Social Cohesion in Eastern Europe and the CIS Marek Belka Executive Secretary of the UN Economic Commission for Europe Under-Secretary-General of the United Nations June 2007 Santiago, Chile United Nations Economic Commission for Europe

Economic Overview of the ECE Region: 56 countries of Europe, Central Asia and North America Rapid Economic Growth and Favourable Prospects Tremendous Diversity: Region Has the some of the Richest and Poorest Economies Future Growth Will Need to Be in Knowledge Intensive Industries-UNECE Has a New Program A Major Challenge from Globalization Is How to Preserve the Social Welfare State

Solid Real Growth in the ECE After a Difficult Decade (1990s) There Is Now Solid Growth in the Transition Economies especially since 2002

Per Capita Income in the UNECE Region:Significant Diversity

Social Cohesion in Eastern Europe and the CIS Poverty Unemployment Gender Discrimination Ethnic Inequalities and Discrimination Migrants, Refugees, Internally Displaced Basic Dimensions of Social Exclusion in the Region:

Inequality in the Transition ECE Above Western Europe, Below Latin America Latin America 50+ U.S. France Nordics

Inequality Increased during the Transition Two Different Patterns of Increasing Inequality: Poland Typical of NMS, Russia of CIS

Poverty in the ECE Region Highest in Central Asia, Caucasus 40 Million ($2.15PPP) and 150 million ($4.30PPP)

Central Asian and Caucasus As Poor as Many African Countries

Poverty: The Vulnerable Groups Rural Areas Unemployed Ethnic Minorities Retired, Elderly Unskilled Single Parent Households Health Problems

Poverty Varies Significantly Within Countries --Geographically Kyrgyzstan Note: Poverty is generally lowest in capital cities Source:UNDP

Unemployment in the Transition Economies Quite high during the 1990s, but has been declining; still very high in southeast Europe A significant percent are long-term due to large structural changes (2 to 3 times western levels) Likely to result in poverty since weak safety nets, tight eligibility, limited funds for active labor market policies Large informal sectors with no benefits Youth unemployment often twice the overall rate

Gender Pay Gap: Worsened During the Transition Percentage Women’s Pay Is Less than Men’s Red=Transition Economy

Ethnic Problems and Refugees There are 530,000 Refugees in Europe Significant number of ethnic minorities in a number of countries Especially a problem in southeast Europe Redrawing of borders and creation of new states have created new minorities, changed national languages, created ongoing conflicts Citizens often speak different languages Example: Georgia: 30% don’t speak one of the several Georgian dialects (9% Russian, 7% Armenian, 6% Azeri, 7% Turkish, etc.) Approximately 7 million Albanians live outside its borders in neighboring states Bosnia: 48% Bosniak, 34% Serb, 15% Croat

The Ethnic Dimension of Poverty The Roma of Southeast Europe Source: UNDP

Improving Social Cohesion Economic growth must be maintained; stick with economic reforms, don’t backtrack Improve social safety nets Resolve political conflicts Address ethnic and gender discrimination Improve access to education and health resources Encourage creation of SMEs, self- employment Keep borders open; benefits of trade and migration