Kosovo Human Development Report 2010 - UNDP Kosovo - United ...

not protect from exclusion from goods
and services. 49 This confirms that there
are many workers engaged in low-paid
and low-productivity jobs who do not
earn enough to move out of poverty.
Unfortunately, Kosovo has not succeeded
in raising the share of the population
that is gainfully employed and job opportunities
remain scarce. Employmentto-population
ratios have stayed nearly
steady during the period of 2003-2008
(see Figure 2.3), when Kosovo experienced
an almost “jobless” GDP growth
outside of the capital Prishtinë/Priština.
While the growing population and the
low skill level of job-seekers are some
factors contributing to this disappointing
outcome, the inadequate level of
labour demand remains the key constraint.
Labour demand has been insufficient
to absorb new labour force entries
and reduce the pool of the unemployed.
Inadequate labour demand is
also main cause for poorly remunerated
and low productivity jobs.
There are two possible causes of the
slow growth in labour demand (employment):
first, the low growth rate of
per capita real GDP and secondly, the
‘pattern of growth’. Economic growth
during the period 2003-2005 was only
slightly higher than the population
growth meaning that the GDP per capita
remained essentially stagnant. For
the period of 2003-2009, GDP per capita
growth rate averaged barely 1.8 percent.
An average annual growth in per capita
income of less than 2 percent is simply
not high enough to induce strong
labour demand and poverty reduction
– particularly without institutional
mechanisms for equitable and povertyfocused
distribution of revenues. Experiences
of other countries show that 2
percent growth in per capita GDP translates
into a minimum of 1 percent an-
FIGURe
0%
2.3
5%
10%
15%
20%
25%
Employment rate (percentage of working age
population)
30%
35%
25%
28%
Source: SOK, Labour Force Surveys (2003- 2008)
nual growth in per capita personal consumption.
50 A consumption increase
of 1 percent would barely prevent an
increase in poverty when the inequality
in the country is increasing. 51
In addition, growth has been dominated
by only two sectors: construction
and trade (imports), in response
to increased consumption financed by
foreign aid and remittances. Kosovo’s
agriculture and manufacturing sectors
- essential engines of private sector
growth, job creation and foreign
direct investment (FDI) - failed to recover.
52 This growth pattern which is
characterised by low private sector investments
in productive sectors and is
based on private consumption (fuelled
by remittances) limits the capacity of
the economy to generate additional
jobs and leads to lower increases in
employment.
Extractive industries such as mining
and minerals are another potential
source of growth that remain underutilized
mainly due to problems with
property rights and lack of sound and
transparent legal and institutional
frameworks for investment. Problems
29% 29%
2003 2004 2005 2006 2007 2008
27% 24%
ECONOMIC AND LABOUR MARKET EXCLUSION
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