Economy situation in the Western Balkan Region , possibilities and needs of agriculture employment of young people

The Western Balkan Economies - Informal, with Huge Unemployment and Unreforming

The countries from former Yugoslavia and Albania have a lot of common problems, but also some differences, which are rather to be qualified as insignificant. All of them suffer from extremely high unemployment, especially among the young people, of widespread corruption, a growing public sector, unjustified optimism when planning the budget and, in general, of bad management of public finances. All of them are in one way or another affected by the crisis in Europe because their markets are to a lesser or greater extent integrated with the EU's single market. In general, the Commission's document reports that all have maintained their political consensus in terms of the fundamentals of the economic and fiscal policy, excluding Bosnia and Herzegovina. But the wording is rather non-specific.

Short problems analysis Macedonia focuses more on political issues

and ethnic issues than on reforms

Macedonia is one of the poorest in the region with an average income per capita, measured by purchasing power standards, of 35% below the EU27 average (the analysis was made before Croatia joined in the EU on July 1st, 2013). The analysis points out, however, that this level was maintained, which means that in 2012 there was no change in the purchasing power of the Macedonians.

Macedonia has a relatively good macro economic picture. Although the EU reports that the external imbalances increased in 2012, they still are 3.9% as the increase is from 3% in 2011. The reason is mainly in the trade deficit which has reached 24 per cent of the GDP and is funded mainly by credit because the net foreign direct investments declined in 2012 by two thirds to 1.4% of GDP.

Montenegro Montenegro's fiscal policy is also very instable and, according to the report, the multilateral introduction of

the euro shows that the government has a very narrow space to conduct monetary policy. Montenegro's budget deficit remains high and in 2012 it was 5.6% of GDP, which is well above the set target in the budget - 2.4%, revealing serious problems with budgeting in Podgorica, as in all the other capitals in the Western Balkans. In an attempt to impose on itself fiscal discipline, the Montenegrin government proposed in July the introduction of a fiscal rule which is valid for the EU, too - a 3% budget deficit and no more than 60% public debt. The draft law, however, is not yet approved by Parliament. It envisages the establishment of an independent fiscal council that will evaluate the government's economic and fiscal policies, as is set in the fiscal compact, which most of the EU member states signed two years ago. The size of the government is huge, compared to other countries in the region - 47% of GDP. It has grown from 45 per cent in 2011.

Montenegro's government debt is also worrying because in 2012 it increased to 54 per cent of the gross domestic product. A huge burden for the budget are more than 30 companies with majority state-owned stakes. The process of privatisation, however, is going very slowly. Montenegro's economy is undergoing a process of restructuring from production (mainly of aluminium) toward energy. In general, the economy is shifting from production to services. Russia is the biggest investor in the country, while the EU is responsible for 50% of the investments. The EU's share in Montenegro's trade marked a decline in 2012 to 36.8% compared to 41.3 the previous year. Instead, the trade flows with the CEFTA countries are increasing.

Serbia - big and hesitating

This is the biggest economy in the region which also went through a recession in 2012, when it shrank by 1.7%. Unemployment in Serbia, too, has reached record heights of 23.9% as here, too, the youth and long-term unemployment are huge across the country. One of the main reasons the Commission revealed is the clumsy labour legislation. The fiscal discipline is also quite unstable. In the election year (2012), the government spending skyrocketed and entirely deleted the not very bold previous efforts for fiscal consolidation. The deficit instead of the expected 4.25% reached 6.4% of GDP, but without taking into account the money for bank recapitalisations and called guarantees. In 2013, the expectations, again, were far from reality. According to the Commission, the main problem is not only bad budgetary planning, but also the inefficiency of spending and the high spending on wages and pensions.

Another factor for the growing of spending and debt is that the state holds majority stakes in many sectors like energy, transport and telecommunications. Serbia has a debt ceiling of 45% of GDP, but it violated it when in 2012 the debt reached 60 per cent. As in all the other countries in the region, in Serbia too, the banking sector is dominated by foreign banks. Here, too, there is significant growth of non-performing loans - up to 19.9% in June 2013. The economy is dominated by services, although the share of agriculture remains big. EU remains a major trade partner to Serbia in 2012 with 58.1% share of the overall export and 58.2% of the imports.

Albania awaiting the candidate status

Generally, the Albanian economy was sheltered from the recession, but the dynamics of growth slowed down in 2012 to 1.6% of GDP which is a serious decline compared to 3.1% in 2011. The country, however, has serious imbalances. The current account deficit, although declining, was 10.5% of GDP in 2012. In 2011 it was 13 percent. The unemployment, too, is high, although not as much as in the above mentioned countries - 13%. In the first half of 2013, the number of unemployed slightly declined to 12.8%, but the long-term unemployment covers two thirds of all unemployed which reveals structural problems. The problem is, though, that statistics is very poor, apart from the very large informal sector which prevents the more precise number of jobless people.

The fiscal discipline is relatively strict in Albania where the budget deficit increased from 3% the previous year to 3.4 per cent in 2012. The debt, however, is quite high and in 2012 reached 62.9% of GDP, exceeding the 60% threshold, abolished in December 2012. In the banking sector the situation is also worrying and quite telling for this is the level of non-performing loans - 24.4% in the second quarter of 2013. In general, Albania's economy is services-oriented. The second important sector is agriculture. The production base is not diversified, the problems with electricity supply and the size of the informal economy remain the main challenges for the Albanian economic development. The GDP per capita remained at 30% below the EU average in 2012.

