Academy of Economic Studies of Moldova

International Economic Relations

INTERNATIONAL ECONOMIC RELATIONS DEPARTMENT

Nicoreanu Alexandra

Using the labour force internationally: case of

EU members states
PROJECT AT IER
Specialty -World Economy and IER

Author:
Studentgr. EMREI 123,

Nicoreanu Alexandra

...........................
Scientific Coordinator:
Chisca Maria -University Lecturer

..........................

Chisinau-2014

Content:
Introduction......................................................................................................3

I.General considerations of labour force and labour market

1.1 The analysis of main notions. Concepts and principles of labour
force..................................................................................................................4
1.2 Labour market status of different groups.................................................10
1.3 The impact of financial crisis on International labour market.................12
1.3.1 Germany...................................................................................................14
1.3.2 Denmark...................................................................................................14
1.3.3 Spain.........................................................................................................15
1.3.4 United Kigdom.........................................................................................16
II.Overview on using labour force in different European countries
2.1 Labour Market Development in Europe....................................................18
2.2 The Employment and Unemployment on the European labour market....20
2.3 European labour market in comparison with USA labour market.............22
2.4 The peculiarities of labour force in the Republic of Moldova........... ........24

Conclusion.........................................................................................................30
Bibliography......................................................................................................32
Annexes..............................................................................................................33

Introduction
The theme that I chose is "Internationally Labour Force" today it is manifest at any time and at
any conferences, I would say that this problem is the first on agenda. Every state is obliged to
provide every citizen the right to work and of course good conditions and fit for sustaining the
country's economy and a future development and the progression. At the moment every country
is concerned about these issues, engaging its population, but also is manifesting the
unemployment and mass migration. People hoping for something more profitable, thus leaving
the homeland, in this case the EU is concerned about this issue thoroughly.
Global force refers to the international labor pool or workers, including those employed by
multinational companies and connected through a global system of networking and production,
immigrant workers, transient migrant workers and telecommuting workers.
The purpose of my work is to characterize all the principles, concepts and changes in labor use.
Also to analyse the workforce in different ways, in different countries and with different
concepts and reforms that can help me in the future to study more detailed the topics of the
objects of our faculty.
My goals at the initiation of this project are to study the basic definitions and characteristics, to
determine and characterize emerging issues within this theme in different countries of the
European Union in important periods of their history. By also analyzing the workforce compared
to other countries, other continents, noting key differences in management reforms and
productive when labor utilization.
This project I divided into chapters which in turn are determined by paragraphs that enrolls
subject. It contains two chapters; the first generalized the main concepts of international labor
and the second focuses more on more detailed characterization of the different countries.
The methodologies that I used in this project are books that contain truthful information on
matters in the workforce, articles and statements of international economists and of course the
use of web sites that gives us the latest information from different parts of the world.

Chapter I
1.1 The analysis of main notions of Labour force
We have given many definitions, notions about the workforce, as an attempt to present only the
most popular or even more, to classify them all would far exceed the space of this paper. This
paper presents synthesis of investigations presented in the literature.
The Labour force is the actual number of people available for work. The labor force of a
country includes both the employed and the unemployed. The labor force participation
rate, LFPR (or economic activity rate, EAR), is the ratio between the labor force and the overall
size of their cohort (national population of the same age range).[10] p.1
Formal and informal labor:
Formal labor is any sort of employment that is structured and paid in a formal way. Unlike
the informal sector of the economy formal labor within a country contributes to that
countrys gross national product. Informal labor is labor that falls short of being a formal
arrangement in law or in practice. Informal labor can be paid or unpaid and it is always
unstructured and unregulated. Formal employment is more reliable than informal employment.
Generally, the former yields higher income and greater benefits and securities for both men and
women.[12] p.2
Informal labor in the world, the contribution of informal laborers is immense. Informal labor is
expanding globally, most significantly in developing countries. According to a study done by
Jacques Charmes, in the year 2000 informal labor made up 57% of non-agricultural employment,
40% of urban employment, and 83% of the new jobs in Latin America. That same year, informal
labor made up 78% of non-agricultural employment, 61% of urban employment, and 93% of the
new jobs in Africa. Particularly after an economic crisis, laborers tend to shift from the formal
sector to the informal sector. This trend was seen after the Asian economic crisis which began in
1997. [12] p.2
Gender is frequently associated with informal labor. Women are employed more often informally
than they are formally, and informal labor is an overall larger source of employment for females
than it is for males. Women frequent the informal sector of the economy through occupations
like home-based workers and street vendors. The Penguin Atlas of Women in the World shows
that in the 1990s, 81% of women in Benin were street vendors, 55% in Guatemala, 44% in
Mexico, 33% in Kenya, and 14% in India. Overall, 60% of women workers in the developing
world are employed in the informal sector. The specific percentages are 84% and 58% for
women in Sub-Saharan Africa and Latin America respectively. The percentages for men in both
4

of these areas of the world are lower, amounting to 63% and 48% respectively. In Asia, 65% of
women workers and 65% of men workers are employed in the informal sector. Globally, a large
percentage of women that are formally employed also work in the informal sector behind the
scenes. These women make up the hidden work force.[11] p.4
The global aspect of the labor market refers to the world and all that contribute within this
measure, also known as globalization. Globalization is the process of integrating regions through
societies, political systems, economies, and culture to share ideas between the countries. What is
better than that? You can learn and use ideas and customs from other countries and this process
profits all that take part in it. Culturally, this is beneficial because we are learning from other
countries and bridging the gap between countries. All around, globalization is a positive action
because we can learn from each other and better our countries with other ideas and in turn work
for the good of the whole world. On the contrary, some believe that globalization only creates
clash within a province. With jobs being scarce in more developed countries because of the
crisis, jobs being filled by immigrants could have a negative effect on the people of a country
and with most immigrants moving to a region with a higher labor market and better chance of
earning a better wage for their families, in turn these countries are homes for most of the
migrants in the world.[11] p.5
Potentially, it could give people the impression that immigrants are a negative thing. Some think
that too much globalizing could give corporations too much power in the long run because they
would be trusted with too much. With the good intentions of this global labor market idea of
globalization, I believe with a checks and balance type of system we could make it work.[10] p.1
Labor Force International is a one of a kind human resource service provider for the reason
that you can expect an exceptionally personalized, professional and warm and friendly
recruitment program. We care about learning the needs of our clientele and their unique human
resource requirements as well as we know our own. Understanding about a clients industry,
being familiar with their working environment and getting to know the actual people at a client
company with whom we work most closely allows us to search for the best suited recruitment
solutions for their distinct staffing and employment needs.[13] p.7
Since our beginning in 2007, we have grown steadily - a growth as a result of our "client first"
approach and our quick response to ever-changing market needs. Our recruitment agency has
gained the respect and trust of major employers throughout the area by matching skilled
individuals with challenging professional opportunities.[13] p.7
A labour market is the place where workers and employees interact with each other. In the labour
market, employers compete to hire the best, and the workers compete for the best satisfying job.
A labour market in an economy functions with demand and supply of labour. In this market,
5

