57
Skills for improved productivity, employment growth and development
workers. During recessions and as part of policies to boost employment of younger
workers, active labour market policies have often included early retirement schemes.
75. Another gender-related issue to take into account is that mid-career and older
women returning to work (after raising a family) have specific skill and retraining
requirements. If these needs are not met, women re-entering the labour market may
experience downward occupational mobility. This underutilization of female workers’
skills has implications for economic productivity.
76. The OECD and the European Commission have both recommended integrated
comprehensive policy approaches to address the range of issues surrounding older
workers (learning and productivity, social security costs, discrimination in the labour
market). In Austria, the so-called “Employment Pact” for older workers was launched as
a tripartite initiative in the mid-1990s
8
to increase the supply of older workers and
stimulate demand for them by lowering the cost of employing them. It includes the
following measures:
ɽ
encouraging later retirement and flexible retirement (for example, gradual
reduction of working time while contributing to pension benefits);
ɽ
legislation to counter age discrimination (already in force for several decades in the
United States);
ɽ
guidance and training programmes targeting older workers, accompanied by advice
and guidance for employers;
ɽ
employment placement services and support for other labour market
intermediation; and
ɽ
coordinated and comprehensive packages of age-friendly employment measures
and policies developed and implemented jointly by government, employers, trade
unions and civil society.
2.2. Countries of Central and Eastern Europe (CEE) and
the Commonwealth of Independent States (CIS)
9
2.2.1. Higher productivity but stagnant employment growth
77. When market-oriented economic policies were introduced in the early 1990s, all
CEE and CIS countries had comparatively low productivity levels. Labour hoarding and
the absence of market incentives for the production of goods and services were major
contributing factors (van Ark, 1999). High employment levels prevailed and wages were
low. As reforms were introduced, however, employment levels fell, drastically in CEE
countries and less so in CIS countries. High unemployment and low wages have
8
In the face of declining labour force participation and rising unemployment of persons over the age of 50, the
Austrian Government and representatives of employers and employees (within the national context of the
country’s national Action Plan for Employment) put in place a set of policies aiming, on the one hand, to provide
incentives for employers to retain and train workers over the age of 50 and, on the other, to ease these workers’
return to employment if they become unemployed (European Foundation for the Improvement of Living and
Working Conditions, 1999).
9
Central and Eastern Europe (CEE): Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic,
Estonia, Hungary, Latvia, Lithuania, Montenegro, Poland, Romania, Serbia, Slovakia, Slovenia, The former
Yugoslav Republic of Macedonia and Ukraine. The Commonwealth of Independent States (CIS): Armenia,
Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Republic of Moldova, Russian Federation, Tajikistan,
Turkmenistan (Associate Member) and Uzbekistan.
30
53
Connecting skills development to productivity and employment growth in developing and developed countries
triggered migration outflows from Central Europe to Western Europe and from the
Central Asian Republics to the Russian Federation.
78. Recently, some CEE countries have embarked on a path of positive economic,
productivity and employment growth; in other countries, this has not happened yet. By
contrast, many of the Central Asian Republics face difficulties in resuming economic
productivity and employment growth, as GDP per capita still remains below 1990 levels.
The limited available data, especially from the CIS countries, show that the painful
adjustment period has not ended in most of the countries in this group.
ɽ
Across the CEE countries, employment growth continues to lag behind GDP
growth, and in some countries employment levels have fallen, particularly in post-
conflict economies. Across the countries that have joined the EU, annual GDP
growth rates are typically three to four times higher than employment growth rates
(Cazes and Nesporova, 2006).
ɽ
Measured from 1995 to 2005, productivity rose dramatically in many CEE
countries. Growth rates ranged from about 40 per cent in Bulgaria, Czech Republic,
and Slovenia, to just over 100 per cent in Estonia and Latvia (ILO, 2007a).
ɽ
However, on average these countries had large shares of workers in vulnerable
employment (12.7 per cent on average across the CEE countries). Despite the large
productivity gains, this share fell by less than one and a half percentage points on
average across these countries during that same ten-year period (ILO, 2007a).
ɽ
In the CIS countries, vulnerable employment was even higher (19.7 per cent of
employment in 2005) (ILO, 2007a).
ɽ
Fully one fifth of the workers in Central and South-Eastern Europe and the CIS
countries lived on US$2 per day (ILO, 2008c).
79. Most countries started the transformation process with universal primary education
and literacy rates and a strong tradition of secondary education, including technical and
vocational training. Data for 2005 show that on average 85 per cent of the labour force
had secondary or higher education (ILO, 2007a). The ability to attract new investment
has also hinged on the availability of skilled workers. Many car manufacturers, for
example, were drawn to the Czech Republic and Hungary, as these countries offered a
skilled workforce, competitive wage rates and proximity to European markets. However,
education and training participation rates have dropped, partly as a result of economic
hardships and partly because much of what was offered had become irrelevant in the
transition from a command to a market economy. The ageing workforce will present a
major economic, labour and policy challenge for many years to come, with important
implications for education, training and migration policies.
