Transcript Rusnok nouveau TD2 - International Labour Organization

Labour Market in Central
and Eastern Europe in
Context of Economic Crisis
Jiří Rusnok,
Chief Economist, Pension Director, ING Czech Republic
ILO, Geneve, June 4, 2009
Content:
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Diversified situation in the CEE region.
Structure of anti-crisis packages.
Risk of excessive government
borrowing in CEE region.
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ILO, Geneve, June 4, 2009
Diversified Situation in the CEE
Region
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Very different macroeconomic situation at the
beginning of the crisis – also very different impact
across the region
Most of the economies (except HU) in CEE grew in
recent years by more than 5% of real GDP per
year, in 2009 almost all of them will face negative
growth
Countries with currency board arrangement
(pegged FX rate) are in much more fragile situation
– labour market and CA deficit more affected,
Mostly small, very open economies – huge impact
of dropping international trade
In general, countries with fewer macro-imbalances
ILO, Geneve, June 4, 2009
are much more robust in times3 of crises.
Unemployment Rates in CEEC
(according ILO definition)
Country
May 08
January 09
February 09
March 09
April09
EU (27)
6,8
7,9
8,1
8,4
8,6
EU (15)
6,9
8,1
8,3
8,5
8,7
Bulgaria
6,6
5,3
5,6
5,9
6,2
Estonia
3,9
9,8
11,1
12,4
13,9
Czech R.
4,3
4,9
5,2
5,5
5,7
Hungary
7,7
8,5
8,8
9,3
9,6
Latvia
6,2
13,2
14,6
16,1
17,4
Lithuania
4,6
11,5
13,5
15,2
16,8
Poland
7,2
7,2
7,5
7,7
7,8
Slovakia
9,7
9,7
10,2
10,6
11,1
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Source:Eurostat
ILO, Geneve, June 4, 2009
Job Creation in Context of GDP
Growth in CEEC, 1999 -2008
Slovakia
1,0
3,0
0,5
2,0
0,0
-0,5 0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
-1,0
-1,5
changes in ER
changes in ER
Czech R.
-2,0
1,0
0,0
-1,0 0,0
2,0
8,0
10,0
12,0
5,0
6,0
-3,0
changes in real GDP
Poland
Hungary
3,0
2,5
2,0
2,0
1,5
1,0
0,0
1,0
2,0
3,0
4,0
-2,0
-3,0
5,0
6,0
7,0
changes in ER
changes in ER
6,0
-2,0
changes in real GDP
-1,0 0,0
4,0
1,0
0,5
0,0
-0,5 0,0
2,0
3,0
4,0
-1,0
changes in real GDP
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Source:Eurostat
1,0
changes in real GDP
ILO, Geneve, June 4, 2009
Macroeconic Prediction for
CEEC Region
Real GDP
change
Gen.Gov.Bala
nce % GDP
Public Debt
% GDP
CA % GDP
Inflation Unemployment
CPI
%
CZ
-3,5
-3,0
29,4
-2,7
1,0
8,2
PL
-0,7
-4,1
47,7
-4,5
1,8
11,0
SK
-2,1
-2,8
30,0
-5,7
2,0
11,5
SI
-2,7
-3,2
24,8
-4,0
0,5
6,2
H
-3,3
-2,9
73,8
-4,0
4,2
9,1
RO
-4,1
-7,5
21,1
-9,0
4,5
6,1
BG
-2,0
-0,5
12,2
-14,1
2,0
7,4
EE
-10,0
-3,2
6,1
-5,7
-0,5
11,8
LV
-12,0
-6,3
30,4
-6,5
-1,0
10,3
LT
-10,0
3,0
20,0
1,5
15,7
IMF, Economic outlook, May 2009
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-7,0
ILO, Geneve, June 4, 2009
Fiscal Stimulus Packages in
CEEC
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Significantly smaller in size compared to the
western Europe and USA, around 1 – 2 % of GDP.
In majority countries almost no banking crises
(except Ukraine, Baltics, partially Hungary).
Significantly lower affordability of public finance –
thus, fiscal policy is both pro-cyclical and hardly
sustainable; the latter because it is and will be
difficult to finance higher fiscal deficits – need for a
coordinated international support.
Mostly small and very open economies –
effectivnes of domestic fiscal stimulus thus limited.
More focus on supply side in order to boost
competetivness of national economy
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ILO, Geneve, June 4, 2009
Specific Labour Market
Measures
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Active and passive labour market measures are part
of regular employment policies in the region.
Automatic (embedded) stabilizers are important
part of anti-crises strategies
The level and effectiveness of these systems is
obviously different from one country to another
Specific (temporary) new measures:
– Social contributions discount (degressive) for employers,
applicable to below average wages (CZ)
– Training programs for employees in case of partial
unemployment subsidized heavily from the European
Social Fund (CZ. SK)
– Temporary subsidizing of mandatory social contributions in
case of shorter working hours due to lack of orders
(„kurzarbeit“) (SK, PL)
– Flexible working time arrangements (SK, PL)
Risk of Excessive Government
Borrowing in CEE Region
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Despite that in general the indebtedness of CEEC is
not (maybe except HU) as high as average of the
EU(15), the perception of the market is much worse
– the assistance packages for: Latvia, Hungary,
Ukraine, Romania, Serbia, Belarus,
Sharp increase in cost of financing of state debts –
CDS increased sharply
Longer term fiscal sustainability could be a huge
issue.
Enormous rise of debt service cost within state
budgets of CEEC in near future – crowding out
effect towards social expenditures
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ILO, Geneve, June 4, 2009
State Debt, % GDP,
forecast 2009
120
100
80
60
40
20
10
T
U
LT
LA
T
ES
B
G
R
O
H
P
I
E
R
G
IR
L
I
S
K
S
L
P
C
Z
K
U
F
D
N
L
Eu
ro
0
ILO, Geneve, June 4, 2009
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ILO, Geneve, June 4, 2009
Closing remarks
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As far as longer-term prospects for CEEC are concerned, I'm
optimistic. Nevertheless, situation will be very different within
the region with regards to the overall macroeconomic
stability.
CEEC which are EU members will have better environment to
survive the troubled period and will be less affected than
some of other countries.
These countries have mostly successfully reformed their
institutions in recent 10-15 years, and most have built
economies that are diversified and resilient.
Labour market tensions will grow, double digit unemployment
rates will be back in some countries and could stay for a
longer time.
The crisis puts them at risk, but even if the slowdown in many
of these economies will be deep, change comes naturally to
this part of Europe. So they will adjust, possibly better and
faster than many of Europe's established market economies.
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ILO, Geneve, June 4, 2009
Thank You For Your
Attention
Questions?
[email protected]