Voices of Europe and Central Asia: ma r í a e . dáva lo s g i o r g i a d e ma rchi i n d hi r a s a nto s New Insights on Shared Prosperity and Jobs ba r ba r a k i ts isil oral © 2016 International Bank for Reconstruction and Devel- opment / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with ex- ternal contributions. The findings, interpretations, and con- clusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or accep- tance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommer- cial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Cover illustration: Nathalie Ramírez Design: Carlos Reyes Voices of Europe and Central Asia: New Insights on Shared Prosperity and Jobs María E. Dávalos Giorgia Demarchi Indhira Santos Barbara Kits Isil Oral Bosnia and Herzegovina. Photo© Hidajet Delic-Degi/World Bank Table of Contents 07 48 - Access to productive assets is also important 78 - Social norms keep many women out of productive jobs Team and Acknowledgements outside the home 49 - Aggregate and idiosyncratic 08 shocks undermine prospects for 83- Weak incentives to work Overview upward mobility may play a role in promoting inactivity 20 51 - Conclusion: growing the chapter 1: The Middle Class middle class and achieving 84 - Moving forward: and Economic Mobility welfare advances on the broadening policy instruments Ladder of Life 22 - Regional trends in growth, poverty reduction, and shared 52 - Spotlight: Resilience 86 prosperity special topic - Jobs and in the face of adversity Shared Prosperity: Youth’s 22 - The performance of the Perspectives region in reducing poverty and boosting shared prosperity has 56 88 - Understanding the youth chapter 2: Jobs: The Weak been good employment challenge: facts Link between Growth and Shared Prosperity and dimensions 23 - ...but there are significant disconnects 88 - There is a lot of untapped 58 - The role of jobs in economic mobility potential among youth in Europe 26 - Perceptions of progress and Central Asia toward poverty reduction and 58 - Jobs are the main driver of shared prosperity: the Ladder upward and downward economic 90 - Jobs as a pathway for up- of Life mobility ward mobility among youth 26 - Jobs and assets that deter- 61 - The jobs challenge 94 - Youth-specific barriers mine resilience to shocks shape in Europe and Central Asia to employment and ways to the steps of the Ladder of Life 61 - Low employment rates have improve employability 30 - Most aspire to become or been persistent remain in the middle class 100 68 - Poor labor market prospects Conclusions and Policy 33 - Many feel left behind, are even more glaring when con- Implications and perceive inequality to be trasted with people’s high, often increasing and the middle unrealistic, expectations class disappearing 109 References 73 - What keeps people out of 43 - Drivers and barriers in jobs in the region? improving living standards 115 73 - Inadequate skills are Annex I: Regional Methodology 45 - Access to more and better recognized as a key barrier to jobs drives economic mobility employment 47 - Education helps improve 75 -Lack of networks and connec- living standards, but it is not tions impede access to jobs enough 6 Team and Acknowledgements T his task was mainly financed by the Umbrella Facility for Gender Equality, a multi-donor trust fund established in 2012 to strengthen awareness, knowledge, and capacity for gender-informed policy making. In addition, it builds on work financed by the Poverty and Social Impact Analysis (PSIA) Trust Fund for FYR Macedonia, as well as various other country-specific tasks from the Education, Poverty and Equity and Social Protection and Labor Global Practices, including a task funded by the Trust Fund for Environmentally and Socially Sustainable Development (TFESSD) on ‘Economic Mobility and Labor Markets in ECA’, a regional task on ‘The Political Economy of Redistribution, Transfers and Taxes in ECA’, the ‘Gender in the Western Balkans’ Program- matic Series, a Technical Assistance project on ‘Human Development’ in Kosovo, a ‘Skills and Migration’ project in Central Asia, a ‘Jobs and Skills Development’ task in Central Asia, and a task on ‘Meeting the Employment Challenge in the Western Balkans’. The work was carried out by a multi-sectoral team from the Poverty and Equity and Social Protection and Labor Global Practices. This report was written by María Eugenia Dávalos (co-task team leader, Senior Economist, Poverty and Equity Global Practice), Giorgia De- marchi (Social Scientist, Poverty and Equity Global Practice), Barbara Kits (Consultant), Isil Oral (Consultant), and Indhira Santos (co-task team leader, Senior Economist, Social Protection and Labor Global Practice). The team also includes Patti Petesch (Consultant) who led the design of the data collection instruments as well as their implementation, and who co-authored a background paper for this report (Petesch and Demarchi, 2015). The team is grateful for support from Dariga Chukmaitova (Consultant) and Angelica Thumala (Consultant), instrumental in the implementation of the data collection instru- ment in Central Asia and in the coding of the qualitative data, respectively. This report draws on primary qualitative research conducted in nine Europe and Central Asia (ECA) countries. We are thankful to the authors of the country-specific reports and local partners who prepared and/or contributed to each of the country reports: PRISM (Bosnia and Herzegovina), Center for Research and Policy Making (FYR Macedonia), Gor- bi (Georgia), Index Kosova (Kosovo), BISAM Central Asia (Kazakhstan), M-Vector (Kyrgyz Republic), IPSOS (Serbia), M-Vector (Tajikistan), and A2F Consulting (Turkey). The report also reflects the work and efforts of other colleagues at the World Bank. We are especially thankful to Mediha Agar, Mohammed Ihsan Ajwad, Joost de Laat, Keiko Inoue, Aylin Isik-Dikmelik, and Ana Maria Munoz. Maria Beatriz Orlando, Emily Weedon, and Sailesh Tiwari acted as peer reviewers. Supervision of this work has been provided by Andrew Mason (Practice Manager, So- cial Protection and Labor Global Practice), Carolina Sanchez-Páramo (Practice Manager, Poverty and Equity Global Practice), Omar Arias (former Acting Sector Manager and Lead Economist, Social Protection and Labor Global Practice), and Hans Timmer (Chief Econ- omist, Europe and Central Asia region). 7 Serbia Photo© Djama86/ Dreamstime.com Overview A inura lives in a village in Naryn Oblast Marko, who is 50 years old, was devastated by (region) in the Kyrgyz Republic. Eco- the socioeconomic transition in Serbia. Over the nomic conditions in the village have course of his life, his household fell from the mid- improved greatly in the last decade, dle class into poverty. allowing many families to escape poverty. Ainura has also seen her life change for the better. She “I’m not from a family that was always poor, but talks about the members of her family seizing the from a family that always traveled and enjoyed opportunities opening up around them. themselves,” he says. “I traveled all over Europe as a young man. I had a good car, and I dressed “In 2007 we opened a shop by ourselves and built well. And then, all of a sudden, it all vanished.” a house,” she says proudly. “We bought a house His problems started in 2005 when he lost his in Bishkek for our son. We have married off our stable job at the Belgrade City Transportation children.” It did not come easy, and both she and Company as a consequence of restructuring. her husband had to work, while her family also Since then, Marko has worked occasionally helped her raise the children. and informally, always thanks to the support of friends, while his wife started making and selling “All the major purchases were made thanks to small handicraft goods. the livestock and hay we sold,” she explains. “All the money we saved, we invested to purchase “When I lost my job, a friend found me construc- the livestock.” This is how they bought their tion work,” Marko says. “I went to South Africa shop, which continues to be their main source for work [for two years] with the help of another of income, together with her husband’s modest friend. Their support was and still is very import- pension and small revenues from agriculture. ant to me.” She says she is lucky “the price of hay has been good”. But, when Ainura reflects on her overall “It was better financially,” he continues, recalling well-being, she talks about her own empower- those years, “but there was less stability because ment, too. the job wasn’t secure.” Indeed, it did not last long. Today, Marko and his wife survive through “I learned to make shirdaks [carpets],” she hap- social assistance. Thanks to this steady source of pily concludes: “I think my commercial experi- income, he pays the electricity bills. Meanwhile, ences [at the store] and making shirdaks have he helps a friend who keeps bees and hopes brought the most meaning to my life: at the mo- eventually to obtain a grant to start his own bee- ment, all is good.” keeping business. But not everyone in the Europe and Central Asia region has been as lucky. * * * 8 overview 9 Voices of europe and central asia: new insights on shared prosperity and Jobs The experiences of Ainura and Marko differ sharply. Over the last decade, a large share of the “Those at the top, the rich ones, stay as they population in the region has benefited, like Ainu- are, but those below are drastically differ- ra, from economic advances generated by strong ent, and we’re going downhill,” was the par- growth in their communities. New opportunities ticularly telling comment of a man in FYR have opened up in labor markets and entrepre- Macedonia. “And, while we sink, those at neurship; new infrastructure and services have the top go even higher.” been built; and people have accumulated new knowledge and assets and been awakened to “Poor people have no foundation,” explains new aspirations. But the story shared by Marko is also not rare. Throughout the region, the eco- an urban Kyrgyz woman. “It is hard for chil- nomic transition of the 1990s and more recent dren to get on their feet if their parents have shocks have reduced the role of the state as a not accumulated money.” source of employment and have taken a toll on many households. “Over the last 10 years, we have only done worse,” said an urban dweller in Bosnia and Although diverging, both stories reveal the cen- Herzegovina. “We took out loans and be- tral role jobs play in driving economic mobility, came poorer, while those at the top started the value of informal institutions such as family, getting richer thanks to our interest rates friends and professional networks in supporting and taxes.” household welfare and employment, as well as the impact of social norms in shaping people’s “If someone has some property or money opportunities. today, it is from previous generations,” said a rural resident in Georgia. “Nowadays, a Using new qualitative data from nine coun- poor person cannot afford even a 100-meter tries in Europe and Central Asia, including row in a vineyard.” structured focus group discussions and semi-structured in-depth interviews in 43 communities, this report explores factors that have supported or hindered economic mobility and access to jobs among men and Listening to the voices of Europe and Cen- women in the region. A bottom-up under- tral Asia reveals that, despite an overall good standing of how societies perceive progress and performance in economic growth and shared the opportunities for and challenges to upward prosperity, there is a lot of discontent and mobility is extremely valuable. Expanding on rising concerns about a disappearing middle traditional quantitative surveys, a qualitative class. While economic growth in most countries approach facilitates the gathering of insights in the region has created a ladder to better liv- on the obstacles to economic mobility and pro- ing standards, many people see no open path to ductive employment that are otherwise difficult climb above the first rungs. Men and women in to capture, most often around informal insti- the region aspire to be or remain in the middle tutions and attitudes. The qualitative analysis class, and yet, many see it as elusive. Instead, covers Bosnia and Herzegovina, FYR Macedo- men and women across the region describe soci- nia, Georgia, Kazakhstan, Kosovo, Kyrgyz Re- eties that are greatly and increasingly polarized. public, Serbia, Tajikistan and Turkey, following Advances in living standards at the lower end a common methodology implemented in 2013 of the distribution are outpaced by more rapid (Annex 1). gains at the top, resulting in widespread percep- 10 overview ig re .1 cross ountries, nequality s Perceived to e Widening Perceived change in gap between poorest and richest in own community, by country, % of employed adult respondents 100% Share of responses in each country, % 80% DECREASED 60% SAME INCREASED 40% 20% 0% Source: Compiled from responses during 86 focus group discussions among employed men and women. ote: The results are not representative at either the country or regional level, but simply help anchor the narrative discussion and allow for some comparative analysis. This applies to all figures in this report. tions of increasing inequality (figure O.1).1 Across amidst rising prosperity. Access to jobs is the countries, people are voicing frustration about main factor that can propel households into slow progress, inequality of opportunities and higher living standards and the middle class, or the limited sustainability of the gains that have precipitate a downward spiral (figures O.2 and been achieved. These concerns may be partly O.3). The voices of Europe and Central Asia com- related to the global economic crisis, but not ex- municate this loudly and clearly. clusively. In fact, these perceptions are echoed in discussions referring to the pre-crisis period, and Across the region, people aspire to a middle are also consistent with related findings for the class that is largely defined by stable em- mid-2000s when the region was growing rapidly.2 ployment and earnings. The Ladder of Life –a community-specific description of the different The lack of good jobs, particularly among socio-economic levels present in the communi- women and youth, is driving the discontent ty– is largely defined by individuals’ employment status and job prospects. 1 The data collection instrument includes a series of Yet, jobs –especially stable, well-paying jobs– close-ended questions, including this one. As the qualitative are seen as out of reach for a large share of discussions, they are not meant to show a representative people. finding, but to provide an initial basis for interpretation of and comparative work with the narratives emerging in the discussions. The rating exercise also helps to reduce poten- Poor labor market prospects are even more tial biases in focus groups discussions arising from anchoring glaring when contrasted with people’s high, views on the perceptions of whoever responded first to the often unrealistic, expectations. The overwhelm- question, and helps capture views of all participants. 2 Cancho et al (2015a and 2015b), using Life in Transition Sur- ing majority of people in the region, even youth, veys 2006. associate the middle class and upward mobility 11 Voices of europe and central asia: new insights on shared prosperity and Jobs ig re .2 Men and Women See obs and Factors ssociated with ob Opportunities - as the umber One river of pward Mobility Factors important in getting ahead in the community, by sex, % of adult respondents Share of respondents of each sex. % 60% Men (755 respondents) Women (771 respondents) 50% 40% 30% 20% 10% 0% New/better job New/growing business Good connections Migration Education/training Attitude/hard work Family support Budgeting/saving Increased crop production/livestock Loan/credit Source: 172 FGDs with adult men and women. ote: Each focus group participant was asked to select two upward mobility factors; the share indicates the share of participants that chose a given factor among the top-two factors. ig re .3 ob Losses Most Often Trigger ownward Mobility Risks that can move households down within the community, by sex, % of employed adult respondents Share of respondents of each sex, % 70% 60% Men (379 respondents) Women (377 respondents) 50% 40% 30% 20% 10% 0% Family conflict/divorce / Job/business loss or unemployment Inconsistent work opportunities Bad economy/rising cost basic necessities Too much debt/no credit Gambling/alcohol/drugs Depression Own or family illness/death separation Natural hazard Wedding/death cost Source: 84 FGDs with employed adults. Data from women focus groups in Ferizaj (Kosovo) and village near Mardin (Turkey) are not available. with jobs that are full-time, formal and with open ciated, most attached more value to the security contracts. The vast majority still aspires to a public and stability of public sector jobs. sector job (figure O.4). Although some voiced their preference for a private sector job, where, they These aspirations about jobs leave out more believed, the wages would be higher, promotion ‘irregular’ forms of employment that are, would be easier, and their skills would be appre- in fact, becoming increasingly common in 12 overview ig re . Most People Prefer Full-Time Formal obs in Large ompanies or the Public Sector Preferred job among sets of alternatives, adults, by sex, % of respondents 100% Share of respondents, % 80% 60% 40% 20% 0% Public Private Formal Informal Part-time Full-time Large Small For For Company Company Someone Yourself Else Men Women Source: 136 focus group discussions with working and nonworking people in all countries, except Turkey. many countries. Traditional definitions of em- ployment used in household surveys include a “Being part of the middle class means to broad range of jobs that go well beyond the for- be employed and to be able to meet your mal, stable jobs that most people in the region needs,” said a jobless woman in a village think of when defining what a job is. These in- near Pristina, Kosovo. “I think you’re lower clude unpaid work, informal sector work, jobs class if you don’t have a job and therefore on irregular schedules, and part-time work. For can’t think about anything else.” example, being a worker in agriculture or con- struction—two very common forms of work— is “People who belong to the middle class often not considered an actual job by people should not be under constant stress that on the ground (figure O.5). they might lose their jobs,” said a jobless man in urban Serbia. Given the centrality of jobs, which factors are perceived to matter most for productive em- “I hope to move into the upper class,” re- ployment and entrepreneurship? lates a jobless woman in Istanbul. “My Although education is critical in opening up daughter is going to start working and access to economic opportunities, and is par- earning wages. My husband will retire and ticularly valued by youth, it is perceived to be receive a pension. I can find a part-time insufficient. For youth, in particular, the chal- job now that my kids are finishing school. lenge is that the education and skills that the ed- There should be two or three wage earners ucational systems offer have not evolved along- in the household before one can move into side the demands of labor markets in the region. the class above the middle class.” Perceptions about low quality education are widespread, and the skills obtained in school are “It is important whether you have one or viewed as irrelevant for the labor market. Youth’s two wages in the family,” explained a wom- lack of experience upon entering the labor mar- an in Belgrade. ket exacerbates this disconnect between skills 13 Voices of europe and central asia: new insights on shared prosperity and Jobs ig re . Many ommon obs re ot onsidered ctual obs in the egion Definitions of types of work as employment, % of adult respondents 90 Percent defining this type of work as 78 76 80 73 70 64 ‘Employment’, % 60 47 50 40 30 20 10 0 Agriculture own land Selling home grown/ Family business Farming other's land Construction jobs and o season made goods unpaid and o season when available Source: Participants from 172 focus group. Instead, political and social connections, and “A secure job? All [employed family mem- social norms are perceived as most critical bers] employed in the public sector,” agreed for accessing jobs and for improving individu- a group of men in FYR Macedonia. “If the als’ well-being. Importantly, these factors shape government falls, they will fall too, but they people’s expectations and aspirations about what are still more secure than other jobs.” they can achieve in life, and how people engage in society. In the region, these factors are perceived to give rise to inequality of opportunities. “A job is good if you have a contract,” said a woman in rural Georgia. “A contract guar- People voice great frustration with how the antees that you will not suddenly end up lack of connections curtails their opportuni- unemployed.” ties, and with the unfairness in the process of getting a job. Connections can play a positive role “If your job isn’t stable, your income isn’t in searching for and finding a job, particularly in stable either,” complained a man in a Tajik the presence of market and institutional failures3. village. But, inequalities in access to connections, power and networks, and the corruption at the top, mean that limited access to productive employment can learned and skills required in a job. However, as become a trap. voiced by youth in the region, youth see—more than the older generations—a value in obtaining Social norms, particularly those related to gen- skills that are relevant for the labor market, and der, also mediate access to jobs. Many women see education as a way to move up the Ladder of referred to the need to redefine roles in the house- Life. And, while they still have job aspirations that are remarkably similar to those of the older gen- erations, they seem willing to give up some job 3 Kaas and Manger (2012) for example, show how employer security for more fulfilling, more ambitious jobs. discrimination disappears in the hiring process in the pres- This is an opportunity for the region. ence of information and networks. 14 overview “Jobs, that’s what you need connections “The education we receive and the skills we for,” stressed a man in FYR Macedonia. learn are poor relative to what is required to meet the responsibilities of the available “Nowadays, it’s very difficult to find a job jobs,” said a young woman in Tajikistan. without connections, whether through a political party or family ties,” relates an Al- “It is a real problem that, after receiving an banian woman in FYR Macedonia. “Some- education, you have no experience,” ex- one has to recommend you.” plains a young man in the Kyrgyz Republic. “For example, you’ve got an education, a “Society has been formed in the way that specialty, and you know the theory, but you you can’t breathe without a connection. don’t know how to apply it in practice.” It doesn’t matter which school you went to. If you don’t have a connection, it’s the “We learned nothing in high school, noth- same as if you didn’t finish school at all... ing practical,” complains a young man in You must be a member of a political party Bosnia and Herzegovina. “My school was to get a job. Some individuals get into uni- not useful to me.” versities overnight through the help of their relations, and they get a job because of po- “Everyone needs an experienced worker litical parties,” explains a man in Bosnia and with at least two or three years of experi- Herzegovina. ence,” said a young woman in the Kyrgyz Re- public. “How can we have experience if we “Anywhere you go, connections matter, at just started seeking a first job?” a medical school or a kindergarten,” said a man in Kazakhstan. thus how they make decisions.5 They can fuel discontent while discouraging job seeking, and hold to be able to look for jobs or get better jobs. investments in human capital. Findings reflect Especially outside major urban areas, families see people’s perceptions that accessing economic a trade-off between women working but earning opportunities is less dependent on one’s effort a low salary and the threats to traditional norms and talent, and more on one’s connections and and values that would come from a woman work- relevant social norms. These factors could af- ing outside the home.4 The good news is that, fect people’s behavior – e.g. in the labor market, in many communities, norms are beginning to support for reforms–6 and their satisfaction with change. Nevertheless, the lack of access to af- life.7 Importantly, since these factors are often fordable and quality child care limits progress. seen as largely outside of the direct control of the individuals, they could be amplifying peo- All of these perceptions matter for policy de- sign and development. Perceptions influence how people view and evaluate situations, and 5 World Bank (2015c). 6 Alesina and Angeletos (2005), Norton and Ariely (2011), Niehues (2014), Cruces, Perez-Truglia and Martin (2013) and Kuhn (2015) discuss how perceptions affect preferences for 4 Beyond social norms related to the role of women in the redistribution. 7 family and at work, social norms around what a job is in the Alesina et al (2004) find that perceptions of economic mobil- region also influence people’s labor market engagement. ity influence people’s reported happiness. 15 Voices of europe and central asia: new insights on shared prosperity and Jobs ig re . More obs and Training Opportunities re mportant in mproving ccess to Employment Factors that would make the biggest difference in improving access to employment and entrepreneurship (for own gender), by age group, % respondents a. o e 50% Young Women (256 respondents) Adult Women (548 respondents) Share of respondents, % 40% 30% 20% 10% 0% b. e 50% Young Men (258respondents) Adult Men (536 respondents) Share of respondents, % 40% 30% 20% 10% 0% Source: 120 Focus group discussions with adults and 60 with youth in Bosnia and Herzegovina, FYR Macedonia, Kosovo, Kyrgyz Republic, Serbia and Tajikistan. ple’s discontent and jeopardizing social cohe- The study findings reveal, however, a blind sion even when there is economic growth. spot in policies aimed at improving access to more and better jobs. The barriers that strongly Some of the barriers to work that people face emerge in the narratives of the qualitative anal- – lack of job-relevant skills and access to pro- ysis - the lack of networks and information, and ductive inputs – are already well known to social norms that keep people out of work -, are policy makers. Moreover, the instruments to ad- often ignored in the design of policy responses to dress them are part of the customary toolkit in the jobs challenge. These barriers play a critical the jobs agenda. These remain important in the role in shaping people’s behavior and opportuni- region, and a majority voiced how better training ties, and are actually amenable to policy. As such, and education, and access to loans, could im- learning from the still small, but growing, body of prove their economic opportunities (figure O.6). evidence in these areas can help enhance more 16 overview traditional approaches to labor market inclusion. of experience, lack of access to accurate informa- Table O.1 summarizes key insights from the rele- tion on labor market prospects, lack of effective vant international experience. Moving forward, networks, and lack of access to productive inputs as part of this process of broadening the menu of such as financing, land, and credit. Notable bar- policy options, new interventions and programs riers encountered by young women are the lack ought to be rigorously evaluated to continue to of affordable, reliable childcare and the social build the evidence base. norms and traditions that hinder women from finding employment. The rest of the report is organized as follows. But, in sum, at the core of people’s perceptions Chapter 1 shows that accessing more and better about economic mobility and jobs in Europe and jobs is the primary mechanism through which Central Asia, and as simply put by two people in households improve their well-being. It com- the region, are a set of common principles: “No plements quantitative indicators with in-depth job, no money,” said a woman in FYR Macedo- analysis of qualitative evidence to explore how nia. “More ties, more work,” concludes a man in the progress in poverty reduction, shared pros- Kosovo. perity, and access to economic opportunities are perceived by people in Europe and Central Asia. It compares and contrasts men and wom- en’s perceptions across countries. The chapter “You can’t open a business if you have a also identifies the key drivers of mobility among husband, two children, and so many house- men and women by urban and rural location and hold duties,” said an employed woman in a across the income and welfare distribution. suburb of Foča, Bosnia and Herzegovina. “It won’t work, at least not here.” Chapter 2 sheds the light of qualitative evi- dence on the economic and social barriers to “If I were to say I wish to work, my husband gaining productive employment that are often would ask me, ‘for what? I make money’,” missed by quantitative data. Many of these bar- riers –particularly those associated with lack of said a woman in Kazakhstan. connections and limiting social norms– are out- side the direct control of the individual and can I have a small child: my wife doesn’t work. therefore be particularly discouraging and foster Why? Preschool is too expensive. She would hopelessness. The chapter discusses the ways in give her wages to the preschool; so, it’s not which these barriers affect individuals and com- worth it for her to work. —Employed man, munities and how countries can promote shared suburb of Vitez, Bosnia and Herzegovina prosperity by expanding the policy toolkit to address “non-traditional” barriers to productive “The salary would have to be greater than participation in the labor market. the income from the farm,” said a woman Given the importance of youth unemployment focus group participant in a village near Tel- and inactivity in the region, the report includes a avi, Georgia. “It should be worthwhile for special section on youth that explores the prior- women to leave their homes to work, but, ities and problems of young people in accessing because salaries are so small, women do and maintaining productive employment. Young not look for jobs.” women and young men face many hurdles in finding employment in the region, including lack 17 Voices of europe and central asia: new insights on shared prosperity and Jobs table 0.1 expanding the Toolkit for Labor Market inclusion Policies is Key Policy objectives examples of interventions Addressing governance failures, especially around public sector employment • System-wide governance reforms • Improving transparency in the process of hiring, firing and rewarding public sector em- ployees through, for example, the professionalization of the civil service, as well as incen- tives and technology to reduce ghost workers and absenteeism Interventions aimed at improving access to information on education and training and labor markets • Labor market observatories, to provide relevant stakeholders with information that can inform their educational and labor market choices Connecting • Professional orientation in the school system and early in the school-to-work transition, people to jobs to provide youth with information that can influence their educational and labor market choices Improving information and networks to access jobs and improve schooling and labor market decision making • Providing incentives to employers to hire new entrants into the labor market can help bridge some of the information and network gaps that make it more difficult for these groups to access their first job. This can be done through apprenticeships/internships schemes or well-targeted and designed short-term employment subsidies • Intermediation services to help improve job search and provide counseling and match- ing services, including improvements in public employment services and their relation- ship with private ones; job fairs, job shadowing and mentoring nterventions to overcome and in uence social norms • Shifting aspirations and expectations through, for example: role models and mentoring; media interventions (e.g. soap operas, campaigns, radio), to expose people to information and role models; or by disseminating information on increased job opportunities for young women Social norms • Working within existing norms, but improving access to economic opportunities for all, through, for example, access to child care (quality and affordable). • Strengthening incentives and using behavioral insights to engage employers directly through novel instruments such as private sector gender certifications or revealing to employers their own biases when hiring or promoting by creating checklists for them to make sure they are not weighing beliefs over facts 18 overview Turkey. Photo© Bunyad Dinc/World Bank Bosnia and Herzegovina. Photo© Tim Cullen/ World Bank 19 Uzbekistan. Photo© Curt Carnemark/ World Bank ChAPTER I The Middle Class and Economic Mobility People were frightened after the Soviet Union collapsed. There were no jobs. How could we live? And, now, people are obtaining land and taking a risk. They’re starting farms. They’re building houses. They’re striving for a better future. They’re educating their children. —Man in rural area, Kazakhstan Certain people come into a better financial situation almost by night, while some people do not have money even for the basic needs. Those are social differences that did not exist in the previous years. The middle class existed. Now you either have nothing or you have too much. —Woman in Sarajevo, Bosnia and Herzegovina T he recent performance of Europe and Central Asia in growth, poverty reduction and shared prosperity has varied widely within and across countries. Using new qualitative data from nine countries in the region, this chapter explores whether and how people experienced chang- es in well-being, the factors that have supported or hindered economic mobility, and the ways in which these diverge among men and women. The findings suggest that access to good jobs and the ability to withstand shocks are critical to improving liv- ing standards, climbing the Ladder of Life and joining the middle class. However, welfare improvements are often out of reach, as informal institutions and social norms that exclude many medi- ate access to these opportunities. 