2.2.2. Investing in relevant education and training programmes
80. The pursuit of market-oriented economic and social policies and the collapse of
training in state-owned enterprises have drastically reduced the supply of training, and
what is on offer is not always relevant to new labour force needs in emerging industries
and services. A major policy challenge for CEE/CIS countries is to restructure education
and training systems and to invest in education and training that is relevant to the new
market economy.
81. In most CEE/CIS countries, public education and training budgets declined
markedly in the 1990s. Participation in school education went down as fees were
introduced and parents withdrew children from school, which threatened future skills
31
48
Skills for improved productivity, employment growth and development
development in the region. Vocational education and training output plummeted. In
Kazakhstan, 42 per cent of the population aged between 14 and 18 years was enrolled in
vocational training and technical education programmes in 1989; by 2000, the share had
dropped to just 24 per cent (UNICEF, 2004). Poor pay for teachers and deteriorating
training infrastructure exacerbated the problems.
82. Investing in new skills that are in demand in the new economy is the new focus.
Many CEE countries are upgrading secondary and vocational curriculum materials and
investing in new areas of skills, for example in banking, finance, computer software,
administration and secretarial work. Training in core work skills is also being integrated
in curricula to enhance individuals’ employability. Many CEE/CIS countries are
endeavouring to improve programme quality by setting competency standards to guide
the development of new curricula and, ultimately, strengthen qualifications systems,
including skills recognition. Systems for skills assessment, accreditation and recognition
are expected to improve individuals’ employability and labour market efficiency.
83. Investing in managerial and entrepreneurial training is also a high priority. Job
and wealth creation depend on an enterprise culture based on risk-taking and
entrepreneurship. The medium-sized enterprise sector has grown in the CEE/CIS
countries but is still relatively small. In 2003, enterprises employing more than 250
employees accounted for 51.2 per cent of total employment in the Russian Federation,
compared to 34.2 per cent in the European Union (RSMERC, 2004).
84. For both small and larger enterprises, business, managerial and entrepreneurial
training has become an important tool for boosting innovation, productivity and growth.
Demand for accountants and managers and for courses in organizational behaviour,
labour relations, human resources management, marketing and related subjects has
mushroomed, while demand for engineering and science professionals has dwindled
generally throughout the region. In the Russian Federation, business training
programmes tripled their output in a decade to 140,000 graduates in 2000 (Mechitov and
Moshkovich, 2004). Governmental and non-governmental programmes increasingly
support small business development, investing in local incubators that provide business
support services and entrepreneurial skills training. Many secondary school programmes
also inculcate business skills and culture in young people, a learning component that was
missing in the past (a specific example is given in box 2.5).
Box 2.5
Know About Business (KAB) programme in Central Asia
In 2002, the ILO and vocational training institutions in some Central Asian countries
started the KAB programme to promote positive attitudes among young people towards
enterprise and self-employment. The KAB programme gives vocational education
students knowledge and practical skills to start, operate and work productively in a small
enterprise, and accustoms them to an environment where full-time wage jobs are scarce.
The curriculum has been adopted as the official business education curriculum for
secondary and vocational training schools. An assessment carried out in Kyrgyzstan in
2007 showed that 44 national vocational training institutions (42 per cent of all
institutions in the country) had introduced the programme, with more than 4,000 students
participating. An additional 15,000 individuals are expected to participate in the training
by 2009.
Source: ILO, 2007d.
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Connecting skills development to productivity and employment growth in developing and developed countries
2.2.3. The role of labour market institutions in mitigating
the negative effects of economic restructuring
85. National public employment services (PESs) were established in the early 1990s to
address the needs of the burgeoning population of unemployed and dislocated workers in
most of the CEE/CIS countries. They primarily administered unemployment benefits,
but have also begun to implement active labour market policy measures to combat
unemployment and help individuals to find jobs (Cazes and Nesporova 2006).
10
They
canvassed businesses for vacancies, which they matched with jobseekers’ skills profiles,
and provided career guidance, training and retraining to the unemployed in preparation
for new occupations, including self-employment.
86. PESs address important equity concerns, taking into account the fact that many
jobless people lack resources and can only afford training and retraining with PES
assistance. These services help the most disadvantaged in society access employment,
for example by supporting job placements for persons with disabilities (ILO, 2004b).
They also help young people to find a first job, particularly those who lack alternative
means to do so. They have proven vital in helping young people to gain access to labour
market information and career advice and in identifying suitable job vacancies (Cazes
and Nesporova, 2006).
11
87. Strengthening social dialogue on education and training plays an important role in
making training programmes more relevant.
