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Social Consequences of
Transition
Vladimir Gligorov
Content
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Risks and skills
Flexibility and social safety nets
Migration
Inequality
Public finances
GDP and employment growth in NMS and NIS
Index 1995 = 100
GDP BY
GDP RU
GDP UA
EMP UA
GDP NMS
EMP NMS
EMP BY
EMP RU
220
200
180
160
140
120
100
80
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: INDEUNIS research results
GDP, employment, productivity 2000-2006
2000 = 100
With approximately five years delay, developments similar to those in the NMS
Employment, LFS
GDP
Productivity
Candidates countries (HR, MK, TR)
130
120
110
100
90
2000
Source: wiiw Database
2001
2002
2003
2004
2005
2006
GDP, employment, productivity 2000-2006
2000 = 100
With approximately five years delay, developments similar to those in the NMS
Potential candidate countries (AL, BA, ME, RS)
150
Employment, reg.
GDP
Productivity
140
130
120
110
100
90
2000
Source: wiiw Database
2001
2002
2003
2004
2005
2006
Employment trends in SEE
1990=100
AL
HR
BG
RO
MK
ME
RS
110
100
90
80
70
60
50
1990
1993
1996
1999
2002
2005
Unemployment in SEE
unemployed in % of active population, average, LFS
Bosnia & Herzegovina
Macedonia
Bulgaria
Croatia
Montenegro
Romania
Kosovo
Serbia
60
50
40
30
20
10
0
1996
1999
2002
2005
Long-term unemployment in SEE
unemployed - 12 months and more, in % of total unemployed
2000
2005
BG
EU-15
100
90
80
70
60
50
40
30
20
10
0
HR
AL
BA
MK
RS
ME
Kosovo
RO
Youth unemployment rates in SEE, LFS
15-24 years, in %
Albania
Macedonia
Bulgaria
Croatia
Montenegro
Romania
Kosovo
Serbia and Monten.
90
80
70
60
50
40
30
20
10
0
1996
1999
Notes: Note: Albania registration data.
2002
2005
Flexibility
• Relatively flexible labour markets
• Declining social safety nets
EPL index, employment, unemployment
in the SEE and peer countries
Country
total
EPL index
reg.
temp.
males
females
coll.
(1)
(2)
(1)
(2)
Albania
2.6
2.1
3.0
2.8
61.4
12.9
38.3
18.2
Bosnia and Herzegovina
2.6
1.8
3.1
3.3
42.3
28.9
20.8
34.9
Croatia
2.7
2.7
2.8
2.5
60.7
12.8
46.3
15.6
Macedonia
2.8
2.0
3.1
4.0
45.6
37.0
31.3
36.3
Serbia and Montenegro
2.9
2.2
3.1
3.8
54.6
15.1
40.6
17.2
Bulgaria
2.0
2.2
3.4
2.6
56.0
14.1
49.0
13.2
Romania
2.8
1.7
3.0
4.8
63.8
7.5
51.5
6.4
Slovenia
2.7
2.7
2.3
4.8
67.4
6.3
57.6
7.1
(1) - employment rate, (2) - unemployment rate, in per cent respectively. Sources: see above.
Inequality
• Diverse
• In Central Europe similar to average in the
EU
• In others higher inequality
• Effects of market power
• Effects of crisis
Development of income inequality
in Central Europe, Baltic States, SEE and CIS, 1989-2006
unweighted averages of Gini coefficients (income based)
Central Europe
SEE
Transition
countries
(polynomial
trend)
Polynomisch
(Transition
countries)
CIS
Baltics
45
Gini coefficient
40
35
30
25
20
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: UNU-WIDER: World Inequality Database Version 2.0c, w iiw calculations.
Income inequality in world regions
unweighted averages of Gini coefficients (income based), 2003
55
Sub-Saharan Africa
Latin America
50
China
45
Gini coefficient
South Asia
East Asia
Russia
40
CIS
USA
Middle East
& North Africa
35
SEE
30
Central Europe
& Baltics
Western Europe
25
Source: UNU-WIDER: World Inequality Database Version 2.0b , own calculations.
Distribution of income &
source of income
Correlation of functional distribution and inequality in transition countries
CE & Baltics, SEE and CIS
50
2002
Gini coefficient
45
y = -0.40x + 48.75
2
R = 0.27
40
35
30
25
20
15
15
20
25
30
35
40
45
50
55
Compensation of employees, in % of GDP
Sources: AMECO database, CIS STAT database, UNU-WIDER: World Inequality Database Version 2.0c .
Role of labour market institutions
Correlation of coverage rate of collective agreements
in transition countries, 2001
45
40
Central Europe,
2001 &
Baltics
BGR, ROU, HRV
Gini coefficient
35
y = -0.15x + 36.80
30
2
R = 0.44
25
20
15
10
0
20
40
60
coverage rate of collective agreements
Sources: Schroeder (2004), UNU-WIDER: World Inequality Database Version 2.0a.
80
100
Migration
• Very high outflow from some countries
• Significant numbers of refugees in some
regions
• Brain drain and return migration
• Functionings and capabilities
Public sector
Public sector
Pensions spending
Pensions
Health
Education
Conclusions
• Social impact large but often positive after
the initial transitional recession
• Social differentiation increasing, but not
unusual for development
• Crisis effects may be significant