20 ChaPTer 1 21 Voices of europe and central asia: new insights on shared prosperity and Jobs Regional trends in growth, poverty is, on less than USD 5 a day, in 2000. By 2013, the reduction, and shared prosperity two poverty rates had declined to, respectively, 3.1 percent and 13.8 percent. While the 2008–09 crisis slowed the pace of poverty reduction, there was The performance of the region in no lasting reversal in the positive trend. Moreover, reducing poverty and boosting shared quantitative data shows that the performance of prosperity has been good . . . most countries in the region in promoting shared prosperity was good; indeed, the bottom 40 per- The Europe and Central Asia region experi- cent of the welfare distribution (the bottom 40) enced rapid economic growth in the first de- experienced consumption and income growth, cade of the 2000s until the global economic often faster than the national averages.8 crisis of 2008–09. Gross domestic product (GDP) grew by an average 6 percent a year from 2000 Regional trends in poverty reduction and to 2008. Although the crisis affected the region shared prosperity were underpinned by high severely, with an average economic contraction upward economic mobility and falling inequal- of 4.5 percent in 2009, the region rebounded ity. Across many countries, a large share of house- quickly and continued to grow in the years that holds moved out of poverty and into the middle followed (figure 1.1a). Now, the region is once class especially until the crisis and, importantly, more facing hard economic times because of once out of poverty they tended not to fall back slow growth and emerging economic, political, into it.9 Upward mobility in the majority of coun- and environmental vulnerabilities. tries during the 2000s translated into a sizable ig re 1.1 a The Region Experienced Rapid ig re 1.1 b Poverty eclined uickly in the Region in Growth until the lobal Economic risis Extreme and moderate poverty rates in ECA Annual GDP growth, % 12 50% Poverty rate at USD 2.50/day Poverty rate (%), population weighted 10 40% Poverty rate at USD 5.00/day 8 6 30% 4 20% 2 0 10% -2 0% -4 -6 Source: World Development Indicators database, World Bank. Source: World Bank’s ECAPOV database. This growth contributed to reducing poverty and boosting shared prosperity. The extreme 8 Data availability determines the period covered in each poverty rate, measured using the regional extreme country. In most instances, it includes the years of the cri- sis. The growth rates are thus sensitive to the end year. The poverty line of USD 2.50 a day, was 15.8 percent growth data are derived from household surveys and may in 2000 (figure 1.1b). Almost half the population therefore differ from national accounting data. in the region was living in moderate poverty, that 9 Cancho et al. (2015). 22 ChaPTer 1 ig re 1.2 The Middle lass Expanded Significantly between and Share of the population with income/consumption levels within the regional thresholds 100% Share of the population by category, % 90% 80% 70% 60% 50% In 2014, 32% of 40% households are 30% estimated to live between US$ 5.00 and 20% US$10 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Extreme Poor (Living below $US 2.50) Moderate Poor (Living between US$2.50 -5.00) Vulnerable (Living between $US 5.00- 10.00) Middle Class (Living above US$10) Source: Calculations by the Europe and Central Asia Team for Statistical Development, World Bank, based on data and projections of the Survey of Living Conditions and household budget surveys. expansion in the middle class in the region, mea- was particularly beneficial for the less well-off. In sured as the share of people living on over USD 10 Moldova, for instance, consumption of the bot- a day. Almost half the region’s population in 2012 tom 40 in this period grew almost three times as could be considered middle class, a rapid increase fast as that of the total population (figure 1.5). from the 17 percent only 10 years earlier (figure Yet, even when countries grew, there are exam- 1.2). Inequality, measured by the Gini coefficient, ples in which this growth did not reach the poor also declined in many countries (figure 1.3). and vulnerable; this is the case of FYR Macedo- nia in the period before the global economic … but there are significant disconnects crisis. And at times of economic downturn, the bottom 40 bore the brunt of the slowdown in Yet, in a number of cases, there is a discon- many countries. nect between economic growth and changes in living standards, especially among the less Beyond the potential disconnect between well-off. Performance in economic growth, pov- economic growth and shared prosperity indi- erty reduction and shared prosperity varied sig- cators, there is an arguably larger disconnect nificantly across the region. Resource-rich coun- in the region between performance measured tries such as Azerbaijan and Kazakhstan enjoyed by traditional economic indicators and peo- particularly rapid growth in GDP per capita in ple’s perceptions of their welfare and eco- the 2000s. Others like Georgia, Kyrgyz Republic nomic mobility. Even in the periods of high eco- and Turkey, also enjoyed growth rates above the nomic growth, nearly half of the people in ECA region’s average of 4.7 percent in this period. In perceived that they were worse off economically contrast, economic growth was below average than in the past (figure 1.6).10 in countries like Bulgaria, Estonia and Hunga- ry, but was particularly low in Western Balkan countries (figure 1.4). In some cases, growth 10 Cancho et al. (2015b), based on Life in Transition Survey. 23 Voices of europe and central asia: new insights on shared prosperity and Jobs ig re 1.3 Inequality Trends Show Great Heterogeneity across Countries, 2003–13 Change in Gini index, percentage points 12 10 8 Change in Gini index, Gini points 6 Slovak Republic Kyrgyz Republic Czech Republic Kazakhstan 4 Romania Slovenia Moldova Armenia Georgia Ukraine Estonia Kosovo Poland Turkey Serbia 2 0 Russian Federation Montenegro Croatia Lithuania Bulgaria Latvia Macedonia, FYR Hungary -2 -4 -6 -8 -10 Source: World Development Indicators database, World Bank. ig re 1. Economic rowth Varied Widely across ountries the Region, per capita in (constant ) (bars, le a is) and growth rate (dots, right a is) 20000 200 18000 180 Percent change in GDP per capita (2003-2013) GDP per capita in constant 2005 USD 16000 160 14000 140 12000 120 10000 100 8000 80 6000 60 4000 40 2000 20 0 0 LVA* SVN* SVK* EST POL HRV LTU* RUS SRB TKM BIH ARM GEO KGZ MKD CZE KAZ MNE ROU ALB AZE KSV HUN* UKR UZB BGR TUR TJK MDA GDP GDP growth Note:* Data refer to 2012, the latest available year. Source: World Development Indicators database, World Bank. 24 ChaPTer 1 ig re 1. Performance in Shared Prosperity also Varied by ountry Average annualized per capita income /consumption growth of the population vs. bottom 40, PPP 2005 USD 10% Bottom 40% Total Population Income/consumption growth, % 8% 6% 4% 2% 0% -2% -4% -6% -8% Croatia (2009-2012) Bosnia&Herzegovina (2007-2011) Kyrgyz Republic (2009-2014) Tajikistan (2012-2014) Estonia (2007-2012) Czech Republic (2007-2012) Turkey (2008-2013) Moldova (2009-2014) Slovak Republic (2007-2012) Russian Federation (2007-2012) Latvia (2007-2012) Hungary (2007-2012) Lithuania (2007-2012) Serbia (2008-2013) Albania (2008-2012) Slovenia (2007-2012) Bulgaria (2007-2012) Belarus (2009-2014) Kazakhstan (2009-2013) Georgia (2009-2014) Montenegro (2009-2014) Armenia (2009-2014) Ukraine (2009-2014) Poland (2007-2012) Romania (200.7-2012) Macedonia, FYR (2009-2013) Source: Source: Europe and Central Asia Team for Statistical Development, World Bank, based on data and projections of the Survey of Living Conditions and household budget surveys. Note: Data on the bottom 40 are population weighted. This is particularly striking in countries that have ig re 1. Nearly Half of the People in E done relatively well in terms of both growth and ountries Perceived that They Were Worse Off shared prosperity, such as Georgia and countries Economically than in the Past in Central Asia, where in some cases two thirds Share of individuals in the ECA region reporting movements of the population perceived that their econom- in living standards up, down or no changes (same) ic situation had worsened significantly after the 50 economic transition. 46.5 45 40.6 This chapter aims to understand, from the 40 voices of communities across the region, whether and how the growth process is ex- Share of the population, % 35 perienced on the ground, and the factors that 30 help explain (i) the disconnect between eco- 25 nomic growth and shared prosperity, and (ii) 20 the disconnect between aggregate economic 12.8 indicators and people’s perceptions on wel- 15 fare and mobility. Previous work has provided 10 evidence for these disconnects in the context 5 of the region.11 This chapter builds on that liter- 0 Down Same Up 11 Cancho et al (2015a), Cancho et al. (2015b), Bussolo and Source: Cancho et al. (2015b), based on Life in Transition Survey. López-Calva (2014), Niehues (2014). 25 Voices of europe and central asia: new insights on shared prosperity and Jobs ature and explores in more depth, using quali- tative data, the factors that have supported or I drive people to the city. hindered economic mobility and the expansion of the middle class, and the ways in which these I hear different views. Some diverge between men and women. It thus also people say things are better, complements related quantitative studies by offering insights into the transmission channels and some say they are worse. through which institutional and market changes People who are employed affect households’ well-being, and the interac- believe things are better. tions among the different mobility drivers. There are people who want to This bottom-up understanding of mobility work, but cannot find a job. processes is extremely valuable. In fact, peo- ple’s perceptions can shape behaviors12 and thus —Taxi driver in a rural village in Kazakhstan affect the sustainability of growth, shared pros- perity and poverty reduction. Ultimately, under- standing how societies perceive well-being levels Focus groups with employed men and women around them, and opportunities and challenges across communities were first asked to describe to upward mobility can offer useful insights for the characteristics of the least well off and the better-targeted policies. most well off in their communities. They were then asked to describe the steps on a ladder that, from the bottom to the top, would represent pro- Perceptions of progress toward gressively more positive levels of well-being in the local community. Finally, each focus group poverty reduction and shared was asked to indicate the steps on the ladder prosperity: the Ladder of Life above which they believed households were no longer poor and, separately, the steps associated Jobs and assets that determine resilience with middle-class status in the community. to shocks shape the steps of the Ladder of Life The Ladders varied widely across communi- ties, mirroring the different realities in each To understand people’s perceptions about community and the different experiences of poverty and economic mobility, it is neces- women and men. Some descriptions of the so- sary to first define what welfare means across cioeconomic steps on the ladders were detailed. communities. The Ladder of Life exercise was Two ladders constructed by women focus groups carried out to get consensus views on communi- had seven steps. Other ladders were simpler, re- ty prosperity and people’s perceptions of chang- flecting the reality of communities with more es in well-being over the previous decade.13 limited economic opportunities and more homo- geneous economies. For example, less well-off rural communities are often less highly stratified 12 For example, Alesina and Angeletos (2005), Norton and Ari- socioeconomically, and this is reflected in ladders ely (2011), Niehues (2014), Cruces, Perez-Truglia and Martin with fewer steps. Overall, ladders with four steps (2013) and Kuhn (2015) discuss how perceptions affect pref- were the most frequent, and the average number erences for redistribution. 13 of steps was 4.5. Figure 1.7 illustrates common fea- The Ladder of Life exercise used here was adapted from previous World Bank studies, most notably Narayan and Pe- tures across the 86 ladders of life constructed by tesch’s Moving out of Poverty, 2005. the focus groups. 26 FIGURE1.7 The Ladder of Life: Well-Being is Described in both Monetary and Non-monetary Terms ChaPTer 1 Typical characteristics of well-being steps of the Ladder of Life, based on analysis of focus group discussions Top step or all adults in the family are working in professions with high income. hey can afford luxuries, own many good cars and big homes, and vacations abroad. hey hire domestic personnel, and sometimes guards or drivers. heir children go to private schools. hey are well connected. Upper middle step In urban areas, one adult working in well-paid job or two adults working with regular salaries in formal jobs requiring higher education. hey have their own homes and cars, and may afford some luxuries, like weekend houses, meals out and vacations. In rural areas they have larger plots and sell produce outside the village. hey are well mannered, enjoy cultural activities, but work a lot. hey can make plans and in some cases save money. Lower middle step Struggle to make ends meet and might need to incur in debt or rely on support from family and friends, but do not have a food consumption problem; they can afford basic needs and housing. ne member of the family works in the formal sector, or sometimes two in the informal or agricultural sector (where they own a small plot). specialized education. nemployed or seasonally employed in the informal sector with low pay. Homeless or living in slums or precarious housing they do not own. Bottom step Social assistance beneficiaries sometimes as disabled, single mothers, families with many children; some members may be unhealthy. Socially marginalized, sometimes they abuse alcohol, are demoralized, sometimes they are beggars. 27 Voices of europe and central asia: new insights on shared prosperity and Jobs In the summer, when there is an opportunity to “Those at the top control work, one feels rich, but, closer to winter, one has no idea to what category one belongs. many important aspects —Jobless woman in a village near Aktobe, of society,” explains a Kazakhstan Bosnian man. “Those at the People in the middle class have a normal life. top have connections and [This means] they have money, but not to ob- acquaintances; they control tain more or to wish for more, but only to fulfill their obligations, to pay taxes, to pay the bills for how the money flows.” electricity, garbage, water, all bills, and to pay to —Employed man in Sarajevo, Bosnia and meet their needs as well and to send their chil- Herzegovina dren to school. In Kosovo, if you have such a life, it is good, but most important is to educate your children until they graduate. This is how I see an The socioeconomic stratification in the lad- average life. ders largely mirror the categories typically —Jobless woman in Ferizaj, Kosovo used in quantitative analyses of economic mobility: the poor, the vulnerable, the middle Our entire village does not include one person on class, and the rich. As in income-based mobility a high step of the ladder. Here, people are involved studies that posit a divide between the extreme in cattle breeding and farming until the winter; poor and the moderate poor, focus group partic- then they sell their produce, buy wheat, and pay ipants at times talked about two groups living in their bank bills. poverty, the rock-bottom poor, who were living in —Employed man in a village in Qumsangir District, extreme misery, and the poor. As they go up, the Tajikistan steps in the ladders depict gradually less vulner- able population segments. The top steps of the ladders are occupied by the economic and political elites in each com- The characteristics associated with each munity.14 “Those at the top control many im- step of the ladder illustrate the multidimen- portant aspects of society,” explains a Bosnian sionality of household well-being. A prom- man. “Those at the top have connections and ac- inent feature of each ladder is the description quaintances; they control how the money flows.” of the kinds of jobs and labor market situation The richest households live in large houses and that characterize each step. Men and women in may own additional property they rent or use the focus groups also talked about the quanti- for vacation. In rural settings, they own most of ty and quality of assets owned by households the land, which others cultivate on their behalf. at each step, including physical assets (such Their lives are perceived as luxurious because as housing), human capital (education and they can afford multiple vacations each year, of- health), and social capital (such as networks ten in Western Europe, and modern cars, while and connections). Women’s empowerment was educating their children in private schools. Wom- also a factor that improved moving up the steps en on this step often do not work, while the men in the Ladder of Life. Finally, the vast majority are in positions of power and are able to rely on of community ladders also reflect attitudes and solid networks and connections to maintain and behaviors associated with life at each step, as well as value judgments on people living at each step. 14 This is also noted by Petesch and Demarchi (2015). 28 ChaPTer 1 improve their economic well-being and social they might have bank debts, for example, mort- standing. gages on their comfortable homes, these house- holds are typically considered to be able to save “They are in a position to do whatever they at least a little money and to be able to afford to want,” some respondents observe. Many groups spend on more than basic needs. They go on an- mention that households at the top are the ‘over- nual holidays, socialize at cafés and restaurants, night bourgeoisie’ who profited during the tran- and pay for their children’s extracurricular activi- sition years or perhaps from more recent political ties, especially in urban areas, all in moderation. connections. There is a strong feeling of distrust A large number of respondents described this among respondents toward this class and a group as the most educated, and some empha- sense that being at the top is often the reward for sized the honesty of people on this step. illegal activities. “These people are corrupt, close to the authorities,” said a man in Skopje, FYR The lower-middle step (or steps) includes Macedonia, who expressed the views of many. households with progressively diminishing Yet, several people in various countries also re- incomes, but in which at least one member flected on the weaknesses associated with this has a relatively stable job. Some live paycheck class in their localities, especially if these people to paycheck, often in low-paying public sector had become established at the top through ille- jobs. Overall, they can take care of needs and pay gal activities or as profiteers during the transition the bills, but cannot afford much more. They of- from the planned economy. Such individuals are ten rely on pensions or remittances for additional described as losing sleep because they are so income to help them get by. worried their wealth may disappear as quickly as it appeared if, for example, their political party “They can afford the necessities, but maybe not should lose power. a vacation,” explained a woman in FYR Macedo- nia. “They have a car, but drive it rarely; they are The richest of us . . . are those who provided all their able to get by on account of the retired members children with houses, educated them at the univer- of the family, and they live with the extended sities, and are happy with their grandchildren. family.” Depending on the community’s econo- —Man in Khujand, Tajikistan my, this step may include the households of in- formal sector workers that have relatively stable The upper-middle step typically includes incomes and households that can barely make the households of professionals, successful ends meet. The jobs and economic activities of small-business owners, or farmers with rel- women and men on this step tend to vary more atively large plots. These households tend to by gender than jobs and activities at higher so- have stable incomes earned, in the majority of cioeconomic steps. The women, for example, cases, by several household members. may be nurses or hairdressers, while the men may work in construction or in factories. Peo- “That’s the level at which at least two members ple on this step may also have good or, at least, of the family are employed; they have social and adequate housing that is generally rented rath- health insurance,” agree men in an urban com- er than owned. They educate their children and munity of Bosnia and Herzegovina. “They can ac- may be able to take short summer holidays with- complish something in life.” People associate this in the country. Households at these steps are stability with a more confident outlook on the perceived to live honestly and work hard. future and less vulnerability. Women and men are likely to be engaged in similar professions, “We are not jealous of each other,” said a man often requiring some higher education. Though in Kosovo, echoing others across the sample. 29 Voices of europe and central asia: new insights on shared prosperity and Jobs “We work hard to achieve something, and the people in this class are modest.” Nonetheless, We try to be middle class, these households are always at risk of being un- but lack a great deal to able to meet unexpected expenses. be really in the middle class. Each day, they have pasta and chicken on the If you look at our families, dinner table. It’s cheap, but healthy food. The housewife somehow finds the food. And, today, we are poor in reality. the husband brought money home, but, tomor- row, he may not. —Working man in Tbilisi, Georgia —Man in Shymkent, Kazakhstan The families have economic problems, but man- spondents in focus groups, and it is not uncom- age. The majority get help from migrants. mon for them to have problems with alcohol —Man in Tbilisi, Georgia and to engage in other risky behavior, accord- ing to a small number of respondents. Some The bottom step is often occupied by house- households on the bottom step may be living in holds living in poverty and unable to afford slums in debased circumstances, and the chil- even basic needs; these households barely dren in these households, instead of attending survive. In most communities, they are de- school, may be doing farm work, washing car scribed as the poor and as survivors. In some windows, or performing other low-paid tasks to cases, they are divided into several economic pay for food. strata, depending, for example, on whether they have a well-built home, receive social assistance, He gets his bread from the municipality. He doesn’t work seasonally or at extremely low pay, or man- have a monthly income. He doesn’t have a house. age to provide food for their families. —Employed man in Ankara, Turkey “These are the people who worked for compa- They are immediately noticeable. They walk around nies that have gone bankrupt,” said a woman in dirty clothes. They rummage through garbage in a town in central Serbia. “Now, they do infor- cans and recycle plastic bottles to earn money. mal jobs for miserable wages.” Almost half of the They’re struggling to survive. They have no support, focus group respondents who participated in no electricity, and are still living by candlelight. building their community ladders, identified the —Roma woman, FYR Macedonia bottom step with households that are receiving social assistance transfers or remittances or that Most aspire to become or remain in the are desperate to find a way to survive. middle class “They are surviving by receiving benefits and Men and women in the region aspire to be or looking after livestock,” said a man in a rural remain in the middle class, and yet, many see area of the Kyrgyz Republic. “They sell milk and, this as elusive. In countries where the econo- in summer, hay.” Other individuals on this step mies were growing in the mid-2000s but prog- may be widows, single mothers, the disabled, ress in shared prosperity was weak, particularly and the homeless. As a cause or a consequence in recent years, the middle class is perceived to of their economic destitution, women and men have lost ground and to have become poorer. on the bottom step are described as weak and Yet, households in the relatively impoverished unhealthy by almost a third of the employed re- segments of these societies are still striving to 30 ChaPTer 1 be included in the middle class. This is the ma- serve middle-class status, and the definition of jority perspective in Bosnia and Herzegovina, middle class is almost synonymous with a “work- FYR Macedonia, and Serbia. Here, there are fre- ing class”, which is sometimes explicitly men- quent disagreements between focus group par- tioned in this context. The middle class “can pay ticipants, and the distinction between poverty their bills, educate their children, and has enough and middle class steps is often blurred. However, money for a vacation once a year,” explained a even people in communities and countries at jobless woman in urban FYR Macedonia. relatively lower levels of economic development (such as Georgia, Kyrgyz Republic and Tajikistan), Employment and earnings are, not surpris- but that have become more prosperous over the ingly, central to the definition of the mid- last decade, display a similar ambition to be dle class (figure 1.8). In response to questions counted among the middle class. about the nature of the middle class, people mentioned a regular salary, two incomes in a We [in the middle class] are considered poor by family of four, or enough money to pay for utili- wealthy people. People who are poor, in our opin- ties. Mentions of types of jobs and employment ion, also have ambition and do not consider them- status were as frequent as statements on in- selves poor. comes and wages. Being part of the middle class —Jobless man in Aktobe, Kazakhstan “means to be employed and to be able to meet your needs,” said a jobless woman in a village We try to be middle class, but lack a great deal to near Pristina, Kosovo. “I think you’re lower class be really in the middle class. If you look at our fam- if you don’t have a job and therefore can’t think ilies, we are poor in reality. about anything else.” In some cases, merely —Working man in Tbilisi, Georgia having a job is considered sufficient to provide the income and consumption associated with Most communities propose a definition of the the middle class. Other respondents viewed middle class that encompasses a large share certain occupations as cues of middle-class sta- of their members. Because no one wishes to be tus, sometimes regardless of income. Medicine, excluded, especially in localities that used to be education, and architecture were mentioned as more prosperous, respondents feel they still de- middle-class professions. ig re 1. Jobs, ssets, and Lifestyle efine the Middle lass Frequency of responses to the question "What comes to mind when you think of the term “middle class”? What does it mean to be in the middle class?" Occupation or profession 258 Income 231 Physical assets (housing, car, land, livestock) 210 Food consumption 108 Lifestyle (holidays, restaurants, theater) 95 Education 94 Financial standing (saving, borrow) 51 Source: Compiled from responses during 172 focus groups with employed and jobless adult men and women. Note: Categories are not mutually exclusive, and the same response may include mentions of two or more categories. 31 Voices of europe and central asia: new insights on shared prosperity and Jobs I hope to move into the upper class... My daughter the poor. Meanwhile, the rich can travel abroad is going to start working and earning wages. My (“without bringing their own food along”). husband will retire and receive a pension. I can find a part-time job now that my kids are finishing Reinforcing the view that the middle class is school. There should be two or three wage earn- more than a purely monetary concept is the ers in the household before one can move into the frequent reference to the middle class as a class above the middle class. group that is more highly educated and more —Jobless woman, Istanbul socially active. “The middle class is a bit more social,” stated a woman in Istanbul. Social en- In parallel, in rural areas, owning productive gagements, participation in cultural activities, assets is critical for belonging to the middle visiting friends, and being able to bring them class. “They must have at least two or three cows,” presents (a traditional practice in Georgia) are all said a jobless woman in a Georgian village about reported as middle-class pastimes. Most focus the middle class, highlighting the particular char- group respondents also identified a good edu- acteristics of the rural middle class. cation as a defining element of the middle class. “Those who are educated and whose children are “In the village, they have one or two chickens,” educated as well,” answered a woman in a rural said a woman in a rural area in Kazakhstan refer- area in Tajikistan when asked about the nature of ring to middle-class families. “They have a cow; the middle class. “People who have knowledge.” they have milk and yogurt; and they make their Certain behaviors and attitudes are viewed as own butter.” In other cases, the middle class is positive middle-class traits. People across the defined by ownership of irrigated land, a tractor, region spoke of the middle class in terms of hon- or earnings from the owner- esty, dignity, and acting and ship of land, as many rural spending rationally. respondents in Tajikistan ex- “People who belong to plained. The voices of the region the middle class should also revealed views that There is a widely shared not be under constant reflected local conditions view that the middle class stress that they might and social norms. For ex- is able to pay for basic ex- ample, in relatively less well- penditure items, such as lose their jobs.” off communities character- food, clothing, children’s ized by high fertility and large —Jobless man in urban community, education, and utility bills. Serbia families, smaller households Extra comforts are also pos- are often immediately identi- sible, though always in mod- fied as middle class. In some eration. Owning a car (“but Kosovar, Roma, and Tajik not too big”) and an apartment are often said communities, a common perspective is that mid- to be typical of the middle class. In Central Asia, dle class means having fewer children because, people mention washing machines and other if you have too many children, you are seen as appliances as clear signs of middle-class status. poor. In a Roma community in FYR Macedonia, In Tajikistan and some communities in Georgia, echoing other women across the region, a wom- people argue that a diversified diet and eating an explained that she became middle class after meat several times a week puts families into the her daughter left the household. middle class. Going out for coffee or a meal once or twice a month or taking a holiday (“but not too Other perceived characteristic of the middle far”) appears to distinguish the middle class from class are stability and security. For most, mem- 32 ChaPTer 1 I don’t know of a couple who both work.” This pre- “Now, it has improved; people condition for middle-class status is a key element in the resilience of households. A few men and are buying flour. Before we women in the sample also point to the ability of had problems about what to middle-class households “to save for a rainy day.” serve our guests if someone “People who belong to the middle class should came to visit; now, it is easy, not be under constant stress that they might lose and people are celebrating their jobs.” some event or other almost —Jobless man in urban community, Serbia every day.” however, the middle class is not considered above all risks. Health expenditures, for exam- —Working man in Tbilisi, Georgia ple, are seen by a sizable share of respondents as a tangible risk among middle-class households. “If a surgery is needed, then the middle class will bership in the middle class means being resilient not be able to afford it,” explained a working man for the foreseeable future. “Having confidence in Pristina, Kosovo. Similar statements are com- in today and tomorrow,” is the meaning of the mon in Georgia. “In the case of serious health middle class for a jobless man in Bishkek, Kyrgyz problems, even they will not be able to afford Republic. “Speaking in general, having stability treatment,” said a jobless woman in rural Geor- in everything.” “They sleep well at night,” said an