English language UNEMPLOYMENT AND RECESSION (Example BIH)
Date 25.05.2016. Surname and name: Spahić Nesiba 1. INTRODUCTION
- In Bosnia and Herzegovina, the consequences of the economic crisis are not more expressed than in other similar countries. Currently, the trade deficit balance of payments in Bosnia is relatively low, but it is still unknown whether Bosnia will face high deficits as it was the case earlier. In Bosnia, the consequences of the crisis have not been more expressed than in other similar countries. Bosnia has a huge state apparatus, and a large proportion of stateowned enterprises. Without a rapid recovery, this sector could find itself in huge problems. It will be necessary to align costs with lower revenues, including pension and health funds.
Bosnia will also need a lot of money to cover the costs of pensions, the unemployed and the disabled population, so, this problem needs to be solved on a creative way and by finding out how such problems have been solved by other countries. The theme of this seminar paper is "Unemployment and recession in
Bosnia and
Herzegovina". Through this paper, I will present unemployment and recession theoretically and practically on the example of Bosnia and Herzegovina. The unemployed people are among the members of society who are partially employed, or not working full time, as they do not have enough income for the mismatch in normal lifestyle. Unemployment can be opened and hidden. There are four major types of open unemployment: 1. Frictional or normal unemployment of workers who change jobs or are interrupted due to lack of materials, 2. Seasonal unemployment; as a result of inability to perform certain tasks because they are tied to the seasons, 3. Technological unemployment; caused by diverting production, 4. Cyclical unemployment; caused by business cycles and other similar disorders. Open unemployment is increasing a lot in a time of crisis, recession.. Hidden unemployment stems from the lack of exploitation of the labor force; which means a form of unemployment resulting from insufficient exploitation of the labor force. Huge efforts of companies to achieve a high level of employment was creating an unnecessary number of jobs for employees. Through this paper, I will cover the following thematic units: 1) the problem of research, 2) the purpose and objectives of research, 3) scientific methods, 4) the structure of the work.
2. THE PURPOSE AND OBJECTIVES OF SEMINAR PAPER ▪
The purpose of this seminar paper is the research of the object that is being analyzed, which, in this case is research of unemployment and recession in Bosnia and Herzegovina.
▪
The aim of this paper is to point out the importance of employment in Bosnia and Herzegovina.
3. MATERIALS AND METHODS
Method used to write this seminar paper is: comparative. The comparative method is a process of comparing the same or similar facts, appereance, processes and relations and determining their similarities and differences in their behavior and intensity -allows investigators to obtain different ideas, or new conclusions, that enrich knowledge
4. RESULTS Research results of this paper are presented in several parts: ▪
The first part describes the unemployment and recession rate of post-war time and the end of four-year long aggression.
▪
In the second part, I presented the unemployment rate in Bosnia and Herzegovina today.
▪
The third part relates to the basic features of the general crisis in Bosnia and Herzegovina.
▪
The fourth part talks about areas of the most intense impact of world economy.
▪
The fifth part describes the problem of global recession in Bosnia which is bigger and longer than in other countries.