labour demand is the firm's demand for labour and supply is the worker's supply of labour. The
supply and demand of labour in the market is influenced by changes in the bargaining power.[12]
p.2
Employment is a relationship between two parties, usually based on a contract, one being the
employer and the other being the employee. An employee contributes labor and/or expertise to
an endeavor of an employer and is usually hired to perform specific duties which are packaged
into a job. An Employee is a person who is hired to provide services to a company on a regular
basis in exchange for compensation and who does not provide these services as part of an
independent business. Employer and managerial control within an organization rests at many
levels and has important implications for staff and productivity alike, with control forming the
fundamental link between desired outcomes and actual processes. Employers must balance
interests such as decreasing wage constraints with a maximization of labor productivity in order
to achieve a profitable and productive employment relationship.[10] p.1
- Workers are labelled as Full-time when they usually work 30 hours or more per week at their
main (or only) job. Otherwise, they are deemed to be Part-time workers.
- There are two broad categories of workers - those who work for themselves (Self-employed)
and those who work for others (Employees).This distinction is important for income and payroll
tax purposes. [13] p.9
So far, the term labour market has been used as if there were only one such market. In
reality, however, the labour market is comprised of numerous individual sub-markets. The two
most important ways in which the labour market can be subdivided are according to geographic
location and occupation. If firms and workers are searching for each other throughout Canada,
the market is described as the national labour market. The search for highly skilled technical and
professional occupations is often carried out on a national basis. The research director of a major
pharmaceutical firm and the chief executive officer of a major charitable association are likely
examples of positions in the national labour market. For some occupations, such as professional
athlete or university professor, the labour market may even be international in scope. On the
other hand, if the area of search is within the local community, the market is described as the
local labour market. Real estate agents and taxi drivers are examples of occupations where job
search and recruitment typically occur within a local labour market. When analyzing wage and
employment opportunities, another important dimension is the occupation under examination.
For example, supply and demand conditions likely differ across the following occupations:
teaching, truck driving, and computer programming. Mobility between occupations is limited by
some fairly obvious factors. First, occupational licenses limit ones ability to work in a given
occupation (e.g., teachers need B. Ed. degrees to teach at public schools in Ontario). And
second, different skill sets and work experience are required for satisfactory job performance
6

across occupations. While the flexibility of workers to change employers is often highlighted in
recent publications, workers still tend to have significant loyalty to their chosen occupations. In
fact, some argue that while workers were much more likely to change employers in the 1980s
and 1990s, they were more likely to keep their occupation. The boundaries between individual
labour markets are, at times, fairly porous. This means that workers may flow from one labour
market to another. Continuing with the examples from above, it could be that a truck driver
returns to school in order to become a teacher and thus forms part of the labour supply in the
teaching profession. Or, a real estate agent abandons a local labour market search and instead
moves across the country in order to secure employment. The amount of mobility existing
across labour markets depends upon such factors as: the degree of similarities between
occupations (in terms of job requirements and requisite skills); the costs of job search; the
geographic disparities between regions; and demographic characteristics that may affect ones
decision to move a significant distance (e.g., the presence of children, a working spouse, etc.).
[11] p.23

Concepts and principles of labour force

The term European labour market is used to describe the demographic profile of the labour
force as well as the systems of regulation, at EU level, concerned primarily with the free
movement of workers but additionally with other forms of regulation that shape Europes labour
market. The project of creating a European labour market is quite different from the objectives
associated with national labour market regulation, where employment protection and industrial
relations are the chief concerns. The aim to establish a free movement of workers provided the
major context of regulation of the European labour market since the foundation of the European
Economic Community in 1957.The demographic profile of the European labour market has
changed significantly in recent years. The proportion of the labour force that is female has
increased over the last decade, with the gender gap between men and women falling from 17.1
percentage points in 2000 to 14.2 percentage points in 2007. Migration now shapes the European
labour market, and the accession of the new Member States in 2004 and in 2007 has utilized the
right to free movement of workers to encourage changes in the national and ethnic profile of the
European labour market. Demographic changes associated with an aging labour force have also
necessitated new labour market incentives to encourage older workers to remain in the labour
force for longer. Despite the limitations of its original common labour market objective, EU
regulation of the labour market did develop beyond the confines of free movement of workers. A
major driving force was the interaction of Member States, both individually and collectively,
with EU institutions. The policies of Member States exerting pressure on the institutions, in
particular on the Commission, have been a major determinant of EC regulation of labour. EU
regulation of the labour market has also been used specifically to shape the demographic profile
of the labour market. To substantiate an appropriate strategy and consistent workforce retraining

is needed , in our opinion , going through a code of interdependent steps to consider , in

particular:[15] p.28
a) Some conceptual clarifications
Without going into details , we believe that requires some conceptual delimitations . We recall ,
in this regard, some of the concepts that have attempted to give content to the idea of further
learning after leaving the mainstream education system .The first type of response to the sociooccupational mobility both within generations was widening multiplication and generalization
professional courses for people. Improvement professional adult - concept of state and the
foundation of " teacher professional development system in our country, enacted in 1971 - but do
not reflect the release its dimensions the idea of continuing education. Practice reported that in
fact, witnessed a mere juxtaposition of a different level of education than initial education , in
addition, the May 8often not articulated , but rather about as subtle express some authors a "
continued education " and not a continuous one . Moreover, although interest embraced the idea
of correcting inconsistencies between the "products" of the education system and the
requirements of the labor market more dynamic , developed countries have come to devote to
support various post-compulsory programs precursor sums. The so-called education rebate
proved so not cheap but even more onerous. For , ultimately , expensive proves insufficiently
trained person who , leaving school or university with a shaky lineup is prone to all sorts of
compromises to adjust the level of training. A second attempt was Refocusing response plan in
the perfectibility of professional adaptation to the needs of the labor market more dynamic . For
fluctuations and sometimes quite unpredictable this market generates , in addition to the
imperatives of continuous improvement of knowledge and the need for reorientation and
retraining of the workforce .Adapting work reflects , in fact, trying post factum reaction when
shocks occurred already , the natural projection of the so-called learning maintained by people
are only prepared to deal with known recurrent situations . International experience reveals an
explosion of different concrete forms of labor vocational adjustment packages from programs
initiated for new entrants to the labor market ( young ) and then continuing with other ways to
improve training for those less disadvantaged in the labor market or the application of " shock
therapy " retraining those already facing serious problems .Adapting training, even if it offers
multiple adjustment possibilities of the human factor reactive to change, but to get permanently
put on people and that company only in a position to react post factum , there is clearly danger put Moreover out of catastrophe theory - that some processes are irreversible shock being , in
this case ,fatal. For if at the individual professional adaptation works like biological law of
natural selection , whereas if the company merely just " react " passively staying out changing
consequences can be increasingly unmanageable .Starting from the belief that this step is
particularly useful to study the experience of developed countries have allocated ample work
space this issue quite as trying as far as possible , to draw out the main practice and tendency
manifested in the plan professional adaptation of labor .Abstract still some of the most
8