12
A recent ILO survey of national social
dialogue on employment policies (Rychly and Vylitova, 2005), found that workers’ and
employers’ organizations are becoming more active in the field of training policy. In
Poland, for example, they are instrumental in designing training curricula. In Estonia,
they are members of the Foundation for Vocational Education and Training Reform. In
the Czech Republic, they are represented on the Council for Human Resources
Development. In most CEE/CIS countries, the social partners are increasingly active in
administering PESs.
88. The social partners, and employers’ organizations in particular, can be instrumental
in improving the quality and efficiency of education and training systems. They can
identify the skills needs of enterprises and translate these into training policies and
programmes. Employers’ organizations can raise their members’ awareness of the need
for more and better workplace training. Evidence concerning current levels of training
taking place in enterprises is scant. A survey conducted by the Georgian Employers’
Association revealed that 43 per cent of its members did not invest in improving
employee skills, although 85 per cent recognized that such investment could raise
productivity and competitiveness significantly. In Azerbaijan, only about half the
enterprises surveyed had plans to provide training to their employees (ILO, 2006h).
10
Across 11 CEE countries, total expenditure in 2002–03 on labour market policies as a percentage of GDP
ranged from 0.28 per cent in Lithuania to 1.25 per cent in Poland, with the share devoted to active labour market
policies being 16 per cent in Lithuania and 11 per cent in Poland.
11
In Romania in 2004, for example, the youth unemployment rate was 21.4 per cent, compared to a rate of
7.1 per cent for adults. In Poland, the figures were 39.5 per cent and 18.8 per cent.
12
“Members should … define, with the involvement of the social partners, a national strategy for education and
training, as well as establish a guiding framework for training policies at national, regional, local, and sectoral
and enterprise levels” (Recommendation No. 195, Paragraph 5(a)).
33
52
Skills for improved productivity, employment growth and development
2.2.4. Education, training and lifelong learning to raise
workforce productivity, adaptability and mobility
89. The European Union’s Lisbon Strategy is the major policy instrument of CEE
countries for enhancing productivity, innovation and competitiveness. It advocates more
R&D and investment in human capital, education and skills to boost productivity,
innovation and competitiveness. Increased investment resources would raise the demand
for skilled workers and contribute to overall job creation.
90. The Lisbon Strategy has education and training policy implications for the
European Union’s CEE member countries, and also for aspiring members in the region,
which need highly skilled and adaptable workers who are able to create and use new
technologies effectively. In boosting innovation and competitiveness, policies and
programmes relating to lifelong learning will gain importance. With the accession of a
number of CEE States to the EU, the Lisbon Strategy is the main policy instrument for
enhancing productivity and competitiveness, and all new EU Members have national
action plans in place for its implementation. These countries are also directed by the EU
Guidelines for Growth and Jobs that call for improved access to vocational, secondary
and higher education, as well as efficient lifelong learning strategies.
13
91. Improving workers’ labour force participation, adaptability and mobility is
particularly relevant in the countries of Eastern Europe, including Ukraine and the
Russian Federation, because of their rapidly ageing labour force. Paying attention to
older women will be exceptionally important because of their longer life expectancies.
14
In the near future, there will be fewer workers than today in these countries to operate
factories, offices and workplaces. A reduction in the number of workers may induce
productivity-enhancing investments. The demographic trend is also likely to motivate
policies to increase labour force participation, encourage workers’ adaptability and
enable older workers to remain in or re-enter the workforce. Introducing polices to
manage the flow of skilled workers in and out of CEE/CIS countries is of growing
importance as a policy instrument to manage the supply and demand of workers at
various skill levels – a theme addressed in Chapter 4.
92. Many countries in the region have large migrant worker populations. The Russian
Federation (14 million migrants), Ukraine (7 million) and Kazakhstan are large net
receivers of migrant workers. In the Russian Federation, many of them come from the
Caucasus and Central Asia, and send remittances to their home countries. Meanwhile
Central European workers, particularly construction workers, migrate in large numbers
to Western Europe, causing skill shortages at home. At present, some 15,000 highly
educated specialists leave Ukraine each year. Bulgaria is estimated to have lost 50,000
scientists and skilled workers since the early 1990s (Mansoor and Quillin, 2007). Many
countries fear that the “brain drain” may damage their future ability to innovate and
compete internationally. Furthermore, the poor labour market situation in many countries
(in particular Belarus, Republic of Moldova and Ukraine) is resulting in increasing
vulnerability of young women in the region to exploitation with the rise in human
trafficking.
13
http://ec.europa.eu/growthandjobs/index_en.htm
14
Women’s life expectancy is longer in all regions. In the Eastern European and CIS countries, the gap in life
expectancy between women and men has increased since transition for a variety of reasons. In the Russian
Federation, for example, women live 13.3 years longer than men on average (UNECE, 2003).
34
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