LABOUR MARKET ADJUSTMENTS IN A TRANSITION ECONOMY OF THE CENTRAL AND EAST EUROPE - ALBANIA Arsena Gjipali, PhD Faculty of Business and Economics Tirana University

General trends of LM in Albania Double digit unemployment rate Around 15% from 2000 and on. Highest for females than males High rate of long-term unemployed (90%) Falling employment Among the lowest in the region of less than 50% of LF. Young demographic structure

Adjustment of the LM Adjustment of LM into non-participation of the labour force; Emigration ; Informal labour market; Hindered unemployment (more than 50 % of labour force in agricultural sector). Poor labour reallocation Between sectors Across regions Mismatch of human capital supply and demand.

Recommendations for government decisions Improve macroeconomic performance Improve the matching processes Provision of incentives to measure and raise educational and professional attainment. Design a complementary package of policy measures Increase positive externalities of labour demand and supply from investing into human capital. Improve social infrastructure Support productive activities; Encourage capital accumulation, skill acquisition, invention, technology transfer.

Challenges for labour market policy Redress the problem of low employment Creation of high productivity jobs in the private non-agricultural sector. Domestic firms Attract FDI (improve domestic climate) Reduce the area of informality Build a coherent LM policy Establish proper legal and institutional LM framework Monitor and enforce procedures Aim Active labour market policies Build a system of comprehensive statistical information.