Matching Supply and Demand in Bulgarian labour market: Sector-based Approach- Statements and Comments

Transcription

1 Matching Supply and Demand in Bulgarian labour market: Sector-based Approach- Statements and Comments Iskra Beleva, Institute of Economics, Bulgarian Academy of Science There are at least two facts that presently outline the importance of matching labour supply and demand in Bulgarian, namely: (a) the increasing demand of labour as a result of the stable economic development and (b) the delay in the restructuring of the educational, incl. vocational system. These two facts deepen the existing skill gap accumulated in the period of economic restructuring. There are also other factors contributing for increasing skill gap e.g. the labour emigration and especially that of skilled labour, the aging of the population, the relatively low economic activity, compared to EU average etc. Due to this the discussion of the sector based approach and the relevant mechanisms, applied in Wales as well as the lessons learned until now could be useful and helpful for Bulgarian policymakers in the field of the labour market. 1. Assessment of the policy context, economic circumstances and institutional/legal background in Bulgaria relevant to matching demand and supply of labour 1.1 The policy context Bulgarian policy makers commonly recognized the improvement of the quality and the competitiveness of the human capital as a basic foundation for sustained growth and higher competitiveness 1. There are a number of documents of the Council of Ministers e.g. National Strategic Reference Framework Republic of Bulgaria, ; Operational Program Human Capital Development: ; Employment Strategy ; National Strategy for Continuing Vocational Training ; Life-long Learning Strategy, Social Inclusion Strategy; etc. that deal with this issue. There are also Annual Action Plans that supplemented the pointed strategic documents. In all these documents the politicians shared the understanding of the need of consistent policies and respective measures to encourage employers to invest in human capital and stimulate employees to be active in education and training. Despite the existing common understanding and the adopted documents it is difficult to conclude that there is a common concept about the policy and the mechanisms that should be in practice. We still miss strategic views of economic request to the education and qualification of the labour force, as well as conceptual, methodological and planning instruments that should put together the existing separate strategic documents. Several reasons could be numbered to explain this fact among which the lack of systematic observation of labour demand in view of labour force quality, the lack of a complete system for professional orientation and information; the need of more closer engagement of employers in labour market projections; the poor schools practical equipment and exiting difficulties for access to the system for vocational training and education of the elderly people. 1.2 The economic circumstances 1 National Strategic Reference Framework Republic of Bulgaria, For the Programming period , Council of Ministers, 2007, p, 29; government.bg

2 The upward and stable economic development in the last ten years causes increasing demand for labour as a result of which unemployment went down from 13.7% in 2003 to 9.1% in 2006 and continues to fall in 2007 (numbering 259 thousand people or 7% in August). With an economic growth of over 6 percent in the last three years ( ), stable inflation (6.1 in 2004, 5.0 in 2005 and 7.3 in 2006), increasing direct foreign investments from million EURO in 2004 to 4104 million EURO in 2006 the economic circumstances favour labour demand. Both economic activity and employment increase (the former from 49,2% in 2003 to 51.3% in 2006 and the latter from 42.4% in 2003 to 46,7% in 2006). Total employment increased by 10.8% in 2006 compared to 2003 and from a branch point of view there was an increase in employment in 10 out of 14 industrial sub-sectors, 2 as well as in most of the service sub-sectors construction, trade, hotels, finance, real estate business, etc. Increasing employment in the above mentioned branches corresponds to increasing registered vacancies, mainly by the private sector, as reported by the National Employment Agency in its Annual Report Labour Market The highest number of vacancies was registered in manufacturing industry, followed by trade, agriculture, construction, etc. Within the increasing demand of labour its structure points out quite contradictive tendencies depending on the source of information on it. Following data on registered vacancies that come from monthly registers of the labour offices one should conclude that demand for low educated and qualified labour prevailed. However, this information should be interpreted bearing in mind that, on the one hand, only some of the available vacancies are registered with the labour offices. 4 On the other hand, labour market program registered about one-fourth of the vacancies. It is well known that these programmes are often targeted to specific, vulnerable groups who are low educated and not qualified. However, if we compare the registered vacancies and the occupied vacancies within a month we will find out that more than half of them are hard to fill vacancies. This fact confirms the serious skill and qualification gap between demand and supply, although the hard to fill vacancies could be a result of bad working conditions as well as low payment, etc. There are several case studies that present additional information on matching supply and demand. A case study on labour demand and supply, 5 pointed out that 86% of the respondents have difficulties to find relevant staff as well as they face lack of relevant personnel in the regions. The employers complained that labour force lacks experience, qualification and motivation. Meanwhile people have higher expectations than offered by employers, which comes to outline not only skill mismatches but expectation mismatch as well. Further, the outcomes of this study point that the experts are the most demanded group (53%), while only 3% need managers; 29% of the firms need administrative staff, among them 15% need workers. People point that the main source of information about labour demand are the mass media and on-line portals. Only 8% of employers search to hire staff through labour offices. 2 Processing industry, manufacturing of vehicles, mineral and non-mineral resources, food and textile products. 3 Labour Market 2006, Annual Report, NEA, p.53 4 According to a case study only 8% of employers registered their vacancies with the labour offices. 5 The study was performed by Manpower Consulting in 2006 and the sample included 300 firms.

