THE PROBLEM WITH THE YOUTH UNEMPLOYMENT IN THE REPUBLIC OF MOLDOVA AND EUROPEAN MEMBER STATES AND THE MEASURES FOR ITS OVERCOMING

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THE PROBLEM WITH THE YOUTH UNEMPLOYMENT

IN THE REPUBLIC OF MOLDOVA AND EUROPEAN MEMBER STATES

AND THE MEASURES FOR ITS OVERCOMING

Tatiana ColesnicovaPhD, IEFS, Moldova

Aurelia uu-urcan

PhD, Associate Professor, Academy of Science of MoldovaEmail:[email protected]

Abstract: The comparable trends of the youth unemployment rates in the Republicof Moldova and EU-27 during the period 2002-2011 are analyzed in the paper. The

main measures for the regulation of this phenomenon in the Republic of Moldovaare proposed by the author in the context of integration in the European Union.

Keywords: youth unemployment rate, Republic of Moldova and EU-27,comparative analysis,measures for overcoming youth unemployment.

INTRODUCTION

Young people face specific challenges in accessing the labour market andthis lowers their chances of finding decent employment [7]. The main difficultiesare:

(a) a higher chance of losing their jobs during economic downturns (last in,

first out);(b) specific barriers to entry, often stemming from lack of experience;(c) path dependence: early unemployment increases the likelihood of

subsequent unemployment.

RESULTS AND DISCUTIONS


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According to Global employment trends for youth: 2012 published by ILO:The global youth unemployment rate has proved sticky, and remained close to itscrisis peak. At 12.6% in 2011 and projected at 12.7% in 2012, the global youth

unemployment rate remains at least a full percentage point above its level in 2007.Nearly 75 million youth are unemployed around the world, an increase of more than4 million since 2007 [1, p.11].In many countries, this grim unemployment pictureis further aggravated by the large number of youth engaged in poor quality and low

paid jobs, often in the informal economy.Many youth are poor or underemployed:some 228 million working poor youth in the world, live on less than the equivalentof US$ 2 per day [2].

According to The Guardian, in the European Union 27 countries (EU-27):Three out of 10 people currently losing their jobs are under the age of 24, althoughthe young represent only a tenth of the labour force. There are 5.5 million 15- to 24-

year-olds without a job in the EU, a rate of 21.4%, up from 15% in early 2008. Butthe overall figures mask huge national and regional disparities. While half of youngpeople in Spain and Greece are out of work, in Germany, Austria and theNetherlands it is only one in 10. In a further six EU countries, youth unemploymentis around 30%. Of those in work, 44% are on temporary contracts [5].

Youth unemployment rates are generally much higher than unemploymentrates for all ages. High youth unemployment rates do reflect the difficulties faced byyoung people in finding jobs. However, this does not necessarily mean that thegroup of unemployed persons aged between 15 and 24 is large because many young

people are studying full-time and are therefore neither working nor looking for a job(so they are not part of the labour force which is used as the denominator forcalculating the unemployment rate). For this reason, youth unemployment ratios arecalculated as well, according to a somewhat different concept: the unemploymentratio calculates the share of unemployed for the whole population (according toEurostat).

As the Republic of Moldova (RM) aspires to become an official EuropeanUnion candidate country, it is interesting to analyze the youth unemployment ratewith the same indicator of EU-27. Figure 1 shows that youth unemployment rate inthe RM are much lower than youth unemployment rate in the EU; they havehowever also risen since 2008 due to the effects of the recent crisis on the labourmarket.


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Figure 1: Evolution of the youth unemployment rate in the RM and EU-27

Source: created by the authors according to the EU-27 data from EurostatDatabase; Moldovas data from NBS RM Database

In 2011, the EU-27 youth unemployment rate stood at 21.4%, 0.5 p.p. higher than in2010 and at its highest rate for the past 10 years. This shows that young people have

borne the brunt of the crisis, with unemployment disproportionately affecting the 15-24 year olds. One out of five young people in the labour force (21.4%) was notemployed, but was available and looking for a job. Table 1 presents the distributionof annual average unemployment rates for both men and women in the Republic ofMoldova and EU-27 for the 15-24 age groups in the period 2002-2011.

