Technical University of Moldova

Economic engineering and business faculty

Students conference
Youth Unemployment in Moldova

Professor/Coordinator: Zingan Olga

Student: Lungu George Accountancy, year 1, group C111

Chiinu 2012

Although Moldovas current youth unemployment rate is comparable to the average for the countries of the European nion !"hich# in $ctober 200%# "as about 1&'(# young people in Moldova suffer clear labour mar)et disadvantage* +here is a negative correlation bet"een age and the ris) of being unemployed and those in the 1,-2. age group face more than t"ice the ris) of being unemployed than the ne/t age segment !2,-0.(* 1n the first 2uarter of 2003# most of the young unemployed had only secondary education or less# "hich places them at a disadvantage in the country "hereby there are pay-offs to education in terms of labour mar)et outcomes* +he current economic crisis has adversely affected youth unemployment* 1n 2010# youth unemployment !i*e* involving those in the 1,-2. age group( rose to 2,' !compared to previous trends "here youth unemployment fell from 20' in 2004 to 1,#&' in 200% and increased to 22' in 2003(* +he unemployment rate amongst young males !nearly 1&'( is higher than for "omen !3'(# although the employment rate for young males is also higher !14' for men# 1,' "omen(* 5outh unemployment rate is higher in rural areas !1.'# in 2010# urban areas 11'(* 1n vie" of this# it is not surprising that migration from Moldova is also mainly from rural areas and substantially involves young people* 6o# "hile the average age of migrants in 200& "as nearly 0, years# over 04' "ere belo" 00* Although the trends in return of migrants is not yet clear !due to a possible lagged response to the crisis(# given the significant representation of young people in the migrant community and given migrants mainly rural origins# return "ould probably lead to detrimental effects on youth unemployment* And if migrants return to "here they lived before migration# these effects "ill be predominantly felt in rural areas and "ill lead to further "orsening of rural poverty* +he disadvantage of young people in the labour mar)et Moldova may "ell deteriorate as the crisis unfolds* +hey "ill continue to face 7normal labour mar)et disadvantage !associated "ith lac) of e/perience and distrust of potential employers( "hile# at the same time# having to compete "ith more e/perienced returning migrants* Even if there is insignificant return of migrants and hence increased competition for 8obs does not eventuate from this source# young people "ill nonetheless be see)ing 8obs in domestic labour mar)ets at a time of rising unemployment !4*4' in the first 2uarter of 2003 as compared to ,' in 2004(* 1t "ould be surprising in these circumstances if youth unemployment "ere not further to increase# particularly if opportunities for migration are constrained* 9emand for labour is also li)ely to fall as a result of declining remittances* 1t is recognised that trends in the return of migrants to Moldova are not yet clear but# if there is significant return# the li)ely effects on remittances are apparent* And# even if migrants are able to avoid having to return# falls in remittances seem probable given declining employment opportunities in migration destinations* 1ndeed# estimates suggest that "hereas# "orld"ide# remittances "ill decline by bet"een ,' and %' in 2003# Europe and Central Asia "ill be the most severely affected region "ith a fall of bet"een 10' and nearly 10'* +he effects of this level of remittance shoc) on the domestic economy in Moldova are li)ely to be severe and "ill# in turn# probably reduce the demand for labour*