3 A more present case study 6 confirmed to a great extent the already described picture and additionally expands the profile of the mismatch with a lack of qualification in languages; ability to work with computers and internet; team work; low communication. This study outlines that present demand for labour in Bulgaria is concentrated in the medium positions (positions that do not need special educational level, but need some special ability) and that there are significant regional imbalances in labour demand and supply. Despite increasing labour demand, on the supply side there are certain groups in the market that are difficult to be reintegrated in employment e.g. long-term unemployed people (55.8% of total unemployment in 2006), of whom 35% are with lower secondary and 11% are with primary or lower education. Nearly one-fifth of the unemployed people are people, looking for their first job, which means that they have no work experience and among them 44% are those, who look for a job after leaving school or university. These facts indicated some aspects of the problems with the supply of labour, as well as lack of correspondence between educational system and labour demand. One reason for this is the missing system for monitoring labour demand as well as the lack of effective system for professional orientation and motivation. In the absence of a system for continuous monitoring and reporting of the labour market s needs of work force with particular professional skills and qualities several surveys reported such needs in certain moments. The study of three branches in a project named Development of a system for identification and monitoring of the employers needs of professional education and development a strategy for education of elderly people (EuropeAid/120163/D/SV/BG) 7 confirmed that there is a direct relation between the changes in the technologies and the changes in the qualification of the labour force and this relation was stronger in textile industry (55.6), followed by construction (53.2%) and hotels (46.6%). The results also outlined that relevant qualification is a factor of first priority for employers in all three studied branches, while relevant education was of highest importance for employers in hotels branch (51.5%). The assessment of the need of new skills, e.g. re-qualification, was pointed by 37.2% of employers in the three studied branches and ranged as second important factor determining labour demand. This need was identified by 45.9% of employers in construction, followed by 34% of employers in textile and hotels. 35.6% of employers reported that their demand for labour will expand in the future. This was valid for 42.3% of employers in construction, followed by 42.5% of all employers in textile and 21% of employers in hotels. By the moment of the survey the employers most frequently point the following jobs as unoccupied in the area of construction: welder, shuttering worker, mason, plasterer, steelconstruction worker. The most unoccupied jobs in the hotel business are: waiter, cook, barman; in the production of clothes (of textile) these are: tailor of male/female clothes, machine operator for sewing, performer of models. According to above mentioned study named Study and projection of employers need of labour force with special qualification 8 in the period , labour demand in Bulgaria will be concentrated on positions in the middle scale of qualification like sales assistants, tailors, cooks, real estate agents, drivers, hotel room attendants, staff accepting and transferring information. 6 Matching and Projections on Demand for Labour, Industry Watch and Vitosha Research, May The project was performed by GOPA Worldwide Consultancy and Balkan Institute for Social Policy. Pilot study was completed in It covered 8 regions and was tested in three branches hotels; textile and construction. 8 Study and projection of employers need of labour force with special qualification performed by Industry Watch and Vitosha Research, May2007 Report, prepared for the Ministry of Labour and Social Policy