5. ECONOMIC RECONSTRUCTION (DISCUSSION) For every post-war time, there are three periods: ▪
Stabilization
▪
Reconstruction
▪
Development
Stabilization time represents the time of the inventory, and the inventory leads to reconstruction and development, which are conditioned by the situation and the possibility of financial support of the international communities, especially the international financial institutions, organizations, donor countries - primarily the World Bank. Support from international financial institutions and donors is particularly important in the period of reconstruction, because this period is crucial whether Bosnia and Herzegovina will develop slower of faster in the future. After the end of almost four-year war in Bosnia, and with the advent of peace in this region, new hopes for swift restoration and reconstruction have appeared in Bosnia. How fast is Bosnia and Herzegovina going to be restored and when will we achieve what we already have had , depends on the international community and financial institutions, as well as our own forces. Some countries, which have gone through a similar situation like ours,show us that the relatively quick recovery is not only predictable, but also realistically possible. An example of Germany, whose economy in the first year after World War II had a growth of 30 percent. Of course, there are countries that have failed to revive their economy in the post-war conditions or after major internal crashes. That happened because these countries have failed to create conditions for the implementation of the reforms the world community suggested. In Bosnia and Herzegovina, the key conditions are: • The creation of a stable macroeconomic environment, • Good management structure at all levels, • Adequate international support, official and private, channeled through good organization and coordination mechanisms. 5.1 RECESSION AND UNEMPLOYMENT IN BOSNIA AND HERZEGOVINA
EMPLOYMENT: In this group are people engaged in any kind of paid work as well as those who have jobs, but they are absent from work due to illness, strike or holidays. Slow job creation and low labor demand is the key problem of unemployment in Bosnia. In comparison with neighboring countries, Macedonia has the lowest employment rate. The labor market and employment in Bosnia and Herzegovina is facing a number of challenges:
• Low level of active working-age population • A high number of "discouraged" • Insufficient job creation (increase in the number of jobs in the informal market) • Inconsistent education programs • The EU standards are at a higher level than in Bosnia • Employment agencies play a limited role in mediating between supply and demand. One of the measures that helps in reducing a long-term unemployment is support for opening private businesses and registering them. Almost a quarter of the economically active population is unemployed: only two out of five working-age persons are employed. Unemployment can be classified according to different viewpoints. The traditional division of types of unemployment according to their causes usually differ: • Normal, • Cyclical • Structural unemployment Normal
unemployment
includes
seasonal
and
frictional
unemployment.
Seasonal
unemployment is the result of strong variations of economic processes in certain sectors caused by traditional or institutional conditions. Significant changes on the supply of labor at certain times during the year, for example, the end of the school year, can also be a cause of seasonal changes in the level of unemployment. Frictional unemployment occurs due to the constant movement of people between areas and employment or through various parts of lifecycle. Structural unemployment denotes mismatch between supply and demand of workers in terms of occupation, education and qualifications. This mismatch may occur because the demand for one type of work is growing while demand for another kind of work reduces the conditions in which labor supply can quickly adapt. In economic theory, an important place has the distinction of voluntary and involuntary unemployment. People who refused a job offered can be called voluntarily unemployed, because they chose to seek for further job hoping for better conditions, and also, persons who have voluntarily left the previous job can be called voluntary unemployment.
5.2 BASIC FEATURES OF GENERAL CRISIS IN BOSNIA AND HERZEGOVINA Unfortunately, various forms of crisis and its different intensity are present here in Bosnia for a long time. The population here is used to the hard life, the uncertainty, low standard, isolation, political instability, the poor quality of public services, poor infrastructure, corruption etc. The general crisis in Bosnia is caused by several factors. Some of them are: Political instability, poor state of the economy, the absence of the law, low efficiency of reforms, high poverty, low level of coordination between different levels of government, low efficiency of the institutions, the great role of the international community. 5.3 AREAS OF THE MOST INTENSE IMPACT OF GLOBAL ECONOMIC CRISIS IN BOSNIA AND HERZEGOVINA We still can not be certain of consequences that will be left by the global economic crisis on Bosnia. Joint action to prevent the bad effects of the crisis does not have to be converted to centralize the creation of new state institutions. Simply, the crisis is a phenomenon that knows no political, national, religious, regional, and any other boundaries. It expands economic channels, aggravating activities and spreading poverty. Harbingers of serious impact of the global economic crisis on Bosnia are already present, although some people do not want to accept this fact. Here in Bosnia, stock exchanges have already experienced the crash. Many investors in the stock markets suffered heavy losses. And even though they are already high, interest rates are increased. Interest rates on earlier borrowings are also increased. 