gia. References to vulnerability, to adverse eco- employed woman in Bosnia and Herzegovina. nomic shocks and other difficult circumstances among the middle class are not unusual and are Job security, regular pay, and regular working especially frequent in communities with a poor hours were thus considered essential to mid- economic and employment outlook. The middle dle-class status. “Those who work from 8 am to class today “cannot make plans, cannot think 5 pm and receive a monthly salary,” responded an about the future,” said a jobless man in Bosnia unemployed man in Istanbul, for example, when and Herzegovina. asked who belongs to the middle class. In the eyes of many, public sector jobs offer the best chance Many feel left behind, and perceive of fulfilling these criteria. Permanent contracts, inequality to be increasing and the formal sector jobs, and guaranteed salary are con- middle class disappearing sidered as possible, almost exclusively if the state is the employer. The security of an income flow Many feel excluded from the benefits of also depends on the number of employed adults growth. While around half of employed men in the household. Except in Turkey and relatively and women report that the well-being of their more traditional communities in FYR Macedonia communities has improved in the past decade, and Central Asia, a large share of the respondents around one in four perceive, in contrast, a wors- highlighted the need for both the parents in a ening trend.15 household to work before the household could be considered middle class. To be middle class, “it’s 15 assumed that both parents are working and that Based on focus groups discussions with employed partic- ipants who were asked whether their community was less they have enough money to educate the children,” prosperous, the same, or more prosperous in 2013 than in said a jobless woman in an urban area in central 2003. Note that this data was not collected among the job- Serbia. “I don’t think the middle class exists here. less, and likely, therefore, has a positive bias. 33 Georgia Photo© Yuri Mechitov/World Bank Voices of europe and central asia: new insights on shared prosperity and Jobs ig re 1. Perceived Prosperity mproved More where Prosperity was Shared, Perceived change in community prosperity between 2003 and 2013, by country, % respondents “Compared to 10 years ago, do you think your community is more/same/less prosperous” 100% Share of respondents, % 80% 60% 40% 20% 0% Kazakhstan Kyrgyz Rep. Tajikistan Georgia Kosovo Turkey Bosnia & FYR Serbia Herzeg. Macedonia LESS PROSPEROUS SAME MORE PROSPEROUS Source: 86 focus group discussions with adult men and women. In countries where prosperity was shared in their communities more favorable than according to quantitative surveys, people the situation ten years earlier, although the perceive greater improvements in living stan- results are more mixed in these countries, dards in their communities. In Kazakhstan, with greater contrast between quantitative the Kyrgyz Republic, and Tajikistan, advances in trends and people’s views. This disconnect well-being are reflected most substantially in the between the macro trends and the situation views of the population. Thus, 60 percent of the on the ground is expressed by many, like this respondents in the Kyrgyz Republic and in Tajik- employed woman in Tbilisi: “The food is better istan reported that the well-being of their com- available, infrastructure is organized. The only munities had been enhanced, while, in Kazakh- important thing is to have money, but unem- stan, the share reached 85 percent (figure 1.9). ployment is high. I have three children and they The narratives from open-ended discussions are all unemployed.” largely confirm these findings, albeit describing the extent of changes as more moderate. In contrast, in Western Balkans countries that have struggled to rekindle growth and From relatively lower standards of living, par- strengthen labor markets, namely, Bosnia ticularly in rural areas, progress was rapid and and herzegovina, FYR Macedonia, and Ser- visible among both women and men. “Every- bia, people describe increasing hardship and one has a washing machine now,” rejoiced a wom- declining community prosperity. Only 12 per- an in urban Kyrgyz Republic. “Earlier, people grew cent of Serbian respondents talk about rising wheat, and life was hard,” said a man in rural Tajiki- prosperity in their communities over the last stan who was also pleased. “Now, it has improved; decade, while 50 percent believe the situation people are buying flour. Before we had problems has stayed the same (see figure 1.9). The largest about what to serve our guests if someone came share of respondents who felt there had been to visit; now, it is easy, and people are celebrating a decline in community prosperity was in Bos- some event or other almost every day.” nia and Herzegovina, at 42 percent. Economic crisis, unemployment, weak economic policies, Similarly, men and women in Georgia, Koso- and the neglect of the public space and of ser- vo, and Turkey consider the current situation vices are typically blamed for this outcome. 36 ChaPTer 1 ig re 1.1 Well- eing s Perceived to Have mproved the Most in ural ommunities Perceived change in community prosperity between 2003 and 2013, by subgroup, % respondents “Compared to 10 years ago, do you think your community is more/same/less prosperous” Percent of respondents, % 0% 50% 100% Total 27.5% 24.6% 47.9% Men 26.4% 25.5% 48.1% Women 28.6% 23.6% 47.8% LESS PROSPEROUS Urban 31.4% 29.8% 38.8% SAME Rural 22.5% 17.9% 59.6% MORE PROSPEROUS Better-off 18.8% 23.9% 57.3% Worse-off 35.2% 25.1% 39.7% Source: Data from 86 focus group discussions among employed men and women. “Everything was getting better, and our motiva- declined in their communities.16 An additional tion was growing. There were more job offers 12 saw no change in poverty incidence. Taken then, but, over the last few years, everything has together, these represent a slight majority of the stopped.” Ladders of Life built through the survey. However, —Woman in central Serbia as a result of the large well-being losses reported by Western Balkan communities, the size of the Across countries, rural communities per- perceived poverty change regionally is slightly ceive greater improvements in living stan- negative –indicating an increase in poverty over dards than urban communities (figure 1.10). the sample (figure 1.11 and Box 1.1). Rural populations report they have benefited from welfare advances over 2003–13 relatively In communities undergoing sustained growth more often than urban residents, whose views across Central Asia, Georgia, Kosovo, and Tur- on changes in well-being are mixed. Almost 60 key, men and women related to experiences percent of rural respondents considered the lo- of upward mobility. In these countries, on aver- cal situation better in 2013 than in 2003, com- age, 20 percent of poor households are perceived pared with 39 percent of urban respondents. to have escaped poverty in the past decade. Rural dwellers tend to focus on other material gains generated among communities through “It is possible,” said a man in central Istanbul who improved infrastructure, expanded access to declared that economic mobility was relatively education, or remittances. The differences be- easy in his community. “There are construction tween the perceptions of men and women are projects; new houses are being built; there are small. people moving up in this way.” In line with community trends, many people 16 across the region reported experiences of Note that these data are based on focus group participants’ subjective definition of poor households, defined during the poverty reduction and upward economic mo- Ladder of Life exercise carried out with employed men and bility. Among 86 focus groups with employed women only. Definitions of poverty thus vary across countries men and women, 41 believed that poverty had and communities. 37 Voices of europe and central asia: new insights on shared prosperity and Jobs ig re 1.11 Poverty is Perceived to Have Fallen in Most ountries Change in perceived poverty rate (2003-2013), by country and sex 100% (percentage of 2003 poor households) 50% Movement out of or into poverty Bosnia & Serbia FYR Herz. Macedonia 0% Turkey Georgia Tajikistan Kyrgyz Rep. Kosovo Kazakhstan -50% -100% Men Women Country average ECA All -150% Source: Moving out of Poverty Index (see Box 1.1 below), compiled from responses from 86 focus group discussions among employed men and women. | Note: Negative results indicate increase in poverty. box 1.1 Perceptions of economic Mobility: the Moving out of Poverty index The perceived rate of poverty reduction was cal- The MOP index, which has been used in a se- culated within each community and focus group ries of global World Bank qualitative studies,17 by using the Ladder of Life described above. After helps describe the perceived poverty trends in identifying the step that represented the thresh- the region over the decade. So, for instance, old between the poor and the middle class, fo- an MOP index of 0.5 (or 50 percent) would in- cus group members were asked to distribute 100 dicate that the share of poor households fell households among the steps to determine the by half in 2003–13. A negative MOP of −1 would share of households in the community belong- show that the share of poor households was ing to each step in 2013. The same procedure two times higher in 2013 than in 2003 (a 100 was applied to represent the perceived situation percent rise in poverty). in 2003. The change in subjective poverty rates was then calculated to generate a Moving Out of It is important to note that poverty rates are Poverty (MOP) index in each country and for the defined subjectively and are different in each region, as follows: community and in each focus group. MOP = (initial poor – poor now)/initial poor 17  17 Narayan and Petesch (2005) and Petesch and Demarchi (2015). 38 ChaPTer 1 ig re 1.12 Urban Populations rive the egative Perceptions of ncreases in Poverty Change in perceived poverty rate (2003-2013), regional average and rural/urban (percentage of 2003 poor households) 40% Movement out of or into poverty Men 20% Women 0% All -20% -40% Urban Rural ECA All Source: Moving out of Poverty Index, compiled from responses during 86 focus group discussions among employed men and women. “Ninety percent moved up from the bottom to countries also had the grimmest views on mo- the middle class,” said another. A sizable num- bility and the growth of the middle class; only a ber of women, especially in rural communities, handful of communities saw any progress. Wors- indicated that, although difficult, moving up is ening infrastructure and public services, and lack not impossible, provided the circumstances are of jobs are perceived to be behind these negative good, and the attitude is positive. experiences of mobility. “It is easy for hardworking people,” agreed women In general, urban and male respondents ap- in rural areas in the Kyrgyz Republic. In rural Tajik- pear to be driving the negative perceptions of istan, a woman who was not working at the time poverty outcomes. Urban men report the bleak- of the survey echoed other focus group members est experiences during the decade. Rural commu- in asserting that many people in her village man- nities and women usually propose a more positive aged to move up, though with some difficulty. view of progress in poverty reduction (figure 1.12). Advances perceived by these latter groups, which “Some know that our family has been poorer,” are typically less empowered and less well off, she said. “When we started to work and our chil- contrasts with the perceptions of urban dwellers dren went to work in Russia, then life became and men. Largely different definitions of poverty better. We climbed into the middle class.” adopted by focus groups, and the different expo- sure of men and women to daily economic life People in countries with slower economic likely drive these perceptions. Half of women and growth and less progress in shared prosper- rural residents offer examples of movement into ity, often felt that the incidence of poverty the middle class, although the positive change is was rising. Respondents in Bosnia and Herze- often small. Meanwhile, the majority of the focus govina, FYR Macedonia and Serbia, who typically groups among men perceive a decline in the share lamented a stagnation or decline in community of the middle class in communities.18 well-being, also reported a large share of house- holds falling into poverty (see figure 1.11). People in these countries often also provided a broader 18 These results are based on differences between the 2003 definition of poor households, which accounted and 2013 shares that the focus groups assigned to the mid- for several steps of their ladders of life. These dle-class steps on the Ladders of Life. Of 86 ladders among 39 Voices of europe and central asia: new insights on shared prosperity and Jobs ig re 1.13 Across ountries, nequality s Perceived to e Widening Perceived change in gap between poorest and richest in own community, by country, % of employed adult respondents “Over the last 10 years, do you think that the gap between poorest and worst-o households and the richest and best-o households in your community has: increased/stayed the same/decreased?” 100% Share of responses in each country, % 80% DECREASED 60% SAME INCREASED 40% 20% 0% Source: Compiled from responses during 86 focus group discussions among employed men and women. Although respondents in many communities during the last pre-transition years. The negative have noticed progress, perceptions of the posi- perceptions were more pronounced in the Western tive results are more muted and nuanced than Balkans even prior to the global economic crisis.19 the evidence of traditional quantitative mea- sures suggests. Even in parts of the region with an Whether community prosperity is consid- expanding middle class, such as the countries of ered to be rising, stagnating, or declin- Central Asia, Turkey, and, to a lesser extent, Geor- ing, inequality is perceived to be widening gia and Kosovo, a substantial share of women and among all groups and in all countries. The men worry about the limits to upward mobility vast majority of participants across all commu- and entry into the middle class. These messages nities repeat that “the poor are getting poorer, emerging from the open-ended discussions within while the rich are getting richer”. This is so es- focus groups are in line with available surveys on pecially in communities facing an economic subjective well-being. As previously mentioned, slowdown or decline, such as large parts of in the Life in Transition Survey (LiTS), a large share the Western Balkans, but urban communities of people in the region reported they were less across all countries echo some of these con- well off even in the peak growth year of 2006 than cerns (figure 1.13). In many of the communities, men and women talk of the decreasing pur- chasing power experienced by the least well off workers and even the middle class during focus groups of working men and women, 39 (21 among women; 18 among men) displayed expansions in the shares the decade. They believe wages are sluggish of middle-class households, 32 narrowing shares (13 among or falling and the sources of household income women; 19 among men), and 15 no change (6 among wom- are drying up because of job losses, while the en; 9 among men). Of 50 urban Ladders of Life, 23 portray a decline in the share of middle-class households, 21 an in- crease, and 6 no change. Of 35 rural Ladders of Life, 18 show 19 an increase, 9 a decrease, and 9 no change. Cancho et al. (2015b). 40 ChaPTer 1 prices of basic necessities are rising or staying the same. “Someone from the bottom class will work for someone from top class for a lot less “Poor people have no money than they would have done 10 years foundation, it is hard for ago”, explains a rural woman in Bosnia. The general feeling is that wealth is expanding at children to get on their feet the top, where rich businessmen are viewed as if their parents have not able to rely on a stronger social and financial accumulated money.” asset base and benefit disproportionately from the way labor markets are functioning. —Woman in urban area, Kyrgyz Republic In my opinion, the difference has increased, be- cause the rich have better chances to develop; their financial situation allows them to develop. The poor, on the other hand, have fewer resources Across countries, people are voicing frustra- for development; so, the speed and the quality of tion about progress and the sustainability of their development are different. the gains that have been achieved. People —Man in a village near Batumi, Georgia at the lower end of the distribution complain about the unequal opportunities in society Men and women across the region describe and the more limited chances to succeed in societies that are greatly polarized. The pre- economic life and entrepreneurship. This ten- vailing view among women and men in the re- sion results in perceptions of a relative loss in gion is that the gap between the most well off well-being and could affect expectations and and the least well off widened in 2003–13 so that behavior and threaten social cohesion. People many are feeling left behind. Advances in living refer mostly to unequal opportunities to partic- standards at the lower end of the distribution ipate in economic life because of shortages in are matched by greater or more rapid gains at human, financial, and social capital. If gender, the top, which affects overall perceptions of the ethnicity, geography, and parental income and dynamics of economic mobility. Thus, although educational attainment can curb a child’s po- people at the bottom of the distribution are mov- tential from the beginning of life, they will likely ing up in some countries, the fact that others are perpetuate poverty across generations and re- moving up more quickly – even from a similar strict economic mobility. starting point - influences perceptions.20 Prog- ress in narrowing inequality, therefore, seems “Poor people have no foundation,” explains an relatively modest or nonexistent. urban Kyrgyz woman. “It is hard for children to get on their feet if their parents have not accu- “Those at the top, the rich ones, stay as they are, mulated money.” Savings and initial capital yield but those below are drastically different, and returns and opportunities for business develop- we’re going downhill,” was the particularly tell- ment among the rich, while loans are difficult to ing comment of a man in FYR Macedonia. “And, obtain and repay among the poor. while we sink, those at the top go even higher.” “Over the last 10 years, we have only done worse,” said an urban dweller in Bosnia and Herzegovi- na. “We took out loans and became poorer, while 20 This is in line with Hirschman, Albert and Michael Roth- those at the top started getting richer thanks to schild (1973). our interest rates and taxes.” 41 Voices of europe and central asia: new insights on shared prosperity and Jobs If someone has some property or money today, it Furthermore, people feel an eroding sense of is from previous generations. Nowadays, a poor stability and security and, therefore, a feeling person cannot afford even a 100-meter row in a of vulnerability and risk, particularly in the vineyard. middle class. As previously discussed, many —Rural resident in Georgia men and women, especially in communities re- porting shrinking prosperity and mobility, point Inequality of opportunity, which translates to the vulnerability and even impoverishment of into a widening gap between the top and the the middle class. bottom of the welfare distribution, is viewed as a self-perpetuating reality because of the “Maybe there is a middle class, but they are much control over power and networks and the cor- poorer than they used to be,” said a working man ruption at the top. People voice great frustra- in Serbia. “The middle class probably still exists, tion with the levels of corruption and nepotism but they are financially in a much worse position. in their communities. These are people who are living below any nor- mal criteria [of the middle class].” “[Those at the top] have money; they can afford everything,” said one focus group participant. The middle class is considered to be shrink- “They have more opportunities. And where did ing. Worries about polarization and vulnera- this money come from? It’s from corruption!” bility are affecting people across the region re- gardless of the performance of their countries in “They control many important segments in so- growth and mobility. References to a vanishing ciety,” said a man in Sarajevo about those at the middle class or a middle class that does not top. “They have connections and acquaintances, exist anymore are especially frequent in West- and they are better connected. They control how ern Balkan countries with high unemployment the money flows.” Especially in urban settings, and sluggish economies, although they are men and women lament that these advantages common in narratives across all countries (fig- give the better off a head start in finding and keep- ure 1.14). This includes communities in coun- ing jobs or establishing successful businesses. La- tries that grew economically over the decade, bor markets are therefore considered rigged. but in which the advance has slowed since the ig re 1.1 The Middle lass s onsidered to e Losing round, Especially in the Western alkans Frequency of mention of the following or similar statements in adult focus groups discussions "The middle class is disappearing"; "The middle class does not exist anymore", by country. Serbia (16 FGDs) 37 FYR Macedonia (24 FGDs) 26 Bosnia Herzegovina (24 FGDs) 24 Kosovo (16 FGDs) 6 Turkey (20 FGDs) 5 Georgia (16 FGDs) 5 Kyrgyz Republic (20 FGDs) 5 Tajikistan (20 FGDs) 2 Kazakhstan (16 FGDs) 0 Source: Compiled from responses during 172 focus group discussions among employed and jobless men and women. 42 ChaPTer 1 financial crisis in 2008–09. People’s accounts, Middle class is what our parents used to be. They especially in communities that have registered had two decent incomes, enough for summer and declines in prosperity, reveal significant frustra- winter holidays, and no debts. That doesn’t mean tion with the current economic situation. Men they had a stress-free, cozy lifestyle, but they could and women refer to a middle class that is radi- meet all their needs. cally different from the middle class of the past. —Urban resident in Serbia Their descriptions point to a middle class that is more vulnerable. Drivers and barriers in improving Many benchmark their current circum- living standards stances with the situation during the social- ist period. Women and men tend to reflect not only on their position relative to other groups Men and women discussed extensively the along the welfare distribution in their commu- complex dynamics driving economic mobili- nities, but also to the position of their families ty in their communities and countries. At the pre-transition. community level, infrastructure investments and better access to services, together with improved “The middle class was the working class 30 years overall economic conditions, are perceived to ago when we were kids..., [when] we could afford drive prosperity (Box 1.2). These factors interact to buy a car and build a house,” said a woman with additional individual and household-level in FYR Macedonia who, like many other focus drivers, related to access to more and better group participants in her country, was looking jobs, education, asset accumulation, resilience back with nostalgia. to shocks, and social and gender norms. box 1.2 what Drives welfare Changes at the Community Level? Greater community prosperity is associat- “New schools and hospitals are being opened, ed most closely with improvements in in- and the roads have been repaired,” said an em- frastructure and service delivery. About 40 ployed man in Tajikistan. Almost as frequently, percent of the focus groups among men and men and women talked about improved ser- 30 percent of the focus groups among wom- vices. “The bus now comes every 20 minutes,” en mentioned the construction of roads, wa- explained a woman in a village in Kosovo. ter systems, sewerage systems, or other pub- lic infrastructure (including schools) to “They don’t switch off the electricity, water, demonstrate enhancements in community and gas as they used to do,” comments a prosperity. woman in urban Kazakhstan, who now enjoys more reliable utility services than in the past. “There were many projects; the sewerage sys- tem was improved,” said an employed woman Even small advances in basic infrastruc- in Bosnia and Herzegovina. “There was then ture, services, and utilities in rural and immediately less disease, and the streets were otherwise remote communities that were paved; there is no more mud.” previously not served are making a big 43 Voices of europe and central asia: new insights on shared prosperity and Jobs difference. Rural communities have unique prescribed role as primary breadwinners in and more basic needs and expectations. While most ECA societies. urban communities often require renovations of public buildings or new street lighting, rural Participant 1: “Infrastructure in the microdis- communities are much more likely to lack ba- tricts has improved.” sic public infrastructure and services such as Participant 2: “There are more opportunities water pipes, sewerage systems, roads, schools to earn.” or bus transport to the closest town, that could Participant 3: “The furniture industry is de- help boost local prosperity. veloping well. Small business is prosperous. It was not easy in the beginning, and then every- Meanwhile, deteriorating infrastructure in- thing went rather well.” dicates a decline in community prosperity Participant 4: “We invest more in business.” in the eyes of most respondents. “There is Participant 5: “There is a desire to earn more. no money to fix old things or for new invest- The more you want to earn, the more you need ment,” said a man in central Serbia. to invest.” Participant 6: “Loans are available now.” Men were more likely to note improve- ments in communication and information Likewise, the modernization of agricultural services. techniques, land reforms and the opportuni- ty to work in cities or abroad available to men “Ten years ago, it was difficult to obtain in- who were previously employed in agriculture formation,” said a man in a rural community are reported to have boosted the prosperity of in the Kyrgyz Republic to explain the views of rural communities. members of his community on greater pros- perity. “Now, the exchange of information has Women’s views on changes in community intensified. In kindergarten, at school, children prosperity seem relatively more rooted in use cellphones, the Internet; they have a lot of factors such as education and a relaxation information... The difference is huge.” in gender norms. Nine focus groups involv- ing employed women argued that better ed- Enhanced labor market opportunities and ucation, knowledge, and cultural offerings higher earnings are also reported by re- contributed to advances in well-being in their spondents as key reasons for greater com- communities, while only four of the focus munity prosperity. While almost as many groups among men mentioned these as fac- women’s focus groups saw the value of “more tors. Women also often consider a decrease in jobs”, “new factories” or “more opportuni- crime rates, the end of conflicts, and political ties to earn” in advancing the well-being of stability as key contributors to progress. Al- entire communities, about twice as many though a relaxation in strict gender and social focus groups with men talked about commu- norms has occurred in only a few localities, nity-wide higher salaries or revenues from ag- women argue this enhances the prosperity of ricultural work, or greater business opportuni- communities. ties. Men’s greater likelihood to mention higher returns to work is hardly surprising, given their “[The community] has changed a lot,” com- greater participation in paid employment and mented rural women in a focus group in Koso- 44 ChaPTer 1 vo. “Women are freer now. Whoever had the relatively more restrictive gender norms, espe- means has started their own business or be- cially urban Turkey, but also parts of Central Asia come employed... The mentality has changed. and among minorities in FYR Macedonia. Mean- Everything is much better.” while, women rather than men referred to wors- ening community cohesion, neighborhood rela- “Yes, [women] are more well educated now,” tions, and the demographic composition of their others said. Similar statements were not un- localities, mainly because of migrating youth, as common in other areas that had experienced factors affecting community prosperity. Access to more and better jobs drives dents across gender, location, labor market economic mobility status and community welfare selected “new or better jobs” (figure 1.15). Many more partic- Jobs are the main driver of upward and ipants selected “new or growing business” as downward mobility. This message strongly a top mobility factor. “New and better jobs” is emerges from both the closed-ended ques- overwhelmingly selected as key driver in coun- tions and the open-ended discussions with fo- tries where labor markets are weaker, especial- cus group participants across the region. Men ly in the Western Balkans. Similarly, job loss is and women across countries talked first and seen as the main event that can cause men and foremost about jobs and ways to get them as women in ECA to bring their households down the top factor to trigger upward mobility. Ref- the ladder (figure 1.16). In the closed-ended erences to “jobs”, “work” or “employment” are question, at least 60 percent of employed ubiquitous throughout the narratives, whether men, employed women, rural respondents in discussions on poverty reduction, the middle and urban respondents indicated that “job or class or mobility processes. business loss” is the biggest risk they face.22 When asked explicitly to select out of a list the top two factors helping men or women get or livestock production (if the focus group was in a rural area); ahead, people in the region related a similarly (o) access to land (in rural areas); (p) other. 