Table 1. The annual average unemployment rates for both sexes

by the age group less than 25 years in RM and EU-27, %


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Country/Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Republic of

Moldova15.2 18.1 19.7 18.7 17.1 14.4 11.2 15.4 17.8 14.9

EU-27 17.8 18.6 19.0 18.8 17.5 15.7 15.8 20.1 21.1 21.4

Belgium 17.7 21.8 21.2 21.5 20.5 18.8 18.0 21.9 22.4 18.7Bulgaria 35.2 26.6 24.3 21.0 18.3 14.1 11.9 15.1 21.8 25.0Czech Republic 16.9 18.6 21.1 19.3 17.6 10.8 9.9 16.7 18.4 18.1Denmark 7.4 9.2 8.2 8.6 7.7 7.5 8.0 11.8 14.0 14.2Germany 9.9 11.6 13.8 15.6 13.8 11.9 10.6 11.2 9.9 8.6Estonia 17.6 20.6 21.7 15.9 12.0 10.0 12.0 27.5 32.9 22.3Ireland 8.4 8.7 8.7 8.6 8.6 8.9 13.3 24.4 27.8 29.4Greece 26.8 26.8 26.9 26.0 25.2 22.9 22.1 25.8 32.9 44.4

Spain 22.2 22.6 22.0 19.7 17.9 18.2 24.6 37.8 41.6 46.4France 17.2 19.1 20.8 21.3 22.4 19.8 19.3 23.9 23.7 23.0Italy 22.0 23.6 23.5 24.0 21.6 20.3 21.3 25.4 27.8 29.1Cyprus 8.0 8.8 10.2 13.9 9.9 10.2 9.0 13.7 16.6 22.4Latvia 23.6 19.9 20.0 15.0 13.5 11.9 14.5 36.2 37.2 31.0Lithuania 23.0 24.8 22.5 15.7 9.8 8.2 13.4 29.2 35.1 32.9Luxembourg 7.0 11.2 16.4 14.6 15.5 15.6 17.3 16.5 15.8 16.4Hungary 12.7 13.4 15.5 19.4 19.1 18.0 19.9 26.5 26.6 26.1Malta 17.1 17.4 16.6 16.8 15.9 13.9 12.2 14.4 13.1 13.8

Netherlands 5.4 7.3 9.0 9.4 7.5 7.0 6.3 7.7 8.7 7.6Austria 6.7 8.1 9.7 10.3 9.1 8.7 8.0 10.0 8.8 8.3Poland 42.5 41.9 39.6 36.9 29.8 21.7 17.3 20.6 23.7 25.8Portugal 14.3 17.8 18.9 19.8 20.1 20.4 20.2 24.8 27.7 30.1Romania 21.0 19.5 21.0 19.7 21.0 20.1 18.6 20.8 22.1 23.7Slovenia 16.5 17.3 16.1 15.9 13.9 10.1 10.4 13.6 14.7 15.7Slovakia 38.1 33.8 33.4 30.4 27.0 20.6 19.3 27.6 33.9 33.6Finland 21.0 21.8 20.7 20.1 18.7 16.5 16.5 21.5 21.4 20.1Sweden 16.4 17.4 20.4 22.6 21.5 19.2 20.2 25.0 25.2 22.9


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United Kingdom 12.0 12.2 12.1 12.8 14.0 14.3 15.0 19.1 19.6 21.1


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Source: created by the authors according to the EU-27 data from EurostatDatabase; Moldovas data from NBS RM Database

Countries differences in the unemployment rate for young people are

however very marked. In 2011, the average unemployment rate for youngpeople aged between 15 and 24 in the EU-27 were extremely high in Spain (46.4%),in Greece (44.4%). High rates were also recorded in Slovakia (33.6%), in Lithuania(32.9%), in Ireland (29.4%) and in Italy (29.1%). The lowest youth unemploymentrates were recorded in Netherlands (7.6%), in Austria (8.3%) and Germany (8.6%).The gap between the lowest and the highest values of youth unemployment rateswas more than 38 p.p.

In the Republic of Moldova the average unemployment rate for young peoplein 2011 was 14.9%. The gap between youth jobless rate in the Republic of Moldovaand EU-27 is 7.5 p.p.

Table 2. The annual average unemployment rates for males by the age group

less than 25 years in RM and EU-27, %
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_ratehttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_ratehttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_ratehttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_ratehttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_ratehttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_rate


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Country/Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Republic of Moldova 17.5 19.0 21.5 19.1 18.0 14.9 10.2 15.8 20.0 14.2

EU-27 17.6 18.5 18.7 18.7 17.2 15.4 15.8 21.2 21.8 21.9

Belgium 17.2 22.2 20.2 21.0 18.8 17.1 17.3 21.5 22.4 18.7Bulgaria 38.3 29.4 25.5 22.0 17.7 13.5 12.8 16.7 22.8 26.0Czech Republic 16.7 18.4 22.3 19.4 16.7 10.6 9.9 16.7 18.3 18.2Denmark 7.3 9.2 8.9 8.6 7.9 7.6 7.4 13.3 16.1 15.7Germany 11.8 13.9 15.3 16.9 14.8 12.6 11.0 12.5 10.9 9.3Estonia 14.3 16.9 21.2 16.6 10.0 12.1 12.6 31.7 35.2 23.7

