since 1981. Therefore, the current surveys s t i l l use the 1981population frame as the starting point for sampling despite likely changes in the population sincethen. Obtaining employment indicators in levels (i.e. population extrapolations) i s l ike ly to provideunreliable results. As such, most estimates presented in this article refer to po pulation rates (and no tlevels). F or years o f available data (2003, 04, and 05), ma in employment ind icators were calculatedand compared to those p ublished in SOK publications. While most estimates are similar, there aremild discrepancies as quantified in the Table below.

Employ ment Rates Unemploy ment Rates Inact ivi ty RatesWB* SOK** HBS* WB SOK HBS WB SOK HBSAg e Group 15-642003 25.3 25.3 30.4 52.3 NIA 45.6 47.0 NIA 44.02004 28.6 27.9 29.1 39.6 39.6 51.6 52.6 53.8 39.82005 28.8 28.9 31.7 41.5 41.3 46.8 50.7 50.8 40.32006 N IA 29.0 29.7 NIA 44.6 49.0 N IA 41.1 41.72003 10.69 NIA 13.4 76.6 N IA 73.0 54.28 NIA 50.32004 12.65 11.3 11.0 63.9 66.5 19.3 64.99 NIA 41.12005 10.6 10.5 13.9 10.9 70.5 14.5 63.61 NIA 45.62006 N IA 11.5 10.3 NIA 15.5 18.1 NIA NIA 51.1

Ag e Group 15-24

* World Bank Estimates usingLFS and HBS data. ** Estimates from SOK reports.

3. F o r comparison, this study also includes analysis o f other groups, namelyyoung adults (aged 25 to 34) and working-age adults (aged 35-64). This study alsoprovides analysis o f tw o subgroups among youth-those aged 15-19 and those aged 20-24411 order to make distinctions between youth in and out of secondary-school age.While most individuals aged 15 to 19 are expected to be in school rather thanparticipating in the labor market, the opposite occurs wi th ind ividuals aged 20 to 24. Assuch, these two groups are likely to display different employment outcomes, especially

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Age group15-2425-3435-5455-64

YOUTH LABORARKET INDICATORS A N D TRENDS

Percent of Tot al Unemploy ed Percent o the WAP38.4 30.531.2 24.027.5 34.42.9 11.1

4. Since 2003, employment indicators in Kosovo have remained rather stable,w i t h some sl ight improvements in overal l employm ent and un employm ent rates. Asmentioned in Chapter I, os ovo has the highest unemploym ent rate in the E C A region at45 percent; follow ed b y Macedonia (36 percent), Montenegro (3 1 percent), and Bosniaand Herzegovina (30 percent). Labor force participation in Kosov o among the workingage population (at 53 percent) i s substantially be low the E C A average (65 percent) andthe second lowest in the ECA region after Turkey (5 1 percent) (Angel-Urdinola andMacias, 2008). There was a decline from 52 percent to 45 percent in overallunemployment rates and an increase in employment rates from 25 percent to 29 percentfo r the working-age population between years 2003 and 2005. Labor force participationremained roughly unchanged during the period o f study at 52 percent. Theseimprovements, however, did not benefit the young population. Estimates for the youngpopulation indicate that unemployment, employment, and participation rates remainedroughly unchanged between 2003 and 2006 at 76 percent, 11 ercent, and 46 percent,respectively. These are very u nfavorable emp loyment outcomes.r

20032006"

Age Group 15-24Employment Unemployment Labor Force Inactivity

Rate Rate Participation Rate10.7 76.6 45.7 54.311.5 75.5 46.9 53.1Age Group 15-642003 I 25.3 52.3 53.0 47.0

2006" I 29.0 44.6 52.3 47.7"Estimates from SOK (2006).Source: Wor ld Ba nk Estimates using 2003-2005 LF S data.

Unemploym ent rates in Kosov o ma y be inflated as individuals d o no t seek for jobs actively although theyclaim so (Le. many re ly o n being registered in he PES as the only o b search method). Also, many workerswork f rom t ime to t ime in the inform al sector, which i s not captured by the LF S questionnaire, whi ch relieson a one-week recall period to calculate employm ent indicators.