22 strong view. 21 About half or more of the respon- Data on downward mobility were collected by asking fo- cus group respondents the following closed-ended question: “What two factors do you think have represented the biggest risks facing especially the [sex of the focus group members] in 21 Data on upward mobility were collected by asking focus this community and have caused households to descend to a group respondents the following closed-ended question: lower step on the ladder of life?” The question was posed to “What two factors do you think have been the most important focus groups with jobless (unemployed and inactive) men and for the [sex of the focus group members] in this community women while displaying a list on a flip chart. The facilitator who have moved their households up the ladder?” The facili- requested the focus group members to write on small slips of tator posed this question to the focus group while displaying paper the two items on the list that each considered the most a list on a flip chart. The facilitator requested the focus group important factors affecting downward mobility. The options members to write on small slips of paper the two items on the included (a) loss of a job or business (unemployment or inac- list that each considered the most important factors affecting tivity); (b) inconsistent job opportunities; (c) too much debt or upward mobility. The options included (a) new or better job; lack of access to credit; (d) reduction or loss of remittances; (e) (b) new or growing business; (c) migration; (d) remittances; less government assistance; (f) own or family illness or death in (e) social assistance; (f) pensions; (g) education and training; the family; (g) depression; (h) family conflict, divorce, or separa- (h) good attitude and hard work; (i) supportive family; (j) loan tion; (i) the cost of a wedding, dowry, or death; (j) gambling, al- or credit; (k) effective budgeting and savings; (l) marriage, di- cohol abuse, drug addiction; (k) rising cost of basic necessities vorce, or separation; (m) good connections; (n) greater crop or bad economy; (l) natural hazard or disaster (drought, floods, 45 Voices of europe and central asia: new insights on shared prosperity and Jobs ig re 1.1 Men and Women See obs and Factors ssociated with ob Opportunities - as the umber One river of pward Mobility Factors important in getting ahead in the community, by sex, % of adult respondents 60% Men (755 respondents) Women (771 respondents) Share of respondents, % 50% 40% 30% 20% 10% 0% New/better job New/growing business Good connections Migration Education/training Attitude/hard work Family support Budgeting/saving Increased crop production/livestock Loan/credit Source: 172 FGDs with adult men and women. | otes: Each focus group participant was asked to select two upward mobility factors; the share indicates the share of participants that chose a given factor among the top-two factors. Since only 1 to 3 percent of all participants selected fewer than two factors in each of these kinds of questions, all figures in this report were approximated based on the share of total responses. This can cause both women and men to bring to economic opportunities, and how these vary their household to a lower step of the ladder, or across respondents’ characteristics. even all the way into poverty. Strikingly, about 85 percent of respondents from the three coun- While jobs are the main driver of mobility, a tries with negative well-being changes attribute plethora of other factors matter and their rel- downward mobility mostly to job loss. evance varies greatly across gender and loca- tion. These factors include education and train- Jobs interact with other determinants of ing, a positive attitude, and hard work —all of welfare changes in driving mobility process- which were more likely to be highlighted in coun- es. Job-related factors that appear to be of tries experiencing advances in well-being. Other secondary importance in the responses to the factors involving positive behavior and attitudes close-ended questions (figure 1.15), such as such as family support and good budgeting and connections, migration, family support, and ed- savings practices were selected, although less ucation, came to the fore in the narratives from often, among the top two upward mobility fac- the focus groups’ open discussions. The role of tors, especially by women. Meanwhile, remit- connections, family relations, and networks thus tances, loans and credit, and government pro- emerged frequently, especially in urban contexts, grams aimed at helping the poor, the vulnerable, and reinforced the value placed on jobs. Chap- or the unemployed, as well as social assistance ter 2 discusses in more detail the role of jobs in and pensions, were rarely brought up by men economic mobility, the factors that limit access and women in the region. However, at least one person in four across the six countries in which well-being improved highlighted the risk of in- and so on); (m) bad harvest (if the focus group was in a rural ability to repay debt and gain access to credit. area); (n) death of livestock (in rural areas); (o) other. In combination with other financial and health 46 ChaPTer 1 ig re 1.1 ob Losses are the Main Event Triggering ownward Mobility Risks that can move households down within the community, by sex, % of employed adult respondents 70% Men (379 respondents) Women (377 respondents) Share of respondents, % 60% 50% 40% 30% 20% 10% 0% Family conflict/divorce / Job/business loss or unemployment Inconsistent work opportunities Bad economy/rising cost basic necessities Too much debt/no credit Gambling/alcohol/drugs Depression Own or family illness/death separation Natural hazard Wedding/death cost Source: 84 FGDs with employed adults. Data from women focus groups in Ferizaj (Kosovo) and village near Mardin (Turkey) are not available. shocks, these often appear to trigger a down- man in rural FYR Macedonia remarked. “You can ward mobility spiral, where the recourse to gam- find a better job by learning foreign languages,” bling and drinking represents additional risks. explained a woman in Bosnia and Herzegovina. These factors are discussed in turn, drawing on the in-depth discussions on mobility processes. A diploma or a training experience are often deemed crucial for consideration for a job, while Education helps improve living the lack of education or relevant skills can keep standards, but it is not enough people stuck at a lower rung on the socioeco- nomic ladder. Older workers throughout the re- Across the region, education is considered an gion, in particular, lament this. The widespread important asset in facilitating upward eco- view in urban communities throughout the nomic mobility. In line with quantitative evi- sample is that at least secondary schooling, but, dence on the correlates of economic mobility, 23 more often, tertiary education, is required to be people in the region value education as a trigger considered for good, well-paying jobs —some- for upward mobility. While only communities times abroad. in Georgia, Kosovo and Turkey overwhelmingly selected this as a top mobility factor, during the I did not complete my education, I put it aside open discussions men and women across all many times. Today, nobody will give me a job countries emphasize the role enhanced educa- without higher education. tion can play. Good education and training are —Jobless man in Kazakhstan perceived to be a “step toward finding a job,” as a More education increases your chances of going abroad and finding work. 23 Cancho et al. (2015a). —Man in Serbia 47 Voices of europe and central asia: new insights on shared prosperity and Jobs Education seems to play a particularly import- ant role in upward mobility among women, es- “Many people want to open pecially in communities in which gender norms have long been more restrictive. For many, it is businesses, but they have no the first step toward a relaxation of these norms money or connections” and accessing economic opportunities. —Man in urban area, Kyrgyz Republic “Women have to be well educated,” said a wom- an in Kosovo who was voicing the view of many. “This was a reason women in this community ing standards in rural areas. Many also talked of have been able to move their households up the the impact access to credit had on their ability ladder.” When denied an education, the proba- to build a business or improve their agricultural bility of upward mobility is slim. assets. The role of savings and good budgeting was highlighted by a few who stressed the val- “We did not become educated because we were ue of these factors in fostering opportunities for not offered the chance to study,” explained a small entrepreneurship. woman in Tajikistan. “We didn’t know what loans were before,” said however, economic opportunities are viewed a woman in rural Kazakhstan. “Now, people can as scarce in any case, and the role of connec- obtain money.” tions is so important that education is fre- quently considered necessary, but not suffi- “Savings are important” commented a man in cient for obtaining work. Turkey. “You can use the money to make things better.” Perhaps because of the low levels of “Education trains you and enables you to com- entrepreneurship among women in the region, plete a specific task,” mentions a Kosovar man. women referred to the link between savings and “Whereas, good connections help you become business opportunities the most. The relative- employed.” ly more common reference to savings among women may also be partly explained by the tra- As a result, especially in Bosnia and Herzegovina ditional role of women in controlling and bud- and in Serbia, there are reported cases of high- geting day-to-day household expenditures. ly educated people migrating abroad, attracted by better job opportunities and the potential for “If you have a normal income, budget manage- higher salaries. ment will help you use your savings effective- ly and grow your enterprise,” said a Georgian Access to productive assets is also woman. “Women are good at budget man- important agement.” In contrast, especially among men in poor communities, there is little faith in the Beyond education, accumulation of pro- possibility of saving. ductive assets was also considered import- ant for mobility. Particularly in Central Asia, “Many people want to open businesses, but they discussions focused on the opportunities to have no money or connections,” said a city-dwell- move to a higher step on the ladder through er in the Kyrgyz Republic, for example. “To open a greater access to land and agricultural inputs. business, you must have access to credit. Loans They tended to reflect on the advantages of are given out by private companies at high inter- land reform and redistribution for improving liv- est rates. This is the main barrier.” 48 ChaPTer 1 Aggregate and idiosyncratic shocks in rural communities include loss of livestock be- undermine prospects for upward cause of animal diseases, declines in the price of mobility agricultural produce, and increases in the price of fertilizers and other inputs. Downward movements on the Ladder of Life are often associated with shocks (figure 1.16). If your cattle become sick, it will disrupt your life. Cumulatively, natural hazards, poor harvests, —Woman from rural Tajikistan illness, and family-related shocks were deemed key triggers of downward mobility by close The price of wheat went down for example, and to 40 percent of the focus group participants. the government subsidies were not paid. High-mobility countries in Central Asia, especial- —Man in rural FYR Macedonia ly rural communities, were portrayed as particu- larly likely to be sensitive to these shocks, while In both rural and urban communities, many health-related shocks worried close to 17 per- people raised the issue of vulnerability to ill- cent of the respondents in the Western Balkans. ness and other health shocks. Men and women elaborated on the ways health shocks can affect Rural households, especially in communities households by providing examples from their own in Central Asia that rely almost exclusively on experiences. Someone in the family falling ill can agriculture, are well aware of the vulnerability directly impact household welfare because it may to natural hazards. Men and women explain that lead to a new financial burden, both by incurring natural hazards can lead families into poverty. in health expenses and losing the contribution by an income earner. Many respondents hinted “In our region, most people’s lives and incomes that public health care systems available in most depend on the land,” said a woman in rural Ta- countries in the region are inefficient and of poor jikistan. “If there is any natural hazard such as quality “So, you have to pay for private care,” ex- too much rain or wind or drought, it destroys the plained a woman in Kosovo. harvest, and people suffer throughout the year, until the next harvest.” The vulnerability of rural “You might have insurance, but the cost of treat- households to this type of shock can trigger oth- ment is still high; drugs are expensive,” com- er disastrous events and lead families down into mented a man in Georgia. A man in rural Ta- prolonged periods of poverty. jikistan explained why health shocks have the greatest potential of precipitating a downward “Farmers take the loans, but, if there is a drought, spiral, even if a household includes several earn- then they can’t pay back the debt,” explains a ers. “Because you never know when and why you woman in Kazakhstan. Similar shocks mentioned get sick, illness happens unexpectedly,” he said. “If your illness lasts a long time, it can be the rea- son you become destitute.” “A lot of people get by thanks “If you’re sick, you can’t work,” said a Serbian to the pensions of their par- woman, highlighting the additional strains put ents, and, if they lose their par- on household budgets if the only or the main in- ents, they lose their income” come earner falls ill. —Woman in Bosnia and Herzegovina Life events such as family deaths and ex- penses related to funerals or weddings can also affect the well-being of households. The 49 Voices of europe and central asia: new insights on shared prosperity and Jobs cost of funerals, cemetery plots, and other ex- penses arising from the death of a family mem- “What matters in our society ber were frequently mentioned by respondents in the narratives. Several women described the is good connections. effects of losing their breadwinning husbands. Otherwise you can’t get a Especially in Bosnia and Herzegovina and in Serbia, some respondents also share the view normal job. Nobody will ever of a Bosnian woman who claimed that “a lot of take you on” people get by thanks to the pensions of their —Young woman in Kazakhstan parents, and, if they lose their parents, they lose their income”. The cost of a wedding is also extremely large “During the last two or three years, the cost of liv- in many parts of the region, causing financial ing has been rising a lot,” said a woman in FYR problems. “In our community, a wedding costs Macedonia. “People are giving up on some basic €5,000 to €10,000,” a woman in FYR Macedonia necessities, such as central heating.” explained. “The time needed to save up that money that they spent on the wedding is around “Prices are going up every day,” laments also a 10 years.” Yet, local customs and social norms ex- man in Serbia. ert pressure on households to spend well above their means to ensure they hold a wedding that People’s responses to such difficulties, and honors the image and standing of the family in the welfare losses that can follow, are differ- the community. ent between men and women. Respondents often mentioned the resolve women need to show “For a wedding, it is necessary to slaughter a to encourage their husbands to stay strong during cow”, said a man in Tajikistan. Another explained particularly difficult times, thereby even ensuring the high cost of a wedding for a rural house- the survival of the household. Especially wom- hold that raises livestock. “Slaughtering a sheep en brought up this subject. Given the role men would not be enough at all,” he concluded. The are supposed to play as the breadwinners for the impact of wedding costs on household vulnera- household, the failure of men to persevere in the bility to poverty is so high in some contexts that face of shocks can generate psychological pres- the government of Tajikistan passed a law lim- sures and raise the risk of stress, depression, and iting the spending on such ceremonies. “None- other ills, such as alcoholism.24 25 theless, day by day, the spending goes up,” and “the Tajik people get money on credit to hold In managing these negative shocks and in anniversary feasts, and, for their whole life, they moving up in the Ladder of Life, individual have to pay the debt,” are common stories heard agency and family support were seen as nec- in Tajikistan. essary complements to the factors discussed above (Box 1.3). Jobless participants also shared In countries that achieved little progress in their views on ways to build resilience against shared prosperity, most respondents com- such shocks (Spotlight). plained that the rising cost of living in a con- text of stagnant wages represented a sub- stantial risk for households. In these countries, 24 Petesch and Demarchi (2015). women and men alike commented on the risk of 25 See Annex 1; see also Muñoz Boudet, Petesch, and Turk declines in well-being fueled by higher prices. (2013); Petesch and Demarchi (2015). 50 ChaPTer 1 box 1.3 The role of agency and Family Support for Upward economic Mobility Positive attitudes and agency, the capacity to A large share of the women and many of act on preferences and the available econom- the men in the focus groups talked about ic opportunities, were often discussed by men the importance of spousal or family sup- and women, especially in communities and port in their search for opportunities for countries that have witnessed significant im- upward mobility. The reflections of respon- provements in well-being. dents on the kind of support they expected or needed from their families varied greatly “The appropriate attitude is important in the by gender and across communities. Some place where you work,” underlined a Tajik respondents referred to financial support or woman in reference to keeping a job or obtain- support in taking financial or business deci- ing a promotion. sions. Others mentioned moral support and encouragement. “The best thing is for you to have a defined goal,” said a Serbian man. “A man has to be “My children are working, and they support hardworking and persistent to see results.” me,” said a Serbian woman. The appreciation of agency and the appropri- ate attitude for enhancing the situation of in- “Sometimes, a person makes a mistake, but, dividuals and families varies greatly by gender, after getting advice, he can make the correct as shown also by earlier studies.24 choice,” said a Kyrgyz woman. “A lot depends on the person,” said a Kyrgyz man, “Whatever people do, they will be doomed to summing up a discussion. “If you’re determined fail if they don’t have the support of people about what you do and if you work hard, you will who are important to them,” concludes a Ser- be successful. Otherwise, nothing will help.” bian man. Conclusion: growing the middle well-being appear to have been linked to weak la- class and achieving welfare ad- bor market performance and perceptions of grow- ing inequality, unfairness, and vulnerability. vances on the Ladder of Life This suggests that, while economic growth is The economic growth and income mobility ex- critical for establishing prosperity and help- perienced in much of the region is not always ing households move out of poverty, it is not mirrored in people’s perceptions. Perceptions of enough. Jobs and factors related to jobs drive the dynamics of welfare were less positive than the changes in well-being, especially in countries quantitative data imply even in countries in which showing slower growth and weaker labor mar- growth, shared prosperity, and poverty reduction kets (an issue examined in greater depth in chap- progressed the most. In the remaining countries, in ter 2). Yet, strengthening local economic oppor- which welfare indicators pointed to economic stag- tunities and public service delivery can go a long nation or decline, men and women speak of even way in improving the experiences of well-being greater worsening in their conditions. The more within communities and are important to shape nuanced or outright negative changes in perceived perceptions of poverty reduction and shared 51 Voices of europe and central asia: new insights on shared prosperity and Jobs prosperity. Ensuring that the bottom of the wel- non-poor households that could push them fare distribution has access to opportunities to into poverty must also be addressed. This move up the Ladder of Life in their communities means the middle class, which is currently per- should be a clear priority of public policy. ceived to be losing ground and struggling to stay out of poverty, must be strengthened and If advances in well-being are to be sus- the resilience of vulnerable households must tained, the vulnerabilities and risks facing be facilitated. spotlight: resilience in the Face of adversity Men and women talk of secure jobs, de- Still, a solid asset base can equip a house- pendable workplaces, and stable income as hold with a sufficient foundation to ensure the single most valuable protection against survival at a modest level and for a limited downward slides. period if the household falls into poverty. Economically inactive men and women re- “More than one person working in the house- spondents often mentioned the value of so- hold also helps,” said a man in Turkey. cial, physical, and, to a lesser extent, human capital assets in their discussions of coping “If one [employed household member] is hav- with joblessness. ing problems, the other can provide sufficient- ly,” explained a man in Serbia. A strong social asset base tops the list of factors that can help households weather Nonetheless, a feeling of uncertainty perme- a crisis. The social asset base can consist of ates the narratives. People acknowledge that community solidarity, help from friends, or finding such secure jobs is difficult and that, in family support. Informal institutions and net- any case, such jobs rarely pay enough to allow works are reportedly providing both financial households to save. “If you work here, you’re and moral support at difficult times and new never sure you won’t lose your job,” said a man job opportunities, in line with the findings on in Georgia. So, people try to discover ways to upward mobility. insure against potential job loss. “If someone sends you money from abroad, that income is “Other people, people in the village, help me,” more stable,” the man continued. Alternative said a man in Turkey. Many other respondents sources of finance such as remittances from admitted they relied on remittances from the family members abroad and interest-free loans Russian Federation or Western Europe. Still can mitigate the impact of a lack of employment others found help with parents, especially if income, but these sources are not always avail- the parents were receiving pensions. Some able. The ability to accumulate a financial base Central Asian communities, especially ones is thus often crucial to withstanding downward in which unemployment levels were high, slides. Many respondents, especially women, focused on supporting unemployed youth, spoke of the importance of the effective use of who generally cope by living with relatives. family budgets and the need to control spend- References to family harmony and mutual ing and to spend rationally, although these support appear in discussions on resilience practices were rarely enough to build resilience. as frequently among men as among women. 52 ChaPTer 1 “An understanding family and respect for each men and women were less likely to mention other until the family can become more stable public transfers to the poor, unemployment are important,” said a Kyrgyz man, who added benefits, pensions, and health benefits in pos- that money is important. itive terms. They were felt to be deficient in pro- viding even basic necessities and were consid- Physical capital provides protection from ered far from adequate to help the poor recover total collapse. Rural focus groups often talk- or supply better opportunities for children. The ed about relying on their gardens, other small choir of discontent stretched across the region, plots of land, and livestock for food. and it was louder in communities in which pros- perity had recently declined the most as a result “So, we don’t have to buy such things in the of job loss and weak labor markets. market, including tomatoes, potatoes and so on,” explained a Kosovar woman whose family “It helps people survive,” stressed a Serbian owned a small urban garden. woman. “But it’s not enough to live on.” “Some of them have cattle that belong to their “Of course social welfare is helpful to people,” parents in the villages,” explained a Kazakh- commented a Bosnian woman. “They can buy stan woman. “They slaughter cattle for meat, at least some food with that money.” sell it, and live on the money they earn.” “It’s 70-odd euros; below any minimum stan- Better human capital, both in terms of dard,” explained a recipient in Serbia. “I live health and skills, can help households build with two kids off that money, and, if it weren’t resilience. Possessing sufficient knowledge for my relatives and friends, I don’t know what and skills or developing better qualifications I’d do.” are mentioned throughout the region as insur- ance against poverty in that these will increase These may “save people from dying of hunger,” the chance of finding a job. said a woman in Georgia. Among the Roma communities visited for the survey, respon- A few employed respondents also point to the dents believe public transfers help people sur- benefits of a positive attitude. “Good behavior vive year after year, although they do not help and hard work help people become more re- people rise out of poverty. Indeed, more gener- silient if they descend the ladder,” said a man ally, the discussions tended to dispel the view in rural Kosovo. that public support mechanisms could help build resilience or protect households while The role of social assistance in sheltering they seek ways to move back up the ladder. households from poverty “The government’s social assistance more or Women and men across the region believe less protects families from falling into the ex- that current levels of social assistance are treme poor category, but this only keeps you not enough to promote mobility. In reflect- from starving and provides basic medical ser- ing on institutions and resources that can help vice,” said a Georgian woman, who added, households become more resilient, working however, that “it’s still a support.” 53 Voices of europe and central asia: new insights on shared prosperity and Jobs Social assistance and other public support Child allowance programs were considered mechanisms are considered to be important helpful. They were most frequently mentioned among households struggling with extreme in Kazakhstan and the Kyrgyz Republic. Sin- poverty. When they were asked directly about gle mothers and poor mothers in Bosnia and the types of formal and informal institutions Herzegovina and in Serbia expressed appre- to which people can turn for help if they are ciation for this support, although they found struggling with poverty, jobless focus group the allowances difficult to obtain because of respondents identified public institutions and the eligibility criteria linked to the economic transfers as crucial. Men and women in rural circumstances of the household. and urban areas considered social assistance, centers for unemployment and social work, Another source of public assistance that was national welfare programs, municipal admin- praised was health-related transfers. Georgian istrations, and local development funds as the respondents referred glowingly to the public most important institutions that help the poor. health insurance program for the vulnerable, In a few cases, people also talked about public saying that it was the best public assistance soup kitchens, and energy or agricultural subsi- program and that it helped many people cover dies. In order of importance, nongovernmental basic health expenses they would have other- organizations (NGOs) came a distant second wise not been able to afford. among men and a distant third among women. Religious institutions and private sector actors The views were also positive on energy and ag- were rarely brought up. ricultural subsidies, which “helped pay the bills.” People often complained about social as- For many poor and vulnerable households, sistance. “We don’t want social assistance; we social transfers are difficult to obtain, want jobs,” declared a man in Serbia. above all because of the eligibility criteria that they believe do not reflect the reality Meanwhile, employment centers were often of poverty. The eligibility criteria are viewed considered ineffective, especially in countries as particularly restrictive and even arbitrary. with high unemployment. In contrast, employ- Especially (but not only) in the countries of ment centers and the job activation programs the Western Balkans, people complain about linked to them were described in positive how, despite long periods without income, terms by several focus groups in Kazakhstan their households cannot qualify because they and Tajikistan. Kazakh women, for example, own their homes or land (often as a result of had long discussions on the role of the em- the socialist legacy), live with parents receiving ployment exchange centers and concluded pensions (which qualify as income), or even that, though they rarely provided a lasting own a motorcycle. solution, they helped people get started or get back on their feet. “They come and check your house,” said an ex- asperated man in the Kyrgyz Republic. “If you “They provide a job for one, two, or three months have a fridge, for example, then you are auto- such as painting and sealing tree trunks. It’s all matically rich.” A jobless Albanian man in FYR temporary,” said a woman in Tajikistan. Macedonia described his paradoxical situation: 54 ChaPTer 1 “I’ve been to all the institutions,” he said. “When plaining about the long travel times and the I went there, they told me I’ve got lots of land associated costs to gather documentation or from my grandfather; so, I can’t apply for wel- to apply at relevant centers. fare.” He paused. “But it’s mountain land,” he explained, “in the rocks, of absolutely no use.” “It’s nerve-racking, all those documents, reap- plying [every few months],” pointed out a man The roots of the ineffectiveness of social assis- in FYR Macedonia, reflecting a view expressed tance systems, according to jobless respon- by the majority. dents, include unfairness in the system and widespread corruption. Debates on the need “It’s hard to apply for assistance because you for connections and party affiliations, as well as have to apply for it too many times, once every the overall lack of fairness in decisions about three months,” explained a man in Kosovo, “and, eligibility for social assistance were frequent. for every document you renew, you have to pay.” Though more typical in the four countries of the Western Balkans, statements about corruption A few respondents complained about the and nepotism were common across the sample. psychological toll of the complicated appli- cation process and the lack of transparen- “There is no justice,” complained a woman in the cy. Many respondents said these were reasons Kyrgyz Republic. “They help their acquaintances.” keeping poor people from applying for social programs, especially because the benefits “You have to have good connections because were so small. officials first inform their own about a pro- gram,” said a Bosnian woman. “They behave like they’re giving us money out of their own pockets,” said a Kyrgyz man. “It’s better not even to try,” related a respon- dent who was discouraged by the need to give These various barriers and problems sug- bribes to receive social assistance. gest there is ample scope for strengthening public support mechanisms for people seek- The barriers also include practical difficul- ing adequate jobs. While social assistance is ties in the application process and in ac- available for the poor, sick, and unemployed, quiring program information. The reports of the systems should be enhanced to serve the unemployed and inactive respondents varied chronic poor and the vulnerable more effec- greatly depending on the programs and on tively. The systems should be fair, flexible, and their educational attainment. transparent and include temporary protection from shocks, while also focusing on easing the “This is difficult for us because we are not ed- transition to longer-term solutions, especially ucated,” said a Tajik woman. “We’re not kept more stable jobs. In a region that is character- informed that much. It’s also difficult to apply. ized by slower growth and fiscal constraints, We don’t know to whom we must turn for ad- ensuring viable yet effective social protection vice.” Some of the poorest respondents said mechanisms, while improving the opportunity they found the paperwork daunting, though for the poor to make greater use of their hu- these were a minority, as were those com- man capital through work, is crucial. 55 Uzbekistan. Photo© Anvar Ikyasov/ World Bank ChAPTER 2 Jobs: The Weak Link between Growth and Shared Prosperity We have many people who have finished secondary school, but there are no new jobs, and the government does not help you find a new or better job. —Woman, rural FYR Macedonia J obs are the weakest link between growth and shared prosperity in Europe and Central Asia. Only one adult in two works, and, if they do work, many are involved in low-productivity activities, often in the informal sector. Job prospects are particularly dismal among women with less than secondary educational attainment, youth, and older work- ers. They are at risk of being left behind. Other people feel it, too. While they may want formal jobs in the public sector that provide security and a regular paycheck, they are met with a different real- ity when they look for work. Conversations with residents in communities across the region have shed light on the economic and social barriers to produc- tive employment, especially barriers related to aspirations, so- cial norms, and connections on which quantitative evidence is lacking. Because many of these barriers are perceived to be be- yond the control of the individual, they can be particularly dis- couraging and often lead to hopelessness. This chapter discusses these barriers to productive work, their ef- fect on various groups, and how countries can strengthen the role of jobs in promoting shared prosperity by devising instruments to reduce or overcome such barriers. The conclusion is clear: there is a need to expand the jobs policy toolkit to consistently address the critical “non-traditional” barriers to employment. 56 ChaPTer 2 57 Voices of europe and central asia: new insights on shared prosperity and Jobs The role of jobs in economic most 70 percent of the respondents in Bosnia mobility and Herzegovina, FYR Macedonia, and Serbia pointed to jobs as one of the two key drivers of upward mobility. Jobs are the main driver of upward and downward economic mobility “We don’t have an old job, let alone a new one,” explained an unemployed man in Serbia. Work. Work. Work... It is all only about work. —Jobless man, Karakol, Kyrgyz Republic “If there were a shoe or dressmaker factory in Fer- izaj, they would provide new jobs,” said a woman In most families, only one person has a job, and in urban Kosovo. “It would be the place where we they are not capable of pulling the family out of could go and apply for a job.” poverty. If all family members worked, the prob- lem would be solved. Many knowledgeable community members —Jobless woman, Kutaisi, Georgia confirmed the difficulty of getting a job, es- pecially for women. In general, when asked People in ECA see jobs and the channels and whether it was easier for men or women to find barriers to obtain jobs as the key factor in up- work in the local economy, the vast majority of ward and downward mobility. As discussed in community leaders or knowledgeable members Chapter 1, more than half of the respondents agreed that it was easier for men. Especially in across gender, location, and socioeconomic relatively poor communities, men are often still and labor market status and across communi- perceived to have better chances than women ties, chose “new or better jobs” as one of the top of finding work in the local private sector (figure two factors in upward mobility (see chapter 1, 2.1). More than a quarter of the communities vis- figure 1.15). Jobs are particularly highlighted by ited during the study showed a large difference urban women: 60 percent of urban women view in employment opportunities by sex, highlight- jobs as a key factor, compared with less than 50 ing that women still face more barriers than men percent of rural women, urban men, and rural in finding jobs. The difficulties are perceived as men. Jobs are considered crucial especially in more severe in communities that are less well off places in which labor markets are weaker, such and in rural communities. These results resonate as most countries in the Western Balkans. Al- with the focus groups participants too. ig re 2.1 Women in Less Well Off Locations Have Trouble Finding Private Sector obs Perceived ease of finding a job for a man or a woman in local community, by community characteristics, according to 0-10 scale 10 9 Evaluation of Ease of Finding Work in Private Sector: Average Score 8 Men Women Average Score 7 6 5 4 3 2 1 0 Urban Rural Urban Rural Better off Worse off Source: Structured interviews with knowledgeable community member in each of 44 communities: 43 communities where adults (or adults and youth) focus groups were conducted, plus 1 additional community where youth only focus groups were conducted (Kazakhstan). Note: One knowledgeable community member in each community was asked to evaluate the ease of finding a job in the private sector. Respondents scored their answers on a range from 1 (very difficult) to 10 (very easy). 