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Transition, Globalisation and Labour in the BS &

CA Region23-24 February 2009

Athens

Kiichiro FukasakuHead of Regional Desks

Development Centre

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OECD and the BS Region

• The BS region is a key component of OECD’s broader Eurasia initiative

• Regional focus and national strategies

• 3 Main Objectives: Improve the business climate by sharing

OECD-country best practices and policy experiences

Peer review and peer learning

Assist partner countries in stimulating investment, creating jobs and supporting local businesses

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BSECAO BSECAO 20082008 An OECD Development Centre Economic

OutlookFocus on the BSEC-CA Regions• A cross-country comparative analysis of

macroeconomic and policy developments of the BSEC-CA region, involving 12 BSEC and 5 CA countries

Black Sea and Central Asia: Promoting Work and Well-being

• Recent economic developments in the BSEC-CA regions (Part I)

• Work and well-being: policy challenges in the global environment (Part II)

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GrowthGrowth Strong & Sustained Overall Growth

GROWTH:• Over 2001-06, average growth rate

for the 11 CIS countries was around 8 per cent, comparing favourably with Asian economies.

• Substantial improvements in productivity have been the driving force behind this strong growth.

TRADE:• The European Union is the main

trade partner for the region, accounting for over half of all trade for the six non-CIS countries.

• Russia is the main intra-regional trading partner,

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ExportsExports Specialisation in BSEC-CA Countries

Export specialisation (Balassa) Index average 2001-06

SITC group 1 2 3 4 6

 

beverages & tobacco

crude materials (ex.

fuel)

mineral fuels

animal & vegetable oils

manufactured goods

Albania 1.9 3.4 0.3 0.1 1Armenia 10.7 3.5 0.3 0.3 3.9Azerbaijan 0.8 0.9 8.8 2.3 0.2Bulgaria 2.5 1.9 0.9 0.7 1.8Georgia 18.8 7.4 0.4 0.1 0.8Greece 4.6 1.8 1 6.4 1.5Kazakhstan 0.2 2.1 6.9 0.1 1.4Kyrgyz Rep. 3.5 3.6 1.4 0 0.7Moldova 33.3 2.8 0.1 8.7 0.6Romania 0.2 1.8 0.9 0.6 1.4Russia 0.2 1.4 5.3 0.2 1.1Serbia 1.5 1.5 0.3 2.3 2.6Tajikistan* 0.2 7.6 0.1 0 4.4Turkey 1.1 0.5 0.2 1.2 1.8

Turkmenistan* 0 0.9 9.3 0 0.2Ukraine 1.2 2.4 1 5.2 3.1Uzbekistan* 0.6 10 1.5 0.2 1.4Source: OECD Development Centre / Comtrade, 2008

• No BSEC-CA countries have any form of specialisation in exports of food and animals (SITC 0), chemical products (SITC 5) or machinery and transport products (SITC 7)

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Central Europe:

First Wave of

FDI

SEE: Second wave of FDI

SCU:Third wave?

FDI in USD

Million

Source: EBRD Transition report 2007, OECD DAF/PSD

Successive Waves of FDI Flows

InvestmentInvestment

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Labour Market Policies in the Global Environment

SHOCKS:• Transition• Globalization

Firms(chapter 4)

Households(chapter 5)

Governments(chapter 6)

BSECAO BSECAO 20082008

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Labour Market Outcomes

• Transition in an open economy → – more severe recession than expected– ↑ volatility and job insecurity

• During the 1990s labour market policy responses were limited

• The Outlook describes how labour market policies evolved during the 2000s– but the context was also set by

households’ responses during the 1990s

BSECAO BSECAO 20082008

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Social indic.Social indic. A heavy social cost: death rates in BSEC-CA countries

Source: OECD Development Centre / IMF

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Households’ Coping Mechanisms• Short-term coping mechanisms

– family and community support• Longer-term coping mechanisms

– Informality*– migration

• Vulnerable groups and coping mechanisms– gender roles, urban-rural gaps, ethnic

relations, pensioners, children

BSECAO BSECAO 20082008

* Jütting & de Laiglesia (2009), Informal Is Normal?, Development Centre Studies , OECD; and Parleviet & Xenogiani (2008), “Report on Informal Employment in Romania”, Development Centre Working Paper 271, OECD

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Policy Responses• ILO Conventions and improving the

labour market environmentemployment protection, unemployment

insurance, minimum wage legislation, reducing informality

• Active Labour Market Policiespublic employment, vocational training,

microfinance, youth employment

• Public redistribution targeting social assistance

• Facilitating private redistribution

BSECAO BSECAO 20082008

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Conclusions and Policy Recommendations

• Investment on statistics• Regularising informal activities• Active labour market policies• Employment-oriented social polices

and targeted assistance• Migration, remittances and migrant

workers’ rights• Sustaining reforms for better job

creation

BSECAO BSECAO 20082008

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From BSECAO 2008 to the OECD Initiative for the South Caucasus and

Ukraine (2009-2010)

• GDP growth disparities across countries in the BS region

• FDI levels and growth still relatively low in the BS region Average FDI per capita up to 6 times lower than South East Europe or CEE Average FDI growth a third lower than regions like South East Europe Limited FDI diversification in most countries

Prioritise policies to improve the business climate and meet the skill gaps facing the private sector

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The OECD Initiative for the South Caucasus and Ukraine

- Key Dates for 2009 -

Preparatory meeting (2-3 March, Paris)

Ministerial conference (31 March-1 April, Paris)

Financial market development (4-5 June, Austria)

Investment climate policy and promotion (16-17 June, Berlin)

Human capital for financial and business services (October)

Advisory Council (November)

Preparatory meeting (2-3 March, Paris)

Ministerial conference (31 March-1 April, Paris)

Financial market development (4-5 June, Austria)

Investment climate policy and promotion (16-17 June, Berlin)

Human capital for financial and business services (October)

Advisory Council (November)

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Thank you