Technical University of MoldovaEconomic engineering and business faculty

Students conferenceYouth Unemployment in Moldova

Student:

Lungu George

Accountancy, year 1,

group C111

Professor/Coordinator:

Zingan Olga

Chişinău 2012

Although Moldova’s current youth unemployment rate is comparable to the average for the countries of the European Union (which, in October 2008, was about 16%), young people in Moldova suffer clear labour market disadvantage. There is a negative correlation between age and the risk of being unemployed and those in the 15-24 age group face more than twice the risk of being unemployed than the next age segment (25-34). In the first quarter of 2009, most of the young unemployed had only secondary education or less, which places them at a disadvantage in the country whereby there are pay-offs to education in terms of labour market outcomes. The current economic crisis has adversely affected youth unemployment. In 2010, youth unemployment (i.e. involving those in the 15-24 age group) rose to 25% (compared to previous trends where youth unemployment fell from 20% in 2007 to 15,6% in 2008 and increased to 22% in 2009). The unemployment rate amongst young males (nearly 16%) is higher than for women (9%), although the employment rate for young males is also higher (17% for men, 15% women). Youth unemployment rate is higher in rural areas (14%, in 2010, urban areas 11%). In view of this, it is not surprising that migration from Moldova is also mainly from rural areas and substantially involves young people. So, while the average age of migrants in 2006 was nearly 35 years, over 37% were below 30.

Although the trends in return of migrants is not yet clear (due to a possible lagged response to the crisis), given the significant representation of young people in the migrant community and given migrants’ mainly rural origins, return would probably lead to detrimental effects on youth unemployment. And if migrants return to where they lived before migration, these effects will be predominantly felt in rural areas and will lead to further worsening of rural poverty.

The disadvantage of young people in the labour market Moldova may well deteriorate as the crisis unfolds. They will continue to face ‘normal’ labour market disadvantage (associated with lack of experience and distrust of potential employers) while, at the same time, having to compete with more experienced returning migrants. Even if there is insignificant return of migrants and hence increased competition for jobs does not eventuate from this source, young people will nonetheless be seeking jobs in domestic labour markets at a time of rising unemployment (7.7% in the first quarter of 2009 as compared to 5% in 2007). It would be surprising in these circumstances if youth unemployment were not further to increase, particularly if opportunities for migration are constrained.

Demand for labour is also likely to fall as a result of declining remittances. It is recognised that trends in the return of migrants to Moldova are not yet clear but, if there is significant return, the likely effects on remittances are apparent. And, even if migrants are able to avoid having to return, falls in remittances seem probable given declining employment opportunities in migration destinations. Indeed, estimates suggest that whereas, worldwide, remittances will decline by between 5% and 8% in 2009, Europe and Central Asia will be the most severely affected region with a fall of between 10% and nearly 13%. The effects of this level of remittance shock on the domestic economy in Moldova are likely to be severe and will, in turn, probably reduce the demand for labour.

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The causes of unemploymentFirst I have to specify that RM has no lack of educational institutions. Institutions in turn

don’t have a lack of students, of whom most of them record a success good to apreciate. But much of young people who graduate from high school, college and even university after finishing are confused, is this due to the educational system?

Namely, some of these young people end up unemployed or increase the ranks of the migrants, when they can thrive in their country.

Some of the reasons given by unemployed are:- Low wages;- Too much to work;- Lack of experience in the domain;- Lack of job places – which actually is closely linked with lack of information on

existing offerings.Lack of information on existing vacancies plays an important role in shaping unemployment.

Lack of information is due to both the state as well as employers. Some employers prefer to hire people known within the company, without taking into account the specialization or the experience owned. Most of the rural unemployed don’t know about the existence of the Agency of Employment and those who know do not try to submit their resume for lack of motivation, they are shure that the only chance is to emigrate.Emigration in the minds of young people has become a point hard to avoid, some of them voluntarily chose to emigrate after finishing the university, others whos parrents are already abroad are forced to follow them, but others do not return back after the programs like: “Work and Travel in USA”

University graduates also faces with other problems. First, knowledge and skills do not meed the criteria put forward by employers. Graduates have a good theoretical training, but too little practical training. Second, higher education is dominated by „prestigious” faculty requests: economics and law have a common share of over 50% of all graduates. These specializations do not correspond to labor market demand.

