Almost two-thirds of working age women in the Western Balkans are either outside the workforce or unemployed, an IMF report says. This situation has contributed to the region having some of the highest unemployment rates in Europe, even at a time when labour markets in the more developed Central and East European (CEE) countries are tightening dramatically.
The working paper, “Western Balkans: Increasing Women’s Role in the Economy” finds that various factors — such as higher education levels, a balanced family leave policies and addressing the “tax wedge” — could help the situation but that sustained economic growth and more robust institutions are also needed to bring substantially more women into the workforce.
Unemployment in the Western Balkans is well above EU levels for both men and women, but it is particular high for women, at around 14 percentage points above the EU average over the last decade.
The female labour force participation rate is below 20% in Kosovo and around 30% in Bosnia, whereas in other countries such as Albania and Montenegro it is not far off the EU average. Meanwhile, the female employment rate diverges even more sharply from the rate in the EU.
The report’s authors, Ruben Atoyan and Jesmin Rahman, stress the negative consequences of this situation for the region’s income convergence to advanced Europe, which has lagged behind other CEE countries.
“Looking forward, the region is set to experience a decline in its working age population which further dampens convergence prospects,” the report says. “There is now a well-documented literature that shows that raising participation of women to the levels of men can significantly boost income per capita particularly in middle income countries.”
The current situation is partly due to the lower level of economic development in the region compared to other parts of Europe. A decade of war in the 1990s, affecting most countries from the region, was unsurprisingly a setback economically, by destroying many industries and delaying the privatisations and economic liberalisation that took place at the beginning of the transition era in other parts of the bloc.
This had implications for female labour force participation, which is typically high in poor countries, but falls as incomes increase — due to a combination of social factors and competition from men — then rises again in line with women’s higher education levels.
The report stresses the importance of educational attainment to female labour force participation. “[W]omen tend to stay outside the labor force or unemployed significantly more than men unless they have a tertiary degree,” say the authors. This has also contributed to the lower level of women in skilled or managerial positions — a situation also seen in other CEE countries.
But there are other factors that have contributed too. Female employment spikes in the 25-54 age bracket. Youth unemployment is particularly high in the region. Meanwhile, a statutory retirement age of 60 in most countries, and an even lower effective retirement age is a contributor to high inactivity rates among older women, the report says.
The official data also hides informal (and often unpaid) work either in the home or in family businesses.
Other social factors are the lack of affordable childcare services and family leave policies that tend to discourage women returning to work after having children as well as not offering alternatives such as paternity leave.
On the fiscal side, “disincentives in the form of higher tax wedge and social benefits contribute to women’s relatively lower participation in formal job market”.
“A country’s relative empowerment of women and success in durable inclusion of women in the labor force seems to be strongly positively correlated with policies to improve education, legal barriers, parental leave policies and entrepreneural support,” says the report. “The [Western Balkans] region, when compared to other European countries, fare poorer both in policies and outcome.”