58 ChaPTer 2 Beyond direct mentions of jobs, the role of “Agriculture is an unstable sector,” said a man factors directly facilitating access or improve- in Georgia who expressed the common opinion ment in labor market opportunities emerged that there should be greater opportunities for strongly. New or growing busi- wage employment. “No mat- nesses, good connections, and ter how much work you put migration, as well as systemic In most families, only into a small piece of land, factors such as inconsistent one person has a you will never earn enough work opportunities or a bad profit to expand.” economy, highlight the critical job, and they are not role of jobs in upward mobility capable of pulling the Overall, people emphasize across groups. (See figure 1.15 family out of poverty. that it is not only access in chapter 1). to jobs, but to better jobs, If all family members that can enhance house- Not surprisingly, better work worked, the problem hold welfare. While both or business opportunities men and women highlight would be solved. for households in rural areas the importance of more jobs is related to agriculture pro- —Jobless woman, Kutaisi, Georgia and new factories, men were ductivity or transitioning out twice as likely to focus on of the sector. Some rural re- the importance of earnings spondents discussing the move to better jobs re- through higher salaries, revenues from agricul- ferred to the shift from subsistence agriculture to tural work, or greater business opportunities. agricultural commercialization. The moderniza- tion of agricultural techniques, land reform, and “A better job is associated with a better salary; so, growing access to markets are seen has having that’s important,” explained a man in Tbilisi, Geor- helped boost the prosperity of rural households gia. “Only more financial opportunities will help in terms of both income (often by increasing the family progress because it’s impossible to do men’s employment opportunities beyond agri- so otherwise.” Respondents in less well off com- culture) and well-being, as rural inhabitants are munities or among the temporarily employed are relieved from performing physically demanding relatively more likely to voice the benefits of bet- agricultural tasks. ter, more stable jobs, especially those involving a change from the informal sector to the formal sec- “In 2003, many people spent a lot of time mowing tor. Previous analysis suggests this is the view also hay manually,” noted a rural respondent in the Kyr- in the case of moving up the socioeconomic lad- gyz Republic. “Now there is equipment to do this.” der from the bottom steps to the middle class.26 “The number of livestock has grown,” add- Currently, I’m a . . . street vendor... You can’t really ed another. “Plowed area has expanded, and achieve a lot... It’d be different if I was at any oth- the number of farm machines has risen.” Such er job. It’s different having a steady income rath- statements are typical in less well developed er than walking through the market trying to sell rural areas. something and earn 400–500 denars maximum for the day; another thing is to get paid 20,000–30,000 “We have olives, but cannot sell them in Mardin,” denars working in the bank. said a rural woman referring to a city in south- —Man in a minority community, urban FYR Macedonia eastern Turkey. “If there was a factory producing olive oil here, many people would find employ- ment. It would be good.” 26 Petesch and Demarchi (2015). 59 Voices of europe and central asia: new insights on shared prosperity and Jobs Often, there must be a second earner in the “I’m forced to go borrow even more money to family before a household can move up in the repay the earlier debt,” said a Serbian woman. socio-economic ladder. Others complained they were unable to raise enough cash to get by until they could find an- “It is important whether you have one or two other job or a new source of income. wages in the family,” said a woman in Belgrade. “Unstable work contributes to the downward Mirroring the importance of jobs for upward slide of the family,” commented a Kyrgyz man. mobility, job loss is viewed as the main factor causing households to move downwards on “[People] work for three or four months, receive the ladder of life and even descend into pov- no salary, or only enough to enable them to sur- erty (chapter 1, figure 1.16). At least 60 percent vive for a month, and then they are fired” said a of employed men, employed women, rural res- Bosnian men. Indeed, unstable jobs was one of idents, and urban dwellers said job or business the most frequently cited factors of downward loss was the biggest risk they face. About 85 per- mobility, especially in rural areas (chapter 1, fig- cent of respondents in Bosnia and Herzegovina, ure 1.16). This was reflected in the narratives. FYR Macedonia, and Serbia attributed downward mobility to job loss and identified it as the num- “If your job isn’t stable, your income isn’t stable ber one risk in maintaining the welfare of their either,” complained a man in a Tajik village. households. The impact of the 2008–09 global financial crisis worsened the already relatively “Inconsistent and unstable work is usually under- low employment rates in these countries, there- paid and, sometimes, not paid at all,” added another. by influencing more pessimistic views among populations. “He took out a loan,” a man in Bosnia and Herze- govina said about a neighbor. “Then, he lost his “No job, no money,” concludes a woman in FYR firm. Now, he doesn’t have enough to survive, let Macedonia. “You fall immediately. It takes time to alone pay off his debt, and the court took away find another job. Some never manage.” everything he had.” Such stories were frequent in the focus groups. You lose the job, you get depressed, you get di- vorced and then you start gambling and drinking. “There are a lot of instances where people It’s all linked. couldn’t pay back loans and had to sell their —Employed man, town in central Serbia homes,” said a man in Tajikistan. Many men and women expressed their frus- Moreover, a poor financial situation can have tration with the lack of stable, permanent further negative consequences, including di- formal sector jobs and stressed the risks asso- vorce, depression, or drinking, gambling, and ciated with informal sector employment. Job drug abuse. When asked to explain how fami- or business losses can push households into a lies in their communities have been ruined eco- downward spiral. This was a major worry among nomically, almost all focus groups mentioned a large number of men and women especially in gambling, alcohol abuse, and, sometimes, even Central Asia, Georgia, Kosovo, and Turkey. violence and crime.27 Although the seriousness Across the region, for example, many were concerned about the cycle of indebtedness 27 See Petesch and Demarchi (2015) for a more in-depth triggered by job loss or low wages. analysis. 60 ChaPTer 2 of the problems varies, the high rate of early The jobs challenge in Europe and mortality among men and the gender gap in life Central Asia expectancy in the region hint at the scale of the problem. Low employment rates have been “Unemployment has caused many misfor- persistent tunes,” commented a man in Georgia. “Some start drinking; others gamble.” Another respon- The poor job prospects faced by many in dent added that some men had started selling Europe and Central Asia mean that import- off household items for cash to use at betting ant segments of the population lack access terminals. Vicious habits such as these can eas- to productive economic opportunities and ily trap people in poverty and economic vulner- risk being left behind. On average, only one ability. in two working-age individuals is employed in the region. The average employment rate is 43 “The husband may be an alcoholic,” a woman percent among women and 59 percent among said in a focus group in a Kyrgyz village. “Because men (figure 2.2). In countries such as Bosnia and of that, he may become unemployed, and the Herzegovina, FYR Macedonia, and Moldova, em- family will be left without an income,” added an- ployment rates dip below 40 percent. The low other. employment rates are often the result of high unemployment rates and, particularly among “Drugs, alcohol: these cost considerable money,” women, low labor force participation rates (fig- said a man in another focus group in the Kyrgyz ures 2.3 and 2.4). This is not merely a reflection Republic. “A man who is a drug user or an alco- of the recent economic and financial crisis. Over- holic does not care about work or anything else.” all, employment rates have essentially been ig re 2.2 Employment Rates are Low in the Region, Particularly among Women, 4 Employment rates (15+) among men and women, percent 80 70 Employment rate, % 60 50 40 30 20 10 0 Kazakhstan Turkmenistan Tajikistan Azerbaijan Bosnia & Herzegovina Uzbekistan Russia Czech Republic Georgia Estonia Armenia Ukraine Latvia Slovak Republic Poland Lithuania Belarus Slovenia Albania Bulgaria Macedonia, FYR Croatia Moldova Kyrgyz Republic Serbia Hungary Turkey Montenegro Male Female Male (ECA average) Female (ECA average) Source: World Development Indicators database, World Bank. | Note: The employment rate is the share of the overall adult population aged 15+ that has paid or unpaid work. 61 Voices of europe and central asia: new insights on shared prosperity and Jobs ig re 2.3 Unemployment Rates re High, 4 Unemployment rates (15+) among men and women in the region, percent 35 30 Unemployment rate, % 25 20 15 10 5 0 Bosnia & Herzegovina Montenegro Croatia Georgia Slovak Republic Bulgaria Tajikistan Turkmenistan Azerbaijan Kazakhstan Serbia Albania Armenia Lithuania Latvia Uzbekistan Slovenia Ukraine Poland Estonia Russia Czech Republic Moldova Belarus Macedonia, FYR Kyrgyz Republic Hungary Turkey Male Female Male (ECA average) Female (ECA average) Source: World Development Indicators database, World Bank. | Note: The unemployment rate is the share of individuals without work who are looking for work among all individuals participating in the labor force. Labor force participation is the sum of those who are working and those who are looking for work as a share of the total adult population (aged 15+). ig re 2. Labor Force Participation s Low, Especially among Women, 4 Labor force participation rates (15+) among men and women in the region, percent 90 80 Labor force participation, % 70 60 50 40 30 20 10 0 Kazakhstan Tajikistan Turkmenistan Georgia Azerbaijan Bosnia & Herzegovina Uzbekistan Armenia Russia Estonia Slovak Republic Czech Republic Latvia Lithuania Ukraine Croatia Albania Poland Montenegro Slovenia Serbia Bulgaria Moldova Belarus Macedonia, FYR Kyrgyz Republic Hungary Turkey Male Female Male (ECA average) Female (ECA average Source: World Development Indicators database, World Bank. | Note: The labor force participation rate is the sum of those who are working and those who are looking for work as a share of the total adult population (aged 15+). unchanged in most countries in the region since the region loses almost 17 years of productive life the early 2000s.28 to unemployment or inactivity, 6 more years than a typical man (figure 2.5). Most of these years are Labor market outcomes are especially weak lost later in life, when workers elsewhere in the across three demographic groups: women, world are still working (Box 2.1). Figure 2.6 illus- youth, and older workers.29 A typical woman in trates how this labor market inequality shapes labor force participation in the Kyrgyz Republic and Turkey. In many cases, the inequality per- 28 Arias et al. (2014). sists even in a context of economic growth. Thus, 29 Arias et al. (2014). On youth, see chapter 3. the gap in labor force participation between men 62 ChaPTer 2 ig re 2. Productive Lives re Shortened by High nemployment and Low Participation, Especially among Women and Workers over ge Average number of years of potential working life lost, by age-group 35 30 Nmumber of years 25 20 6 6 7 7 15 6 4 5 5 3 6 6 6 7 10 4 5 5 4 6 6 6 7 3 4 5 7 5 4 5 5 0 Kazakhstan Azerbaijan Kyrgyz Republic OECD Czech Republic Slovenia EU Estonia Bulgaria Lithuania Ukraine Latvia Georgia Slovakia Poland Croatia Tajikistan Romania Armenia Hungary Serbia Moldova Macedonia ECA Turkey ASIA LAC Russia 25-34 35-44 45-54 55-64 Female total Source: : Arias et al. 2014. | Note: Data show the sum of employment rates by age-group, among 15- to 64-year-olds, less total potential working life. OECD refers to Organisation for Economic Co-operation and Development; EU to European Union; LAC to Latin America and Caribbean. ig re 2. Labor Force Participation Rates re Low among Some Socioeconomic roups Labor force participation, by sex, age, and education, the Kyrgyz Republic and Turkey, percent Kyrgyz Republic Turkey 100 100 90 90 80 80 70 70 60 60 Percent Percent 50 50 40 40 30 30 20 20 10 10 0 0 Young low-educated female Young educated female Young educated male Prime-age low-educated male Prime-age educated male Prime-age educated female Older low-educated female Older educated male Older educated female Prime-age low-educated female Young low-educ male Older low-educated male Young low-educ male Young low-educ female Young educ male Young educ female Prime-age low-educ male Prime-age low-educ female Prime-age educ female Older low-educ male Older low-educ female Older educ male Older educ female Prime-age educ male LFP by group Average LFP LFP by group Average LFP Source: World Bank calculations based on data in household and labor force surveys in Arias et al. 2014. | Note: Young = 15–24 age-group. Prime age = 25–49 age-group. Older = 50–64 age-group. Low-educated = completed secondary education or less. 63 Voices of europe and central asia: new insights on shared prosperity and Jobs and women has stayed almost unchanged in tries in the region was achieved mainly through the region for over 20 years (figure 2.7). In some higher productivity rather than through increased countries, such as the Kyrgyz Republic, it has employment. The pace of net job creation started even widened. to accelerate in the countries that were the most advanced in the transition in terms of reform. How- Jobs are thus the weakest link between growth ever, even in countries in which job creation was and shared prosperity in Europe and Central accelerating, the newly created jobs tended to Asia. Countries in the region have struggled to pro- benefit mainly only certain segments of the work- vide jobs for all workers even in a context of strong force, such as workers with relatively high educa- economic growth. Over the two decades of eco- tional attainment or workers in some locations.30 nomic transition, economic growth in most coun- The economic crisis heightened the challenge by weakening job creation and affecting youth and ig re 2. The ender aps in Labor Force less highly skilled workers disproportionally. Participation Rates Have Persisted Since the Transition, 99 The disconnect between job creation and Labor force participation (15+ years old), by sex, percent economic growth is also apparent within and Women Men across communities.31 Even in communities Georgia that reported doing better now than in the past, 80 starting a business or finding a job in the private or public sector had not necessarily become eas- 60 ier (figure 2.8). Less well off urban communities 40 were an especially challenging environment for finding private sector jobs. Evaluations of the ease 20 of starting a business show roughly the same pat- 0 tern. Equally telling is the fact that perceptions 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 about job prospects were not so different among respondents in communities that were prospering Kyrgyz Republic and communities that were not prospering. They 80 were fundamentally different, however, among 60 women. This suggests that the burden of jobless- 40 ness and poor prospects falls disproportionately on women in hard economic times. 20 0 Beyond poor access to employment, earnings 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 and productivity are low among many work- ers. Despite the high returns to education and the Macedonia, FYR rapid real wage growth in the region in the 2000s, 80 large segments of the population are in low-pro- 60 ductivity, low-earning jobs, often in the informal 40 sector. Depending on how informality is mea- sured, at least one-third of employment in most 20 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 30 Arias et al. (2014). 31 Source: Source: KILM (Key Indicators of the Labour Market) The analysis presented in this paragraph is based on the opin- (database), International Labour Organization, Geneva. ions of selected knowledgeable community members only. 64 ChaPTer 2 box 2.1 The age Divide: older workers The challenges faced by older workers in the sures for employment. For the time being, it’s labor market are salient. rather sloppy. mployment agency staff member, village, Workers are perceived to be too old well be- central Serbia fore retirement age. Many people draw the line at 40 years of age, reporting that it then Older workers face specific challenges. For becomes more difficult to find a job because older workers, the main barrier to finding em- of age. ployment is lack of physical strength or overall lack of good health (figure B2.1.1). This is espe- “In urban communities in particular, older men cially important among men, whereas among are often seen as highly unlikely to find work, women, family obligations and physical ap- because employers tend to look for young, pearance also appear to weigh heavily. Across healthy, strong workers,” said an employed communities, the various reasons older work- man in Bishkek, Kyrgyz Republic. ers face challenges differ slightly. In all types of communities, people also stress that older From 35 onwards, they immediately say you workers do not have the types of skills employ- are old... One medical nurse applied for a job ers require nowadays, especially knowledge of after 15 years of waiting at the bureau of em- foreign languages and computers. ployment. One girl who recently graduated also applied, and she got the job. They said they Representatives at local employment agen- needed young staff. cies confirm that, among the various age —Man, village in Bosnia and Herzegovina groups, older workers face by far the most challenges in searching for work. In 60 per- At the same time, respondents in some com- cent of the communities visited for this study, munities stress that older women do find jobs employment agency representatives stressed in the informal sector as nannies, seamstress- that youth (aged under 25) have a much better es, or cooks, for example. In many cases, rep- chance of finding work relative to older workers resentatives of employment agencies confirm (aged 50 and above). In the rest, the represen- that employers generally look for workers who tatives contend that opportunities are equal are below the age of 35. among these two groups, but this is partly be- cause many young workers migrate abroad in People up to 35 years of age have the biggest search of better job opportunities, a trend that is chances for employment, and they are the much less common among older workers. ones who are the most successful in finding jobs. Employers are looking to employ younger [Older workers] have worse prospects... All the persons because they are healthier and spend private companies and banks are looking for less time on sick leave compared with older young people. However, they do not fully un- workers. On the other hand, young people are derstand the benefits of hiring people with work easier to manipulate than older people. I think experience. that, in case of people above 50 years of age, —Employment agency representative, Bishkek, we should offer a bit more diversified mea- Kyrgyz Republic 65 Voices of europe and central asia: new insights on shared prosperity and Jobs It’s difficult for older people to find a job. Their most sought-after women workers. People education and years of work experience do not perceive that employers prefer young wom- matter. There are a lot of people with higher en workers because of their physical appear- education in this group, but age is the biggest ance and superior health, but also because obstacle when people apply for jobs. they are generally considered more motivat- mployment agency official, village in the ed than older women. For example, young Kakanj Municipality, Bosnia and Herzegovina women are less likely to negotiate high sala- ries and other benefits, because they do not The age divide is particularly stark among yet have children to support. women. It is generally perceived to affect women the most and to start posing restric- “An employer doesn’t want women with family tions among women earlier than among men. responsibilities,” said a community member in a relatively poor urban community in Serbia. “Thirty-five is a critical age limit,” stressed a “She’ll ask for sick leave and similar benefits.” In woman in Sveti Nikole, FYR Macedonia, “but, many communities, women with children are if I say to the employer that I want to have said to be more motivated to find work because children, then I’ll never get the job.” Overall, they often need the money, but many add that women in their late 20s are considered the such women often struggle to find jobs. ig re b2.1.1 Among Older Workers, Lack of Physical Strength, Weak Health, and Obsolete Skills Are the Most Important Constraints to Finding Work Response frequencies by focus group participants, highlighted by share A. Rural B. Urban PHYSICAL STRENGTH OBSOLETE SKILLS APPEARANCE DIFFICULT TO EXPLOIT OBSOLETE SKILLS DEPENDS ON TYPE OF WORK DISCOURAGED LEGISLATION HEALTH FAMILY OBLIGATIONS CLOSE TO RETIREMENT DIFFICULT TO EXPLOIT HEALTH MENTAL CAPACITY LESS PRODUCTIVE PHYSICAL STRENGTH Source: 86 focus group discussions with employed men and women. | Note: Keywords derived from responses by employed men and women to the question: “Why is it harder for older workers to find a job?” countries appears to be informal, that is, with no In the face of these challenges, migration is written contract, or in small firms. Informality is an important outlet for limited local oppor- disproportionately prevalent among older work- tunities, especially for men. Most respon- ers and workers in low-earning jobs.32 dents who discussed the value of migration in upward mobility depicted it as a second-best option after a more well-paying job or any job 32 Packard, Koettl, and Montenegro (2012). at all at home. 66 ChaPTer 2 ig re 2. The Link between ob Prospects and Economic Performance s omplex Share of knowledgeable community members reporting that it is easier to find a job now than 10 years ago, percent Ease of finding work for men and women in private sector / through starting own business / in public sector Percent reporting improvement, % 80 60 40 20 0 0 0 Men Women Men Women Men Women Private sector Starting a business Public sector Communities that are doing better than 10 years ago Communities that are doing worse than 10 years ago Source: Structured interviews with knowledgeable community member in each of 44 communities. | ote: One knowledgeable community member in each community was asked to evaluate the ease of finding a job. Respondents scored their answers on a range from 1 (very difficult) to 10 (very easy). “Migration means a high salary,” explained a man living standards on account of their land, entrepre- from the Kyrgyz Republic. “If we had had good neurship, and effort. salaries, we wouldn’t have gone anywhere.” In- —Working woman in rural Tajikistan deed, many describe migration as unavoidable given the difficult economic situation in their Migration is described by some as a tempo- home communities. rary solution, to build a more solid asset base for the family. Across countries, there are stories “Migration is occurring because people are tired of people working abroad for a few years and of their way of living, of stress, and they don’t then returning with a higher standard of living. have any other choice but to migrate,” said a Several participants acknowledge, however, that man in Kosovo. migration is not without difficulties and conse- quences (Box 2.2). The State doesn’t meet the needs of people, and that is the main reason people migrate. [The State “They come back and live on that money for two leadership] are thinking only about themselves, or three years,” said a man in FYR Macedonia. not the population. They don’t open more work- There are also stories of women and men return- places to employ the people. Even if they do, they ing from Western Europe or Russia with sufficient hire people they know. You are forced to go find a savings to start a business. job, while your children remain uneducated. —Jobless man in Ferizaj, Kosovo “She migrated, earned some money, returned, and opened a business,” said a Kyrgyz woman Extremely poor men and women go to Turkey to about a neighbor. work at seasonal jobs for three months. —Rural woman, Kobuleti Region, Georgia In nearly every household in our community, we have migrants. Without migration and the search Migration is not a good way. . . . Because of the low for work elsewhere, life would not be good. The standard of living and the lack of salary, we have wealth and health of our people today depend on to migrate. However, the people of our country are the remittances we get from our migrants. migrating less than before; the standard of living —Employed man, village in Qumsangir District, among our people is rising. People are raising their Tajikistan 67 Voices of europe and central asia: new insights on shared prosperity and Jobs box 2.2 The double face of migration Migration to pursue economic opportuni- rights abroad can take a toll on the psycholog- ties abroad is a common way for men (and ical well-being of labor migrants. to a lesser extent for women) to improve the welfare of their households. Across all com- Second, migration can negatively affect munities, people stress the role of migration family relationships. Stories of migrant men and remittances in promoting upward mobility keeping two families—one in Kyrgyz Republic, or preventing slides into poverty, especially at Tajikistan or Kazakhstan, and one abroad— times when getting a well-paid job is difficult are frequent, with a detrimental impact on at home. While being, first of all, a way to earn women left behind, who can no longer rely on higher income, migration is also often viewed the same level of economic and other kind of as an enriching experience that trains people support from their husbands. “Migration may in new skills and personal strength. be dangerous for married people” points a man in the Kyrgyz Republic, referring to the But labor migration also has some disrup- family tensions it can generate when spouses tive and negative impacts, which focus are apart. Women are reportedly more vulner- group participants do not fail to highlight. able to the consequences of such events, and This is particularly common in countries of thus to poverty. Central Asia, where people are vocal about the difficulties faced by both migrants in Rus- Lastly, the brain drain seems to worry a sig- sia and their families staying behind. nificant share of people. They highlight that many migrants do not return to their country First, some talk about how tough living and of origin, but remain abroad, where they end working conditions can be. An unemployed up building a new life and stop sending mon- man from the Kyrgyz Republic reports that “my ey home. According to a Tajik woman, voicing wife was working abroad for two years, recently the concern of many others, “some of them she returned home, she had lost ten kilograms. gained knowledge there and became good She said how hard it was to earn money. Now specialists and stayed. It’s a major problem she is working as a caregiver, it is a better job when going to Russia.” The consequences for her. But many migrants aren’t able to stand are viewed as negative both at the household it – we are kind of slaves there, treated like an- level, with a reduced stream of financial sup- imals.” In addition, there are widespread views port as time passes, and for the country as a that discrimination and violation of workers’ whole, as it loses its human capital. Poor labor market prospects are a job revolve around financial and nonfinancial even more glaring when contrasted security and stability. Regularity in employment, with people’s high, often unrealistic, security in supplying one’s basic needs, and the expectations ability to provide for one’s family are good exam- ples of such elements. Employment in a public In the region, people believe a job is one that institution is also considered an element. This is provides a regular source of income (figure 2.9). a legacy of pre-transition times, when the state Most of the elements people view as central to was the main source of employment. 68 ChaPTer 2 People looking for work are interested in jobs more important among jobless men than among that are well paid and stable. Men and women jobless women. in rural and urban areas cite income as the most important attribute they look for in a job (figures When I go to an automated teller machine, I’m 2.10 and 2.11). Good working conditions—reg- disappointed by the amount I have. I sometimes ular hours or the ability to work at home from have to force myself to go to work. I can’t afford time to time—is the second most critical attri- anything for my children or for myself. That means bute people look for in a job. A factor considered a good wage is important. highly important is adherence to an eight-hour —Employed woman, urban Serbia work day. Respondents also often stress the sig- nificance of a regular wage. Especially in the in- “The contract should state all my rights and re- formal sector, many experience situations where sponsibilities,” said a jobless woman in a village they are promised a salary, but do not receive near Batumi, Georgia, “and, so I don’t end up in a one. A long-term contract seems to be relatively bad situation, only if I like them will I sign it.” ig re 2. The Standard of a ob s Set High Definitions of employment reported in focus group discussions, highlighted by share . mong people in employment . mong people out of employment INCOME FROM PUBLIC OR PRIVATE SECTOR OR OWN BUSINESS WORK IN PUBLIC INSTITUTIONS ABLE TO PROVIDE FOR FAMILY HAS MONEY PERMANENT JOB SALARY FORMAL WORK AGRICULTURAL WORK SALARY CAN PLAN HIS FUTURE CONTRACT MAKES A PROFIT STABLE SITUATION SOCIAL SECURITY JOB WITH PERSPECTIVE REGULAR WORKING HOURS INCLUDING SELF EMPLOYMENT OPPORTUNITY FOR CAREER DEVELOPMENT FINANCIAL INDEPENDENCE GOOD INCOME ABLE TO SEND CHILDREN TO SCHOOL HEALTH SECURITY INCLUDING SELF-EMPLOYMENT NO AGRICULTURAL WORK LONG-TERM-JOB WANT TO BE LIKE THEM LONG-TERM CONTRACT STABILITY ABLE TO GET A LOAN CAN PLAN HIS FUTURE PERMANENT JOB SOCIAL BENEFITS INDEPENDENCE REGULAR WORKING HOURS HAVING SOMETHING HAS A FULL TIME JOB FORMAL JOB PERMANENT EMPLOYMENT SOCIAL BENEFITS PRIVILEGE TEMPORARY WORK ABLE TO GET A LOAN HAVING SOMETHING TO HOPE FOR PERSONNEL OF A KINDERGARTEN EASIER LIFE LIVING WAGE NOT HOUSEWORK STABLE JOB FINANCIAL SECURITY NOT TEMPORARY WORK PROTECTION BY LAW SECOND WORK REGULAR JOB INSURANCE MONTHLY SALARY NORMAL PERSON GOOD JOB TEMPORARY JOB NOT DEPENDENT ON SOCIAL WELFARE ALL WOMEN ARE WORKING INSURANCE MILITARY MEN NO STRESS OLD AGE PENSION PRIVATE OR PUBLIC SECTOR HOUSEWORK ANY JOB ABLE TO PAY THE BILLS HAS A JOB NO FINANCIAL PROBLEMS BENEFITS STATUS OWN BUSINESS INDEPENDENT REGULAR JOB SAFETY CONFIDENCE OPPORTUNITY FOR PROGRESS HAVING A NORMAL LIFE PERMANENT SALARY ABLE TO PROVIDE FOR FAMILY HAPPINESS FULL TIME JOB LOW INCOME NOT REGISTERED UNEMPLOYED GOOD JOB HAS A JOB SECURITY STABLE COMPANY PAID INSURANCE SUCCESS INCOME MIDDLE CLASS HAPPINESS INFORMAL WORK CONFIDENCE AGRICULTURAL WORK STEADY JOB SECOND WORK PAID JOB SURVIVAL STABLE JOB BENEFITS HAS VACATION SEASONAL JOB BETTER FAMILY RELATIONS CAN PLAN TO HAVE CHILDREN PAYMENT IN KIND OLD AGE PENSION SOCIAL SECURITY SOCIAL INSURANCE CAN GET OUT OF POVERTY JOB IN HIS SPECIALTY HAS A JOB HOUSE APARTMENT MONEY DOES NOT GET FIRED IF ILL ABLE TO PAY THE BILLS PERMANENT CONTRACT PARTY MEMBER SECURE IN BASIC NEEDS AT LEAST MINIMAL INCOME VALUES HIS JOB OCCASIONAL WORK SECURITY CONTRACT WORK IN OWN SPECIALTY NORMAL PERSON WHO STRIVES TO BE BETTER HAS MONEY INCLUDING INFORMAL WORK FINANCIAL SECURITY DESIRE TO WORK NOT ALWAYS INSURANCE HEALTH INSURANCE EMPLOYMENT RECORD DOES NOT HAVE DEBTS WORK EXPERIENCE HAVING SOME INCOME NO PROBLEMS WITH FOOD AND CLOTHES HAVING SOMETHING TO HOPE FOR WORK IN PUBLIC INSTITUTIONS HEALTH INSURANCE WORK BY DIPLOMA STABLE EMPLOYMENT SECURE IN BASIC NEEDS INCLUDING SELF-EMPLOYMENT WORK IN PRIVATE INSTITUTIONS BETTER WELL BEING NOT WORKING ON THE BLOCK MARKET TRIES TO IMPROVE FINANCIAL SITUATION REGULAR INCOME SUPPORT FROM FAMILY AND FRIENDS EMPLOYMENT RECORD OLD AGE PENSIONS REGULAR INCOME Source: 172 focus group discussions with adult women and men. | ote: Keywords derived from responses to the question: "What does it meant around here if someone says they are employed?" 