UNDP reflections on results of the Labour Force Survey 2012

02 May 2013

image a Miner from the Trepca complex

UNDP reflections on results of the Labour Force Survey 2012

Osnat Lubrani, UN Development Coordinator and UNDP Resident Representative published an OpEd in Kosovo daily newspaper Koha Ditore in which she reflects on the labour market data for the first half of 2012 which were released by the Kosovo Agency of Statistics (KAS) on the occasion of 1 May, International Labour Day.

UNDP reflections on results of the Labour Force Survey 2012 and relevant policy mix for Kosovo's labour market

On the occasion of May 1st, International Labour Day, we should all welcome the release of labour market data for the first half of 2012 by the Kosovo Agency of Statistics (KAS).

KAS is now implementing a continuous Labour Force Survey (LFS), which is a demanding exercise but allows policy makers to monitor more often and more closely certain occurrences on the labour market and have a better pulse of the situation. UNDP commends the World Bank and UKAID on investing in the transition to this survey instrument. As of April 2013, UNDP is also supporting KAS in continuing the Labour Force Survey under this framework as a step towards it becoming a permanent feature of the statistics landscape of Kosovo, with resources allocated from the central budget for KAS to pursue these efforts even further.

The best way to argument the value of being able to gauge the labour market situation with timeliness and accuracy is of course to use these data to inform policies and policy decisions on a continuous basis.

Reading these preliminary 2012 data, it is useful to already consider how these particular indicators can inform policy decisions. Certainly, policy decisions and orientations go beyond the purview of the Ministry of Labour and Social Welfare. The promotion of employment is a complex and multi-layered challenge for any government, as job creation requires mutually reinforcing policies across sectors, beyond macroeconomic stability and education policies to strategically engineered, situation-specific, sectoral policies and local level interventions.

Despite the fact that the census has indicated positive population growth, labour force participation rate in Kosovo is - at 36.8 per cent - the lowest in the region. This is the result of the combination of a large share of youth population and the little participation of women in the labour market (18.6 per cent), as well as of another phenomenon that is worrying, i.e the discouragement of workers. While we do not have yet disaggregated data, it is likely that worker discouragements is higher among women and among those (particularly youth) with low level of education or an inadequate set of skills.  Continuous monitoring of the labour force participation rate is essential in providing information to better understand the labour market behaviour of different categories of the population, and to inform employment policies.

Overall employment is as low as 23.9 per cent, but we have very low employment rates, dramatically low, for women and youth. Only one woman out of ten is actually working: shows the extent of the under utilisation of labour in Kosovo. If we assume that external migration flows and some income transfers may have compensated for the demographic pressure on the labour market, we still find ourselves in a situation where we need to radically change industrial development strategies towards high employment-absorbing sectors (i.e. away from energy and mining, as they are currently promoted, towards sectors with higher employment elasticities).

While it appears to be still disproportionally high for young people (60.2 per cent), it is not so surprising to note that the overall unemployment rate is now estimated at around 35 per cent, i.e. almost 10 percentage points lower than previous estimates and the census.  This sudden reduction in the value of the unemployment rates is a signal that KAS is now capturing more precisely labour market phenomena that we could not see before. In turn, more and better data inevitably lead to the surfacing of further questions and questioning of the data, which eventually can also prepare clearer paths for policy makers.

Clearly now, prompted by professionally-trained KAS enumerators, someone who is working even for a few hours a week as unpaid family worker would appear in the cohort of the employed. This is actually accurate from a statistical point of view, but reminds us that the employment rates do not tell us much about the quality and the decency of the jobs that are generated in the economy.

We need to have more disaggregated data and we need to start interrogating these figures more in-depth to extract relevant policy guidance.

Many workers and their families rely on work in the informal economy and migration to cope with the risk of unemployment and low earnings. Through the UNDP Remittance Studies, we see how remittances remain an important source of income for households but are not injected into a virtuous circle of productive investment for employment generation.

Job creation in Kosovo's private sector is still dominated by micro-enterprises (more than 98% of business entities in Kosovo). Kosovo must not overlook the sector with greatest potential to generate decent work. This calls for specific measures to be taken in to support the organic growth of the micro-enterprise sector and their progressive transformation into high-value adding entities, 

If the proportion of own-account workers (self-employed without hired employees) in the 2012 LFS is still sizeable, it may be an indication that more needs to be done to promote growth in the formal economy and upgrade rural enterprises. If disaggregated data bring to the surface large shares of workers as contributing family workers, there is likely to be little job growth, and, ultimately, wider spread poverty.

Own-account workers and contributing family workers have a lower likelihood of having formal work arrangements, and are therefore more likely to lack elements associated with decent employment, such as adequate social security and a voice at work. The two statuses together, therefore, are summed to create a classification of "vulnerable employment", a key indicator of the Millennium Development Goal (MDG) employment target. A country with a large informal economy, in both the industrial and services sectors, may tend to have larger proportions of contributing family workers (and thus higher rates of vulnerable employment) than a country with a smaller informal sector. It may be more relevant to view status in employment within the various sectors in order to determine whether there has been a change in their relative shares, and such degree of detail is likely to be available for countries with strong labour force surveys and/or recent population censuses.

KAS deserves congratulation on having brought this data to the fore and enabling these initial policy discussions. UNDP looks forward to more labour market indicators and we stand committed to listen more carefully to the policy guidance that one can derive from more precise statistics.

The "vulnerable employment rate" is calculated as the sum of contributing family workers and own-account workers as a percentage of total employment.