Social Consequences of Transition Vladimir Gligorov

Content Risks and skills Flexibility and social safety nets Migration Inequality Public finances

GDP and employment growth in NMS and NIS Index 1995 = 100 Source: INDEUNIS research results

GDP, employment, productivity = 100 Source: wiiw Database With approximately five years delay, developments similar to those in the NMS Candidates countries (HR, MK, TR)

GDP, employment, productivity = 100 Source: wiiw Database With approximately five years delay, developments similar to those in the NMS Potential candidate countries (AL, BA, ME, RS)

Employment trends in SEE 1990=100

Unemployment in SEE unemployed in % of active population, average, LFS

Long-term unemployment in SEE unemployed - 12 months and more, in % of total unemployed

Youth unemployment rates in SEE, LFS years, in % Notes: Note: Albania registration data.

Flexibility Relatively flexible labour markets Declining social safety nets

EPL index, employment, unemployment in the SEE and peer countries (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, unweighted averages of Gini coefficients (income based)

Income inequality in world regions unweighted averages of Gini coefficients (income based), 2003 SEE CIS East Asia Russia USA Middle East & North Africa South Asia Sub-Saharan Africa Latin America Central Europe & Baltics Western Europe China Gini coefficient 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 y = -0.40x R = Compensation of employees, in % of GDP Gini coefficient 2002 Sources: AMECO database, CIS STAT database, UNU-WIDER: World Inequality Database Version 2.0c.

Role of labour market institutions

Migration Very high outflow from some countries Significant numbers of refugees in some regions Brain drain and return migration Functionings and capabilities

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