69 Voices of europe and central asia: new insights on shared prosperity and Jobs ig re 2.1 People re Looking for ood Pay and Stability in a ob Response frequencies among jobless men and women, highlighted by share . Women . Men GOOD-BENEFITS JOB SATISFACTION JOB SATISFACTION GOOD-INCOME TRUSTWORTHY-EMPLOYER TRANSPORTATION MATCH-WITH-FIELD-OF-TRAINING HEALTHY-SAFE-CONDITIONS STABLE-WORK-SCHEDULE CLOSE TO HOME PUBLIC SECTOR GOOD-CONDITIONS STATUS EASY-JOB GOOD-ATMOSPHERE PAY-FOR-OVERTIME WORTHY-CAUSE NOT-PHYSICALLY-DEMANDING STATE-OWNED-COMPANY LOCATION INTERESTING REGULAR-JOB ANY-JOB CONTRACT ACCESS-TO-LAND PROMOTION STABLE-JOB TEMPORARY FORMAL-JOB INSURANCE GOOD-WORKPLACE PART-TIME NO-HARASSMENT ANY-JOB WITH-CONTRACT PAY-FOR-OVERTIME STABILITY WORTHY-CAUSE PROMOTION GOOD-CONDITIONS BONUSES PERMANENT-CONTRACT TRANSPORTATION PROTECTION-OF-RIGHTS FULL-TIME PART-TIME STATUS INSURANCE ENOUGH-FAIR-WAGES WITH-CONTRACT VALUABLE-EXPERIENCE CONTRACT ACCOMMODATION EASY-JOB NO-DISCRIMINATION PENSION GOOD-BENEFITS GOOD-INCOME GOOD-ATMOSPHERE GOOD-WORK-ENVIRONMENT PENSION LONG-TERM-CONTRACT REGULAR-WAGE FORMAL-JOB HEALTHY-SAFE-CONDITIONS REGULAR-WAGE CLOSE-TO-HOME MATCH-WITH-FIELD-OF-TRAINING ENOUGH-FAIR-WAGE LONG-TERM-CONTRACT Source: 86 focus group discussions with jobless men and women. | ote: Keywords derived from responses to the question: “If you were looking for work today, what characteristics of a job would be most important to you?” Good conditions include regular hours, the ability to work at home occasionally, or complimentary lunch. Good benefits include holidays, paternal or maternal leave, and sick leave. ig re 2.11 People re Looking for ood Pay and Stability in a ob Focus group respondents who selected a characteristics among the top two, percent If you were looking for work today, what characteristics of a job would be most important to you? 60% Share of respondents, % 50% 40% 30% 20% 10% 0% Men (755 respondents) Women (771 respondents) Source: 172 Focus group discussions with adult men and women. 70 ChaPTer 2 “A job is good if you have a contract,” said anoth- fall too, but they are still more secure than other er woman in the same village. “A contract guar- jobs.” antees that you will not suddenly end up unem- ployed.” “Public jobs are considered good jobs here be- cause they are stable and there is more chance “To have a good job, you have to work in your of promotion,” explained a woman in a Georgian profession,” responded a man in a village near village. Pristina, Kosovo. “Then, you have to have a good income, a permanent contract, or long-term sta- However, these definitions and aspirations bility, and you have a job that is safe in terms of about jobs leave out more ‘irregular’ forms of health.” employment that are, in fact, becoming com- mon in many countries. Traditional definitions This desire for stability helps explain the of employment used in household surveys in- strong preference for public sector jobs. clude a broad range of jobs that go well beyond Mostly, respondents believe public sector jobs the formal, stable jobs that most people in ECA are the best at guaranteeing a regular salary. think of when defining what a job is. These include Overall, 80 percent of the respondents preferred unpaid work, informal sector work, jobs on irreg- a public sector job over a private sector job. ular schedules, and part-time work. For example, The reasons largely correspond to the factors being a wage worker in agriculture or construc- listed as important for a good job (figure 2.12). tion—two very common forms of work— are often Although some respondents preferred to work not considered an actual job (figure 2.13). in the private sector, where, they believed, the wages would be higher, promotion would be This partly reflects an overall preference for easier, and their skills would be appreciated, formal over informal work. Over 95 percent of most attached more value to the security and the focus group participants indicated they would stability of public sector jobs. prefer formal sector employment to an informal one if it were available. Although many also stress “A secure job?: all family members employed in that the pay of informal work is better, this is fre- the public sector,” agreed a group of men in FYR quently followed by statements on the downside Macedonia. “If the government falls, they will of not receiving pensions and health insurance. ig re 2.12 Public Sector obs re Preferred ecause of the reater Security and Stability Response frequencies on the main advantages of public sector jobs, highlighted by share ANNUAL LEAVE SECURITY YOU HAVE A VOICE PERMANENT SALARY INSURANCE LESS STRESSFUL REGULAR WAGES PENSION SEVERANCE PAY BETTER WAGES SICK LEAVE MORE FREE TIME WEEKENDS OFF SAFETY CONTRACT PROTECTION NETWORK NO HARASSMENT STABLE WAGE STABILITY STABLE BETTER WORKING HOURS BENEFITS GOOD SALARY LOWER RISK OF GETTING FIRED Source: 172 focus group discussions with adult men and women. | ote: People were asked "Is it preferable to work in a job in the public sector or the private sector? Why?". Response frequencies showed here are based on explanations provided in answering this question. 71 Voices of europe and central asia: new insights on shared prosperity and Jobs ig re 2.13 Many ommon obs re ot onsidered ctual obs in the egion Subjective definitions of types of work as employment, share of focus group participants 90 78 76 Percent defining this type of work as 80 73 70 64 60 'Employment', % 47 50 40 30 20 10 0 Agriculture own land Selling home grown/ Family business Farming other's land Construction jobs when and o season made goods unpaid and o season available Source: 172 focus group discussions with adult men and women. | ote: People were asked the following questions: “We would like to get your views on some scenarios about types of employment. Would you categorize someone in this situation as employed or unemployed: someone works full time in agriculture on their own land, at least three months a year and they do occasional jobs when available during the rest of the year? Someone works full time in farming or with livestock on other people’s land when the weather permits, and in occasional jobs the rest of the year? Someone works regularly for a small family business but does not get paid? Someone sells items at a local market that they make in their house or grow on their own land? Someone works in construction when jobs are available?” “You take an informal job only because you have “They pick blueberries or mushrooms,” ex- no choice,” said an employed woman in a village plained another. Respondents told stories about near Shymkent, Kazakhstan. poor, ‘unemployed’ men who washed cars or worked at construction for a day’s wages and The conversation is particularly telling in focus about poor ‘unemployed’ women who cleaned groups in a village in central Serbia. “In the for- houses. Georgians in urban areas described peo- mal sector, everything is done according to the ple who sold the limited produce of their gardens law,” said an employed man. “You have pension or peddled their old jewelry on the streets. Many contributions and social security.” respondents talked about running up bills at lo- cal shops until they could find a job or until after “Most people would accept a smaller wage if it the harvest. is secure and regular,” stressed a jobless man in the same community. “That’s the most import- In urban areas, in addition to a good salary ant thing.” and stability, opportunities for career devel- opment were considered important. In urban “[Informality] is a necessary evil,” another em- areas, respondents said it was important that a ployed man argues. “It’s bad for everyone, for job offers opportunities for training or promo- the government and for the person working. The tion, a discussion that was absent in rural areas. only positive is that you have a job.” Women were more specific than men about In fact, informal jobs are seen as a coping their preferences in looking for work. The pref- mechanism for when formal, stable jobs are erences included a fixed contract, annual leave, not available. paid benefits and insurance, or, simply, a job one likes, a job that is interesting, or a job involving “They collect coal; go to the woods, cut wood, responsibilities. Women also attach more impor- and sell it, and that’s how they survive,” said a tance than men to a good atmosphere, including respondent in Bosnia and Herzegovina. building up social networks in the workplace. 72 ChaPTer 2 These high expectations –of stable, formal, people back from wage work and entrepre- high-paying and satisfying jobs– clash with a neurship in the region. Besides the creation of reality of slow job creation, and high unem- more jobs, men and women respondents said ployment and informality. This mismatch can the four most critical factors that would improve be frustrating. their chances to access productive employment are: (i) better education and skills; (ii) improved “People aren’t looking for work anymore because social and professional networks, and informa- they’ve already made several attempts, but failed, tion; (iii) social norms more conducive to wom- and they don’t want to try again,” said a man in en’s access to economic opportunities, captured Shymkent, Kazakhstan. “After the first rejection, in mentions of the importance of daycare and they don’t want to search for a new job.” family support; and (iv) stronger incentives to work and run a business related to flexible work I haven’t applied for a job in the last two years be- arrangements and lower taxes (figure 2.14). cause I was pregnant with my son and had compli- Some of the underlying barriers behind these cations during the pregnancy. But, for 10 years, I factors —especially those related to networks applied regularly without any success. Maybe now and social norms—appear to affect women more they know my documents by heart, and they don’t severely than men. even check them anymore; they just throw them right away. . . . [I applied] not only at schools, but Inadequate skills are recognized as a key also at ministries and day-care centers and a lot barrier to employment of other places. I only haven’t applied for a job as a cleaning woman yet. What can you say about Obtaining at least a secondary-school edu- me: that I don’t want to work or that they won’t cation can help improve labor market pros- hire me? Maybe it’s because they hire relatives and pects. Quantitative evidence shows that labor don’t consider other applications at all. market outcomes improve with educational at- —Jobless woman, village near Pristina, Kosovo tainment (World Bank 2015b). This is consistent with the qualitative evidence collected for this I can’t find a job to earn money. Private sector em- report. Men and women listed education as one ployers require at least a bachelor’s degree, which I of the top four factors that would help improve don’t have, and I’m not even talking about govern- people’s chances of finding work. Respondents ment jobs... In the weekly newspaper Reklama [ad- also often mentioned that having at least a sec- vertisement], I can’t find a suitable job; most want ondary-school education, but preferably more, people under age 35. About four months ago, I was signals to employers that the individual is mo- trying to get work at the Korvon market, but the busi- tivated and diligent. Lack of education was con- nessman turned me away because I don’t have ex- sidered to play a role in explaining poor employ- perience as a salesman. He told me I’d bankrupt him. ment prospects among marginalized groups, —Jobless woman, Dushanbe, Tajikistan such as Roma. The value of education and skills is evident What keeps people out of jobs in in parental investments in education. Parents generally stressed that they do everything they the region? can to ensure their children obtain a good edu- cation. Many expressed hope that the degrees Barriers related to inadequate education and their children obtain will pay off some day. Some skills, lack of networks and connections, so- argued that, although there are not many job va- cial norms, and poor incentives to work hold cancies in the local community, a university ed- 73 Voices of europe and central asia: new insights on shared prosperity and Jobs ig re 2.1 ob reation s rucial, but People Face Many arriers to ccess Economic Opportunities Factors considered as the main aid in accessing productive job opportunities, by sex, percent of respondents who selected a factor among the top two. Factors for Women 50 Share of respondents, % 40 30 20 10 0 Urban (876 respondents) Rural (643 respondents) 50 Factors for Men Share of respondents, % 40 30 20 10 0 Urban (876 respondents) Rural (643 respondents) Source: Data from 172 focus group discussions with adults. ucation is useful if the individual migrates within education. It is often argued in many communi- the country or beyond. Many observed that em- ties that a prospective worker with a vocational ployers prefer to hire university graduates even background will find a job more easily than a if the jobs they offer do not require the expertise colleague with a university degree. Employment gained in university. agency managers often declare that the most difficult to employ are individuals with low edu- “Everyone tries to provide higher education to cational attainment and individuals with generic their children so that they have more prospects educational degrees or degrees in fields in which for employment,” said an employed man in a vil- few jobs are available in the local community. lage in Georgia. “Nowadays, finding a job is still hard for people with degrees, but we hope the Obtaining a degree is challenging for many situation will change.” because of financial and nonfinancial bar- riers. For many, university is too expensive, es- Even among those with education, much pecially given that it takes four or five years to depends on their specific degrees or type of obtain a university degree, compared with the 74 ChaPTer 2 two years required in many vocational programs. to become valuable employees. Those who do This is partly caused by university tuition fees and possess valuable skills often emigrate. By con- partly by additional costs such as transportation trast, employers said less highly skilled workers and housing. Many focus group participants ac- are easy to find. knowledged that corruption also takes a toll: certificates can sometimes be bought by paying It’s easy to find [workers], but it’s hard to find work- a bribe. Some people are also discouraged from ers who meet all the criteria we need. People, in- completing university programs because of the cluding youth and older individuals, are still living low number of local places available and the per- in the past... Back then, you could work, but didn’t sistent influence of nepotism in the labor market. have to. How do these people behave? They’re not complying with established procedures. In addition, there are concerns related to —Employer, Belgrade, Serbia quality: many stress that local universities do not offer good-quality education and that it is Given the limited supply of jobs in many loca- much more useful to study abroad. Employers tions outside main urban areas, employers and argued that standard school curricula may not workers stressed the importance of strengthen- optimally equip workers with the skills that are ing business courses in curricula to foster entre- in demand and may not prepare individuals for preneurship. a proactive job search, including initial network- ing opportunities. Although vocational degrees Most respondents believed there was no over- are generally cheaper and do not take as long all distinction between men and women in to complete as university degrees, the types of skill proficiency. However, women were gen- jobs available to recent graduates of vocational erally considered better at language and com- programs are often less attractive among youth, munication skills and other soft skills such as even if the associated job security is greater. As teamwork, while men were thought to have an with university degrees, some are discouraged advantage in skills requiring physical strength from attending vocational schools because of such as construction. Respondents also stressed the shortage of places or poor program quality. the importance of factors outside education, but related to human capital, such as good health. Technical and soft skills are important in find- ing employment (figure 2.15). Among technical Lack of networks and connections skills, expertise in computers and knowledge of impede access to jobs foreign languages are viewed as areas of high demand. Vocational skills are also important if The role of connections, affiliation to po- workers are specialized in a sought-after trade or litical parties, and strong networks in gen- sector. Soft skills are considered critical, includ- erating opportunities for upward mobility ing communication skills, networking skills, a through jobs is key. Examples abound across sense of responsibility, a good work ethic, strong countries and shed light on how networks and motivation, precision, and discipline. connections influence the ability of people to obtain a job or increase physical or human cap- Local employers confirm that the most chal- ital. Although connections and networks can be lenging aspect of hiring good workers is their positive for accessing economic opportunities, lack of skills, motivation and experience. Many particularly in the presence of market failures, local employers emphasized that vast numbers inequalities in access to those channels fuel dis- of individuals are looking for work, but few have content. These views are especially widespread the required skills and are sufficiently motivated in urban areas and in the Western Balkans, where 75 Voices of europe and central asia: new insights on shared prosperity and Jobs ig re 2.1 Technical and Soft Skills re Especially alued by Employers Response frequencies among focus group participants, highlighted by share COMPUTER-SKILLS FOREIGN-LANGUAGES TECHNICAL-COMPETENCE AUTO-MECHANIC GENERAL-KNOWLEDGE HARD-WORKING VOCATIONAL-SKILLS AMBITION PROPER-BEHAVIOR PERSISTENCE SOCIABILITY INTERPERSONAL-SKILLS INDEPENDENCE PROFESSIONALISM LITERACY PUNCTUALITY PLUMBER BAKER LIABILITY CONSCIENTIOUSNESS EFFICIENCY ADROITNESS MANAGERIAL-SKILLS COMPETENCE AGRONOMIST QUALIFICATIONS ZEALOUSNESS DILIGENCE MOTIVATION WELDER ELECTRICIAN BEHAVIORAL-SKILLS TRAINING CRAFTS TOLERANCE TRACTOR-DRIVER HONESTY FLEXIBILITY TEACHER RECOMMENDATIONS LEARNING-ABILITY SELF-DEVELOPMENT TURNER CONSTRUCTOR LEADERSHIP-SKILLS EFFECTIVENESS STRONG-PERSONALITY ETHICS TEAM-WORK HAIRDRESSER ADAPTIVENESS COSMETICIAN PRESENTATION-SKILLS DETAIL-ORIENTED ASPIRATION SEAMSTRESS EXPERIENCE RESPONSIBILITY INVENTIVENESS DRIVER’S-LICENSE INDEPENDENT-LEARNING PURPOSEFULNESS PHYSICAL-STRENGTH NETWORKING DEMAND-FOR-UNQUALIFIED-WORKFORCE EDUCATION COMMUNICATION-SKILLS Source: 86 focus groups with employed adult men and women. | ote: Keywords derived from responses by employed men and women to the question: “What kinds of skills do workers most need to get a job these days?” The results among men and women out of work presented a similar pattern. unemployment rates are high. Connections mat- “Ten years ago, employers paid attention to ter not only for accessing jobs, but also to get knowledge, diplomas, and experience,” explained well-paying jobs (figure 2.16). a knowledgeable community member of a village near Jalal-Abad, Kyrgyz Republic. “Now, one can “More ties, more work,” said a man in Kosovo. get a job by pulling strings or paying money.” “Jobs, that’s what you need connections for,” “If you don’t have connections you simply won’t said a man in FYR Macedonia. be hired,” confirmed a woman focus group par- ticipant in Ferizaj, Kosovo. “The alternative is to “Nowadays, it’s very difficult to find a job without give a bribe to someone.” connections, whether through a political party or family ties,” said an Albanian woman in FYR “For sure, they specify the age in job vacancies,” Macedonia. “Someone has to recommend you.” said an employed woman in a village near Pris- tina, Kosovo. “Also, English is a priority, but, if “You can’t apply if you don’t have connections or you know the right people, then they won’t relatives,” said a jobless woman in a village near bother asking you about your age or your En- Vushtrri, Kosovo. glish or anything else.” And another one added 76 ChaPTer 2 ig re 2.1 onnections and etworks re ey eterminants for ccessing Well-Paying obs Response frequencies among focus group participants, highlighted by share . rban areas . ural areas PARTY-MEMBERSHIP AGE EXPERIENCE EXPERIENCE POLITICS KNOWLEDGE DIPLOMA WORK-ETHIC CONNECTIONS FOREIGN-LANGUAGE CREATIVITY KNOWLEDGE EXPERTISE EXPERTISE HEALTH TOO-COSTLY SOCIAL-NORMS FAMILY-TIES TRAINING FOREIGN-LANGUAGE CORRUPTION PROBATION PROFESSIONALISM FEW-JOBS GENDER MARRIAGE QUALIFICATIONS CHILDREN CAPABILITIES PARTY-MEMBERSHIP SKILLS TRAINING SKILLS FEW-JOBS GENDER PRESTIGE FAMILY-TIES PROFESSIONALISM EDUCATION CORRUPTION COMPETITION EDUCATION Source: : 86 focus groups with employed adult men and women. | ote: Keywords derived from responses by employed men and women to the question: “What kinds of barriers do workers face in hiring or promotion for mid-level and upper-management positions?” Experience refers to responses indicating that a lack of work experience poses a challenge. Connections refers to responses indicating a lack of connec- tions is a barrier. “The first requirement is membership in a polit- “Anywhere you go, connections matter, at a med- ical party”. ical school or a kindergarten,” said a man in Ka- zakhstan. “Workers don’t have opportunities for promotion in the private sector because these are family “You need connections even to get into the hos- businesses, and the management positions are pital,” said a man in the Kyrgyz Republic. for family members,” said an employed woman in Debar, FYR Macedonia. Connections and social networks are not only about a shortcut to jobs, but also a In some communities, a sense of frustration is source of information for making informed aggravated by the perception that job vacan- decisions on education and the labor mar- cies are fake, that is, the jobs that are advertised ket. In many communities, respondents said have already been filled based on the connec- the greater availability of accurate informa- tions of the employers and bribes. tion was important in accessing better oppor- tunities, especially among women (see figure “Society has been formed in the way that you 2.13). Many declared that, if they could be- can’t breathe without a connection. It doesn’t come more well informed about job opportu- matter which school you went to. If you don’t nities, women would be more likely to pursue have a connection, it’s the same as if you didn’t professional careers. finish school at all... You must be a member of a political party to get a job. Some individuals “Here, a big problem is that women are not so get in to universities overnight through the help well informed as in Niš, for example,” said an of their relations, and they get a job because of employed woman in Serbia. “They came here political parties,” said a man in Bosnia and Her- and organized seminars and gave advice on how zegovina. women should come together as in [a nearby 77 Voices of europe and central asia: new insights on shared prosperity and Jobs “If a woman starts working, her household chores “They only way to get infor- won’t get done. If she works from morning till night, her house will be deserted. Her husband, mation about job vacancies is for example, will come home tired from the field. through people you know.” If she’s still working at a shop, there won’t be any food on the table. Imagine what that would be —Woman in rural Georgia like,” similarly expressed an employed man in a village in Kazakhstan. town] and make goods for the German market: “It’s a small town,” explained a jobless woman that was very useful.” in Debar, FYR Macedonia. “Sometimes, even if a woman has ideas, the social norms prevailing in “The only way to get information about job va- the community will cause her to give up her ideas.” cancies is through people you know,” said a woman in rural Georgia. Through work, anything can be accomplished, but, if people don’t have work or can’t find jobs, Social norms keep many women out of then it is difficult [to move up]... On the other hand, productive jobs outside the home for women, it is difficult because of the social norms, the mentality of society, and the gossips. Gender norms also mediate access to jobs —Woman, village near Tetovo, FYR Macedonia and thus mobility, especially for women. Many women referred to the need to redefine I have experienced this [mentality]... [I received a roles in the household so they are able to at- job offer:] the job was in Gayrettepe; there were a tempt to search for and find jobs, or get better lot of perks, too. I came home, and [my husband jobs. In extreme cases, women equate family and children] started saying, “you are going to support with any permission their husbands wake up in the morning at 6–7, come back at 12,” may give them to work. Alas, men in more tra- and so on. Then, I thought I would start my own ditional communities often still refuse to allow business. Why not? “You cannot manage,” [my their wives to work. family said.] My kids, on one side (I have three sons: 28, 25, and 16 years old), were against my idea “If I want to work, it’s necessary to have my hus- altogether. My husband was in the same mood, band’s support,” said a Kyrgyz woman who was dis- too. On the one hand, I was so excited about it... cussing the limited opportunities available to her I thought, I can cook dishes, manti [dumplings], and her peers to contribute to the upward mobility and so on. The idea was so exciting. But they dis- of their families. couraged me. Without their support . . . I became so discouraged; would I be able to do it? “The main factor is pregnancy, children, and —Woman, central Istanbul, Turkey stuff like that... When a child is small and needs care, a minimum of one or two years is required. In some cases, women stressed that they actu- That’s why a certain percentage of women are ally preferred to be housewives, but, more fre- left out of the labor force. On the other hand, quently, both men and women stated this was some men are against their women working. simply the norm in society. Especially in com- Even if he only earns enough to buy bread and munities beyond major urban areas, families see water, he will say, stay at home because I must a trade-off between women working but earning earn the money,” said a man in Bishkek, Kyrgyz a low salary and the threats to traditional norms Republic. and values that would come with the woman 78 ChaPTer 2 working outside the home. As a result, many men to continue their schooling as long as men and still see employment, including entrepreneurship, that women should only pursue certain subjects, as only a last resort for women (box 2.3). such as teaching. Such norms also affect the resources avail- The good news is that, in many communities, able to women for productive activities, such norms are beginning to change. as start-up capital for a business, access to training, and other forms of support in their “We’re no longer facing the stereotypes of the communities. Likewise, the traditions related to past,” declared an employment agency repre- inheritance are often biased in favor of men, and sentative in an ethnically Macedonian communi- women are sometimes not allowed to inherit. It ty in Skopje, FYR Macedonia. “We now have men is often stressed that women are not expected who are working in the textile industry as tailors.” box 2.3 Gender and the impact of Social Norms on entrepreneurship Men engage in entrepreneurship more of- but the names of their husbands are on the ten because social norms dictate that this is documents.” not an appropriate activity for women. When asked why entrepreneurship is much Social norms discourage entrepreneurship less common among women, many men and among women in both more well off and women emphasized the views of their com- less well off communities. In some commu- munities that women are not fit to run a busi- nities, respondents stressed that, though there ness. Some also stressed that women are were jobs available for women, many women more risk averse than men and that they are were either accustomed not to have to work not tough enough. if their husbands could work, or faced great pressure not to work from their husbands or “Only if she is really out of options, if her hus- families. Even if husbands supported their band is deceased or something like that,” an- wives in the desire to work, the rest of the com- swered an employed man in a suburb of Is- munity may not have done so. tanbul when asked why few women start their own businesses. “Women who are smarter than men may be insecure about starting a business, and they “You can’t open a business if you have a hus- don’t have the support of the local society,” band, two children, and so many household said a man in a suburb of Vitez, Bosnia and duties,” said an employed woman in a suburb Herzegovina. of Foča, Bosnia and Herzegovina. “It won’t work, at least not here.” “Society actively discusses women,” said a woman respondent in a village near Ghafurov, “It is mostly the mentality of society,” said an Tajikistan. “[People] pay attention to every- employed man in a village near Pristina, Koso- thing [women do], and especially neighbors vo. “There are cases of women leading firms, intervene in the affairs of other families.” 