Transition from school to work – Serbian perspective Mihail Arandarenko ETF Workshop Turin, 18 June 2007

Structure of the presentation Macroeconomic and demographic framework Labour market – current situation and perspectives Youth labour market Links between education and labour market Reforms of education system Standardisation and differentiation Labour market structure and its impact on school to work transition Open research and policy issues

Macroeconomic and demographic framework Relatively high GDP growth, without transition recession (but due to low base) However, jobless growth, as a result of –Transition, esp. sales privatisation –Neglected employment policy (broadly defined) ● Demographic framework –emigration and secular ageing of the population – mean age over 40 years

Labour market balance trends Continuous growth of unemployment, reduction in unemployment and participation LFS unemployment rate doubled since 2000, some impact from methodological change Total Female Part. rate Empl. rate Unempl. rate

Age groups on the labour market, LFS 2006 Share in population Share in unempl Share in employment

Educational distribution of working age population, unemployed and employed, LFS 2005 Education Pop. share Unemployment share Employment share Less than primary Primary Vocational Secondary Higher

Labor market indicators by age groups LFS 2005 Total Participation rate Employment rate Unemployment rate Long term unemployment

Labour market indicators for educational groups, LFS 2005 Less than primary PrimaryVocatio nal Second ary Higher or more Participation rate Employment rate Unemployment rate Long term unemployment

Transition possibilities for exit from unemployment by age, EmployedOut of labour force Unemployed Age groups

Transition probabilities for exit from unemployment by education, EmployedOut of labour force Unemployed Education groups Less than primary Primary Vocational Secondary Higher or more

Summary of the analysis of labour market indicators and matrices of transition probabilities Status of the youth on LM very unfavourable – inherited but also insufficient job creation However, young and prime age workers have similar chances to exit from unemployment Quality of jobs held by youth is inferior – typically informal jobs or flexible employment contracts Education offers less advantages in terms of labour market status then expected – higher participation and employment rates, but not significantly lower unemployment rates Secondary and higher education do not increase probability for exit from unemployment ( )

Institutions and policies on the labour market and youth In principle, labour legislation rarely treats youth separately from other age groups – except in protection of workers younger then 18 and treatment of probationary workers New fiscal measures – tax and contribution reliefs for private employers employing young workers below 30 years of age – significant gross effects (some 5,000 placements in 6 months), but exposure to deadweight effect. Need net impact evaluation.

Looking ahead: Labour market trends Two sub-periods – stagnation or slight worsening until the end of privatisation in 2008: after 2008 recovery and growth of employment and participation However, it would be too optimistic to predict rapid improvement in labour market indicators because of large number of ‘bad jobs’ in informal economy, self- employment and agriculture. These will have to be transformed into ‘good jobs’ in the second sub-period. At that time, however, skills gap will become more prominent, with a growing number of vacant jobs requiring modern skills Until 2012 – LFS unemployment rate 15-17%, but higher participation and employment rates and better quality of jobs.

Basic labour market indicators for young (15-24) and younger prime-age (25-34) workers, LFS Participation 17.6%54.8%37.0% 90.0%89.2% Employment 7.3%30.1%19.2% 65.5%72.5% Unemployment 58.6%45.1%48.1% 27.2%18.7% 2005 Participation 19.1%52.1%35.8% 76.3%88.5% Employment9.1%28.1%18.7% 49.9%68.3% Unemployment 52.0%46.2%47.7% 34.6%22.8%

Labour market status of youth yrs by education level Participation rate Employment rate Unemployment rate 2004 No education 42.0%12.8%69.6% Unfinished primary 45.2%24.1%46.7% Primary 14.3%7.6%46.6% Secondary 51.2%26.1%48.9% College 71.0%42.1%40.7% University 68.4%52.6%23.1% 2005 No education31.4%8.1%74.1% Unfinished primary35.0%17.1%51.0% Primary15.6%8.7%44.6% Secondary48.5%25.3%47.9% College74.8%37.6%49.8% University63.2%25.4%59.8%

Participation in formal education by age groups Age group In education Out of education In education Out of education %24%75%25% %67%37%63% %47%56%44%

Primary and secondary education Mandatory primary lasts 8 years. First and most important choice at the age of 15. Almost 90% of age cohort continues further education, choosing between 4-year gymnasium, leading to matura exam and further university education (23% of all enrolled in secondary schools in 2004/05) 4-year vocational education, with the possibility to enter university (56% of all enrolled in secondary schools in 2004/05) 3-year vocational education (21% of all enrolled in secondary schools 2004/05)

Secondary and higher education Secondary education 2004/5 (Statistical Yearbook 2006) takes place in: 138 gymnasiums 347 vocational schools Art schools; Vocational schools for children with special needs. Vocational schools offer choice of 312 profiles within 15 areas. Education participation rates 2004/2005 (Statistical Yearbook 2006) 7-14 years 99.03% years 77.09% Higher education takes place at: 135 faculties of social and natural sciences 25 art faculties and 3-year colleges

Standardisation levels High standardisation of curricula in priamry and general secondary education Insufficient stadardisation in vocational secondary education Challenges of standardisation in higher education (Bologna, public vs private universities etc)

Differentiation Early differentiation of streams (after 8 years of schooling) Differentiation of results relatively modest (grades 1-5 i 5-10) Progress differentiation –Within the education level – more through dropouts then through grade elimination –From lower to higher level – good, both through gymnasiums and 4-year vocational schools

Labour market structure and access of youth Primary private sector – internal labour markets, but good access for youth with higher education Secondary private sector – external market, good access for youth Public sector – internal labour markets, very limited access for youth Socially owned firms – external labour markets, no access Self-employment – limited access, lack of loans Informal sector – external labour markets, primary entry point for youth

Problems in linking the sphere of education and sphere of work Growing ‘skills gap’ in sight – labour market is changing much faster compared with the education reforms at all levels Active labour market programs – training and retraining Choice of strategy and institutional framework Vocational education University education Role of social partners