Journal of Business Economics and Management ISSN 1611-1699 2006, Vol VII, No 4, 223–233 PROBLEMS OF IDENTIFYING AND REGULATING THE STRUCTURE OF THE LABOUR MARKET IN DEPRESSIVE LITHUANIAN REGIONS Algis Šileika 1, Daiva Andriušaitienė 2 Vilnius Gediminas Technical University, Saulėtekio al. 11, LT-10223 Vilnius, Lithuania E-mail: [email protected]; [email protected] Received 26 June 2006, accepted 9 Spalio 2006 Abstract. In order to identify labour market problems in the depressive regions of Lithuania and to provide guiding lines in the search for their solution, it is necessary to conduct a systematic analysis of the structure of employable population encompassing the characteristics of segments of employed and unemployed persons as well as individuals not registered with the official labour market. Correlation and factor analysis of eighteen macroeconomic indicators investigating into indicators of all municipalities of the country and depressive regions separately (20 municipalities where the unemploy- ment rate exceeded the average in the country by 1,5 times in 2004) enabled evaluation of the significance of employment and unemployment indicators as well as impact thereof on other indicators chosen for the analysis to feature the trends of social and economic development on national level and in depressive regions in 1996–2004. Apart from special socio- logical research, characterization of the structure and peculiarities of labour force is confined to assumptions of logical analysis, but the invented technologies give grounds to maintain that dynamics of the employment indicator reflects the trends and outcomes of the development of economic activities only to a certain limited extent. Relation of the unemploy- ment indicator, particularly that of long-term unemployment, with other macroeconomic indicators is much tighter. How- ever, as we can see from the analysis, relevantly big share of employable individuals not participating in the labour market has been little analysed by the structure, though most probably this share consists of the following basic groups: unem- ployed “volunteers”, “labour migrants”, unofficially employed individuals and persons employed in in-kind farms. Yet, the analysis of statistical data shows that this is not an idiosyncrasy of depressive regions of the country. In the analysis of the structure of the labour market, the following problems extremely important in the depressive regions of Lithuania may be singled out: long-term unemployment trap determines emigration of youth and better skilled labour force; conse- quently this results in prevalence of senior and pension-age population, unskilled labour force and out-of-skill individuals in the structure of employable population, and in unofficial, ineffective “survival” employment in small, quasi-in-kind farms that have become a traditional way of life of rural population. Keywords: labour market, employment, unemployment, migration, unregistered employment. 1. Introduction link of the research – employable population, and then identifying portions of unemployed individuals and those Rapid economic growth in Lithuania gives grounds to not participating in the labour market. The next stage expect positive social changes and growing welfare of is analysis of the structure of labour force in the de- the national population. It looks like shortage of labour pressive regions of the country, including definition of force, which is becoming the major labour market prob- the observed trends and specific features thereof. In lem on a macro level, should lead to crossing the un- this paper we invoke the results of correlation and factor employment problem off the list of the most relevant analysis in order to identify the relation of labour mar- problems with the exception of one circumstance: there ket indicators with other macroeconomic indicators. still exist depressive regions, where the unemployment indicator remains quite above the average in the country. Identification of determinants of the social economic Such regions are bypassed by investments, there pre- development in the depressive regions in the country vail ineffective agricultural sector, while earnings of the is problematic due to a number of reasons. One of local population are considerably behind average indi- the basic reasons is the lack of indicators character- cators in the country and give grounds to state that izing the situation in these regions. Publication Lietuvos poverty and social exclusion are prospering in these Apskritys (Counties of Lithuania), which publishes regions. In order to identify the labour market prob- annual indicators on municipal level, comes up with lems prevailing in these regions, the first necessary step data only after a year, but even among the published is a systematic analysis of the structure of labour force, indicators there prevail quantitative ones. For exam- starting from identification of the structure of the first ple, there are even 30 agricultural indicators illustrating 223 Algis Šileika, Daiva Andriušaitienė nearly the whole range of agricultural yield in kilos 2. Employment (down to the number of collected eggs) in each mu- nicipality, but there are no data about the wage size As we can see from the data published by the Lithua- in the same agricultural or other economic activity. nian Statistics (see Fig 1), the number of the employed The Lithuanian Statistics publish data about GDP in the depressive regions of the country is fluctuat- created in counties, but they do not present data about ing from 48 per cent in the municipality of Lazdijai GDP created by separate economic activities, and there district to 77 per cent in the municipality of Jurbar- are no possibilities to order such data. kas district. Comparing to the average in the coun- try, quite lower employment rates are prevailing in the One more problem is the continuation of computing mentioned municipalities of Lazdijai and Akmenė dis- statistical indicators. Computation of some indicators tricts as well as Šalčininkai district. In these regions, is terminated, while others are computed using new employed persons account to as few as a half of the methodology and thus they do not suit for an integral total employable population, while the employment rate data line any longer. Due to the above-mentioned rea- in the country exceeded 69 per cent in 2004. Analy- sons, processes of social economic analysis and so- sis of the structure of the employed in the depres- lution searching in regions (county level) are consid- sive regions shows that in principle this structure in- erably more complicated compared to the micro level: significantly differs from the employment situation on lack of data restricts invocation of usual methods of national level or in municipalities where registered mathematical analysis, direct programming or other unemployment is the least. In some municipalities methods of functional analysis. Even with sufficient attributable to the depressive regions of the country, statistical data, a complicated mechanism of factor e.g., in Jurbarkas district, Kelmė district, Panevėžys interface may be fully deformed at different stages district, Pagėgiai, the employment rate is even sig- of modelling of a social psychological factor (approach- nificantly higher compared to the average in the coun- es, interests, subjectivity, etc.) and analysis, and task try: 77, 75, 75 and 73 per cent respectively. Accord- settling. ingly, no consistent patterns were revealed by the All the mentioned reasons significantly restrict the analysis of the situation in the depressive regions in selection of the very factors and mathematical sta- the light of employment rates only. tistical methods of computation. All this is also rele- In order to identify, in the cross-sectional analysis vant to the analysis of the social economic situation of the municipalities, the relations of these suppos- of the depressive regions of the country and, concur- edly scattered employment rates with other 17 indi- rently, the labour market situation of these regions. cators featuring social and economic development in Accordingly, in order to identify the submerged cor- municipalities, the authors of this article carried out relation of processes we often have to simply con- a correlation analysis. Results of this analysis dem- fine to a local analysis of statistical indicators. onstrated that in the context of all indicators of the So far, the Lithuanian Statistics has presented the data Lithuanian municipalities in 1996–2004, the rate of featuring social economic situation of municipalities employment is strongly correlated to budgetary ex- penses of the municipalities (r = 0,166, p < 0,01), fi- for the year 2004 [1]. Published labour market indi- nancial investments (r = 0,266, p < 0,01), scale of cators are much more up-to-date, but application there- works performed by construction companies and en- of in statistical mathematical calculations enabling terprises (r = 0,165, p < 0,01), number of the oper- analysis of in-depth correlation of indicators is restricted ating economic entities (r = 0,383, p < 0,01), munic- by delayed key macroeconomic indicators. Therefore ipal expenses for social benefits (r = –0,240, p < 0,01), this analysis of labour market structure uses the data number of retired individuals falling for 1000 employ- of 2004. able individuals (r = –0,300 p < 0,01) and unemploy- Thus, in order to identify the labour market problems ment rate (r = –0,223, p <