79 Voices of europe and central asia: new insights on shared prosperity and Jobs “I think, in the past 10 years, more women have Approximately 90 percent of business deals are started to run businesses, which is totally okay settled in restaurants or bars. Those aren’t suit- because they deserve it,” stated a man in rural able places for women, especially not in this kind Kosovo. of environment. You’d be labeled immediately, that you’re not a good housewife, that you’re this “Our tradition is that larger enterprises and more or that, that you should stay at home and not be production offer more opportunities for men. out at bars. Trends are changing. Computers and new tech- —Woman in urban FYR Macedonia nologies are included in production and in all other sectors. So, most jobs aren’t so physically Despite progress, traditional social norms are demanding, and women can do them as well,” slow-changing. expressed an employment agency representa- tive from a village in central Serbia. “Much more time must pass so that women can progress,” said a woman in an ethnic Albanian “Regardless of their circumstances, women community in Debar, FYR Macedonia. “There weren’t free in exercising their rights 10 years must be awareness raising on business possibili- ago. But, nowadays, we have more openness, ties among women.” and secondary school is mandatory, which has influenced the education of women, but also “If a woman goes to the rayon [district] center on men,” said an employed woman in a village near business and comes back late at night, it will be Tetovo, FYR Macedonia. hard for her to explain to her husband that she was on a business trip,” said a woman in a village Even when women work, they face a labor near Shymkent, Kazakhstan. “And men go on market that does not see them fit for certain business trips.” occupations. Across both well off and less well- off communities, respondents highlighted that In fact, social norms that still dictate that opportunities to find employment may be equal women are the main household and family among men and women in aggregate, but that caretaker, make it hard for women to com- there was a sectoral and occupational divide. Men bine family and work outside her home. were preferred by employers for physically de- Beyond overcoming social norms ingrained manding work, while women were popular in ac- in families and communities, from the per- tivities such as tailoring and housekeeping and in spective of employers, it often becomes un- services generally. These patterns also affect wag- attractive to hire women with young children es, and traditional gender norms, although seen because they may request time off much more as less important than a decade ago, still exert an often than men. The discussions made clear, in effect beyond occupational segmentation. fact, that, in the informal sector, women during their childbearing years are extremely vulner- Men earn a little more. That’s what I hear from able to losing their jobs or being obliged to people when they come here. Men can do harder accept a pay cut upon becoming pregnant or physical jobs, which are paid better. Therefore, the giving birth. type of job affects the wages. If a man and a wom- an are employed in the same position at a super- “There are lots of cases of women who used market, the man will have additional responsibili- to work getting married, and, if she decides to ties. He’ll have to carry more and load and unload have a child, nobody will keep her job for her,” goods, and he’ll be financially rewarded for that.” said a Georgian woman. “She’s doomed to lose —Employment agency manager, urban Serbia her job.” 80 ChaPTer 2 In this context, a lack of affordable, high-qual- “Preschool is too expensive. ity childcare and day-care facilities and fami- ly support are important barriers to obtaining My wife would give her wages jobs, especially among young women (see fig- to the preschool; so, it’s not ure 2.14). Fifteen percent of women respondents worth it for her to work. That’s cited better day-care options as the key measure that would help them access jobs; a similar share why women sit at home and mentioned greater family support as their main take care of the children.” need. Many respondents said preschool and day- care facilities did not even exist in the local envi- —Employed man in urban Bosnia ronment, obliging women with small children to and Herzegovina stay home. I have a small child: my wife doesn’t work. Why? Preschool is too expensive. She would give her Women [with jobs] work outside till 7–8 pm, then wages to the preschool; so, it’s not worth it for her come home, tend to the children, clean, cook, and to work. That’s why women sit at home and take so on. At least, [the husband could] help around care of the children. the table, at least remove your own plate for God’s —Employed man, urban Bosnia and Herzegovina sake. No, some don’t even do that. Are we the women not also human beings? “The salary would have to be greater than the in- —Employed woman, central Istanbul, Turkey come from the farm,” said a woman focus group participant in a village near Telavi, Georgia. “It Working conditions are hard. Work hours in the should be worthwhile for women to leave their private sector are long, up to 12–14 hours. She homes to work, but, because salaries are so would not be able to do her housework because small, women do not look for jobs.” she gets home so late. —Employed man, Mardin, Turkey “Why would women go to work?: the wages are from KM 400 to KM 500–KM 600 [€200–€300],” There are fewer jobs available for women. My hus- said a woman in a suburb of Sarajevo, Bosnia band is an engineer, and his company employs and Herzegovina. “It’s not worth it to work if you mainly young men. It is risky to employ a young have a child and need to pay a woman to take woman because women must take care of chil- care of the child.” dren, and, if the children become sick, the women won’t be able to come to work. “The children are a problem because we don’t —Employed woman, village in central Serbia have anywhere to send them, and it would be wrong to send them to another town or village,” “They have duties given by nature, which include said a woman in a village near Tetovo, FYR Mace- giving birth and bringing up the children,” said donia. “On the other hand, men as fathers do not an employed man in Osh, Kyrgyz Republic. “And care so much about the accommodations of chil- they’re also physically weaker.” dren.” “Women have worse prospects because mental- A clear divide emerges between urban and ity, family, and children prevent them from being rural environments in the availability and ac- hired,” explained an employment agency man- cessibility of childcare. In urban environments, ager in a village near Jalal-Abad, Kyrgyz Republic. childcare centers rarely have sufficient space to 81 Kosovo. Voices of europe and central asia: new insights on shared prosperity and Jobs Photo© Jutta Benzenberg/ World Bank 82 ChaPTer 2 meet the demand, can be prohibitively expen- taining a job may result in the loss of social ben- sive, and sometimes operate during limited hours, efits, the availability and scale of social benefits thereby posing significant restrictions on parents, may represent a potential disincentive to work in mainly mothers, to engage in paid employment. the formal sector. If social assistance authorities In rural environments, availability itself is the main discover that a recipient is working, this may dis- challenge. If kindergartens do exist, they are often qualify the recipient from the assistance program far away and thus represent added costs and time even if the recipient’s salary is low and does not re- constraints because of the necessary travel. sult in a meaningful change in household welfare. In a number of instances, social norms, com- With this program, a family of five people has to bined with the lack of affordable childcare, depend on GEL 100. We have to work secretly in lead to outright discriminatory practices. temporary jobs. Many people write the names of Across the region, it is not uncommon to hear their neighbors on the employment forms so that stories of how women are questioned about they do not become ineligible for benefits. their marital status and family situations when —Jobless woman, village near Telavi, Georgia they are applying for jobs or that they are obliged to sign agreements on these matters. Men are “You need to work, of course,” said a jobless not asked such questions. woman in a Roma community in FYR Macedonia. “The money you receive from social assistance is “When he’s employed, no man has to sign a con- far from enough.” tract stating that he won’t have children,” de- clared an employed woman in Sveti Nikole, FYR “Thousands of people have lost social assistance Macedonia. “That’s not the case of women.” because they worked for two months,” said a so- cial worker in Georgia. Weak incentives to work may play a role in promoting inactivity “Often, such people are forced to forgo any work possibilities out of fear of losing social assistance Another obstacle to employment in the region for the entire year,” agreed a colleague. appears to be the weak incentives to work. Previous quantitative evidence has highlighted “There are cases of people who are forced not to the potential role that taxation, social protection work because, if they hear that you have a con- benefits, and migration can play in discouraging tract or you are working somewhere, you have to formal work.33 Taxation does seem to be a rele- give them back all the social assistance that you vant policy lever, although it may be more im- received,” explained a jobless woman in Ferizaj, portant in decisions on whether to work in the Kosovo. formal or informal sector rather than in decisions on whether to work at all. However, social assistance benefits are often unstable, not generous, and, hence, insuffi- Beyond taxation, the design of social assistance cient as a sole source of household income. can further affect employment decisions. Find- Especially in less well-off communities, respon- ing a temporary paid activity, including a week dents claimed that hardly anyone would want to of agricultural work, can disqualify households depend on social assistance if they had a choice. from receiving social assistance. Because ob- The benefits are small; they eventually expire; and a household can easily become ineligible because of a change of address, overall family 33 Arias et al (2014). income, or the acquisition of assets. Moreover, 83 Voices of europe and central asia: new insights on shared prosperity and Jobs because the benefits are generally too low to vious studies have analyzed key barriers to job sustain a household without additional sources creation and some of the specific obstacles faced of income, many recipients of these benefits try by women, youth, older workers, and the less to find work (See spotlight 1). highly skilled in accessing better opportunities to climb the ladder of life.34 However, they lack an Finally, in communities from which migra- important ingredient: the voices of people in the tion has been substantial, the possibility region. The testimony of witnesses in rich and of working abroad or the remittances from poor communities and in growing and declining family members outside the country can dis- areas can shed light on the more subtle barri- courage employment. Some men work abroad ers to employment, barriers that—as this report part of the year and do not bother searching for shows—can often be the most relevant in shap- work during the months spent at home because ing perceptions and aspirations. This chapter they know they will soon return abroad. underscores the economic and social problems people face in gaining productive employment, “Here, people who don’t have jobs usually have especially problems related to aspirations, social remittance income from abroad,” said an em- norms, and connections, which are often largely ployed man in a village near Vushtrri, Kosovo. “So, outside the control of individuals and on which they’d rather rest, take the money, and not work.” quantitative data are often lacking. “The other thing is the fear that, if they start to As a result, the voices in the region can be heard work, maybe those in the diaspora won’t send calling for more comprehensive policy instru- them money anymore,” said a woman focus ments—an updated toolkit—to confront the group participant in the same village. barriers to the expansion of the middle class. Some of the barriers identified through this process “If someone’s providing for him, he probably are already well known to policy makers, including doesn’t want to work,” admitted an employed man insufficient job creation and lack of relevant skills. in a suburb of Sarajevo, Bosnia and Herzegovina. The instruments to address these constraints are part of the customary toolkit in the jobs agenda. Yet, many other barriers, especially those that af- Moving forward: broadening policy fect specific segments of the population, are often ignored in the design of policy responses to the instruments jobs challenge. Three underlying barriers are par- ticularly relevant: a mismatch between aspirations When asked to identify specific factors that and reality, social norms that directly or indirectly would help increase the opportunities among limit the participation of individuals in the world of men and women, respondents in communi- work, and the critical role of unequally distributed ties across the region pointed to three areas: social and professional connections that serve as education and skills, job creation, and assis- the main gateway to good jobs. Learning from the tance in starting a business (figure 2.13). Wom- limited, albeit growing, evidence on interventions en also frequently mentioned their need for sup- that can help address these barriers is therefore a port from family members so they could work. key next step in making the jobs agenda more in- clusive and jobs in the region more conducive to These three areas correlate with those iden- improving shared prosperity. tified in quantitative studies, but the qualita- tive evidence gathered for this report points to a more comprehensive policy agenda. Pre- 34 For example, see Arias et al. (2014). 84 ChaPTer 2 FYR Macedonia. Photo© World Bank Serbia. Photo© Nomadbeg/Dreamstime.com 85 Tajikistan. Photo© Gennadiy Ratushenko/World Bank SPECIAL TOPIC Jobs and Shared Prosperity: Youth’s Perspectives The education we receive and the skills we learn are poor relative to what is required to meet the responsibilities of the available jobs. —Young Woman, Tajikistan I don’t know how I’m going to get work experience if it’s impossible to have the chance to gain it. —Young Woman, Kosovo W hat about the next generation? Young men and wom- en in Europe and Central Asia have higher expecta- tions about their job prospects compared to the older generation. It is also striking that youth still look for jobs, mostly in the public sector, resembling traditional jobs in pre-transition times. However, they face a number of challenges in finding em- ployment or setting up a business. Young women and men face hurdles that are either unique or more marked among youth than among adults, including lack of experience, lack of access to in- formation on labor market prospects, lack of effective networks, and lack of access to productive inputs such as land and credit. A notable barrier among young women is the lack of affordable, trustworthy childcare facilities, besides social norms and tradi- tions that prevent women from searching for and finding employ- ment. Young people in the region think that the greater availability of jobs, more training, better information about vacancies, access to loans and day-care services, and family support would improve their chances to overcome these barriers. 86 SPeCiaL ToPiC 87 Voices of europe and central asia: new insights on shared prosperity and Jobs Understanding the youth employ- and in society overall have also evolved. Today’s ment challenge: facts and dimen- youth have been born and raised in societies that are more open to the outside world, more well sions integrated in global value chains, and more well adapted to new technologies. Youth employment and participation in the labor market are crucial to achieve sustain- This chapter explores young people’s percep- able growth in the region.35 Yet, youth face par- tions and insights about jobs in their com- ticular difficulties in accessing productive em- munities and the barriers they encounter in ployment. Early experiences of unemployment the effort to get ahead. The aim is to present a or bad matches between skills and jobs have thorough picture of the employment challenges consequences on an individual’s future working young people face, from their perspective. The life. Youth unemployment can lead to long-term chapter is based on focus group discussions unemployment and lower earnings.36 The earn- with young adults (18-25 year olds) in all coun- ings penalty may be as high as 20 percent rela- tries where adult focus groups were conducted, tive to young people who find appropriate jobs except Georgia and Turkey. The chapter exam- early, and the earnings deficit can persist up to ines issues such as why youth employment is 20 years. These long-term effects can be a result crucial for shared prosperity, what young people of a deterioration in skills, intermittent work ex- think good jobs are, how youth believe they can perience, and employer’s perceptions that these get ahead in their communities, how they view workers will not be productive.37 In addition to economic opportunities and prospects, and the the economic consequences, idleness at a young barriers they face in looking for and finding jobs. age may jeopardize happiness, job satisfaction, and health for many years38, with potential impli- There is a lot of untapped potential cations for social cohesion.39 among youth in Europe and Central Asia Young labor market entrants today are in Unemployment and inactivity have histori- many respects more well prepared than pre- cally been greater among youth than among vious generations for a modern labor market. adults. This challenge was exacerbated in the Across many countries in Europe and Central region following the global economic crisis. The Asia, they have higher educational attainment crisis led to large employment losses and a sub- than older workers. This is particularly true stantial rise in unemployment (by as much as 20 among young women in countries such as FYR percentage points among youth in some coun- Macedonia, Poland, and Slovenia, indicating an tries).41 Youth employment rates remain low, and expansion in, especially, tertiary education in the persistent unemployment continues to be a key last few decades.40 Social norms around the role challenge in the region.42 of women in the household, in the labor market, Almost 20 percent of youth in the region are not in education, employment, or training 35 (NEET).43 Many young people (aged 15-24 years) Youth in this chapter refers to 15- to 25-year olds. The par- ticipants in the focus groups during the qualitative surveys can be expected to be in school; yet in the re- ranged in age from 18 to 25. 36 Kahn (2010); von Wachter, Song, and Manchester (2009). 37 Morsy (2012). 38 41 Bell and Blanchflower (2011); Dean (2013). World Bank (forthcoming). 39 42 World Bank (2012). Arias et al. (2014). 40 43 Arias et al. (2014). Mauro and Mitra (2015). 88 SPeCiaL ToPiC ig re 3.1 round One Young Person out of Five is not in Employment, Education or Training EET in the egion Youth (15–24) NEET rates in the region, by sex, latest available data, % 60 50 NEET rates, % 40 30 20 10 0 Young men Young women Source: Mauro and Mitra 2015. gion, many of them remain idle as they are not force participation rates among young women, working nor acquiring skills (figure 3.1). This is ranging from 33 percent in Turkmenistan and Uz- likely to lead to greater detachment from eco- bekistan to 44 percent in Kazakhstan in 2013. The nomic life, labor market marginalization, and range in the Western Balkans is from 13 percent social exclusion. in Kosovo to 30 percent in Albania. This means that young women face two disadvantages, one In most countries in the region, young women because of their age, and another because of are at a greater risk of being out of work and their sex. out of school or training. Figure 3.1 shows that 18 percent of young men and 21 percent of young Among those who are looking for a job, many women are NEET. The variation across countries have difficulties finding one. The average youth and between the sexes is substantial. In Tajikistan, unemployment rate in the region is 22 percent, half of women ages 15 to 24 are NEET, whereas, in which is more than twice as high as the overall the Russian Federation, the NEET rate for young unemployment rate of, around 10 percent.44 The women is only 9 percent. The NEET rates among difference between the youth and overall unem- young men in the region range from 10 percent in ployment rates is the smallest in Central Asia. the Kyrgyz Republic to 31 percent in Moldova. The In the Western Balkans, the picture is complete- largest gender gap within a country is observed in ly different. Data for 2013 shows that in Bosnia Turkey, where 17 percent of young men and 43 per- and Herzegovina, the youth unemployment rate cent of young women are NEET. was 60 percent, while the overall unemployment rate was 28 percent. In Kosovo, the rates were 55 Young women are particularly likely to be out percent and 31 percent,45 respectively, and, in of the labor force. Although the gender gaps in FYR Macedonia, they were 52 percent and 29 per- labor force participation in the region are wider among adults, young women’s labor force partic- ipation rates are much lower than young men’s in 44 Based on World Development Indicators and KILM (Key Indi- all countries in the region except Azerbaijan. Cen- cators of the Labor Market, International Labor Organization). tral Asian countries show relatively higher labor 45 Data for Kosovo is for 2012. 89 Voices of europe and central asia: new insights on shared prosperity and Jobs cent, respectively. This means that young people high-quality education,” said a young woman in are often in a particularly vulnerable position in Tajikistan. “When they have them, their salary terms of their labor market prospects.46 also goes up.” Migration is considered important by youth, Jobs as a pathway for upward mo- although less so than by adults. 18 percent of young men consider migration as a top factor, bility among youth vis a vis 27 percent of adult men (figure 3.2). This might mean that, people lose their motivation to As with adults, young women and men believe stay in their own country as they grow older or as new and better jobs are the most important they witness others do better as a result of migra- factors to get ahead (figure 3.2). Among adult tion, or because youth face additional (financial) women, 56 percent chose this option, while the constraints that limit their possibilities to migrate. rate was 44 percent among young women. The Similarly, among women, the importance of mi- gap between the two age groups is similar for gration is different among youth (11 percent) than men: 50 percent of adult men and 42 percent of among adults (19 percent) (figure 3.2). young men selected “new and better jobs” as a key mobility factor. This is followed by good con- There are important differences in percep- nections, with 26 percent of young women and tions of what matters most to get ahead 30 percent of young men listing ‘Connections’ as between young men and young women. All a significant factor in getting ahead in their com- youth, regardless of sex, location, and socioeco- munities (figure 3.2). nomic status, consider jobs as the most import- ant factor in upward mobility. Good connections, “What matters in our society is good connec- ownership of a new or growing business, and mi- tions. Otherwise you can’t get a normal job. No- gration are more important among young men, body will ever take you on” said a young woman while young women place greater value on edu- from Kazakhstan. cation and training, family support, and attitude. This is in line with perceptions of older adults The priority given to education and train- (chapter 2). Ownership of a new or growing busi- ing as a factor in getting ahead is the most ness is listed as an important factor in upward remarkable difference between the gener- mobility by 21 percent of young men, but only 7 ations of men and women. Around a third of percent of young women. Among young wom- young men and young women think education en, 24 percent mentioned family support as an and training together represent one of the two important factor, while the share was 14 percent most significant factors in getting ahead, while among young men. only 15 percent of adult men and 13 percent of adult women agreed. This might have to do [You need family support] because you are not with the expectations for the future between independent. If you have your own job and apart- these two age-groups. Since there are usually ment, then it’s a different story. We depend on our limited lifelong learning and training opportu- families. Abroad, the state helps young people a nities among adults, and, considering their age, lot in these matters. adults might look for other ways to get ahead. —Young woman in Kosovo “To get new and better jobs, people need good, Youth have higher expectations from a job, but are willing to give up some job security. 46 World Bank, forthcoming. Men and women of all ages mentioned a good 90 SPeCiaL ToPiC ig re 3.2 While etter obs and Having onnections re rucial, Youth re More Likely than dults to Link Education to pward Economic Mobility Factors to get ahead in the community, by age-group, % of respondents who selected factor among top two . Women Share of respondents of each age group, % 60% Adult Women (548 respondents) Young Women (256 respondents) 50% 40% 30% 20% 10% 0% MARRIAGE / DIVORCE / SEPARATION FAMILY SUPPORT OBTAINED LOAN / CREDIT GOOD CONNECTIONS GOOD BUDGETING / SAVING REMITTANCES SOCIAL ASSISTANCE PENSIONS OTHER NEW OR GROWING BUSINESS INCREASED CROP PRODUCTION/LIVESTOCK MIGRATION ACCESS TO LAND THE RIGHT ATTITUDE AND HARD WORK EDUCATION / TRAINING NEW OR BETTER JOB JOBS FACTORS RELATED EDUCA- ATTITUDINAL SHOCKS OTHER INCOME GOVERNMENT OTHER TO JOBS TION AND BEHAVIORAL SOURCE (PRIVATE) SUPPORT Source: 90 focus group discussions with employed and jobless female adults and youth in Bosnia and Herzegovina, FYR Macedonia, Kosovo, the Kyrgyz Republic, Serbia, and Tajikistan. . Men Share of respondents of each age group, % 60% Adult Men (536 respondents) Young Men (258 respondents) 50% 40% 30% 20% 10% 0% MARRIAGE / DIVORCE / SEPARATION FAMILY SUPPORT OBTAINED LOAN / CREDIT GOOD CONNECTIONS GOOD BUDGETING / SAVING REMITTANCES SOCIAL ASSISTANCE PENSIONS OTHER NEW OR GROWING BUSINESS INCREASED CROP PRODUCTION/LIVESTOCK MIGRATION ACCESS TO LAND THE RIGHT ATTITUDE AND HARD WORK EDUCATION / TRAINING NEW OR BETTER JOB JOBS FACTORS RELATED EDUCA- ATTITUDINAL SHOCKS OTHER INCOME GOVERNMENT OTHER TO JOBS TION AND BEHAVIORAL SOURCE (PRIVATE) SUPPORT Source: 90 focus group discussions with employed and jobless female adults and youth in Bosnia and Herzegovina, FYR Macedonia, Kosovo, the Kyrgyz Republic, Serbia, and Tajikistan. 91 Voices of europe and central asia: new insights on shared prosperity and Jobs ig re 3.3 Youth Have Higher Expectations from a ob, ut re Willing to ive up Some ob Security Preferred characteristics that are most important in seeking a job, women, by age-group, % of respondents . Women 60% Adult Women (548 respondents) Young Women (256 respondents) 50% Share of respondents, % 40% 30% 20% 10% 0% Source: 90 focus group discussions with employed and jobless female adults and youth in Bosnia and Herzegovina, FYR Macedonia, Kosovo, the Kyrgyz Republic, Serbia, and Tajikistan. . Men 70% Adult Men (536 respondents) Young Men (258 respondents) 60% Share of respondents, % 50% 40% 30% 20% 10% 0% Source: 90 focus group discussions with employed and jobless male adults and youth in Bosnia and Herzegovina, FYR Macedonia, Kosovo, the Kyrgyz Republic, Serbia, and Tajikistan. 92 SPeCiaL ToPiC income and stability as the most important char- important features of a good job, while, among acteristics of a job, but other factors were also young men, the share was 48 percent. These considered important. More than half of all men differences in perceptions were echoed also in and women believe a good income is one of the the open discussions in the focus groups. This two most important features of a good job. A might be because young people are more com- good income means “a lot of possibilities to buy fortable with more flexible work arrangements or something other than the basic supplies, suste- because they know how hard it is to obtain per- nance, clothes, a vacation,” said a young woman manent jobs. in Bosnia and Herzegovina. Yet, there are clear differences in preferences across generations. Nevertheless, it is remarkable how stable job Young men and women put more emphasis on preferences are in the region across gener- the opportunity for promotion, while among ations (figure 3.4). A majority of young respon- adults this is lower. Non-pecuniary benefits also dents across all subgroups preferred to work in have a higher priority among young workers. A the public sector, which is perceived to be more good working environment, a convenient loca- stable and secure. The shares were 70 percent tion, and self-satisfaction seem to be also more among young men and 84 percent among young important for youth than for adults (figure 3.3). women. At the same time, youth put less emphasis than older workers on having a permanent contract “A public sector job is stable; we all need that,” and job stability. For example, around 61 percent said a young woman in Kazakhstan. “It provides of adult men said stability is one of the two most employees with records of service and social ig re 3. Most People Prefer Full-Time Formal obs in Large ompanies or in the Public Sector Preferred characteristics that are most important in seeking a job, youth and adults, by sex, % of respondents 100% 90% 80% Share of respondents, % 70% 60% 50% 40% 30% 20% 10% 0% PUBLIC PRIVATE LARGE SMALL FOR FOR FORMAL INFORMAL PART-TIME FULL-TIME COMPANY COMPANY SOMEONE YOURSELF SECTOR SECTOR ELSE Adult Men (536 respondents) Young Men (258 respondents) Adult Women (548 respondents) Young Women (256 respondents) Source: 180 focus group discussions with employed and jobless male and female adults and youth in Bosnia and Herzegovina, FYR Macedonia, Kosovo, the Kyrgyz Republic, Serbia, and Tajikistan. ote: Each focus group participant was asked to choose their preferred job among two mutually exclusive options. 93 Voices of europe and central asia: new insights on shared prosperity and Jobs contributions.” Among adult men, 79 percent “There are no new job openings. We’re all ready to preferred public sector jobs, while 70 percent work, but nobody needs workers.” of young men showed the same preference. In —Young man in FYR Macedonia general, women have a stronger preference for public sector jobs compared with men, and this however, young people face particular bar- preference does not change with age: 85 per- riers to employment, especially related to cent of adult women and 84 percent of young skills, access to productive inputs and net- women said they preferred public sector em- works. ployment. In terms of skills, it is not merely that young Across sex and age groups, participants exhib- people are not sufficiently well educated, but ited a strong preference for formal sector jobs: that their education and skills do not match around 95 percent among young and adult men the demands of the labor market. The quality and women. Among young men, 86 percent pre- of the education young people obtain in school ferred to work full time, while the share was 73 is considered poor, and the resulting skills are percent among young women. Among young viewed as irrelevant to the labor market demand. women, 27 percent preferred part-time work, Young people believe that the kind of skills they while the corresponding share was 20 percent require nowadays to obtain a job include skills in among adult women. Younger women are more computers, foreign languages, communications, open to working part time, possibly because of team work, and problem solving, in addition the flexibility such an arrangement provides to to basic skills learned in formal education. The accommodate household and childcare respon- combination of these skills is needed to smooth sibilities that still fall mostly on women. the transition into working life, and the absence of these skills is perceived as a serious obstacle to employment. Youth-specific barriers to employ- “It is a real problem that, after receiving an ed- ment and ways to improve em- ucation, you have no experience,” said a young ployability man in the Kyrgyz Republic. “For example, you’ve got an education, a specialty, and you know the As with adults, lack of labor demand is seen theory, but you don’t know how to apply it in by youth as the main barrier for getting a job. practice.” This seems to be a more pronounced issue in the Western Balkans, although it comes up consis- “We learned nothing in high school, nothing tently throughout. The lack of jobs seems to be practical,” said a young man in Bosnia and Her- a bigger problem in rural areas. Urban areas are zegovina. “My school was not useful to me.” not immune to the issue, but large companies, political parties, and the public sector offer more “Education has to be more closely related with the opportunities that are attractive to youth in ur- professions and trades so we can have some prac- ban areas. tical skills,” said a young man in FYR Macedonia. [It’s difficult to find a job] because there are no “I think, in our time, education is more difficult jobs at all. There are no jobs where a worker and because we can’t learn about the practical sides his rights are protected. Salaries are low. You can of our subjects,” said a young man in Kosovo. compromise your health, but get nothing else. “We had no labs; so, we were able to study only —Young man in Bosnia and Herzegovina the theory of specific subjects.” 94 SPeCiaL ToPiC The mismatch between the skills of youth, must dedicate more effort in training in educa- coupled with the expectations of employ- tion because practical application in education is ers that job-seekers have previous work poorly represented, and this is an obstacle to em- experience, seems to be a major barrier to ployment. employment among youth. After completing — Employer, FYR Macedonia their education, young people face difficulties finding a job because of their lack of work ex- Youth, especially youth who want to become perience. Young people view this expectation entrepreneurs and start their own business- as contradictory: it is not possible to have work es, are hindered by a lack of access to pro- experience as first-time job-seekers. They also ductive inputs such as land, collateral, and believe they do not possess sufficient practi- credit. In the course of the discussion, to under- cal knowledge that could count toward the re- stand the perceptions of youth about this topic, quirement for experience when they start look- young people were presented with the hypo- ing for a job. thetical case of a young married woman who is poor, who has a high school education, but little Everyone needs an experienced worker with at least work experience, and whose husband cannot two or three years of experience. How can we have find a stable job. The young respondents were experience if we just started seeking a first job? asked how difficult it would be for the woman —Young woman, Kyrgyz Republic to open a small grocery store and how their an- swers might change if the young woman were a Work experience is expected even if you’re ap- young man. plying for your first job, I think this is the biggest problem. The young respondents seemed to believe that —Young man in Serbia. becoming an entrepreneur would be challenging without access to money, land, or bank cred- Employers are looking for experience among pro- it. However, they also felt that obtaining a loan spective employees, but they don’t give a chance would be nearly impossible without work experi- to the inexperienced to prove their abilities. In al- ence, support from their families, or money. most all the advertisements, it’s emphasized that you need experience for the job, but you can’t get “If she’s not employed, where will she get the experience if no one will employ you. money?” asked a young woman in Serbia. “No —Young woman, FYR Macedonia bank will give you a loan if you’re not employed and don’t earn above SRD 30,000 a month.” Employers and employment office represen- tatives agreed that the reason young people “It would be difficult to convince the bank to give are not hired is mainly their lack of experi- her a loan,” said a young man in Kosovo. “Fur- ence. “Absence of job activity or experience [is] thermore, the interest rates are too high, and, if the reason why many employers try to teach she fails, she would not be able to pay the money them about production so that they have some back.” skills,” an employment agency official in the Kyr- gyz Republic said. “It’s difficult for youth to be When the question is repeated, but, instead of a employed without any experience.” young woman, a young man is the one who wants to open the store, the statements about the dif- They completed some level of education and ficulty remain similar. Young people believe it is don’t have any work experience. They don’t even difficult to start a business, regardless of their sex, have any relevant training. So, the government without access to money, land, or credit. 