Living Standards Measurements Study - Serbia 2002 - 2007

9. EMPLOYMENT STATUS
Despite significant positive changes over the
past few years, the Serbian economy is still
confronted with serious problems, unemployment
being one of the most serious. A high
unemployment rate represents one of the major
economic and social problems in every country as it
is a well-known fact that unemployment is closely
related to poverty and a low standard of living.
Regardless of the numerous hardships
encountered by the Serbian economy over the past
five-year period, a series of positive effects were
reported including: a growth in GDP, a moderate
inflation rate, an increase in real salaries, an
expansion of most of the economic activities, a rise in
industrial production, etc. yet all of it did not result in
the relevant increase in the number of employed and
unemployment reduction. From 2002-2007 GDP
grew at an average annual rate of 5.74 percent
whereas, in the same period, the unemployment rate
rose by 2.2 percent. The issue of high unemployment
carried over from the pre-transition period escalated
even more over the past five-year period as a result of
the ownership transformation and company
restructuring processes. The inherited number of
unemployed was also joined by an army of workers
whose firms were in bankruptcy or liquidation, as
well as by lay-offs from companies in which
restructuring and ownership transformation had been
completed. An even greater disparity between labour
offer and demand was created. Such disparity is
primarily reflected in the excessive offer, on one
hand and modest demand, on the other. Likewise,
there is a mismatch between the qualification, age
and professional structures of labour on offer and in
demand.
One of the objectives set in the National
Employment Strategy adopted by the government of
the Republic of Serbia from 2005-2010 is ensuring
full employment i.e. reaching an employment rate
of 70 percent - a standard adopted by the European
Union. At present, Serbia is still far away from
accomplishing the set objective.
Given that privatization was, for the most part,
completed in the period between 2002 and 2007, in
this chapter, we shall try to find an answer to the
question as to what took place in the Serbian labour
market in the period concerned using the data from
LSMS conducted in May 2007, and the Labour
Force Survey (LFS).
9.1. Activity status
It is a well-known fact that in terms of its
labour status, the entire population of a country may
be divided as follows:
• working population (employed) and
• population that do not work (inactive and
unemployed)
However, a classification by activity status is
much more often used. According to this
classification, the population may be divided as
follows:
• active 01 (employed and unemployed) and
• inactive
The above classification of the population is
shown in the following figure.
Figure 1 shows LSMS data for the total
population aged 15+ according to activity and
employment status. Data show that the activity rate
of the total adult population (aged 15+) is 54
percent, 3.8 percent less than in 2002. On the other
hand, during the past five years the proportion of the
inactive population has increased from 42.2 percent
to 45.9 percent.
The decrease in the active population within
the total population is due to the decrease in the
number of employed persons. The share of
employed persons in the total population has
decreased from 51.6 percent to 47 percent in the
past five years.
Labour force indicators (relating to the
population aged 15 to 64) show that over the past
five years, the Serbian economy passed through a
difficult and challenging period on its path towards
a market economy. This was particularly reflected
on labour market developments. The period
between 2002 and 2006 saw a constant decline in
the number of employed persons and a rise in
unemployment. In 2007, there was a positive
turnabout, yet the results are still very poor,
particularly when compared to the European Union
average. The activity rate1F1F2 of 64 percent is now
even further from the Lisbon objective of 70 percent
than in was in 2002 when it was 67 percent. The
results in 2007, as compared to 2002, exhibit a 2.2
percent increase in unemployment rate.
116 Living Standards Measurements Study - Serbia 2002 - 2007