significant conclusions drawn from the analysis of some of the aspects that characterize
international experience in professional adaptation of labor . We note in this regard , considering
them useful for guiding operators in our country ( regardless of the sector they belong to
private state , mixed), the following :[16] p.13
- Institutional diversification and decentralization of the activities by the coexistence of
specialized bodies at national or local level with those at industrial companies ;
- The adoption of special programs for professional adopting the most disadvantaged in the labor
market by initiating special software packages that youth employment and for retraining and
providing functional flexibility of adults who face great difficulties ;
Following the escalation of the sovereign debt crisis in the euro area, uncertainty dominated the
economic outlook since the second half of 2011, influencing investments and consumption
decisions.Output growth in most EU countries decelerated, including in light of further
headwinds linked, inter-alia, to a slowing growth in emerging economies. Employment was
hardly hit. The timid recovery started at mid-2011 was interrupted and job losses prevailed.
Repercussions were felt not only in terms of reduced job finding rates, but also in terms of a
renewed process of job shedding. Unemployment in the EU as a whole grew, in contrast with
other world regions. The unemployment rate in the euro area is currently at the highest level
since the start of the monetary union, and the degree of diversity in the unemployment
performance remains at unprecedented levels. Against this background, this chapter analyses the
anatomy of the current labour market adjustment by looking at aggregate developments in the
EU and the euro area. In doing so, it compares the EU labour market performance with that of
other world macro-regions and assesses the role of cyclical and structural factors in
unemployment dynamics and the role played by the relevant adjustment margins, including
working hours and labour costs. [8] p.9
Labor market includes all quantitative and qualitative facts related to labor markets. Summary
statistics are included, as are demographics; employment; unemployment, and vacancy rates;
industry data; occupational statistics; summary reports on outcomes; and forecasts of future
trends. A common thread running through all LMI is that it must be timely, accurate, consistent,
and relevant to labor-market activity. Development of these data also requires adequate funding,
reliable data gathering system.

 1.2 Labour market status of different groups

The labour market situation deteriorated for both genders, with women faring relatively better
than men as it has been the case since the beginning of the crisis. The female activity rate
continued its rise, while the employment rate also increased slightly.[2] p.7
Table 1.2.1.Women: employment, activity and unemployment rates, EU2

Source : Eurostat, LFS

As men's activity rate increased less, and their employment rate declined, the gender gaps in
participation and employment rates were slightly reduced. Still, as these gaps remain at around
13 pps, the current reduction is minor and mostly driven by the worsening conditions for males
rather than by improved conditions for women. The unemployment rate increased similarly for
both genders, testifying of increased labour market pressures for all. Yet, increased labour market
pressures did not result in strong withdrawal from the labour market as evident in the high
activity rate reflecting high labour market participation.[2] p.7
Table 1.2.2 Men: employment, activity and unemployment rates, EU28

10

Source : Eurostat, LFS

The gender gap in employment rates narrowed in the majority of countries, but often as a result
of strongly shrinking male employment rates (Spain, Portugal, Greece) while countries showing
some signs of labour market recovery (Lithuania, Latvia) saw their employment gap increasing
again. This reflects the higher sensitivity of male employment to the business cycle compared to
female employment as well as the increase in the labour supply of married women when their
husbands become unemployed.Consequently, the crisisrelated reduction in the employment gap
may partly prove a temporary phenomenon, while substantial employment gaps persist in
Member States, with only 3 countries exhibiting an employment gap of below 5 pps, 19
countries having a gap of 5 to 15 pps, and 6 countries having a gap in excess of 15 pps.[2] p.7
The young are a vulnerable group for several reasons. They have little or no work experience, are
more likely to be hired with an unstable contractual relationship, and their short tenure usually
implies limited access to unemployment benefits. The transition from education to work is often
difficult and those who enter the labour market very young tend to have left education very
early. Moreover, the lack of job openings put an extra burden on those who have not yet
managed to get a foothold on the labour market.[2] p.8
Table 1.2.3 Employment rate by 5-year age group, EU28

Older cohorts saw their employment rate increasing or maintained, while younger cohorts
suffered significant employment losses. This resulted from the fact that elderly workers were
continuing to work as in some cases the legal retirement age increased and early retirement often
11

became restricted, while young and middle age workers were strongly impacted by increased
labour shedding and the scarcity of job openings. While in 2011 middle-aged workers saw their
employment rate roughly unchanged, in 2012 they again suffered significant losses. By 2012,
persons below 25 years of age in 13 Member States experienced unemployment rates of about 25
per cent or higher, with peaks above 50% in Spain and Greece. The youth unemployment rate
always exceeded the unemployment rate of adults (those older than 25 years) but there were
considerable differences between countries. While in countries such as Germany, Denmark and
Estonia, the ratio of youth vs adult unemployment remained below 2.3.Youth unemployment
rose remarkably after the crisis in light of its strong sensitivity to economic activity. This is
confirmed by the fact that the countries that exhibited the largest increases in youth
unemployment rates in 2012 were those registering also a particularly weak GDP performance
(Cyprus, Spain, Greece, Italy, Portugal, and Slovenia).[2] p.8
The extraordinary resilience in labour market participation that has been manifest since the
inception of the crisis is confirmed in 2012. This is unlikely to stem from demographics, but
seems rather associated with an "added-worker" effect given the significant rise in female
participation. Youngsters were especially affected in the crisis and continue to represent the most
vulnerable group also in 2012. This is related to the fact that unemployment of young persons
below 25 years is more sensitive to the cycle than unemployment of the rest of the labour force.

1.3 The impact of financial crisis on International labour market

In 2007, the rapid employment growth that preceded the crisis began to slow, and by 2008 all
regions of the world of work had experienced a deceleration of employment growth. In the G20
countries, year-on-year employment growth fell from around 1.9 per cent to -1.2 per cent
between the beginning of 2008 and the second quarter of 2009. And although negative growth
rates have started to decline, until the beginning of 2010 growth rates had not yet turned positive.
When comparing year-on-year employment growth between the first quarters of 201009, 2009
08 and 200807, 14 of the 19 G20 countries analysed had moved to negative growth rates by the
first quarter of 2009, and by the first quarter of 2010 only Turkey had returned to pre-crisis
growth rates.(see Figure )[4] p.3
Table 1.3.1 Growth rates comparing year-on-year employment growth between the first quarters of 201009,
200908 and 200807.

12

Source: IILS estimates based on Eurostat database; ILO, Laborsta database and OECD

By early 2009, employment losses rose to historically high levels in a majority of countries (ILO,
2009). Some advanced G20 countries such as the United States and the United Kingdom were
the first countries to experience employment contractions as the crisis spread throughout the
financial system.In other advanced economies, job losses were initially contained but eventually
accelerated as the effects of lower confidence and lower demand mutually reinforcing factors
took hold. For the EU 15, job losses totalled 6.2 million between the third quarter of 2008 and
the first quarter of 2010.[4] p.4
The combination of new labour market entrants and recent job losers looking for employment
led in many cases to a rapid increase in the unemployment rate: in G20 countries the
unemployment rate surpassed 9 per cent at the beginning of 2010. Rapid increases have occurred
across countries, with unemployment levels rising by close to 19 million between the first
quarters of 2008 and 2010, bringing the total number of individuals unemployed in these
countries to close to 74 million. Between the first quarters of 2008 and 2010, the unemployment
rate rose nearly 2.5 percentage points. And by country, among all G20 and EU countries
analysed, only Argentina, Brazil, Germany and Indonesia experienced decreases in the
unemployment rate (Figure 2). Over the same period, for the EU27, the rise in unemployment
rates has been above the G20 average 2.9 percentage points. The hardest hit Member State
economies in the EU, in terms of the increase in unemployment, are Estonia, Latvia, and
Lithuania, with changes above 13 percentage points. Spain follows a similar trend with its
unemployment rate more than doubling increasing from 9.6 per cent in 2008 to over 20 per cent
in 2010. Unemployment rates have also grown in the emerging G20 countries although less
significantly (on average 1.8 percentage points in the seven quarters leading up to the first
quarter 2010).[4] p.4

13

Table 1.3.2 Change in the unemployment rate 2010 Q1 2008 Q1*

Source: IILS estimates based on Eurostat database and ILO, Laborsta database.