5.4 PROBLEM OF GLOBAL RECESSION IN BOSNIA BIGGER AND LONGER COMPARED TO OTHER COUNTRIES The global recession brings economic downturn, lack of liquidity in the realistic sector, problems of financing of current income, growth and development,and the enormous growth of unemployment. Three main features of the crisis are: a drop in asset prices, the fall in employment and production, and a decline in the real value of public debt in Bosnia, due to the adoption of the depreciation of the labor market and the political sensitivity of the problem
of mass long-term unemployment. In the pre-recession time, it has been repeatedly pointed out to "slower progress of structured reforms. Unemployment rate will cause a huge pressure on the budget of the country and the impoverishment of a lot of people. This will lead to potential conflicts between those who have jobs and those who do not. Economic inequality between employed and unemployed, as well as among employees, penetrate and undermine cohesion. High inequality leads to the increase of crime, increased corruption, greater macroeconomic instability and lower life expectancy. Sustainable development during the crisis is particularly a complex problem, especially because the neo-liberal individualism has destroyed social cohesion and deepened the antagonism between labor and capital. Broken social cohesion like this has eliminated the citizens' feeling of patriotism. 5.5 PRIORITY GOALS OF EMPLOYMENT STRATEGY The aim of the employment strategy in Bosnia is to promote full, productive and freely employment for all. The main objective of the employment strategy in Bosnia and Hercegovina is to increase the quantity and quality of jobs, to promote social inclusion and fight against inequality between the sexes. 5.5.1 Priority objectives: • The main priority is the economy of Bosnia and Herzegovina. Bosnia needs to improve the capacity to enable sustainable and strong growth in employment, to improve the quality of the workplace, to reduce the deficit, and to offer a productive employment and decent work. • An equally important priority is to increase the relativity of education and training to build skills, and also to develop human resources for women and men. This method is the most important for the contribution to move to higher productivity, employment growth and income growth. • The third priority objective would be to improve the effectiveness, efficiency and management of policies and labor market institutions.
According to analyzes and assessments of economists from the Vienna Institute for International Economic Studies, in relation to the countries of the region, Bosnia is the worst because it has the lowest percentage of employees to the total working-age population and one of the highest unemployment rates. Forecasts for the next year are even gloomier. Bosnia will get out of the crisis in about two years, at least when it comes to the macroeconomic indicators, but this benefit will not be experienced by all population. This year, unemployment will, from last year's 24 percent, increase to 27 percent, regarding to analysts from Vienna.
6. CONCLUSION
At the very beginning , the topic of this seminar paper looked very simple, but, during collecting information about this topic, I realized that this was a very complex and demanding topic to write about. Before the war, there were companies where people worked at full capacity, but after the war, businesses were destroyed without almost any reconstruction.
Today, in Bosnia and Herzegovina, number of uneducated people is increasing, which could affect the development of Bosnian economy. In Bosnia, it would be preferable to invest more in human knowledge, so that ,'tomorrow', we get the right person to lead the economy in Bosnia. The greatest wealth of Bosnia and Herzegovina are wide forests and clean mountain rivers. After 1995, there was a big increase in production which led the economy and the country to start recovering. Bosnia and Herzegovina has started accession negotiations with the European Union in November 2005. Bosnia and Herzegovina is a country which today offers a huge number of resources and natural beauties, attractive locations, a large number of available production facilities, transparent legislation, low taxes, educated workforce, and more. Also, it is an ideal place for foreign investors in Bosnia and Herzegovina who have the same status as the citizens of Bosnia in terms of rights and obligations. I believe in a better future for Bosnia and Herzegovina, by increasing the number of employees, reducing recession and development of the economy in general.
7. REFERENCES Books : •
Hatunić E., Isaković M., Kuč H., Menadžment i ekonomija u funkciji privrednog razvoja BiH,Tuzla,2012.
•
Zulić A., Sakić Dž., Svjetska banka Bosna i Hercegovina, Srajevo, 1998.
•
Dr. Tomaš R., Kriza i siva ekonomia u Bosni i Hercegovini, Beograd, 2010.
•
Zbornik radova, Internacionalna konferencija; „Kako upravljati u vrijeme krize“, Univerzitet u Tuzli.
Internet : •
http://www.mcp.gov.ba/zakoni_akti/strategije/Archive.aspx?langTag=bsBA&template_id=108&pageIndex=1
•
http://www.fes.ba/files/fes/pdf/publikationen/2013/FES%20-%20studija%20o %20nezaposlenosti%20-%202013_11_29.pdf