4 The demand in the specialized positions will be directed towards mechanics, fitters, civil construction engineers, nurses, civil construction technicians, etc. 1.3 The institutional and legal background Describing the existing infrastructure for matching demand and supply of labour in Bulgaria we have to say that the institutional and legal base develop in a satisfactory way Institutional framework The institutional net for matching labour market needs in respect to education and training is developed at national, regional and local level. At national level it includes the following institutions: Council of Ministers, which determines the national policy in the field of education and labour market; Ministry of Education and Science; Ministry of Labour and Social Policy; National Employment Agency; National Agency for Vocational Education and Training (NAVET); Ministry of Culture; Ministry of Health, etc. The branch ministries are important institutions of this net. They participate in the development, coordination and actualisation of the state educational standards for acquisition of qualification under specific skill. There are 208 skills in the present register of skills in the country, disaggregated to over 5000 work positions. The branch ministries are also participants in the process of development, coordination and upgrading the Register of skills in regard to the professional education and qualification. They are closely involved in the planning and the coordination of the state quotes for vocational education, financially contribute for this education due to which they participate in the distribution of the financial resources for vocational education and training within the state quotes. They are also participants in the process of controlling the usage of financial resources through their participants in the managing bodies and the different expert groups in the NAVET. The representative organisations of employers and employees are also members of the institutional net at national level as well as two councils the Council for encouraging employment with the Minister of Labour and Social Policy and the National Consultancy Council regarding Profession Qualification of the Labour Force. At regional level the institutions, responsible for matching supply and demand in respect to education, training and qualification are the Regional Directions for Employment; the Regional Educational Inspectors; the uniformly and the temporary employment commissions with the regional development councils as well as the regional administration. At a local level the municipalities are the institutions that consult the policy makers regarding the professional education within the municipality, the need of skills and the professional orientation of scholars, unemployed people, as well as about the existing capacity, incl. the financial resources for the development of the professional education, the centres for professional orientation and the efficiency of the active labour market measures in the field of education and professional training. There are also councils for cooperation with the local labour offices that monitor the realisation of the programmes and measures, included in the National Employment Action Plan. As seen from all above pointed there is a net, including both horizontal and vertical institutions, that is supposed to be able to match the interests of all agents regarding supply and demand of labour at national, regional and local level. It includes branch interests, but only as an element of

5 the national, regional or local structure, while in the Welsh case the branch approach is the leading when the institutional structures are set up Legal framework The existing legal base is relatively new and favours the improvement of the quality of the human capital and the labour force in particular. The Constitution of the Republic of Bulgaria includes the basic principle for peoples rights to free education. There are a number of other laws and legal acts that regulate the vocational education Labour Code; Education Act; Professional Education and Training Act; Higher Education Act; Employment Promotion Act; Crafts Act; The Chitaliste 9 Act; Convention on Technical and Professional Education, etc. Each of these legal acts regulates certain areas from the process of formation of labour force with the necessary skills and qualifications. Despite the availability of this relatively good legal base the problems with matching labour supply and demand remain The international experience and assistance During the period of transition and in more present time, in particular Bulgaria has been quite open in studying the international experience in labour market, and has been assisted in the process of organization and application of a number of market tools and mechanisms, as well as in policy design. It is worth to mention the UK assistance in the sphere of labour office administration and services development, the German assistance in vocational and training education, the Dutch consultancy support in the development of monitoring system in different fields of the labour market and the building up of a relevant system for assessment of labour market programs. There are many other examples that could be provided, however, the point is that based on the international experience Bulgaria has reached progress in some fields of the labour market but still has to progress in another and matching supply and demand and forecasting skill needs is one of these fields. 9 Chitaliste this is a type of local cultural centre typical for Bulgaria.

