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Transition labor markets more flexible, but joblessness has risen – UN study

Transition labor markets more flexible, but joblessness has risen – UN study

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Workers in Central and East Europe are more mobile than they used to be but unemployment is a growing problem in the region, the United Nations International Labour Organization (ILO) says in a new report.

“Central and East European labour markets have increased their flexibility, but the forms of flexibility are different from those to be found in the OECD [Organization for Economic Cooperation and Development] countries,” says Alena Nesporova, co-author of the study, with Sandrine Cazes.

In developed countries, job turnover increases during economic boom times because higher demand for labour encourages people to leave their jobs for better ones, while during recessions labour turnover declines due to low demand, according to the report, Labour markets in transition: Balancing flexibility and security in Central and Eastern Europe.

In the transition countries, however, people do not trust the economic health of many of the companies offering new jobs. They know that if they become unemployed their loss of income would be dramatic and the support provided by labour market and social welfare institutions is poor. For these reasons, they prefer to stay in their current jobs even during an economic upswing.

Between 1994 and 2002 unemployment increased to 19.9 per cent from 14 per cent in Poland and to 7.3 per from 4.1 per cent in the Czech Republic. In 2000 unemployment rose to 13.4 per cent in the Russian Federation, compared to 8.1 per cent in 1994, according to the report.

Only two transition countries saw a drop in unemployment between 1994 and 2002: to 5.8 per cent from 10.7 per cent in Hungary and to 6.4 per cent from 9 per cent in Slovenia, the agency says.

The report recommends that countries review their labour legislation with a view to protecting workers, especially those in the informal sector. The authors also recommend that transition countries spend more money on labour market policies and strengthen social dialogue between governments, workers and employers.