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

have been compounded by the ongoing
poor performance of the energy
sector. Business cannot thrive in a
climate of frequent and unpredictable
power outages. The business environment
also continues to suffer from
many weaknesses of policy and regulatory
practices. In the World Bank Doing
Business Report 2009 Kosovo was
ranked as the 113 th country out of
183 countries. The report emphasized
Kosovo’s problems in dealing with the
post-registration phase of starting a
business, which includes operational
licensing and a variety of permits
(ranking 164 th ), construction permits
(ranking 176 th ), and contract enforcement
(ranking 157 th ). 53
Low productivity in agriculture
sector: the agriculture sector, which
along with food processing, is considered
to have a comparative advantage
and growth potential, remains disorganized
and is characterised by average
small land plots, inefficient production
practices, low factor productivity,
and limited income generation.
As a result, many smallholder farmers
remain mired in poverty.
The average farm size utilized in
Kosovo is about 1.4 hectares normally
spread over multiple plots. This farm
structure leads to subsistence farming
and prevents the sector from
meeting its production potential. Agricultural
productivity and yields are
low in small farming. Combined with
the low access to technical assistance
and lack of credit, agricultural farming
is performed with inadequate use
of inputs as well as outdated farming
and management practices.
Inadequate and untargeted social
protection: the current social protection
system in Kosovo consists of
40 | KOSOVO HUMAN DEVELOPMENT REPORT 2010
a narrowly targeted social assistance
benefit and a network of social work
centres that provide counselling and
referral services to individuals and families
at risk (young offenders, orphans,
victims of domestic violence, etc.), as
well as a three-pillar pension system
comprising a flat-rate basic pension,
a mandatory advance funded scheme
and a voluntary enterprise-based
scheme. The pension system is complemented
by special schemes for war
invalids, early retirement to support restructuring
in the mining sector and a
recently introduced disability pension.
In Kosovo, the social protection
system is far from fulfilling its main
function which is protection against
deprivation. The World Bank calculates
that in the absence of the social assistance,
poverty would be higher by
about 2 percentage points; whereas
in the absence of pensions poverty
would be higher by about 4 percentage
points. 54 This is largely because
the current social protection system is
characterised by very limited benefits,
and low coverage of the poor.
The current policy defines two categories
eligible for social assistance:
Category One households are those
without any member of the family capable
of working, and Category Two
households are those with only one
member capable of working who is
registered as unemployed with the
Public Employment Service (PES) and
is actively seeking work, and with at
least one child under the age of 5 or an
orphan under the age of 15. The pension
system in Kosovo is also far from
adequate – seen as a symbolic gesture
to Kosovo’s 138,900 elderly. As a flatrate
system, it makes very limited distinction
between length and amount
of contribution. A household with