SVIBOR - Project code: 5-02-013

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Project code: 5-02-013

LABOUR HOARDING AND THE FUNCTIONING OF THE LABOUR MARKET IN CROATIA

Main researcher: CRNKOVIĆ, SANJA (79724)

Assistants

MARUŠIĆ, SVETISLAV (79671)
KEROVEC, NADA (174121)

Type of research: basic
Duration from: 01/01/91. to 12/30/93.

Papers on project (total): 22

Institution name: Ekonomski institut, Zagreb (2)

Communication: Phone: 235-700/30; Fax: 235-165; E-mail: sanja.crnkovic@ekist.eizg.hr

Summary: The theoretical framework for the functioning of the labour market was defined. A detailed overview was given of the long and short term labour market functioning in Croatia with an attempt to quantify all the seperate elements of labour supply. A comparison with long term trends in labour demand indicated a chronic labour surplus which was consequtively absorbed on foreign labour markets and the shadow economy. Two features of the labour market recieved special attention i.e. the autonomous and asymmetric behaviour of employment in varying economic conditions. An estimate was given for the extent of labour hoarding i all the sectors and branches of the economy from 1965 to 1987. A psychological profile of the average worker in the social sector of Croatia was given with respect to worker adaptability and readyness for change towards a more market oriented environment. The analyisis is based on a survey of a sample of large firms in the social sector. The fourth part of the study gives a review of economic policy measures in developed market economies for achieving a greater measure of flexibility in the labour market. Measures to eliminate rigidities are given special attention. The results of the first years' work were published in the book entitled "The labour market in Croatia". The second part of the project consisted of preparations for the institution of the first Croatian Labour force survey. There are significant differences in the content of the elementary labour market cathegories in Croatian and ILO statistics. Any serious and complementary work in the field of labour economics necessitates the application of international standards in labour statistics. In this vain a methodological material was prepared based on ILO recommendations which will be used for the preparation of a labour survey questionnaire. The preparations for the first labour force survey are under way. The pilot is planned in November 1995. and the full-scale survey will take place after the population census in June 1996.

Keywords: labour market, labour supply, labour demand, unemployment, labour hoarding, flexibility on the labour market, labour market disequilibrium, underemployment, discouraged workers, the added worker effect, work in the shadow economy, labour force survey, international standards

Research goals: PHASE I: The aim of the first year of research was to: 1)determine the theoretical framework for the analysis of the functioning oflabour markets in general and the Croatian labour market in particular. Thebasic results indicate that the Croatian labour market was characterized by along term and chronic labour surplus in the post Second World War period. Employment dynamics show autonomous behaviour in relation to short termeconomic conditions i.e. employment rates are positive regardless of the stage in the business cycle. Job creation in the modern socialist sector was not extensive enough to absorb the pressure on employment from the traditional agricultural sector. 2) The second aim was to determine and estimate the extent of labour hoarding at a desaggregated level. The results show that the extent of labour hoarding was small and even falling up to the late 70s. Thereafter, and especially towards the end of the analysed period, there was a substantial increase in the phenomenon with more than 300.000 workers employed but without sufficient work. It is shown that the same level of GDP could have been attained with a 23.5% smaller work force had the previously attained levels of labour productivity been maintained. 3) The third aim was to provide an empirically verified psichological profile of the average worker in view of estimating his/her adaptability to change, especially a change towards a market economy. The results of a survey carried out on a sample of Croatian social sector firms show that workers harbour a significant degree of unwillingness to adapt to new conditions, a lack od independent thinking and judgement and a dearth of inventivness and initiative in their work environment. Most of these traits were attributed to the previous self-management system and they present a real challenge to the inaugeration of modern management and workers participation systems in a competitive environment. 4) The aim of the fourth part was to describe the various measures of economic policy in the field of labour market regulation. A wide range of policies, their aims and effectiveness were discussed in view of their applicability in the Croatian setting. 5) The aim of the fifth part was to outline possible measures of active and/or pasive labour market policy in order to reduce the labour market disequilibrium and to stimulate employment. It was deduced that the government was at present incapabale of financing a comprehensive safety net for all the workers who would become laid-off as a result of restructuring, privatization and the present recession. All the viable options lie in the realm of an active labour market policy which should include fiscal measures which would reduce the total cost of labour, the reduction of costs of hiring and firing and the reduction of redtape necessary for registration of small businesses and household workschemes. This legislation should be buttressed by credit extension especially to stimulate self-employment. In war damaged areas government and foreign funds should go into public works with the aim of rebuilding the infrastructure, employ the local population and raise the purchasing power and thus demand. PHASE II and III: The aim of these two phases of the project was to create preconditions for bringing the present labour statistics in line with international standards. Firstly, all the major differences between the two sistems were outlined. It was shown, for example, that our unemployment rates showed only the number of registered unemployed in relation to a labour force which did not account for significant numbers of workers in the private sector as well as the shadow economy which has immense proportions in Croatia. Similarly, there are many de facto employed workers among the unemployed and they do not satisfy all of the ILO criteria for attaining the unemployment status. In view of the untransparent situation on the labour market it was decided to prepare the methodologicalmaterials for the inaugeration of a labour force survey. A methodological material was compiled on the basis of United Nations and ILO materials which will serve to work out a questionnaire relevant in the Croatian setting. Preparations are under way for the first labour force survey in Croatia in June 1996.

Other information about the project.


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