6 2. Assessment of the potential transferability of the Welsh policy/measures experience to Bulgarian practice The presented transferability of the Welsh policy/measures experience in marching supply and demand of labour to Bulgarian practice could be discussed at least from two points of view: regarding the applied approach and regarding the applied mechanisms. Transferability regarding the applied approach to match demand and supply Comparing Welsh and Bulgarian structures, that are supposed to contribute for matching demand and supply of labour we have to say, that many of the contained elements of the systems are similar as far as institutions and relevant infrastructure are concerned. However, the Bulgarian approach to managing the system is based on vertical levels of market organization (national, regional and local institutions and respective obligations including the sectoral level ), while the Welsh approach relays mainly on horizontal market structures. From this point of view we have to say that Welsh labour market is to a higher extent unregulated compared to Bulgarian labour market. Bearing in main these significant differences the transferability of the experience, as an approach seems to be relatively low. Transferability related to the applied mechanisms As far as applied mechanisms are concerned the transferability of different elements and mechanisms could be very useful for Bulgarian practice; The first point is the regular system for studying and monitoring market need of specific labour; The second point is the evaluation practices and the assessment of the impacts; The third point is the need to have strategic views on economic and labour market development so as to build a Strategy as a guidance for the policy; Quite interesting and provocative are the views whether the economic growth and the sustainable development should be based only on high skill level strategy; Quite interesting and transferable to a high extent is the method used of building networks, open enough to engage the participation and the contribution not only of governing bodies and social partners, but the non-governmental organisation and other structures of the civil society.

7 3. Important issues and further developments More than a half of the employers in Bulgaria expected an increase in demand of qualified labour as a result of the technological updating of the capital. 10 This means that there is a need of more effective debate on the strategic issues of matching supply of labour with market requests. This debate should result in a clear political decision with respective operational tools for completing the integration of the institutions in an integrated system including: (a) an effective information system for monitoring and projecting labour market skill matching; (b) complete system for professional orientation and information ensuring effective and timely orientation of supplier of labour about future labour market needs; (c) closer integration between the providers of training and employers; (d) a system for regular assessment of the efficiency of existing matching system related to matching demand and supply from the point of view of labour skill and qualification; (i) evaluation of the impact of existing system on matching demand and supply. Further to above mentioned it is worth to discuss the Welsh practice and encourage the development of more active sectoral dialogue for describing the sectoral development and its need of skilled labour, creating sectoral skill networks, that could integrate all interest agents incl. the providers of training so as to uncertain specific sectoral labour needs. With regard to the relatively low level of payment and living standard and skilled labour emigration as a specific for Bulgaria issue that needs political and respective operational decisions is labour migration. There is a need of political decision about the dilemma to export qualified labour and import low qualified labour to fill the skill gap. This means to have clear idea whether the country will focus the policy on attracting local labour force by improving labour conditions, incl. payment of skilled labour, or will invest in increasing the quality of low qualified immigrants. This question concerns also the way of distribution of financial resources, incl. EU fund, for investments human capital. References 1. National Strategic Reference Framework Republic of Bulgaria, For the Programming period , Council of Ministers, 2007, p, 29; government.bg 2. Operational Program Human Capital Development: ; Council of Ministers, 3. Employment Strategy ; Council of Ministers 4. National Strategy for Continuing Vocational Training ; Council of Ministers 5. Life-long Learning Strategy, Council of Ministers 6. Social Inclusion Strategy; Council of Ministers 7. Labour Market 2006, Annual Report, National Employment Agency, Matching and Projections on Demand for Labour, Industry Watch and Vitosha Research, May Some outcomes of case study on labour demand, published in news paper 24 hours, 1 October, 2007, 10 Development of a system for identification and monitoring of the employers needs of professional education and development a strategy for education of elderly people (EuropeAid/120163/D/SV/BG), GOPA Worldwide Consultancy and Balkan Institute for Social Policy, 2006.