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5. Despite improvements since 2003, young females display the worstemploym ent outcomes in the l abo r m arke t . Emp loyme nt outcomes for females are lessfavorable than those for males, especially among youth. For females, employment andparticipation rates are very low, not only for young women but for the overall femaleworking-age population. As expected, employment rates among female youth are l owerthan among females on average. Howev er, w hil e labor marke t indicators fo r yo ung maleshave been stable (roughly unchanged) since 2003, labor market indicators am ong females(albeit worse than among males) im pro ve d between 2003 and 2006 (Figure11.1).

90.0 -80.0 -70.0 -80.0 -50.0 -40.0 -30.0 -

F i g u r e 11.1: You ng females par t ic ip ate very l i t t l e in the labor force com pared to youngmales, and the few par t ic ipants ar e l ike ly to be unemployed.

77.70.9E.; . , +* - - - - - .. - --I. 64.760.61.3-15-24 - I-15-64

Male Employment Rates

30.0 -20.0 -

30.0 4

-15-24 - I-15-64

17.621.2 15.6'O'O 1 -15-24 - I-15-64

Fema le Emp loy men t Ra tes-15-24 - I-15-64

40.00'0130.0 420.0 4 11.9 11.910.2

4.4 5.6 %7"." I2003 2004 2005 2006. 2w3 2004 2005 2006'

Male Unemploy ment Rates100.0 7 -15-24 - I-15-6480.0

67.964.153.8

A1 1_...40.04 m . . . 32.9 34.3. 0.930.020.0 .. - ..- - - - - ..2w3 2004 2005 2 wMale Labor Force ParticipationRates

80.0 ,

Female Unemployment Rates100.0,

2003 2004 2005 2006.

Female Labor Force Partlcipatlon Rates80.0 ~70.0

50.0 I -15-24 - I-15-64..

2003 2004 2W5 2006'

Source: W or ld Bank calculations using 2003-05 LFS data. * Estimates for 2006 from SOK (2006).6. Employment and par t i c ipa t ion ra tes are h igher fo r young ind iv idua ls wi thhigh er levels of educat ion. Employment and participation rates are higher among youthaged 20 to 24 than among youth aged 15 to 19. This occurs because youth in the lattergroup are largely enrolled in secondary education. For youth aged 20 to 24, having

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attained secondary education i s associated with higher employment and participationrates, as i s generally the case. Unemployment rates are higher among youth who haveattained secondary education compa red to those wh o ha ve attained primary. This occursbecause low-skil led young workers are more l ikely to be employed in low- ua l i tysubsistence agri cult ure (that is, unpaid work in he agriculture sector) (Figure 11.2). %F i g u r e 11.2: Unemp loym ent rates are s l ight ly h igh er among h igher-sk i l led youth, in p a r tbecause ow-sk i l led y outh ar e l ike ly to be employed in subsistence agricu ltur e.

(%) Employment Rate by Ed ucat ion (15-19)25.0-Cempl.t. Primary....... C0mpl.t . e e o o n d a r y

15.0

(Y Employment Rate b y Educat ion (20.24)

1.9.30.0 4

2003 2004 2005 0.0.01003 2004 2005(%) Labor Force Par t ic ipat ion Rate by Educat ion (151 9)

70.0 1

30.010.7 9.510.0

0.0 42003 2004 2005

Unemployment Rate by Educat ion (15-19)90.0

83.8... 159. .....

60.055.050.0

2003 2004 2005

Labor Forc e Part ic ipat ion Rate b y Educat ion (20.24)r4....57.2 .............. 5a,3

30.0

10.00.0 i

2003 2004 2005

Unemp loym ent Rate by Educat ion (20-24)90.0 ,85.0 -80.0 -75.0 -70.0 -65.0 -60.0 -55.0 -

76.1.... 72.3.... ........59.4

"_."2003 2004 2005

Note: Employment in Subsistence Agriculture = Unpaid fami ly work in agriculture.Source: Wo rld Bank calculations using 2005 LFS data.7 . Y o u t h in Kosovo d i sp lay a ve ry d i f f i cu l t t r ans i t i on f r om schoo l t oemployment . Figure 11.6 plots the share of individuals wh o are employed, enrolled inschool, and jobless (that is , inactive or unemployed), b y age and gender. Lab or marketproblems faced by individuals during their young years are l ikely to accompany theminto adulthood, especially among females. School enrollment decreases substantiallybetween ages 15 and 19, especially among females, but drops in enrollment are notlo FS estimates indicate that 81.2 percent o f al l youth wit h n o education engage in subsistencelunpaidagriculture.