Ireland 9.1 9.4 9.1 9.2 8.9 9.8 16.1 31.1 34.0 35.3

Greece 19.9 18.9 19.1 18.7 17.7 15.7 17.0 19.4 26.7 38.5Spain 17.9 18.9 18.2 16.7 15.0 15.2 23.7 39.1 43.2 48.2

France 16.9 18.5 20.0 20.2 21.1 19.1 19.2 24.7 23.0 22.0Italy : : 20.6 21.5 19.1 18.2 18.9 23.3 26.8 27.1Cyprus 8.0 8.7 9.0 13.2 8.9 10.9 8.7 13.5 16.0 23.3Latvia 21.9 18.3 17.6 13.0 11.6 12.4 14.5 40.2 38.0 31.3Lithuania 23.1 22.5 22.3 16.0 10.0 7.0 12.6 35.1 38.5 34.6Luxembourg 5.8 9.9 12.0 12.6 16.0 13.8 13.4 15.0 17.2 14.5Hungary 13.2 13.8 16.2 19.6 18.6 17.6 19.1 28.2 27.9 27.2Malta 17.5 16.9 15.9 17.2 17.2 15.8 13.7 15.9 14.1 13.7

Netherlands 5.7 7.7 9.1 9.5 6.7 6.3 6.3 8.1 8.8 7.5

Austria 6.4 7.3 9.3 10.7 8.9 8.3 7.9 10.5 8.9 7.9Poland 41.9 40.9 37.7 35.7 28.3 20.0 15.2 20.2 22.4 23.6Portugal 12.7 16.0 17.4 17.6 18.8 17.5 17.2 24.1 27.4 28.7Romania 20.7 19.1 22.4 20.5 21.6 21.1 18.8 21.2 22.3 23.7Slovenia 15.0 15.6 13.9 14.5 11.6 9.4 9.9 13.8 15.2 15.0Slovakia 39.7 35.0 34.9 31.2 26.6 20.6 18.6 27.9 34.8 33.2Finland 21.2 21.9 22.0 20.6 19.0 16.4 17.1 24.1 23.8 21.8Sweden 17.3 18.2 21.3 22.6 21.0 18.7 19.7 26.3 26.7 23.8


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United Kingdom 13.7 13.8 13.3 14.4 15.7 15.8 17.0 21.8 21.5 23.5


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Source: created by the authors according to the EU-27 data from EurostatDatabase; Moldovas data from NBS RM Database;: - dates are not available

Table 2 presents the distribution of unemployment rates for males in theRepublic of Moldova and EU-27 for the 15-24 age group during last 10 years.

In 2011, the average unemployment rate for young males aged between 15and 24 in the EU-27 were extremely high in Spain (48.2%), in Greece (38.5%). Highrates were also recorded in Ireland (35.3%), in Lithuania (34.6%), in Slovakia(33.2%), and in Portugal (28.7%). The lowest youth unemployment rates wererecorded in Netherlands (7.5%), in Austria (7.9%) and Germany (9.3%). The gap

between the lowest and the highest values of youth unemployment rates of maleswas about 40.7 p.p.

Table 3. The annual average unemployment rates for females

by the age group less than 25 years in RM and EU-27, %

Country/Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Republic of Moldova 12.6 17.1 17.6 18.3 15.9 13.8 12.4 15.0 15.0 15.8

EU-27 18.1 18.7 19.3 19.0 18.0 16.1 15.8 18.9 20.2 20.8

Belgium 18.3 21.3 22.4 22.1 22.6 20.9 18.7 22.5 22.4 18.7Bulgaria 31.4 23.3 22.8 19.7 18.9 14.8 10.5 12.8 20.3 23.6Czech Republic 17.3 18.9 19.5 19.1 18.7 11.0 10.0 16.7 18.5 18.0Denmark 7.5 9.2 7.4 8.6 7.5 7.4 8.7 10.3 11.8 12.7Germany 7.6 8.9 12.2 14.1 12.6 11.1 10.0 9.8 8.8 7.8Estonia 22.5 26.0 22.4 14.9 14.7 7.1 11.3 22.0 30.0 20.7Ireland 7.6 7.8 8.3 7.9 8.2 7.8 10.3 17.3 21.5 23.3