95 Voices of europe and central asia: new insights on shared prosperity and Jobs “Nowadays, it’s difficult to open a business for er for them to find jobs. Most young men and men or women,” said a young woman in the Kyr- women mention relying on advertisements in gyz Republic. “It’s all about the money and doc- newspapers, various websites, and the employ- uments; there’s a need for money to buy goods ment agencies in their communities. However, and for the necessary documents.” the advertisements are not considered accurate or sufficient by most respondents for determin- Personal and professional networks and con- ing the suitability of the jobs or if they want a nections, which youth often lack because they particular job. have little experience and exposure, are con- sidered key entry points for jobs. Statements “I think better information would be helpful,” such as the following are common. said a young woman in Kosovo, “such as organi- zations going to villages to meet with all women, “If you’ve got no connections, you won’t get a job organize them also, give them information, and anywhere,” said a young man in FYR Macedonia. tell them about various opportunities.” “If you don’t have any connections, you can get Information about employers is insufficient. I’m degrees from six colleges and still find no job,” not sure where we could get more information said a young woman in Bosnia and Herzegovina. about vacancies other than shop windows, for ex- ample. The employment bureau has information “What matters in our society is good connec- nobody needs. tions or good money,” said a young woman in —Young woman, Serbia Kazakhstan. “Otherwise, you can’t get a normal job: nobody will ever take you on.” Weak connections and lack of information are interrelated. Just as it was voiced by adults, “Those people who have good connections skip young people say there is not enough informa- up the stairs,” said a young man in the Kyrgyz Re- tion about job vacancies because people get public. jobs through connections. The following is an ex- change on this topic during a focus group among Today, to get any type of work, regardless of young women in urban Serbia. whether you need education or not, you need a connection. People in my surroundings have Participant 1: “The information about vacant found work via connections: paid connections or positions is unavailable mainly because these family connections. If you have a paid connection, positions are being saved for people with good you pay for the workplace. You pay a few thousand connections.” euros to get a job. I know a guy who paid €6,000 for a permanent job. Also, there’s employment with a Participant 2: “Job vacancies are simply a for- political party. mality; it’s usually well-known who’s going to —Young woman, Serbia get the job.” Lack of relevant information about job va- Social norms mediate and exacerbate these cancies, salary levels, and the expectations barriers to economic opportunities, affecting of employers is another substantial barrier women in particular. One of the most promi- that discourages young people from looking nent patterns emerging during the focus group for work. Young people have difficulty under- discussions was that, in the job search, social standing where and how to look for jobs. Their norms and traditions affect women much more inexperience and weak networks make it hard- than they affect men—in some respects even 96 SPeCiaL ToPiC Tajikistan. Photo© Nozim Kalandarov/World Bank more so among youth than older generations. The young woman’s family or her husband might Physical appearance was mentioned frequent- be displeased with it. Even if a young woman has ly as an advantage among young women while a diploma in higher education, her husband may seeking a job. Not only men, but also women not allow her to work. Our village preserves and have this impression. In the narratives, it was respects old customs according to which a young emphasized repeatedly that it is difficult for woman must stay at home and take care of the young women to find jobs because childcare household chores... It’s a shame on the family if a and household responsibilities fall exclusively wife works, while her husband stays home. on them, their families or their husbands do not —Young woman, Kazakhstan allow them to work, employers discriminate in hiring based on women’s marital or family status, They don’t want to hire women because they or they are perceived to be unable to perform think women will get married. They mostly hire ex- certain types of jobs. Family responsibilities such perienced women who have children and will not as childcare seem to be an important barrier. In take maternity leave. Women can’t take maternity some cases, there are no services available; in leave here. They would get fired immediately. others, the available services are not trusted, not —Young woman, Bosnia and Herzegovina affordable, or not convenient in terms of loca- tion, distance, or hours. The way social norms are internalized by society, including women themselves, can be observed Some young women seem to have internal- in the following exchanges: ized some of the social norms that are effec- tively a barrier to employment, while others Participant 1: “For him it would be easier than for push hard against such normative obstacles. a woman.” There are hundreds of respondent statements that could serve as illustrations of how social Participant 2: “Men have some sort of entrepre- norms affect women. neurial talent that is inherent in their nature. This is why it’s easier for them.” “They interrogate me: if I’m planning on getting married, if I’m married,” said a young woman in Participant 3: “For men, it would be easier to fight Serbia. “They don’t hire women who are married a way through and collect all the necessary doc- or who are planning to get married soon.” uments.” 97 Voices of europe and central asia: new insights on shared prosperity and Jobs Participant 4: “Men take it easy, while women are would make employment and entrepreneur- too emotional. A woman may visit an official and ship more accessible? In parallel to what youths then come home and cry, while a man is emo- see as key barriers to employment, they consider tionally stronger.” that policies aimed at providing more and better training, access to credit and networks, and qual- What can be done to overcome the barriers to ity child care are essential to opening up work employment? What do young people believe opportunities (figure 3.5). ig re 3. The Factors onsidered mportant in mproving ccess to Employment iffer ased on ge Factors that would make the biggest difference in improving access to employment and entrepreneurship (for own se ), by age group, % respondents who selected factor among top two . Women 50% Young Women (256 respondents) Adult Women (548 respondents) Share of respondents, % 40% 30% 20% 10% 0% Source: 90 Focus group discussions with employed and jobless female adults and youth in Bosnia and Herzegovina, FYR Macedonia, Kosovo, the Kyrgyz Republic, Serbia, and Tajikistan. . Men 50% Young Men (258 respondents) Adult Men (536 respondents) Share of respondents, % 40% 30% 20% 10% 0% Source: 90 Focus group discussions with employed and jobless male adults and youth in Bosnia and Herzegovina, FYR Macedonia, Kosovo, the Kyrgyz Republic, Serbia, and Tajikistan. 98 SPeCiaL ToPiC Turkey. Photo© Assignments/Dreamstime.com Kyrgyzstan. Photo© Isak Wiklund/Dreamstime.com 99 FYR Macedonia. Photo© Yosef Hadar/ World Bank Conclusions and Policy Implications T his report focused on answering an elusive goal. Instead, men and women across three sets of questions: the region describe societies that are greatly polarized. Advances in living standards at the (i) What is the role of jobs in promoting lower end of the welfare distribution are seen as social and economic mobility and the growth of a overtaken by more rapid gains at the top. Across middle class, and in protecting households from countries, people are voicing frustration about poverty? progress and inequality of opportunities and concerns about the sustainability of the gains (ii) What are the barriers to productive employ- that have been achieved. ment? Are job opportunities different for men and women? Do these gender differences vary These frustrations and concerns arise from with the life-cycle, socio-economic situation and mainly two interrelated factors: location? i. Jobs are seen as crucial for economic mobility, (iii) To what extent are opportunities shaped by and yet people do not perceive they have a fair expectations, goals and social norms? To what chance at having access to productive jobs. extent are they market-driven? Are there also These concerns may be partly related to the government/institutional failures that lead to global economic crisis, but not only. In fact, different opportunities for men and women? Do these perceptions are echoed in questions these play out differently for youth? and discussions referring to the pre-crisis period, and are also consistent with related Listening to the voices of women and men in findings from the mid-2000s when the region Europe and Central Asia reveals that, despite was growing rapidly.47 They are also more sa- an overall good performance in economic lient in countries in which job creation has growth and shared prosperity, there is a lot of been weaker, like in the Western Balkans. discontent and rising concerns about a disap- For the majority of people in the region, ac- pearing middle class. While economic growth in cessing productive jobs requires political and most countries in the region has created an eco- social connections —which the most disad- nomic ladder to better living standards, many people see no open path to climb beyond the first rungs. Many see reaching the middle class as 47 Cancho et al (2015b). 100 101 Voices of europe and central asia: new insights on shared prosperity and Jobs vantaged lack given limited information and interventions from around the world, further de- access to networks—. For women, the fact scribed in the following paragraphs. Many inter- that they often have to work around a set of ventions address more than one barrier at a time. informal institutions and social norms that This is probably not surprising given that many of keep them —intentionally and unintention- the barriers and processes that underpin the im- ally— from reaching their productive poten- portance of social norms and connections in the tial, means that their sense of frustration in region are common and associated with issues accessing economic opportunities may be of information, lack of role models and biases. heightened. These barriers play a critical role in shaping people’s behavior and economic First, connecting people to jobs requires poli- opportunities, particularly in a context of lim- cies that address governance failures, as well ited job creation. as lack of networks and information asymme- tries. ii. These frustrations are exacerbated by very high expectations about what a job is and Especially in the public sector, accessing jobs should be. Most people, including youths, still is often more a matter of who you know, than aspire to a public sector job with a permanent what you know. Beyond system-wide gover- contract, and do not consider as proper em- nance reforms, improving transparency in the ployment anything that is informal or irreg- process of hiring, firing and rewarding public ular, including self-employment. These job sector employees can play a key role; this could preferences are in fact a form of social norm, be achieved, for example, through the profes- rooted in the region’s history and legacy. The sionalization of the civil service, by introducing risk is a vicious cycle of low productivity, low processes and criteria for merit-based compet- investments, unmet expectations, and more itive recruitment and objective evaluations,48 or frustrations. by using incentives and technology for reducing ghost workers and absenteeism.49 But not all is doom and gloom—and the anal- ysis also reveals important opportunities for Public policy can also aim to build networks policy. First, youth see —more than the older and provide access to job-market relevant generations— a value in obtaining skills that information, to students, job seekers and are relevant for the labor market, and see edu- employers. There is growing evidence of cost-ef- cation as a way to move up the Ladder of Life. fective interventions that address information And, while they still have job aspirations that failures, including labor market observatories are remarkably similar to those of their parents, that provide the public with information on labor they seem willing to give up some job security for market conditions and the quality of education more fulfilling, more ambitious jobs. This is an and training institutions.50 For example, the state opportunity for the region. Second, the key barri- of Colorado in the United States has recently cre- ers to productive employment related to the role ated a website called “Launch My Career Colora- of networks and connections and social norms do”, an interactive web-tool that allows students —although they are largely outside of the control and parents to determine the estimated rate of of the individual— are actually amenable to pol- icy influence. 48 OECD 2013. 49 Duflo, Hanna, and Ryan 2012; Cilliers and others 2013; Cal- There is a small, albeit growing, body of evi- len and others 2014; Aker and Ksoll 2015; Dhaliwal and Hanna dence on which policymakers and researchers 2014. can build on. Table C.1 summarizes examples of 50 Arias et al. 2014. 102 CoNCLUSioNS aND PoLiCy iMPLiCaTioNS table c.1 expanding the toolkit for labor market inclusion policies is key Policy objectives examples of interventions Addressing governance failures, especially around public sector employment • System-wide governance reforms • Improving transparency in the process of hiring, firing and rewarding public sector em- ployees through, for example, the professionalization of the civil service, as well as in- centives and technology to reduce ghost workers and absenteeism Interventions aimed at improving access to information on education and training and labor markets • Labor market observatories, to provide relevant stakeholders with information that can inform their educational and labor market choices Connecting • Professional orientation in the school system and early in the school-to-work transition, people to jobs to provide youth with information that can inform their educational and labor market choices Improving information and networks to access jobs and improve schooling and labor market decision making • Providing incentives to employers to hire new entrants into the labor market can help bridge some of the information and network gaps that make it more difficult for these groups to access their first job. This can be done through apprenticeships/internships schemes or well-targeted and designed short-term employment subsidies • Intermediation services to help improve job search and provide counseling and match- ing services, including improvements in public employment services and their relation- ship with private ones; job fairs, job shadowing and mentoring nterventions to overcome and in uence social norms • Shifting aspirations and expectations through, for example: role models and mentoring; media interventions (e.g. soap operas, campaigns, radio), to expose people to informa- tion and role models; or by disseminating information on increased job opportunities for young women Social norms • Working within existing norms, but improving access to economic opportunities for all, through, for example, access to child care (quality and affordable). • Strengthening incentives and using behavioral insights to engage employers directly through novel instruments such as private sector gender certifications or revealing to employers their own biases when hiring or promoting by creating checklists for them to make sure they are not weighing beliefs over facts 103 Voices of europe and central asia: new insights on shared prosperity and Jobs return for various post-secondary college de- time, these programs can improve knowledge grees and certificates. These observatories could about labor market conditions for both employ- be complemented with professional orientation ees and self-employed, and strengthen job-rele- in the school system and early in the school-to- vant skills.56 work transition,51 as is being done in FYR Mace- donia. Second, evidence is also building up on poli- cies to influence and overcome social norms Programs that provide incentives for employers that limit access to economic opportunities, to hire new entrants into the labor market, most particularly for women. Social norms can be in- commonly youth or women, can help bridge fluenced by promoting greater knowledge about some of the information and network gaps that alternatives, and promoting the coordination of make it more difficult for these groups to access individuals to challenge social norms or collective their first job. Apprenticeships and internships, action.57 Interventions include shifting aspirations for example, have been shown to improve em- and expectations through mentoring and role ployment and earnings in countries as diverse as model figures,58 increased female participation in the Colombia, Dominican Republic, and Kenya.52 decision-making59 as well as media interventions Employment subsidies can play a similar role, (e.g. soap operas, campaigns, radio)60 that, for ex- although they are most likely to avoid inefficien- ample, portray women at work and in traditional- cies when limited to temporary economic down- ly male-dominated sectors, or people starting and turns.53 Other interventions may focus on inter- running their own business or working in specific mediation services to help improve job search sectors.61 However, recognizing that social norms and provide counseling and matching services, can take time to change, it is important to also and guiding people in the process of searching think about policies and measures that work with- and finding a job. These type of services have in existing social norms, yet improve access to op- been found to be very cost-effective, especially in portunities. For women, access to affordable and more advanced countries.54 Related to interme- high quality child and elder care is arguably a pri- diation, job fairs –often organized in collabora- ority to help balance work and the family respon- tion between the private sector and educational sibilities that in most cases fall on them.62 More institutions– can also provide an accessible plat- broadly, innovative approaches among employ- form to learn about job opportunities and vacan- ers, such as private sector gender certifications,63 cies.55 There is also recent evidence suggesting recruitment checklists to reveal employers’ bias- that job shadowing, mentoring and linking peo- es,64 and behavioral interventions65 can help ad- ple to role models can help build and broaden dress stereotypes and improve incentives to hire social and professional networks; at the same disadvantaged groups. 51 56 Ibarraran and Rosas, 2009; Honorati, 2015; Card et al, 2011; Eby et.al, 2008; Rodriguez-Planas, Nuria, 2014. 57 Ibarraran et al, 2015; Attanasio et al, 2011; Kugler et al., 2015; World Bank (2011). 58 Aedo and Nuñez, 2004. Eby et.al, 2008; Rodriguez-Planas, Nuria, 2014; Jensen 2012. 52 59 Ibarraran and Rosas, 2009; Honorati, 2015; Card et al, 2011; Beaman and others, 2010; Bhavnani 2009. 60 Ibarraran et al, 2015; Attanasio et al, 2011; Kugler et al., 2015; La Ferrara, Chong, and Duryea 2012; Jensen and Oster Aedo and Nuñez, 2004. 2007; Di Pietro, 2016; DellaVigna and Ferrara 2015; Banerjee, 53 Card, et.al, 2010; Betcherman, et.al, 2010; Betcherman et al, La Ferrara, and Orozco, forthcoming. 61 2007; Kluve et al, 2010. Di Pietro 2016. 54 62 Kluve et al, forthcoming; Behaghel, Crepon, and Gur- Calderón, 2012; Del Boca and Locatelli, 2006. 63 gand, 2009; Honorati and McArdle 2013, Almeida et al. 2012; Pungiluppi 2010. 64 Behncke, Frolich, and Lechner, 2008 and 2010. Kaas and Manger 2010; Good, Aronson, and Inzlicht 2003 55 65 Beam, 2015. Good, Aronson, and Inzlicht 2003. 104 CoNCLUSioNS aND PoLiCy iMPLiCaTioNS Sarajevo. Photo© Radiokafka/Dreamstime.com Despite the insights gathered in the course so most successfully, can be strengthened. of this study, there are still areas where ad- But more can be done to reach the low-hang- ditional research is needed to fully answer ing fruits for impact also in the shorter term. pending policy questions. Three areas for fu- Insights from behavioral economics could be ture work emerge clearly from this study. particularly useful in designing interventions that help address these constraints through- • Building the evidence on what works to out an individual’s life-cycle, and especially address non-traditional barriers to jobs early on in life within families and in the ed- and mobility, both in the short and the ucation system, as well as at the communi- medium/long-term. Overcoming barriers ty level. For example, interventions to over- such as social and gender norms or lack of come the impact of teachers’ biases in the access to connections requires specific inter- classroom or employers’ biases during hiring ventions which can be used alongside more processes could benefit from behavioral in- traditional policy measures. Yet, evidence on sights, and provide ways to address norma- what interventions work and when they do tive barriers to productive jobs. 105 Voices of europe and central asia: new insights on shared prosperity and Jobs • Better understanding the implications of Finally, this study has two important lessons perceptions and aspirations and chang- for analytical and operational engagement on ing realities in the region for countries’ poverty, mobility and jobs in the region. First, social contract. This study provides exten- the need to expand the diagnostics toolkit to har- sive evidence that the social contract be- ness the strong synergies in combining quantitative tween citizens and the state is still rooted and qualitative work. This is particularly important in the pre-transition legacy.66 The latter ap- in topics like labor markets where quantitative sur- pears to still shape strongly expectations in veys can only provide a partial view of some of the terms of jobs and what they should provide barriers to work including networks, social norms, including, surprisingly, among youth. But attitudes and aspirations, as well as economic the changing realities in much of the ECA re- mobility where people’s perceptions are arguably gion—related to globalization, demograph- just as important as hard data. The lens provided ics, migration, technological change— push by qualitative evidence in this report on how soci- for the social contract to adapt to new con- eties perceive progress and the opportunities for texts, and for policies to facilitate such adap- and challenges to upward mobility is extremely tation. For example, it might be necessary valuable and complements traditional quantitative to rebalance the role of social protection analyses. In particular, it provides insights that the programs as safety nets with their poten- latter often miss, related to informal institutions tial insurance function. This, given the high and attitudes. Importantly, it reveals a disconnect preference people place on job and income between performance measured by traditional stability, but at the same time the significant economic indicators and people’s perceptions of disruptions that can be expected in labor their welfare and economic mobility. The negative markets due to global forces. perceptions on how people get ahead and find good jobs –widespread across the region– can in- • Better understanding and adapting the fluence how they view and evaluate situations, and concept of “work”, especially in low and how they make decisions.67 Addressing the factors middle income countries. Over a third of behind this disconnect is important. The second adults who took part in this study do not lesson, therefore, calls for expanding the policy tool- consider irregular wage work in agriculture kit to incorporate programs and interventions, like to represent employment. Over half do not the ones discussed above, that aim at addressing consider irregular wage work in construction non-traditional barriers to work. as such. Yet, both concepts would fall within traditional definitions of employment used in household surveys, possibly leading to wrong conclusions. Given the importance of these sectors for employment in low and middle income countries, it is important to test and understand better people’s inter- pretation of such key concepts, and find ways to adapt our own thinking, including the tools and methods of analysis, to the better reflect the context. 66 67 See also Niehues (2014). World Bank (2015c). 106 Voices of Europe and Central Asia: CoNCLUSioNS aND PoLiCy iMPLiCaTioNS New Insights on Shared Prosperity and Jobs On paper vs. on the ground: a disconnect Many people do not see improvements in their daily lives, despite indicators that show progress in economic growth and poverty reduction. Jobs are seen as crucial to a better life, but Connections and social norms: access to jobs is perceived to be unfair barriers or keys to a better future? 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Washington, DC: World Bank. 114 aNNex Annex annex i: regional Methodology This report is based on data gathered using the qualitative methodology devel- oped by a multi-sectoral World Bank team (Patti Petesch, Giorgia Demarchi, María E. Dávalos and Indhira Santos). The same methodology and instruments were used for fieldwork in nine ECA countries (Bosnia and Herzegovina, FYR Macedonia, Geor- gia, Kazakhstan, Kosovo, Kyrgyz Republic, Serbia, Tajikistan and Turkey). The data collection took place between April and September 2013, and was conducted by local research teams.68 Purposive sampling was used to select 4 to 6 communities in each of the nine coun- tries, to provide a diverse range of experiences on the study topics. The community was taken as the unit of analysis, and was conceived as a relatively well-defined neighborhood or village where people generally know each other. Researchers ensured a balance between rural and urban areas, between better-off and worse- off communities, and –where relevant- between different ethnic groups. Better-off communities were conceived as having a large share of formal sector workers or entrepreneurs, and they were in many cases middle-class neighborhoods. In con- trast, worse-off communities were thought of as inhabited mostly by informal sector workers, relying on lower-productivity economic activities. A total of 43 communities were sampled. The data collection tools in all countries featured a mix of instruments (see table below). The tools comprised a community questionnaire, two focus group discus- sions with adults (one with people who work, and one with people who are out of work), life story interviews, key informant interviews (one with an employer and one 68 Bosnia and Herzegovina – PRISM, Sarajevo; FYR Macedonia - Center for Research and Policy Making, Skopje; Georgia - Georgian Opinion Research Business International (GORBI), Tbilisi; Kazakhstan - Busi- ness Information, Social and Marketing Research Centre (BISAM), Almaty; Kosovo - Index Kosova, Prishti- na; Kyrgyz Republic - M-Vector Research and Consulting, Bishkek; Serbia - IPSOS Strategic Marketing, Belgrade; Tajikistan - M-Vector Research and Consulting, Dushanbe; Turkey - A2F Consulting, Bethesda MD, USA. 115 Voices of europe and central asia: new insights on shared prosperity and Jobs table 3. Data collection tools Time Data Collection Method Purpose Respondents per community required To gain an understanding of the local context, and Activity 1. community level factors that influence economic 1 or 2 key informants 1.5 mobility and labor markets. This includes a discus- as needed to complete Community Question- hours sion on how these factors affect men and women questionnaire naire differently. To explore with adult women and men who work: 1 FGD of 8 to 12 adult Activity 2. Focus group • Trends in local economic opportunities, and women, ages 25 to 55 discussion: factors affecting this; 1 FGD of 8 to 12 adult economic Mobility, 2.5 • Economic mobility and the middle class men, ages 25 to 55 Jobs, and entrepre- hours • Access to labor markets and entrepreneurship neurship among the opportunities (employees and entre- employed • Impacts of labor market policies preneurs in formal and informal sectors) To explore with adult women and men who do not 1 FGD of 8 to 12 adult Activity 3. Focus group work: women, ages 25 to 55 discussion: • Trends in local economic opportunities, and 1 FGD of 8 to 12 adult economic Mobility, 2.5 factors affecting this men, ages 25 to 55 Jobs, and entrepre- hours • Economic mobility and the middle class neurship among the • Barriers to accessing labor markets and entre- (unemployed and Non-employed preneurship opportunities inactive) • Impacts of labor market policies To explore with adult women and men: • How and why some individuals climb into or 1 adult woman worker Activity 4: Semi-struc- stay in the middle class, while others fall into 2 1 adult man worker tured interview poverty or remain poor. hours 1 (either sex) on social individual Life Story • The factors that facilitate or hinder access to assistance labor markets and entrepreneurship opportu- nities To explore with knowledgeable informants: Activity 5. Key informant • Local economic trends affecting enterprises A major private sector interviews: and labor force opportunities employer Gender and Local 1.5 • Access to labor markets and entrepreneurship An official with a major employment and hours opportunities local public employment entrepreneurship • Impacts of labor market policies service agency opportunities • Differences across gender and age-groups in access to jobs and economic opportunities To explore with young women and men: • Education decisions Activity 6. Focus group • Barriers to accessing labor markets and entre- 1 FGD of 8 to 12 women discussion preneurship opportunities ages 18 to 25 young People Moving 2.5 • Motivations behind labor market decisions 1 FGD of 8 to 12 men ages ahead in work and hours • Family formation preferences and how they 18 to 25 Life link to labor market choices • Access to youth services • Use of free time and risky behavior Note: These data collection instruments are available with the online version of the report. 116 aNNex with employment agency staff), and in seven countries focus group discussions with youth (in a total of 34 communities). The focus group discussions were conducted with men and women separately. This provided a fundamental gender lens, which complemented the views on gender-specific issues investigated through direct questions on such topic. Field coordinators were also instructed to select respon- dents with a variety of demographic and employment profiles, to ensure further di- versity in labor markets and mobility experiences. The detailed methodology guide contained precise questions and instructions for local field coordinators, facilitators and note-takers. It included a mix of closed-end- ed and open-ended questions, and relied on the use of visuals and other such tools. An example of this is the Ladder of Life activity, conducted within focus group discus- sions with working men and women, to explore levels of well-being and mobility at the community level. The exercise entitled the Ladder of Life was used to explore mobility trends and fac- tors, as well as their gender dimensions. The activity was only conducted in focus groups discussions with employed adults. Focus group members began to build their ladder by detailing in their own words the characteristics of the “best off” and “worst off” households residing in their community. The traits of each were then noted by the focus group facilitator on a flip chart with just the top (for the best off) and bottom (worst off) steps of a ladder depicted. Focus group members then moved on to outline the characteristics of households on a step added just above the bottom step (or step one). Next, they described any additional steps needed to capture the different levels of well-being that they perceived to be present in their community. Most ladders featured between three and six steps, representing differ- ent levels of well-being perceived to exist in their society. The descriptions included types of assets, jobs, education levels, as well as personality and attitude traits that are common at the different levels. After identifying the community poverty line and the steps seen to belong in the middle class, focus groups were asked to distribute 100 households in their community across the steps, representing first the current situation and then the distribution ten years ago. Focus groups then move on to discussing trends in inequality and reasons for mobility up and down. 117