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accompanied b y s i m i l a r increases in employment (that is, as students drop out o f schoolthey are lik el y to become jobless). A mo ng you ng females, school-to-work transition i sscarce. I t takes about 10 years for young males to transition from school to work, asmeasured b y the time i t takes from when 50 percent of the population i s enrolled inschool to when 50 percent o f the population i s employed (Figure 11.3). In the neighboringcountry o f Macedonia, using a s i m i l a r definition, A nge l-Urd inola and Macias (2008) findthat i t s takes four to five years for young males to transition f ro m school to employment.In developed countries, i t takes an average o f about 1.4 years for new young entrants toget a stable job. The comparable time for less-developed countries i s four years, morethan twice as long. The lack of good employment opportunities has caused youthdiscouragement and idleness in Kosovo.

F i g u r e 11.3: I t akes abo ut 10 years for young males to t rans i t ion f r o m school to wo rk , asmeasured b y the t ime i t takes to shift 50 percent of this popu la t ion f r om be ing enro l led inschool to hav ing employment.Males

100%90%80%70%60%50%40%30%20%10%0%

#males100%90%80%70%60%50%40%30%20%10%0%

15 16 17 18 19 20 21 22 23 24 25 28 27 28 29 30 31 32 33 34 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34Age Age

Yo Jobless Yo Employed Yo Enrolled

Source: Wo rld Ba nk calculations using 2005 LFS data.8. There are impor tant reg iona l d i f fe rences in youth employment ind ica torsthat are associated w i t h the com posi t ion o f region al economic act iv i t ies. In particular,estimates indicate that youth employment rates are higher and you th unemploym ent ratesare l ower in Gjakova, Gjilani, and Peja than nationally (the aforementioned aretraditionally ag ricultural regions). Accord ing to Ange l-Urd inola and Ma laiyan di (2008),this i s part ly due to the fact that the agricultural sector i s displaying a hig h demand foryoung low-skil led male labor. Labor force participation i s higher than nationally inregions with a large tertiary sector, such as M itr ov ic a and Prizren. Ne vertheless, theseregions display the highest unemploym ent rates and lowest employme nt rates nationally.These f indings hold t rue by gender. Female employment rates are higher and femaleunemployment rates lo we r in regions with a more developed agriculture sector, whilefemale participation and unemployment rates are larger in regions with a large tertiarysector. The secondary sector (that is , manufacturing) absorbs very little youthemployment (at most 10 percent in regions where this sector i s more representative)(Angel-Urdinola and Malaiyandi 2008) (Table 11.4).

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Box 11.2: The Ed ucat io n Sector in KosovoIn 2000 Kosovo went into a period o r reform of i ts educational system. The ref orm introduced nineyears o f compulsory education: f ive o f primary education; two o f o w secondary education: and two o f highsecondary education. Secondary education include s general secondary education, w hic h lasts for f our yearspreparing students for university, and vocational secondary education which lasts generally three years.Primary Enrollment: Primary gross enrollment rates in Koso vo (at 95 percent) are comparable to those o fother EC A countries given Kosovos levels of development as prox ied by per-capita GDP. Student teacherratios at the primary level (at 20 students per teacher) are high for E C A standards (at 16 students perteacher).Secondary enrollment: Kosovos gross secondary education enrollm ent rates (at 75 percent) are rather lowfor E C A standards (at 90 percent). Drop-out rates in upper-secondary education are large among femalesand in ru ral areas. In particular, secondary attainment rates in ru ra l areas and among females (at 47 and 42percent respectively) are belo w the nation al average (at 60 percent).Tertiary enrollment: Enrol lment in post-secondary education in Kosovo (at 20 percent) i s lower than thatin the E C A region (at 47 percent). The lack o f a quali f ication framewo rk and a perceived low quali ty o feducation are t wo ma in challenges o f post-secondary education in Kosovo. Th e lack o f an acceptedqualification system i s pushing employers to use hig hly experienced workers as a prox y for occupationalqualifications, thereby li mi tin g employme nt opportunities for y oung people (albeit educated) to enter in thelabor market.Source: Ange l-Urdinola and

Documents

Kosovo Youth Employment 2008 WORLDBANK