Greece 35.3 36.6 36.3 34.8 34.7 32.1 28.9 33.9 40.6 51.5Spain 28.2 27.9 27.3 23.4 21.6 21.9 25.8 36.4 39.8 44.4France 17.6 19.9 21.7 22.7 23.9 20.7 19.4 23.0 24.5 24.1Italy : : 27.2 27.4 25.3 23.3 24.7 28.7 29.4 32.0Cyprus 8.0 8.8 11.5 14.7 11.1 9.4 9.4 13.9 17.2 21.5Latvia 25.9 22.1 23.4 17.9 16.3 11.2 14.6 30.9 36.3 30.6Lithuania 22.9 28.1 22.7 15.3 9.6 10.0 14.6 21.6 30.8 30.4Luxembourg 8.6 12.5 21.5 17.2 14.9 18.2 22.0 18.2 14.3 18.6Hungary 11.9 12.8 14.4 19.0 19.8 18.6 20.9 24.2 24.9 24.6

Malta 16.6 17.9 17.4 16.2 14.3 11.6 10.4 12.5 11.9 13.8Netherlands 5.1 6.9 8.9 9.4 8.4 7.8 6.4 7.3 8.6 7.8Austria 7.1 8.9 10.1 9.9 9.3 9.1 8.2 9.4 8.8 8.8Poland 43.3 43.1 41.9 38.3 31.6 23.8 19.9 21.2 25.4 28.9Portugal 16.5 20.1 20.8 22.5 21.7 24.0 23.8 25.5 28.0 31.7Romania 21.3 20.1 18.9 18.4 20.2 18.7 18.3 20.1 21.8 23.8Slovenia 18.6 19.8 19.2 17.8 16.8 11.2 11.3 13.4 13.8 16.8Slovakia 36.2 32.3 31.7 29.4 27.5 20.7 20.3 27.1 32.6 34.3Finland 20.9 21.6 19.4 19.5 18.4 16.6 15.8 19.0 19.0 18.4Sweden 15.4 16.5 19.5 22.5 22.0 19.8 20.8 23.7 23.7 22.0
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_ratehttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_rate


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United Kingdom 10.2 10.5 10.7 11.1 12.0 12.5 12.7 16.0 17.3 18.4


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: - dates are not availableSource: created by the authors according to the EU-27 data from Eurostat

Database; Moldovas data from NBS RM Database

In the Republic of Moldova the average unemployment rate for young males

in 2011 was 14.2%. The gap between youth jobless rate of males in the Republic ofMoldova and EU-27 is 7.7 p.p.

Table 3 presents the distribution of unemployment rates for females in theRepublic of Moldova and EU-27 for the 15-24 age groups during last 10 years.

In 2011, the average unemployment rate for young females aged between 15and 24 in the EU-27 were extremely high in Greece (51.5%), in Spain (44.4%). Highrates were also recorded in Slovakia (34.3%), in Italy (32.0%), in Portugal (31.7%)and in Lithuania (30.4%). The lowest youth unemployment rates for females wererecorded in Netherlands (7.8%), in Austria (8.8%) and Germany (7.8%). The gap

between the lowest and the highest values of youth unemployment rates of females

was 43.7 p.p.In the Republic of Moldova the average unemployment rate for youngfemales in 2011 was 15.8% (high on 1.6 p.p. than for Moldovas males). The gap

between youth jobless rate of females in the Republic of Moldova and EU-27 is 5.0p.p.

The measures for overcoming youth unemployment in the EU and RM:

In many important acts note the purpose and measures to overcoming theyouth unemployment. The Millennium Development Goals notes that it is necessaryto achieve full and productive employment and decent work for all, includingwomen and young people.

The European Commission has announced a plan to tackle youthunemployment in the 27 EU member countries. The Youth Opportunities

Initiativepromises to create 370,000 work placements across the EU. It proposes ayouth guarantee to put young people in work, study or training within four monthsof leaving school [4].

It will be paid for by 30bn euro ($39bn; 25bn) from the European SocialFund. "The current situation for young people in many EU countries today is

becoming dramatic," said Laszlo Andor, EU commissioner for employment, socialaffairs and inclusion. "Without decisive action at EU and national level we risklosing this generation, with a heavy economic and social cost" [4].