Country case studies (see Annex 1)

The following section attempts to explore in more detail i.e. at the country level the role
internal flexibility in the context of the current crisis. The analysis will focus on the cases of
Germany, Denmark, Spain and the United Kingdom. [4] p.10
1.3.1 Germany: Employment stability despite strong export orientation
Germany is a country which was heavily affected by the steep decline in international trade
which, in turn, led to a significant fall in orders and exports especially in core areas of the
production model such as machinery and car manufacturing. However, despite its vulnerability
due to the dependency on exports and the associated GDP decline of five percent in 2009,
unemployment remained stable initially, rising marginally, and employment fell only marginally
compared to other countries. Employment stability is due to a number of factors of course. First,
strong growth in major parts of the service sector helped offset losses in export-oriented sectors
such as manufacturing and logistics. Second, the relative success of Germany is partly explained
by the fact that the core labour market of skilled workers in manufacturing is covered by strong
legal dismissal protection hence, short-term adjustment does not lead to quick layoffs but is
dominated by an elaborate arrangement of internal flexibility.Given the abrupt character of the
crisis and the uncertainty of its duration, employers have been reluctant to dismiss skilled staff as
long as partial unemployment was feasible and a recovery if partial expected. In that respect,
the internal flexibility mechanisms such as working-time flexibility and complementary shorttime work allowances discussed above appear to have been successful in mitigating employment
losses. And as exports show some preliminary signs of recovery, the gap may have been
14

sufficiently bridged. At the same time, the marginal workforce has borne the brunt of job losses
and most workers have witnessed declines in wages and hours or worked or both. [4] p.11

1.3.2. Denmark
In the decade before the crisis, Denmark became a celebrated model country for the flexicurity
approach. The combination of its traditionally flexible labour law, generous unemployment
benefits and active labour market policies ensured a rather smooth functioning of the
employment model. Thanks to this golden triangle the Danish labour market was characterised
by high mobility and far above-average employment rates with unemployment virtually nonexistent. However, the recent crisis had a comparatively strong impact on the economy and
especially on the labour market with the unemployment rate more than doubling to reach
upwards of 7 per cent. One reason for the strong impacts is that the Danish employment system
features less internal institutional buffers against an output shock. As one would expect, liberal
dismissal regulation contributes to a large inflow into unemployment in an economic crisis.
However, labour market recovery should be more dynamic once the economy returns to growth
as hiring barriers are lower and activation policies are in place.Whether this institutional
advantage of the Danish model will prove to be beneficial in the near future also depends on the
second aspect of the flexicurity concept social security and activation. The Danish welfare state
provides high income replacement in the case of job loss.[4] p.13
Even after five years of unemployment, net benefits of previous low-wage earners can amount to
more than eighty percent. This is the most generous level in the OECD (average: 45 percent). To
diminish disincentives to take up work, labour market reforms in previous years have
strengthened the activation of unemployed. While active labour market policies were sufficient
to promote employment in normal economic times, it remains to be seen how the system will
work against the background of severe unemployment. So far, Danish active labour market
policies are characterised by policy continuity also with respect to activation strategies trying
to increase labour supply. The crisis also revealed the macro-economic advantages of a high
level of social protection. It can be shown that unemployment insurance had a significant effect
as an automatic stabiliser in those countries with sufficient levels of income protection (e.g. vis-vis the United States). This holds true for Denmark in particular. Together with Austria and
Sweden, the income stabilisation effect of benefits is the largest in the OECD (see Section B
above). In a similar fashion the budget available for active measures is tied to the development of
the unemployment rate. Therefore, the Danish regime adapts automatically and needs less
discretionary intervention by policy makers. Hence, although the crisis had a severe impact, by
supporting incomes the generous Danish welfare state is also helping to support aggregate
demand and lessen the overall impact. This is an insight that should be reflected in the reform
15

discussions of countries that traditionally refrain from implementing strong automatic stabilisers.
Going forward, the Danish experience has shown that the right mix of welfare state generosity
and activation is crucial to reconcile both objectives in times of recovery. While the country has
been very successful in the past, the current crisis may require future amendments to strike the
right balance.[4] p.13
1.3.3. Spain
Concerning the international economic crisis, the Spanish labour market is one of the hardesthit
in the European Union. The unemployment rate was 20 per cent in April 2010: the highest in
over 13 years and double the EU average. The origins of the devastating impact lie partially in its
exposure to a vulnerable sector but also in the extent of labour market duality. The pre-crisis
period in Spain was characterised by above-average growth rates, strong job growth and
significant reductions in unemployment. Much of the growth stemmed from the strong housing
and construction sector but with the onset of the housing price bubble, employment losses were
particularly severe in the oversized (in retrospect) sector. In addition, Spain has relatively
flexible job protection regulation at the margin of the labour market. As opposed to strictly
regulated permanent contracts, temporary workers form a very flexible tier in the labour market.
While this pattern of asymmetric flexibility is by now quite typical for highly regulated
European labour markets, Spain in this regard is an extreme case. Before the crisis,
approximately one third of all employees worked on a fixed-term contract. Moreover, around 85
percent of all employees working on a temporary contract do so involuntarily with as many as
two-thirds holding a contract with a duration of six months or less (twice as high as the EU-15
average) Much like Germany although to a greater extent this segment of highly flexible
workers mainly carried the burden of labour market adaptation in the recent recession. Between
the beginning of 2007 and the end 2009, the share of temporary workers in total employment
decreased from 32 to 26 percent accounting for close to 90 percent of the jobs lost (or more
than 1.2 million workers). At the same time, employment among permanent workers has been
relatively stable. Similarly, in an attempt to encourage German-style employment retention,
social security payments were lowered for companies that reduced employees working hours
instead of dismissing them. In addition, wage subsidies for workers on short hours and subsidies
for companies hiring part-time workers were created. Hence, Spanish policy makers tried to
stimulate policies in favour of working time and therefore internal flexibility which is seen as a
better alternative to excessive external flexibility stemming from fixed-term contracts. At the
same time, policy makers also extended unemployment benefits. However, unlike Germany, the
experience of Spain has been unsuccessful. [4] p.15
A possible reason for the failure of this programme to prevent unemployment from rising
continuously may be in the characteristics of the laid-off workers. The jobs that were created in
the upswing preceding the crisis and which were subsequently lost were predominantly low16