Bosnia and Herzegovina - the biggest challenge before the enlargement policy

The Dayton invention is the only exception in terms of national consensus for economic development. "[...] despite some slight improvement, the consensus on economic and fiscal policy essentials remains weak", is said in the Commission's report. In 2012, the Bosnian economy shrank by 1.1%, but in 2013 an improvement started. Bosnia, however, is among the countries that have serious imbalances. The current account deficit in 2012 reached 9.5% of GDP and is funded mainly by foreign borrowing, as the

World Bank is the biggest creditor.

In terms of unemployment, Bosnia is not an exception from the general picture in the Western Balkans with levels of 28.6% in 2012. Instead, the number of employed in the public sector is growing. The management of the public finances in general is bad. The public debt is growing and in the end of 2012 it was 44% of GDP. The business is having hard times to survive in the difficult political environment and still needs registration in the two state entities - Republika Srpska and the Bosnia and Herzegovina Federation. In the former, the registration of firms was significantly reduced from 23 to 3 days and the price also dropped to 200 euros. But in the Federation, the establishment of a company is much more complicated and expensive. The share of non-performing loans is also high and growing. In the second quarter of 2013 they reached 14.3%. Bosnia and Herzegovina's public sector is huge and inefficient, as many of the competences overlap or are duplicated.

Kosovo - a young, dynamic and full of unemployment country

Kosovo has the most dynamic economic growth than all the others in the region, but it felt the cold from Europe's economic troubles, not very strongly though. From 4.4% the economic growth declined to 2.5% in 2012. The country has gross domestic product per capita of 11% of the EU27 average. Unemployment is 35.1%, but comparisons with previous periods cannot be made due to recently introduced changes in the methodology and the high level of informal economy. Kosovo and Bosnia and Herzegovina - the two most difficult solutions from the war in former Yugoslavia - have the biggest problems with statistical data and generally the analysing of the main macro economic indicators.

The deepening of the analysis of the economies in the enlargement countries in the Western Balkans will probably support the European Commission's and EU's efforts to prepare them and themselves for the next enlargement wave. When will it be is too early to forecast, but it is certain that it will depend mainly on the efforts of the candidate countries to fulfil the growingly more precise criteria and the assimilation of the lessons from previous enlargements. Youth unemployment should be among the biggest concerns for the EU in the context of the visa-free regime and also against the backdrop of the hysteria with the abolishment of labour restrictions for Bulgarians and Romanians from January 1st. The conclusions in the same vein of the December EU summit welcome the Commission's efforts to increase the dialogue on the economic governance with these countries.

In this regard, the Council will be discussing how exactly to improve the bilateral and multilateral dialogue with them, including through cooperation with the major international financial institutions. The key, however, should be money for reforms. Otherwise, it could hardly be expected the Union to open its doors again in the coming decades, especially bearing in mind that the Union already has quite enough problems of its own that stemmed from previous enlargements.

Europe- agricultureThe agricultural sector has some special characteristics that make it more difficult, compared to other sectors, to know precisely how many people itemploys. Firstly, in most Member States agriculture is still dominated by family farms, where family members provide labour input at different times of the year. Secondly, many farmers and farm workers pursue agriculture as a part-time activity and have other more or less important sources of income.Thirdly, agriculture is characterized by seasonal labour peaks, where large numbers of workers may be hired for relatively short periods. Finally, statistical data sources with different methodologies and purposes reflect all these situations differently, resulting in figures that may differ greatly from one source to another.This Brief presents the most recent data on agricultural employment in the European Union to address the key question of the number of people employed in agriculture and the main characteristics of this agricultural labour force. It explores and compares the different Eurostat data sources for this information: the Farm Structure Survey, the Economic Accounts for Agriculture, the National and Regional Economic Accounts and the Labour Force Survey, to identify the most appropriate sources.

How manu people work in agricututre in Europe?

In 2010 there were 12 million farms in the European Union. Nonetheless, most data sources tend to agree in saying that around 10 million persons1 are employed in agriculture, representing 5% of total employment2 . On the other hand, the Farm Structure Survey (FSS) indicates that 25 million people were regularly engaged in farm work in the EU during 2010. These very different and somehow contradictory figures are explained by the special characteristics of agricultural employment but also by divergences in scope, methodologies and definitions. In particular, the FSS collects information about some categories of workers which are not included in other employment data sources, mainly family and part-time workers. Effectively, in most EU countries the bulk of farm work is carried out by the holders and their family members (mainly their spouses): together, they account for 92.2% of those working on the farms, to very similar shares (46.6% for the holders, 45.6% for their family members). Hired non-family workers only represent 7.8% of those regularly working on the farms. However, for many of the 25 million regularly working in agriculture, farm work only represents a minor activity: according to the FSS, more than half of them (13.8 million persons) spent less than 25% of their working time on farm work. Agriculture was a full-time activity for only 14.3% of them, being the main economic activity3 for a further 28.5% of the total (7.1 million persons)4 . As a result, when converted into full-time equivalent jobs (called annual working units or AWU in agriculture), these 25 million persons only represented 9.8 million AWU, which is close to the figures provided by other data sources1 and can therefore be considered a good estimate of the total number of people employed in agriculture in the EU.

Problems can be solved

In period of world crises, we have empty villages, the cities become to small for the people, to much unemployment, and food deficit…

The possibilities which NEA suggests like solutions are in agriculture reforms in the region.