The Commission estimates that the cost to society of youth unemployment is

around 2bn euro per week or 1% of the entire EU's economic output.The ILO helps member States with the following steps:
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_ratehttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_ratehttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_ratehttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_ratehttp://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/1568&format=HTML&aged=0&language=en&guiLanguage=enhttp://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/1568&format=HTML&aged=0&language=en&guiLanguage=enhttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_ratehttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_ratehttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_ratehttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Glossary:Youth_unemployment_ratehttp://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/1568&format=HTML&aged=0&language=en&guiLanguage=enhttp://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/1568&format=HTML&aged=0&language=en&guiLanguage=en


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Figure 2. Country-level model for technical assistance on youth employment Source: ILO: Youth Employment Programme [2, p.34]

CONCLUSIONS AND RECOMMENDATIONS:

Homegrown solutions and policy recommendations: Moldova's problem with theyouth unemployment is specific. The analysis show that youth unemployment rate inthe Republic of oldova is not high in comparison with the EU countries due toinfluencing of such phenomena as mass youth emigration from the country. Many

youth citizens are not officially registered in Employment Agency. Unemploymentpayments are low. The main solutions for the Republic of Moldova include thereforms to the educational system, which is uncoordinated with labour markerrequires and lower taxes to help businesses grow. The following measures can betaken among priority directions of the state policy with the purposes to overcoming theyouth unemployment [6]:(a) creation of new jobs by opening new or modernizations of the old enterprises;

(b) stimulation of development of small and medium enterprises;(c) implementation of balanced investment and tax policy, development of

credit system for youth;

(d) making the average wages and unemployment benefits equal with the costof living;(e) introduction the tax benefits to the enterprises granting jobs to the most

vulnerable categories of the population, including youth;(f) assistance to young specialists in their adaptation and integration on the

labour market;(g) creation of the technique of long-term forecasting of a market demand;(h) concentration of efforts in overcoming the unemployment in rural areas;(i) placement in a free press of the information on existing vacancies;(j) creation of active personnel services at the country enterprises.


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United efforts of the state, Employment Agencies, personnel services ofemployers, and public organizations can lead to positive results in this field.

Reference:

1. Global Employment Trends for Youth 2012. ILO: Geneva. May 2012, p.55,ISBN 978-92-2-126325-8 (print), http://www.ilo.org/wcmsp5/groups/ public/---dgreports/---comm/documents/publication/wcms_180976.pdf

2. Youth employment programme. http://www.ilo.org/employment/ areas/youth-employment/lang--en/index.htm

3. The Youth Employment Crisis: Time For Action. ILO Report. 2012. ISBN 978-92-2-126345-6 (print). p.40

EU launches youth employment plan. BBC. News Business. 20 December 2011.

http://www.bbc.co.uk/news/business-162741134. TRAYNOR IAN. Unemployment of Europe's young people soars by 50%. Theguardian, Monday 16 April 2012, http://www.guardian.co.uk/

business/2012/apr/16/european-youth-unemployment-soars5. COLESNICOVA T. Comparative analysis of unemployment rates between the

Republic of Moldova and EU-27: challenges and perspectives. n: Analeleinstitutului de Economie, Finane i Statistic. Chiinu: IEFS, 2012.

6. CLARK K., SUMMERS L. The dynamics of youth unemployment. The YouthLabour Market Problem: Its Nature, Causes and Consequences, Freeman, R. andD. Wise (eds.), University of Chicago Press, 1982, pp.199234
http://www.ilo.org/wcmsp5/groups/%20public/---dgreports/---comm/documents/publication/wcms_180976.pdfhttp://www.ilo.org/wcmsp5/groups/%20public/---dgreports/---comm/documents/publication/wcms_180976.pdfhttp://www.ilo.org/employment/%20areas/youth-employment/lang--en/index.htmhttp://www.ilo.org/employment/%20areas/youth-employment/lang--en/index.htmhttp://www.bbc.co.uk/news/business-16274113http://www.guardian.co.uk/%20business/2012/apr/16/european-youth-unemployment-soarshttp://www.guardian.co.uk/%20business/2012/apr/16/european-youth-unemployment-soarshttp://www.ilo.org/wcmsp5/groups/%20public/---dgreports/---comm/documents/publication/wcms_180976.pdfhttp://www.ilo.org/wcmsp5/groups/%20public/---dgreports/---comm/documents/publication/wcms_180976.pdfhttp://www.ilo.org/employment/%20areas/youth-employment/lang--en/index.htmhttp://www.ilo.org/employment/%20areas/youth-employment/lang--en/index.htmhttp://www.bbc.co.uk/news/business-16274113http://www.guardian.co.uk/%20business/2012/apr/16/european-youth-unemployment-soarshttp://www.guardian.co.uk/%20business/2012/apr/16/european-youth-unemployment-soars

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THE PROBLEM WITH THE YOUTH UNEMPLOYMENT IN THE REPUBLIC OF MOLDOVA AND EUROPEAN MEMBER STATES AND THE MEASURES FOR ITS OVERCOMING