productivity jobs in construction. The lack of success may have much to do with the absence of
skill-oriented internal flexibility as is the case in the German manufacturing sector adjustment.
Hence, there are deeper-rooted challenges for the Spanish employment model: to shift
jobcreation to sectors with higher productivity and to overcome segmentation in the labour
market. Concerning the latter, the lessons of the crisis do not seem to have increased chances for
reform. While there has been an expansion of unemployment benefits to counter social concerns,
liberalisation of dismissal laws still ranks low on the agenda.[4] p.15
1.3.4. United Kingdom
The United Kingdom was also heavily hit by the current crisis but in contrast to Spain and
Germany, the British economy was hit initially by virtue of its role as Europes financial centre,
which had benefited from a dynamic development of the banking sector and strong housing price
growth for many years (Bell and Blanchflower 2009). This has been associated with a dynamic
development of job creation in the private service sector. High exposure to global financial
business and, at the same time, a quite flexible labour market and a smaller welfare state
compared to most Continental European countries imply a high vulnerability of the labour
market. Compared with, for example, Germany, external flexibility is more dominant than
internal adjustment of firms. In accordance with a pattern dominated by external flexibility,
working time adjustment did not contribute significantly to the adjustment process following the
recent shock. More flexibility is thus observed with respect to wages in the private sector. In
good times, a less-regulated labour market can contribute to strong employment growth; in bad
times this reduces the buffering effect of intra-organisational arrangements. At the same time, the
tax/benefit system in the United Kingdom provides less automatic stabilisation than Continental
European or Scandinavian countries. While the increase in unemployment was stronger in the
United Kingdom than it was in Germany, it was less in comparison to Denmark, Spain or the
United States. A more in-depth analysis shows that, at least until recently, job losses in the
private sector were compensated for by a stable and still-expanding public sector. Major job cuts
could be observed in the vulnerable exposed sectors such as manufacturing, finance and
construction, as well as distributional services. [4] p.16
Given the limited role of automatic stabilisation and the size of the shock experienced by the
British economy, it is interesting to see that the United Kingdom adopted a larger-thanaverage
fiscal stimulus package which helped mitigate the immediate labour market impact of the crisis
but is now contributing to pressures to reduce fiscal deficits and debt. At the same time, the
United Kingdom is also one of the countries which implemented the most comprehensive crisisrelated reforms in the realm of unemployment protection and active labour market policies. Here,
the existing institutional repertoire was expanded in order to cope with increasing unemployment
and speed up reintegration into employment. Discretionary policy-making complemented active
labour market instruments which were already in place at the outset of the current crisis such as
17

the JobCentre Plus and Rapid Response Services to achieve a broader activation with more
intensive support for all jobseekers out of work for more than six months, an activation
guarantee for young people and a more general scheme implemented in fall 2009 ('Flexible New
Deal') replacing earlier, more selective ones. Furthermore, incentives for employers which recruit
and train people who have been unemployed for at least six months were introduced and extra
funding was given for training, not only for unemployed people but also for start-up support. [4]
p.18
The labour market impact of the current crisis has varied considerably across countries
irrespective of the GDP loss. Early indications are that countries that could rely on strong
internal flexibility were better able to control employment losses and rising unemployment.
There is an urgent need to move towards more equal distribution of risks and benefits. In this
respect, the role of automatic stabilisers such as unemployment benefits merits special attention.

Chapter II
2.1 Labour Market Development in Europe
GDP growth turned negative in 2012 after a sluggish 2011, reflecting a decline in both private
consumption and investment, only partly offset by increasing net exports.In light of
disappointing economic growth amid growing fragmentation of financial markets and persisting
uncertainty about the bond market outlook, the unemployment rate in the EU28 and the euro
area started rising in 2011, a trend that contrasts with developments observed in other world
regions. The trend persisted in 2012 and in the first quarter of 2013. The number of unemployed
in July 2013 was 19.231 million in the euro area, 26.654 million in the EU. Job losses since the
beginning of the crisis amount to about 4.8 million for the euro area and6.6 million for the EU.
Current unemployment rates are unprecedented for both the euro area and the EU in recent
history. Data for a 12-country euro-area aggregate for which a time series going back to the
18

1980s can be constructed show that the current unemployment rate is well above the peak
reached during the mid-1990s.[2] p.5
For the EU15 aggregate (the EU countries before the 2004 enlargement), the unemployment rate
recorded in 2012 was 10.6%, higher for the first time than the 10.5% peak reached in 1994.At
the beginning of 2013, GDP witnessed a notable contraction. The negative growth in both the EU
and the euro area is the result of a negative contribution from domestic demand (mostly a fall in
gross capital formation, amid persistently tight credit conditions), while net exports had a
positive impact on growth. Growth turned positive in the second quarter of 2013. The positive
quarter-on quarter growth recorded put technically an end to the recession in the euro area and
the EU. Signs of improvement in the labour market followed. While the first quarter of 2013
witnessed a fall in employment and an increase in the unemployment rate comparable to the
previous quarter, some months later there were signs instead that the growth of unemployment
was reaching a halt. Quarter-on-quarter, the seasonally adjusted unemployment rate stopped
growing in 2013q2 both in the euro area and in the EU as a whole. In the euro area, the
unemployment rate continued growing until April to then stabilize at 12.1%, a level confirmed
for July 2013. In the EU, it stopped rising in March and remains at the same level of 11% in July
2013.Headcount employment started falling after moderate growth between the second half of
2010 and the first half of 2011. This fall continued throughout the following year until 2013q1.
The employment reduction was felt particularly strongly in the euro area. Not only was the
recession deeper in euro area countries, but the response of employment to GDP losses was also
more intense there. The changed sensitivity of unemployment to economic activity may have
been associated, among other things, with increased uncertainty about the economic outlook and
about the policy response to the debt crisis in some euro-area countries, notably Italy and Spain.
[7] p.10

Table 2.1.1 Employment and GDP growth in the EU

19

Looking forward, the average annual unemployment rate could decrease slightly in 2014
according to the Commission Spring Forecast, which assumes growth to resume in the second
half of 2013, mainly driven by net export and supported by improving economic sentiment. The
latest data from the European Commission Business and Consumer Surveys support a
moderately optimistic outlook for unemployment. Expectations on unemployment for the next
12 months have improved since 2013, especially those of consumers albeit remaining at high
levels. Despite the expected recovery, unemployment remains historically high and will need a
sufficiently robust and sustained growth to start embarking on a downward trajectory.[14] p.11
The labour market outlook remained rather weak in 2012 and the first half of 2013 in G7
countries. At the same time the divergence continued between major world regions as
unemployment continued to tick down in the US, Canada and Japan. In the US, job creation
slowed down in the first half of 2012 but picked up again during the rest of the year.
Unemployment fell by 0.6% in the 12 months to June 2013, reaching 7.6%, down by about 2
percentage points from its peak. The employment developments in the US during the crisis
differed from those in the EU in that labour force participation dropped substantially. While it
held relatively steady around 66% in the years before the crisis, it fell afterwards to about 63%.
Some of the drop reflected demographic changes that were already apparent before 2008. Some
of the drop may instead be cyclical: the share of individuals in the working age population who
want a job but stopped searching is about 0.7% higher than in the decade before 2008.[2] p.23
In 2012, the recession in economic activity in the euro area and the EU was paralleled by falling
employment and a rise in unemployment rates. The unemployment rate of the EU28 stopped
growing relative to the previous quarter and in July 2013, it confirms again stable from the
previous month. The response of the labour market to the rebound of economic activity in 2013
was therefore unusually fast. It is however early to judge if these recent developments are the
inversion of a trend or just a temporary pause in an otherwise upward tendency for
unemployment.

