UNMIK ON AIR

Unemployment is one of Kosovo’s biggest problems. According to the latest research done by RIINVEST institute around there are around 450 thousand unemployed people in Kosovo and, unless there are drastic changes, this number will continue to grow at a rate of 21 to 25 thousand people every year.

With most of the employed working either in small private businesses or working the land, and no industry to speak of - or any short term prospect of creating one - the future of the kosovar unemployed does not seem too bright.

In addition to this, the average Kosovar salary is around 150 Euro, while the local prices rival those elsewhere in Europe. So it’s no surprise that a large number of people are making their living in the so-called informal economy. Which means that they are employed doing seasonal work or in the private sector, but they do not pay income taxes or pension contributions, they have no social security or work insurance and, they do not sign contracts.

Some employers welcome the opportunity to employ casual workers, since it is much cheaper than creating a proper contract. And, in a Kosovo where jobs are hard to find, most job seekers will accept any offer that comes in their way, never minding the conditions.

Muhamed Sadiku, from RIINVEST, says that this is no surprise, since the “informal economy” is a common by-product of a society facing an economic crisis:

CUt 1 : I do not think that this phenomenon is a Kosovar specialty. This has happened to all the countries that went through transition. It is because informal economy is a result of serious irregularities in general economy. And if we take a look at this phenomenon through the world economy perspective we will see that this type of economy is still present in a lot of places.

Still, it is quite damaging to the society as a whole, says Ismail Kastrati, the head of the Chamber of Commerce, since about one third of the revenues that would be collected through income tax is lost:

CUT 2 : When it comes to income taxes it is certain that this is very damaging since it is estimated that up to 30 percent of the people working are within the informal economy. But when it comes to the pension fund they are damaging themselves because none of them secures anything for their old age

Besides the damage that is being inflicted to the general budget Ismail Kastrati warns that people who are working in informal economy face a lot of risks, not getting the pension being the smallest of them all:

CUT 3 : There is another risk involved in this – A person employed in the informal economy can be hurt while working, can even become an invalid and he will not get any payments in the future. A person can actually die at his workplace and the employer will not bear any responsibility for that. He is not protected on his working place, he does not even have the right for holidays, daily breaks, even days off.

So, what should be done to improve the situation? According to RIINVEST’s Muhamed Sadiku the economic policy makers should try to orient the overall economy in another direction, including trying to cut down on all cash payments:

CUT 4 : I believe that the activities of the people who create economic policies in Kosovo should be oriented towards placing the economy from, how should I put it …from the informal tracks to formal tracks. Here I mean also moving financial transactions from cash to into the banking system .

Another way to deal with the problem of the informal economy is labour inspections. It has been well over a year since the labour law was introduced, and it quite clearly states the penalties for employers hiring workers without signing contracts. Ismail Kastrati from the Chamber of Commerce says that the inspectorate has been created quite some time ago, and that inspectors are ready to get out on the field but, there is a law under which the labor inspectors should function:

CUt 5 : It is understandable that there is labor inspection within the ministry of labor , which should oversee the way the law is implemented. But the regulation on the work of that inspectorate is still waiting to be approved,

And until it does there will not be much anyone could do to stop the informal economy from growing. Still, Muhamed Mustafa from RIINVEST, says that, at least when it comes to the informal economy, this situation cannot last too long:

CUT 6 : Kosovo has entered a stage of finalising its institutions and, within all of this, I do think that Kosovo will create a job market. First of all legislation will be created and the job market will be institutionalized, and this will be accompanied by a three-sided agreement between the government, the independent unions and the chamber of commerce.

An optimistic note closes today’s ….