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 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 FIGURE 0.1 Across Countries, Inequality Is Perceived to Be 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. Note: 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 t at is largely de ned y sta le e - 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 o en unrealistic, e ectations. 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 FIGURE 0. Men and o en See Jobs and actors ssociated wit Job O ortunities as t e u ber One Dri er o ward 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. FIGURE 0.3 Job Losses Most Often Trigger Downward 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 FIGURE 0.5 Many Common Jobs Are Not Considered Actual Jobs in the Region 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 Interventions to overcome and influence 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