2.2 The Employment and Unemployment on the labour market

After a small increase in 2011, employment dropped by 0.2 per cent for the EU28 and 0.6 per
cent for the euro area. The fall in employment concerned most economic activities, but it was
considerable especially in the construction sector, a development that appears to reflect a
structural transformation occurring in a number of euro-area countries.At the same time, the
labour force in 2012 expanded by about 0.8 million individuals. About 80% of the expansion of
the labour force can be accounted for by the increased participation of women. The increasing
participation of women was coupled with a stable female employment rate at around 58.5%,
20

while the male employment rate decreased somewhat to 69.6%. The unemployment rate
increased for both sexes at a similar rate. [9] p.15
Table 2.2.1 Employment, unemployment and activity rates of women in the EU workforce

Source : Eurostat Labour Force Survey

The expansion of participation has a marked age pattern as well: the active young and prime-age
population has actually diminished, while participation among the 50-64 age group increased by
almost 2 million individuals. The increase of participation of older workers and the decrease of
younger ones were about equally shared between the sexes. The decrease in prime-age
participation was, however, concentrated among men. Overall, the dynamics of activity rates
seem to continue reflecting the added worker effectwhich characterised the response of
participation since the start of the crisis (European Commission, 2011). The need to contribute to
the household with additional income in the presence of missing,or more uncertain, labour
income in single-earner households had a positive effect that compensated the negative
discouraged worker effect which dominated in previous recessions and that is currently
dominating in other world regions. However, a growing trend is observed regarding the
relevance of discouragement effects leading to jobseekers dropping from the labour force. While
the share of discouraged workers among the inactive population was below 5.5% in early 2008,
at the end of 2012 it was above 6.5% in both the euro area and the EU. In the countries
characterised by the highest unemployment rates and high shares of long-term unemployment,
there was a considerable increase in the share of discouraged workers starting from 2011. An
additional element to take into account is the outcome of past and recent reforms in pension and
tax and benefit systems that contributed to the rise in the effective retirement age. These policy
developments may help explain the increased participation of elderly workers.[2] p.10
Table 2.2.2 Number of employees and average hours worked per employee, Euro area

21

Source : Eurostat, National Accounts

Graph show the development of the number of employees and average hours worked in the US
and the euro area since 2008. Since the low point of the recession, the US economy has added
over 6 million jobs, thus making up about of the ground lost before 2010, while hours per
worker virtually returned to their pre-crisis level by 2012. In the euro area, the initial decline of
employment was substantially smaller than in the US, even though the fall in output was similar
in magnitude. For the same reason, the rebound of employment during the 2010 short-lived
recovery was slower in the euro area than in the US. The cumulative employment loss after the
stalling of the European recovery is about 4%, which is about half of the employment loss the
US endured at the low point of the crisis, but the tendency is still negative at the beginning of
2013.[9] p.16
Average hours worked, after having fallen in 2009 stabilised at a lower level in 2010 and 2011.
During the course of 2012, a renewed fall in hours is observed, which parallels this time with a
fall in headcount employment. The adjustment of hours worked was again, in a number of
countries, facilitated by the operation of short-term schemes, that were reapproved and
reactivated as a response to the aggravation of the job crisis in the second half of 2011. In the
absence of such an adjustment in hours worked, job shedding would have been even deeper,
with implications for unemployment developments. Looking forward, the considerable
downward adjustment in average hours worked may imply a relatively subdued recovery of
employment in case of GDP recovery gaining momentum.[9] p.17
The increase in the euro-area unemployment in 2012 was linked both to job separation rates
remaining persistently high after the wave of job dismissals in 2011 and job finding rates
remaining persistently at a level that is the lowest since the start of the crisis. Headcount
employment fell despite considerable downward adjustment in average hours worked. As
opposed to the first post-crisis wave of reductions in average hours worked occurring

22

 2.3 EU labour market in comparison with USA labour market

Back in January Paul Krugman wrote a column about the surprising comeback of the European
economy. He argued that Europe had overcome its lags in IT investment and addressed many of
the labor market rigidities that had saddled it with very high rates of unemployment, particularly
among younger workers. He was quickly corrected by economist Greg Mankiw and others who
pointed out that Europe still lags significantly in economic wellbeing measured by per-capita
GDP adjusted for purchasing power parity. For the 15 original members of the European Union
(the E.U. 15) per-capita GDP is about $34,900. For the U.S. it is about $47,500more than onethird larger. Since I am currently working in Italy for a few months it has been interesting to get
more of a European perspective on these issues from my colleagues here. It is clear that
Krugman was correct in one sense. Coming into the recent economic crisis Europeans did feel
that their economies were more vibrant and flexible than they had been previously. And as the
crisis took hold they expected to come out of it a lot better.[7] p. 7
The unemployment rate in the E.U. 15 has increased to 9.9%, still not as high as in the U.S.
Krugmans column observed, In particular, in the prime working years, from 25 to 54, the big
gap between European and U.S. employment rates that existed a decade ago has been largely
eliminated. Apparently so, but this misses the deeper reality of European labor markets.
Consider the following data I took from David Altigs superb Macroblog site. The first chart
shows the response of employment in the U.S., the E.U., Canada, the U.K. and Japan since 2007,
the beginning of the financial crisis. The losses have been far more dramatic in the U.S.
something I have emphasized in previous columns. Bad for us, good for them, right? Not
necessarily.[7] p.9

Table 2.3.1:

23

The next graph shows what has happened to productivity in these same countries. As you see
productivity has increased sharply in the U.S. but has fallen everywhere else. One interpretation
of this is that it is logical given that the U.S. has shed more workersoutput per worker has
increased faster. But that is probably not the correct interpretation.
Table2.3.2:

It is true that European institutions act to protect employment and keep more workers on the job.
To understand the data on productivity, however, one has to take account of how the Europeans
managed to change their labor markets. In many European countries the costs of involuntary
employment separationseither firing or laying off workersis very high. It is exceptionally
difficult and costly to terminate an employee. Because of this many countriesSpain and Italy are
notable examplesdeveloped dual labor markets. A lot of recent employment is classified as
temporary to avoid the separation costs. As a result most of the separations in the current
recession have been of temporary workers. In a more flexible labor market, like the U.S., it is
more likely for the least productive workers to be separated first.[13] p.18
24

There is also more to the European problem. When countries experience shocks to their
economies that are distributed differently across regions, they adjust in two important ways:
through movements in capital and through movements in labor. Countries can also adjust by
manipulating their exchange rates, but that is not a policy issue in most of the E.U. or the U.S.
One of the features that accounts for the incredible dynamism of the U.S. labor market is the
mobility of workers across firms and regions. The same is not true in Europe. One of the
founding principles of the European Union was to build a more dynamic economy by
encouraging the free flow of trade, capital and labor across national borders. But this was not to
be. In spite of the ideal, labor is very immobilenot just across national borders but within
borders as well. Peter Rupert and Etienne Wasmer showed using Census data that on average
15.5% of U.S. workers move annually for one reason or another. In the E.U. 15 less than onethird of that4.95%do. Interestingly the reasons cited for moving suggest that the shocks to
households are similar in the U.S. and Europe. Its just that the Europeans dont move.
Obviously there are choices being made that reflect differences in culture, language and
institutions. Nevertheless it is clear that Europeans are again experiencing the costs of the
inherent rigidities in their labor markets. Many of them expect the consequences of these
differences will be a more robust economic recovery in the U.S. than in the E.U.[13] p.21
After all, with the exception of Spain and Ireland, most European countries had not had a
housing market bubble as the U.S. did. Also, the financial sector problems were not as
ubiquitousalthough certainly the U.K., Switzerland and the Netherlands were big participants.
But many Europeans now express frustration that their experience has not been very good. GDP
in the E.U. 15 economies declined by 4.1% in 2009 and is projected to increase by a very
sluggish 0.7% in 2010, according to the latest statistics from Eurostat.

