2004年-世界发展银行全球_Firms_Jobs_and_Employment_in_Moldova_50页_354kb

Summary of "FIRMS, JOBS AND EMPLOYMENT IN MOLDOVA"

Core Content

This paper analyzes the labor market performance in Moldova, focusing on firm dynamics and their impact on employment and job creation. Despite a relatively low unemployment rate, the labor market is underperforming due to low employment levels and the prevalence of low-productivity, non-regular jobs. The paper argues that the primary issue is not high job destruction, but rather the low rate of job creation, which is attributed to a poor business environment.

Main Points

• Low Employment and Underutilization of Labor Resources:
  Moldova's employment ratio is 57%, below the OECD average of 66%. Many workers are in low-value-added, informal, or precarious jobs, leading to low earnings and higher poverty levels.

• Unemployment Rate vs. Labor Market Conditions:
  While the ILO/LFS unemployment rate is around 7%, the actual labor market is weak. A significant proportion of the working-age population is not productively employed, and many formal jobs are underpaid or non-regular.

• Gender Disparity in Employment:
  Men are more likely to be unemployed than women. Only 71% of prime-age men are employed, compared to 75% of prime-age women, which is the opposite of the pattern seen in OECD countries.

• Firm Dynamics and Employment Growth:
  Employment growth is determined by firm entry, expansion, and contraction. The paper presents a formula that links employment growth to firm dynamics and job creation/destruction rates.

• Firm Entry and Exit:
  The rate of firm creation is low in Moldova, especially compared to other transition economies. The rate of firm closure is also low, but the number of inactive or semi-active firms is high, indicating a lack of reallocation of resources.

• Firm Expansion and Contraction:
  Most firms in Moldova are contracting, leading to a significant reduction in employment. The ratio of contracting to expanding firms is 4:3, and contracting firms account for a larger share of employment due to their larger size.

• Job Creation and Destruction Rates:
  Moldova's job creation rate is significantly lower than in other transition economies, particularly Lithuania. The job destruction rate is somewhat higher than in Lithuania, but not enough to offset the low job creation rate, resulting in negative employment growth.

• Job Turnover and Reallocation:
  Moldova's job turnover rate is lower than in more dynamic economies, indicating limited restructuring of the labor market. The job reallocation rate is also lower, suggesting that resources are not being efficiently moved from declining to expanding firms.

• Impact of the Business Environment:
  High costs of doing business, including administrative barriers, costly inspections, and corruption, discourage firm formation and growth. These factors contribute to the low job creation rate and the persistence of inefficient firms.

• Policy Recommendations:

  • Improve the investment climate by reducing administrative and operational costs.
  • Facilitate the formation of new firms and reduce constraints on firm expansion.
  • Allow for the natural exit of unviable firms to promote restructuring and productivity.
  • Enhance labor market flexibility by revising the Labor Code to make it more adaptable.
  • Target active labor market programs at the most disadvantaged worker groups.

Key Findings

• Low Firm Entry and Job Creation:
  Moldova's firm creation rate is 7–8% for legal persons and 5% for natural persons, far below the 16–18% average in Central European transition economies.

• High Job Destruction Without Corresponding Creation:
  While job destruction is high, it is not matched by job creation, leading to a net loss in employment.

• Dominance of Non-Viable Firms:
  A significant proportion of firms in Moldova are non-viable, with many operating at a loss or in a non-regular manner, contributing to low productivity and employment levels.

• Low Productivity and Income Levels:
  The low productivity of many jobs results in low earnings, which exacerbates poverty and limits the labor market's ability to generate sustainable employment.

• Need for Structural Reforms:
  The paper emphasizes that structural reforms, particularly those improving the business environment and labor market flexibility, are essential for enhancing employment and reducing poverty.

Conclusion

The labor market in Moldova is characterized by low job creation, high job destruction without corresponding creation, and a significant underutilization of labor resources. These issues are primarily due to a poor business environment, high costs, and rigid labor regulations. The paper concludes that improving the investment climate and fostering firm growth and restructuring are crucial for enhancing labor market performance and reducing unemployment and poverty. Active labor market programs are unlikely to be effective unless they are specifically targeted at vulnerable groups.