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ENPI 08-14 BLACK SEA LABOUR MARKET REVIEWS MOLDOVA COUNTRY REPORT WORKING DOCUMENT January 2009 The contents of this report are the sole responsibility of the authors and do not necessarily reflect the views of the European Training Foundation (ETF) or the European Union. 2 Foreword This report is an outcome of the Black Sea Labour Market Reviews project, which was initiated and funded by the European Training Foundation (ETF) to collect information on and analyse selected labour market and related human capital issues in six countries of the Black Sea region (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine). It is planned that this ETF project will be carried out in two phases: (i) preparation of country reports in 2008; (ii) regional analysis with cross-country comparisons in 2009. In the first phase, a common thematic outline was developed and used for the preparation of country reports, including quantitative and comparable data and other relevant qualitative information as well as basic qualitative analyses. These country reports constitute the main preparatory work and stocktaking exercise for the regional- level analysis. In the second phase, a comparative cross-country analysis of the labour markets with a regional Black Sea perspective will be conducted on the basis of issues that emerge from the country reports. For the Moldovan part of the project, a local company, the Expert-Grup independent think-tank, was contracted to work with the ETF on the Moldova country report. This report was drafted by Expert- Grup, with involvement from the following authors: Ana Popa, Alex Oprunenco and Valeriu Prohniţchi. The draft report was then commented on by an ETF team of experts (Jesús Alquézar, Ummuhan Bardak, Siria Taurelli and Agnieszka Majcher-Teleon) and an external expert, Dr Constantin Zaman. The team gratefully thanks the National Bureau of Statistics, and particularly Mr Vladimir Ganta, for invaluable help and cooperation in respect of the collection of the necessary statistical data. The authors alone are responsible for the economic interpretation of labour statistics. A national workshop has been organised for 24 November 2008 in Chişinău, at which the draft country report was to the key national stakeholders and its key findings discussed with them. The report was finalised on the basis of comments received from the key stakeholders during and after the workshop. 3 Abbreviations and Acronyms BEEPS Business Environment and Enterprise Performance Survey CIS Commonwealth of Independent States ECA Eastern Europe and Central Asia FTA Free Trade Agreement GSP Generalised System of Preferences GVA Gross Value Added HBS Household Budget Survey LFS Labour Force Survey MDL Moldovan Leu, national currency of Moldova NBM National Bank of Moldova NBS National Bureau of Statistics NEA National Employment Agency PSU Primary Selecting Unit SLMT Survey on Inter-sectorial Mobility and Transition from school to work VET Vocational education and training 4 Table of contents Executive summary 9 Introduction 15 1. Background: Review of data sources and key demographic and labour market indicators 17 1.1. Review of data resources 17 1.2 Demographic trends and demographic transition 22 1.3 Employment trends 27 2. Human capital, employment and economic transition 39 2.1 Investment in human capital 39 2.2 Returns to education 47 2.3 Transition from school to work 54 3. Restructuring labour markets and changing employment patterns 59 3.1 The macroeconomic situation and economic restructuring 59 3.2 In which sectors are new jobs created? Mobility from old to new sectors 64 3.3 The size and structure of the informal economy and informal employment 68 4. Labour migration 73 4.1 Mobility in the domestic market and immigration 73 4.2 International labour migration 75 5. Employment policy framework and recommendations 85 5.1 The place of employment policy in the overall policy agenda 85 5.2 Business environment and investment climate 86 5.3 Labour legislation 89 5.4 Labour market policy 92 6. Policy conclusions and recommendations 97 6.1 Improving labour statistics 97 6.2 Addressing the demographic decline 97 6.3 Increasing economic participation and employment 98 6.4 Greater investment in human capital 98 6.5 Scaling up the returns to education 99 6.6 Smoothing the transition from school to work 99 6.7 Making informal employment formal 100 6.8 Controlling domestic migration 100 6.9 Stemming international migration 101 6.10 Developing effective labour policy 101 6.11 Improving the business environment 102 Annexes 105 Annex 1: Sociological survey conducted by CBS AXA on inter-sectorial mobility and the transition from school to work 105 Annex 2. Review of data sources 114 Annex 3. Structure of the education system in Moldova 119 References 121 5 List of tables Table 1. The standard set of variables used by the NBS in tabulations ................................................. 19 Table 2. The population growth of Moldova, 1959–1970 to 1989–2004 (Trans-Dniester region not included) .................................................................................................................................................. 23 Table 3. Forecasts of Moldova’s population, 2010–2050 (millions) ........................................................ 26 Table 4. The population of Moldova by main age categories (thousands) ............................................. 27 Table 5. Employment rates of the population aged 15–64 years in some transition countries............... 28 Table 6. Employment rates of the population aged over 15 years in Moldova (%)................................. 28 Table 7. Size and structure of the economically inactive population in Moldova.................................... 30 Table 8. Unemployment rates in Moldova (%) ........................................................................................ 31 Table 9. Trends in employment and gross value added (GVA) by major economic sectors (1998=100%)........................................................................................................................................... 33 Table 10. Trends in employment in agriculture by gender and age (thousands).................................... 36 Table 11. Number of public and non-public institutions and students enrolled by level of education, 2007......................................................................................................................................................... 44 Table 12. Student achievement in mathematics, science and reading................................................... 46 Table 13. Regression of log of hourly wage on number of years of education....................................... 50 Table 14. Average monthly wage per employee as a percentage of the national average wage (%).... 51 Table 15. Average monthly salary of women compared with men’s salary ............................................ 51 Table 16. Distribution of respondents to the SLMT module ‘Transition from school to work’ by gender, area of residence and educational level.................................................................................................. 54 Table 17. Distribution of respondents to the SLMT module ‘Transition from school to work’ by their participation in the labour market ............................................................................................................ 55 Table 18. Distribution of answers to the question ‘How easy was it to find your first job?’ by highest level of education attained (N=111)......................................................................................................... 55 Table 19. Graduates by highest level of education attained and the correspondence between their first job and the field of study in which they graduated (N=152) .................................................................... 56 Table 20. Graduates by field of study in which they graduated and the correspondence between their first job and the field of study in which they graduated (N=151) ............................................................. 57 Table 21. Increase in employment by sector of economic activity (% of the previous year) .................. 64 Table 22. Rate of firm creation and firm closure (%)............................................................................... 66 Table 23. Access to water and canalisation services in urban and rural areas, 2002–2006 .................. 73 Table 24. Rural population as a proportion of total population in selected countries, 2005 (%)............. 74 Table 25. Poverty rate according to area of residence, 2001–2006 (%)................................................. 74 Table 26. Migration profile by age and region of the country, 2007 (thousands).................................... 76 Table 27. Opening a business indicators ................................................................................................ 86 Table 28. Trends in the cost of licensing activities.................................................................................. 86 Table 29. Comparison of rankings in Employing Workers survey (Doing Business) 2008..................... 91 Table 30. World Bank Investment Climate surveys: major constraints to business in Moldova (%) ...... 91 Table 31. ALMPs implemented by the NEA by number of unemployed people covered and jobs found, 2007........................................................................................................................................................
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