2.4 The peculiarities of labour force in the Republic of Moldova

National labour statistics in Moldova are produced mainly by the National Bureau of Statistics
(NBS). These data are obtained through household/establishment surveys and from
administrative sources. Moldova is a member of the International Labour Organization (ILO),
and therefore one of the main objectives of the NBS is to produce reliable and internationally
comparable labour statistics according to ILO recommendations. In order to achieve this
objective, the NBS conducts the LFS and establishment surveys. In addition, some labour-related
data are collected through the HBS and the census. Private researchers focus more on small
qualitative surveys and studies of specific topics, since these are less expensive. Moldovas ILO
membership and its aspiration to become a member of the EU have determined important
changes in the official statistical system. As a result of the support offered by the ILO, EU,

25

UNDP and statistical offices of donor countries it is possible today to say that Moldova has a
functional and reliable system of labour statistics.[6] p.5
The evolution of business processes during 2012 particularly influential and change structures
within the active population. In the third quarter of 2012, active population was 1.2869 million
people have decreasing by 4.5% (- 60 300) to tr. III 2011 of which 1224.7 population and 62 200
unemployed according to ILO. of the total assets greater odds of persons observed in people of
age group 35 - 44 years (293.7) and 45-54 years (320.9) activity rate of 62%. most people
economically active lives in rural areas where instability under the rural sector and lower
educational attainment of the population, economic activities are less profitable and lower
wages.[8] p.27
Table 2.4.1 Employment of Moldovan people

Source : Biroul Naional de Statistic

The employment rate of working age population (15-64 years) was 45.5%, having higher for
males 46.7% versus 44.4% for women and that for people in urban areas 48.2% to 43.6% in rural
areas. 29.3% were employed of young people (15-29 years) and 45.3% of older people (55-64
years). Employment rate of people who complete higher and specialized secondary is
higher,because with increased skills and ability to work placements.[8] p.27

26

Table 2.4.2 Employment rate by education level

Source: Biroul Naional de Statistic.

Quality and competitiveness of human potential nonconformance needs and high demands
training and qualifications which jobs declared by operators leads to mismatch between supply
and demand on the labor market.
The ILO unemployment rate at the national level was 4.8%. The unemployment rate for men and
women the following values: 5.9% men and 3.7% women, and urban and rural aspect is 7.3%
compared to 2.8% in urban areas. The ILO unemployment rate was the highest (12.7%) among
youth (15-24 years). Estimated at the end of 2012 is expected to rate unemployment equal to
5.4% and for 2013 is projected unemployment rate of 5.8%.In the third quarter of 2012 there is
an improvement in the situation in terms of unemployment, which recorded decreasing trends.
The number of unemployed persons in this period marked value of 62 200, with 8800 being
lower than the third quarter of 2011. However, the number of inactive population of working age
15-64 years, which up 1.3699 million people, increasing by 63.8 thousand compared to Quarter
that of 2011. declared number of people left to work abroad or looking for a job has been some
increase, amounting at 367.60 thousand to 351.0 thousand in 2011.[6] p.13
Table 2.4.3 Evolution of unemployment rate on average for 2007 - tr. III in 2012,%

27

Source: Biroul Naional de Statistic.

According to data of the National Bank and its territorial structures, over 11 months of 2012
were 47.0 thousand unemployed registered 14.2 thousand less than period of 2011. Lack of
employment opportunities in rural areas remains be a major problem. Of the total number of
registered unemployed 72% are in rural areas and number of vacancies managed in this
environment is 12%. This demonstrates that the harder to find a job peasant. The database of the
National Agency number of vacancies registered During 11 months of 2012 amounted to 33 500
jobs, increasing by 24.8% compared to the year 2011. Estimated number of vacancies registered
by the end of the year will be 36 500 jobs. Of the total number of many places identified, 79%
are intended for workers and only 21% vacancies for people with secondary vocational education
and higher education.[6] p.15
As of mid-2006, approximately one-quarter of the economically active population of Moldova
was working abroad. This suggests that 345,000 individuals are migrant workers representing
25.4 per cent of Moldovas economically active population.According to the same source, 58.4
per cent of migrants are male and 41.6 per cent are female, with the main sectors of employment
of Moldovans abroad being construction (51.6%), transport (10.8%), housekeeping and care
(7.8%), trade (11.6%), services (21.4%), industry and mining (5.5%), and agriculture (3.9%). A
system of collecting adequate information on labour migration and its effects is being gradually
developed in Moldova. In particular, the problems of Moldovan labour force migration were
presented in a separate volume of the 2004 Census results (the census counted 242,300
Moldovan labour migrants in 2004). Another major source of information on the number of longterm labour migrants is the results of the labour force survey that are collected on a quarterly
basis by the National Bureau of Statistics (NBS). Data show that, starting from 1999, the number
of Moldovan labour migrants has been increasing (from 57,000 in 1999 to almost 430,000 in
2005). Nevertheless, grasping the exact number of Moldovans abroad is a daunting exercise.
According to some sources, estimates may exceed 800,000.[16] p.14
Table 2.4.4 Destination countries of Moldovan migrants

28

State migration policy is reflected in National Strategies, programs and plans and in domestic
legislation of the Republic of Moldova (RM). The current legislative framework regulates the
immigration of foreigners and strictly divides competences between responsible bodies and
favours strengthening relations with Moldovan citizens residing abroad; providing services for
returning migrants; and stimulating conditions to prevent the emigration of citizens. In
September 2011, the National Strategy in the migration and asylum domain (2011-2020) was
approved, providing the basis for a comprehensive regulation of migration and asylum
management, the harmonization of the national legal framework with international and EU law,
and the regulation of migration flows. This strategy is intended to contribute towards socioeconomic development, state security and towards the achievement of European integration
goals. In December 2011, the Action Plan for 2011-2015 regarding the implementation of the
Strategy was approved. The activities included a Plan describing how the state intends to
improve migration management. The cooperation with the CIS countries is maintained within
the framework of regional or bilateral agreements. The Moldova-EU Action Plan includes the
strategic objectives in the domain of migration. Based on this document, Moldova adopted
National Programs, where the European vector has become a must when implementing policies
for all public authorities. Taking into consideration the European integration as a political
priority for the development of the RM, the mobility facilitation of people and stimulation of
contacts between the RM citizens and the EU are set as goals. After a decade of vacillation, the
relations between the RM and the EU have started to be been seen as a priority. The National
Strategy in the Migration and Asylum Domain (2011-2020) sets out the main priorities regarding
emigration and circular migration. The Action Plan for 2011-2015 for the implementation of the
National Strategy in the Migration and Asylum Domain (2011-2020) stipulates the importance of
the compatibility of skills and qualifications of migrants. The recognition, evaluation and
certification of competences and skills acquired by Moldovan migrants abroad are seen as vital.
Despite the presence of some contradictions between the various political actors in Moldova
regarding the paths of the national social development, Moldovan migration policy of the last

