In Serbia, an inflexible and outdated labor code has been a major inhibitor for the competitiveness of domestic companies and, in turn, the Serbian economy as a whole. Reform of this legislation was the focus of a recent event hosted by CIPE partners the Serbian Association of Managers (SAM) and the Center for Liberal Democratic Studies (CLDS) in Belgrade.
The event gathered close to 100 participants from government, private sector, civil society, and media to discuss the key barriers and recommendations for possible solutions for improving labor legislation and reducing red tape.
Looking at the impact of the global economic crisis on the Arab world, the new issue of the Arab Reform Bulletin published by Carnegie brings up a number of important issues that will resonate far beyond the region.
Particularly interesting is the piece on reform prospects in Egypt. From public dissatisfaction with dire economic conditions and a widening gap between the have and have nots to an expanding public sector in light of tight fiscal conditions, Egypt certainly faces some tough reform choices in the coming months and years.
Not only in Egypt, but elsewhere in the world, governments are facing a difficult choice. As economies continue to contract or stagnate, the ranks of dissatisfied with socio-economic conditions swell. In countries with little diversification and weak safety nets, people who lose jobs face few opportunities besides taking it to the streets in protest, turning to survival entrepreneurship, or even embracing criminal means of generating income. For many governments, the only practical option seems to be opening up the public sector coffers and providing employment or subsidies — something they ultimately can’t afford, especially in the times of crisis.
Just thinking about creating private sector jobs in the times of crisis can get depressing (see South Africa and the challenges of permanent unemployment), but it is possible. For instance, in many emerging markets, just reducing the levels of corruption and extortion to lower the pressure on business, might do the trick. However, instead, in countries like Russia, we’ve seen the opposite – corruption pressures intensifying, putting companies out of business entirely and destroying jobs in the process.
Education is the backbone of any modern, competitive society. In this Feature Service article, Manilka W. Leanage, 3rd place winner in CIPE’s 2007 Youth Essay Contest in the category of ‘Education Reform and Employment,’ talks about the need to make Sri Lanka’s education system more responsive to the needs of students and the market. Despite very high literacy rate and free education up to the tertiary level, young Sri Lankans find themselves unprepared for the challenges of a modern workplace. Many are unable to pass highly selective university entrance exams; and even those who complete their university education often lack the skills and entrepreneurial drive to succeed professionally.
Leanage highlights the problem of youth unemployment among the educated: “I personally know a rickshaw driver named Jayantha who lives in my area. He told me one day that he held a bachelor’s degree in liberal arts (with honors), was unable to find a job, and had being driving rickshaws ever since graduating to support his family. A sad story, but it is the reality of Sri Lanka.” He concludes that “There are many young people able and eager to contribute to the society if only given that opportunity. Possibilities abound if these young people have proper education and exposure to practical training.”
Article at a Glance
- Sri Lanka’s education system is inadequate to equip students with practical skills and knowledge.
- Curricula require extensive updating and teachers need better training to help students achieve their academic and professional goals.
- The business community must be better integrated with the education system in order to foster skills needed to succeed in the job market.
This week, the world is celebrating the Global Entrepreneurship Week. As the organizers are putting it:
For one week, millions of young people around the world will join a growing movement of entrepreneurial people to generate new ideas and to seek better ways of doing things. Dozens of countries are coming together for the first time to host Global Entrepreneurship Week, an initiative to inspire young people to embrace innovation, imagination and creativity. To think big. To turn their ideas into reality. To make their mark.
There are a ton of ideas circulated already – or thousands to be exact – among hundreds of organizations and individuals from nearly 60 countries. And not just ideas – but concrete projects and activities. There are things like the Global Innovation Tournament and Mentoring Maddness.
The way the event is organized and conducted is quite interesting – it makes entrepreneurship exciting. And its quite important, especially in places where upon graduating young people tend to look towards the public sector for employment, even if the public sector is not always up to task. Traveling around the world, its not uncommon to see young people who don’t think of private enterprise as an option. There are many reasons for this.
Sometimes its culture, family pressures, or education. Sometimes its skills or lack of financing. But oftentimes, its simply institutions.
The legal and regulatory barriers are not brought up in discussions on entrepreneurship as often as they should. We talk about innovation, risk-taking, business plans, financing, education, and many other things – all quite important. But we sometimes forget about the institutional barriers.
You may obtain the necessary financing, but in a corrupt society, where are the guarantees
The Iraqi government is growing in size, steadily moving towards pre-2003 levels, according to this NY Times piece by Campbell Robertson. Not only the growth in the size of the government is putting pressures on the budget, it is also a sign of another worrisome trend – the inability of the private sector to generate jobs and provide opportunities outside of the public sector.
One interesting stat:
In 2006, 31 percent of Iraq’s labor force was working in the public sector, according to the agency for statistics in the Ministry of Planning. The agency expects that figure to reach 35 percent this year, about 5 percentage points short of where the C.I.A. estimated it to be on the eve of the 2003 invasion.
As the article puts it, the problems of private sector growth and job creation are linked to the security situation and the lack of credit. While these are certainly important factors, another key point is missing in the analysis - institutions.
CIPE’s own survey of the Iraqi business community revealed that its was legal and regulatory climate as well as governance concerns that private sector saw as impediments to its own growth, especially as many felt that the security situation did improve last year. More specifically, outside of security, the top concerns for Iraqi companies were:
- Not applying laws and regulations (i.e. lack of enforcement)
- High fees
- Lack of respect for property rights
- Difficulties in obtaining loans
- Challenges of communications
Certainly, the government has its hands full. Still, thinking more broadly about improving the business climate across the board – not just providing loans – and taking tough steps to actually improve it, is a viable solution to the employment problem in Iraq. And, considering the growing pressures of its own size, its in the best interest of the government to do so.
Bhutan, a small country wedged between China and India, has made great strides over the past 45 years toward transforming itself from an isolated kingdom into a fledgling modern democracy. The country has progressed in terms of economic and political development, but one significant area still lagging behind is the education system.
In his Feature Service article, Kinley Rinchen, Planning Officer in the Office of the Vice Chancellor at the Royal University of Bhutan and an honorable mention winner in CIPE’s youth essay competition, traces the development of Bhutan’s education system and analyzes its current challenges. He emphasizes that more reforms are necessary to make the country’s education system able to better meet the needs of students and employers. As the Bhutanese economy grows, it needs well-educated and skilled labor in order to make this growth sustainable.
“Education Reform in Bhutan: Meeting the Employment Challenge” was entered in the “Educational Reform and Employment” category and notes that due to inadequate education, many of Bhutan’s graduates have only limited skills that are insufficient for finding suitable employment in a modern marketplace. Instead of striving to acquire the necessary private sector skills, many young people prefer to wait for government employment. In practice, however, that translates into prolonged unemployment since the public sector cannot possibly accommodate all job seekers.
Appropriate education system and curriculum reforms could change that. If young people are equipped with critical thinking, creativity, innovation, and leadership skills in the course of their education, they can succeed in the job market.
Article at a Glance
- Bhutan’s current education system does not meet the needs of students and employers, only contributing to growing youth unemployment.
- Most Bhutanese students tend to see education as a way to obtain jobs in the public sector, which cannot accommodate them all.
- School curricula should emphasize more skills-based training as well as critical thinking, creativity, innovation, communication, and leadership skills sought after by private sector employers.