The causes of unemployment

:irst 1 have to specify that ;M has no lac) of educational institutions* 1nstitutions in turn dont have a lac) of students# of "hom most of them record a success good to apreciate* <ut much of young people "ho graduate from high school# college and even university after finishing are confused# is this due to the educational system= >amely# some of these young people end up unemployed or increase the ran)s of the migrants# "hen they can thrive in their country* 6ome of the reasons given by unemployed are? - @o" "agesA - +oo much to "or)A - @ac) of e/perience in the domainA - @ac) of 8ob places B "hich actually is closely lin)ed "ith lac) of information on e/isting offerings* @ac) of information on e/isting vacancies plays an important role in shaping unemployment* @ac) of information is due to both the state as "ell as employers* 6ome employers prefer to hire people )no"n "ithin the company# "ithout ta)ing into account the specialiCation or the e/perience o"ned* Most of the rural unemployed dont )no" about the e/istence of the Agency of Employment and those "ho )no" do not try to submit their resume for lac) of motivation# they are shure that the only chance is to emigrate* Emigration in the minds of young people has become a point hard to avoid# some of them voluntarily chose to emigrate after finishing the university# others "hos parrents are already abroad are forced to follo" them# but others do not return bac) after the programs li)e? DEor) and +ravel in 6AF niversity graduates also faces "ith other problems* :irst# )no"ledge and s)ills do not meed the criteria put for"ard by employers* Graduates have a good theoretical training# but too little practical training* 6econd# higher education is dominated by HprestigiousF faculty re2uests? economics and la" have a common share of over ,0' of all graduates* +hese specialiCations do not correspond to labor mar)et demand* +oday are increasingly re2uesting mechanical-engineers# developers# builders# engineerstechnologists* A lot of young la"yers and economists fiind themselves in a position to accept offers that do not meet their specialiCation or to leave the contry* :e" countries can afford the lu/ury to prepare unemployed and immigrants "ith higher education* 5oung people choose IprestigiousI specialties# but the labor mar)et re2uire technical specialties* +o reduce the gap# the government should be stronger in stimulating young people to chose specialities re2uired by the mar)et* +echnical faculties could become more attractive to young people* Giving schoolarships# increasing number of budget places# providing placement for students and internship programs could help* An information campaign among abiturients "ould significantly increase the number of students doomed to unemployed conditions* 5oung people should learn having confidence that their intellectual effort and :inancial 1nvestments "ill not be lost* +he state invests in education and training to raise citiCens that it needs* nfortunately Moldovan education system prepares increasingly more unemployed sentenced to e/ile* According to data provided by +he >ational <ureau of 6tatistics B the number of unemployed teenagers !1,-2. years( !6ee 6chedule >o*1( in the period of 2000-200% is continuously dicreasing# starting from 04 thousands unemployed in 2000 year and reaching up 1,#& thousands in 200% year# almost ,%' fe"er unemployed* <ut starting "ith the year 2003 there is a significant increase# reaching 22#1 thousands from 1,#& thousands in 200% year appro/imately "ith 00'* <ut the "orst is that

gro"th continues in 2010# unemployed young people reach 2,#& thousands an increase of 10' according to the previous year* Most probably that in 2011 gro"th "ill continue around 10'# but in 2012 "ith apro/imately 4-%'# the up"ard trend is observed that the annual gro"th begins to shrin)* Even if G>J !6ee 6chedule >o*2( is continuously increasing# unemployment is not decreasing "ich means that a big part from G>J is built from remittances* p to 2003 year unemployment in ;epublic of* Moldova had a 2uite lo" level compared "ith other countries# but since the begining of 2010 its increasing due to return of the migrants B for e/ample in the first 2uarter of year 2003 from ;ep* of Moldova "ent abroad in search of a 8ob around 10' fe"er people than in the first 2uarter of the year 200%# "hich also reflected on the number of the unemployed# usually the biggest part from them are men loo)ing for a 8ob* Also in 2010 can see some people "ho "here inactive before and relied on remittances sent by other family members began to loo) for 8obs* <ut this is a problem that "as created over several years because of the lac) of 8obs and failure to create ne" 8obs in ;M# "hich at the moment "as aggravated*

Solutions?
1ts really hard to find solutions namely in times of crisis* <ecause solutions for the e/isting unemployed are fe"# because the budgets revenues are lo" and in the same time the number of the unmeployers rise# this means that a possible increase in the unemployment allo"ance "ould bring high costs for the budget for "ich he isnt prepared to support no"* +he solutions are the clasics one# creating a climate that is favorable for businesses# to encourage companies to hire more or to )eep e/isting 8obs* Eliminate any barriers to carrying out business process B this is a condition necessary for )eeping a high level or rising the number of 8ob places* Another solution "ich "ould have effect on a short period "ould be of course facilitating recruitment of remittances# but this "ouldnt solve the problem of increasing the employment rate in Moldova# but rather medium-term unemployment problem# "hen European countries "ill recover after the crisis* +he rest are the medium-term solutions that need to be implemented# namely the business climate and some changes or reforms in education system# "hich are very important and sometimes "e see that they are an impediment to employment for the youths* 1nfrastructure pro8ects can be a solution to problem= +he infrastructure pro8ects# ho" sho"s the e/perience of other countries# indeed contributed to employment even during the crisis# but here again it depends on "hat "e have* 1f "e ta)e credit for infrastructure investment# then "e could tal) about it* <ut at the moment "hen "e have not contracted loans# "e can not say that "e "ill do it# although it is also a solution B infrastructure investments have a positive effect on both short-term employment and# consumption respectively*

Conclusion
5oung people "ant to study faculties that are currently the best payed* As long as the state "ill not intervene and "ill not motivate students to chose other faculties# the number of unemployed and migrants "ould be in a continuous gro"th*