29

decade is characterized by a certain degree of continuity, accumulation and use of conceptual and
practical experience, both international and national.[1] p.7

One may wonder about the remittances, which play such an important role in the countrys
economy? In the first ten months of 2007 Moldovans abroad sent remittances of 972.18mln USD
through commercial banks, which is 14% more than the same period of the previous year.
Remittances represent 36% of GDP, raising Moldova to first place in the last World Bank
classification. Despite the large amount of remittances, they do little for the most vulnerable.
According to field interviews, they: arrive intermittently; are used to cover debts (mostly for
utilities), medicines, clothing and school materials; usually cover basic needs and seldom
improve the familys quality of life; and may not be managed and used appropriately. It is true
that many of older cares receive remittances from their parents working abroad. From the
interviews held with older people during HAI project, the remittances are random, once in 2-3
months, and are about 150-200 Euros. It must be remarked that the financial situation of such
families does not change to a great extend; they still remain poor as remittances are used to cover
primary needs and debts. These amounts are not invested in a business and are not used to form
stable income. This is why, even if remittances in some cases reach the poorest, they do not solve
the poverty issue.[5] p.21
Over the last decade, economic inactivity has degenerated into a specific feature of the
Moldovan society. Educational sector, essential in the training of the workforce for the real needs
of the economy proved to be inefficient to meet the changing needs of the national economy in
the last decade. All these raise the question: how could the Republic of Moldova become an
attractive place to live and work? Authorities have developed a lot of laws, strategies and plans
for employment, but most of them lacked practicality and failed to achieve the objectives and
goals set. This study examines the main problems of the Moldovan labour market and comes
with some recommendations to address them.

30

Conclusion
Writing this project, I was pretty impressed how the level of labour force changed among the
years and countries. Labour International market meets a lot of reforms and developing
processes during crisis period and innovation period. Not only the level, but also the structure of
unemployment and the extent to which it is structural differs widely across countries.
There is nonetheless clear evidence of worsening labour market matching and growing
unemployment of persistent nature in a number of countries, notably those mostly affected by
current account reversals and debt crises. Upward changes in structural unemployment rates
appear to be mostly driven by persistently lower job finding rates ensuing from worsened labour
market matching across skills and sectors, and an increased duration of unemployment spells. To
a certain extent, job destruction rates may have also become persistently higher. On the contrary,
structural reforms and developments in labour market policy frameworks may have rather played
in the direction of reducing structural unemployment. Looking forward, while increased
mismatch linked to job shedding from specific sectors, notably construction and manufacturing
may have gone back to some extent since 2011, labour market matching problems persist of are
aggravating for unskilled workers and workers expelled from some market services (notably
retail) and the public sector. Growing matching problems are also linked to the lengthening of
unemployment spells and the grim prospects for labour market entrants.
Policy responses across the board for the EU or the euro area would work only to a certain
extent, since the magnitude and typology of challenges are largely country specific. While some
countries are characterized by an unprecedented labour market slack, in others labour market
31

conditions are getting remarkably tight. Tailor made responses are needed, with policies that may
differ, also considerably, from one country to another. The unemployment rate in most EU
countries remains nonetheless very high, and a sustained and solid growth will be necessary to
bring about substantial improvements. In light of the protracted economic slack, hiring rates
remain low and separation rates high. The share of long-term unemployment keeps growing,
with implications for job finding rates and labour market matching.
These chapters analyses the main features of the current labour market adjustment by looking at
aggregate developments in the EU and the euro area. In doing so, it compares the EU labour
market performance with that of other world macro-regions and assesses the role of cyclical and
structural factors in unemployment dynamics, that of job market flows, and the role played by
the relevant adjustment margins, including working hours and labour costs. This project provides
a detailed analysis of labour market trends at the EU country level. It looks at employment,
unemployment, participation, and job market flows. Special attention is devoted to data
disaggregated by age, gender, national origin. The increase in the euro-area unemployment in
2012 was linked both to job separation rates remaining persistently high after the wave of job
dismissals in 2011 and job finding rates remaining persistently at a level that is the lowest since
the start of the crisis. The share of long-term unemployed has been increasing at an accelerated
rate, which does not bode well for job finding rates looking forward.
Recent years have witnessed a strong intensification of reform activity across the EU. Major
reforms have been passed and others are planned for the years to come. Most of the measures
adopted in the latest years appear to be largely in line with the priorities set at European level,
notably measures that help to mobilize labour, make labour markets more dynamic, tackle
precariousness and improve competitiveness. Countries with high unemployment and large
external imbalances have taken up the challenge of improving the responsiveness of wages and
their labour market adjustment capacity, by thoroughly reforming their job protection and wage
setting systems.

32

Bibliography
I.Laws and regulations
10.07.2008 - Lege cu privire la migraia de munc nr.180-XVI din 10.07.2008

II.Textbooks, monographs and didactic works

European Economy published under the responsibility of the European
Commission, Brussel 2013
The European Labour Market 2013: A Brief Appraisal David Bell, University of
Stirling
The impact of the crisis on employment and the role of labour market
institutions Authors: Werner Eichhorst,Vernica Escudero,Paul Marx,Steven
Tobin. Published 2010
OECD Labour Force Statistics 2013 OECD
33

Republic of Moldova labour market and labour market of Transdniestria

Vaculovschi Dorin, PhD in economy
III.Periodical articles
Report written by the MPC Team on the basis of CARIM East database and
publications, June, 2013
IV. Sites
http://www.anofm.md/files/elfinder/Docs/prognoza/PROGNOZA-PIETIIMUNCII-2013-web.pdf
http://ec.europa.eu/economy_finance/publications/european_economy/2013/pdf/ee
6_en.pdf
http://en.wikipedia.org/wiki/Labor_force
http://www.economist.com/topics/labour-market
http://economictimes.indiatimes.com/definition/labour-market
http://www.ilo.org/global/about-the-ilo/media-centre/issuebriefs/WCMS_209596/lang--nl/index.htm
http://ilo.org/empelm/lang--en/index.htm
http://www.statistica.md
http://www.tcu.gov.on.ca/eng/labourmarket/currenttrends/docs/guide.pdf

Annexes
34

Annex 1: List of EU members (year of entry)

Austria (1995) Belgium (1952) Bulgaria (2007) Croatia (2013) Cyprus (2004) Czech
Republic (2004) Denmark (1973) Estonia (2004) Finland (1995) France (1952) Germany (1952)
Greece (1981) Hungary (2004) Ireland (1973) Italy (1952) Latvia (2004) Lithuania (2004)
Luxembourg (1952) Malta (2004) Netherlands (1952) Poland (2004) Portugal (1986)
Romania (2007) Slovakia (2004) Slovenia (2004) ,Spain (1986), Sweden (1995),United
Kingdom (1973)

Annex 2

Sourse : Eurostat

35