Today are increasingly requesting mechanical-engineers, developers, builders, engineers-technologists. A lot of young lawyers and economists fiind themselves in a position to accept offers that do not meet their specialization or to leave the contry. Few countries can afford the luxury to prepare unemployed and immigrants with higher education.

Young people choose "prestigious" specialties, but the labor market require technical specialties. To reduce the gap, the government should be stronger in stimulating young people to chose specialities required by the market.

Technical faculties could become more attractive to young people. Giving schoolarships, increasing number of budget places, providing placement for students and internship programs could help. An information campaign among abiturients would significantly increase the number of students doomed to unemployed conditions. Young people should learn having confidence that their intellectual effort and Financial Investments will not be lost. The state invests in education and training to raise citizens that it needs. Unfortunately Moldovan education system prepares increasingly more unemployed sentenced to exile.

According to data provided by The National Bureau of Statistics – the number of unemployed teenagers (15-24 years) (See Schedule No.1) in the period of 2000-2008 is continuously dicreasing, starting from 37 thousands unemployed in 2000 year and reaching up 15,6 thousands in 2008 year, almost 58% fewer unemployed. But starting with the year 2009 there is a significant increase, reaching 22,1 thousands from 15,6 thousands in 2008 year approximately with 30%. But the worst is that

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growth continues in 2010, unemployed young people reach 25,6 thousands an increase of 13% according to the previous year. Most probably that in 2011 growth will continue around 10%, but in 2012 with aproximately 7-8%, the upward trend is observed that the annual growth begins to shrink.

Even if GNP (See Schedule No.2) is continuously increasing, unemployment is not decreasing wich means that a big part from GNP is built from remittances.

Up to 2009 year unemployment in Republic of. Moldova had a quite low level compared with other countries, but since the begining of 2010 its increasing due to return of the migrants – for example in the first quarter of year 2009 from Rep. of Moldova went abroad in search of a job around 13% fewer people than in the first quarter of the year 2008, which also reflected on the number of the unemployed, usually the biggest part from them are men looking for a job. Also in 2010 can see some people who where inactive before and relied on remittances sent by other family members began to look for jobs. But this is a problem that was created over several years because of the lack of jobs and failure to create new jobs in RM, which at the moment was aggravated.

Solutions?Its really hard to find solutions namely in times of crisis. Because solutions for the existing

unemployed are few, because the budgets revenues are low and in the same time the number of the unmeployers rise, this means that a possible increase in the unemployment allowance would bring high costs for the budget for wich he isn’t prepared to support now. The solutions are the clasics one, creating a climate that is favorable for businesses, to encourage companies to hire more or to keep existing jobs. Eliminate any barriers to carrying out business process – this is a condition necessary for keeping a high level or rising the number of job places. 

Another solution wich would have effect on a short period would be of course facilitating recruitment of remittances, but this wouldn’t solve the problem of increasing the employment rate in Moldova, but rather medium-term unemployment problem, when European countries will recover after the crisis. The rest are the medium-term solutions that need to be implemented, namely the business climate and some changes or reforms in education system, which are very important and sometimes we see that they are an impediment to employment for the youths.

Infrastructure projects can be a solution to problem?The infrastructure projects, how shows the experience of other countries, indeed contributed to

employment even during the crisis, but here again it depends on what we have. If we take credit for infrastructure investment, then we could talk about it. But at the moment when we have not contracted loans, we can not say that we will do it, although it is also a solution – infrastructure investments have a positive effect on both short-term employment and, consumption respectively.

ConclusionYoung people want to study faculties that are currently the best payed. As

long as the state will not intervene and will not motivate students to chose other faculties, the number of unemployed and migrants would be in a continuous growth.

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