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Vol 3, No 8
26 February 2001
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Sam Vaknin Unemployment:
The case of

Part five of a six-part series
Sam Vaknin

Read part one of Sam Vaknin's unemployment series of articles first.
Read part two of the series.
Read part three of the series.
Read part four of the series.

Administrative measures

The dissemination of information regarding employment practices, opportunities, market requirements, etc, is a prime component of the activity of the employment bureau in Macedonia. Yet, it is poorly executed. Theoretically, it seeks to transform itself from a mere registry of the unemployed to an active exchange of labour. This will be done through computerized employment exchanges and intermediation.

The image of the employment bureaux is that of places where the unemployed merely register and receive benefits. It strives to rebrand itself as a labour exchange. In other countries in transition, this was done, for instance, by publishing examples of successful job placements. In countries like Croatia, Hungary, Poland and the Baltics, state employment bureaux compete head on with the private sector by prominently displaying and disseminating information regarding the rights of the unemployed, their obligations and services available to them. They also publish weekly or daily employment bulletins and organize seminars for the unemployed and employers in which the rights of the unemployed, their obligations and the services offered to them and to their potential employers are described.

This is combined with employment fairs. Separately, the unemployed are taught in these seminars how to find a job, write a curriculum vitae, sharpen entrepreneurial skills, prepare business plans, marketing plans, feasibility studies and credit applications, as wel as how to hone interview skills. The employment bureaux work in collaboration with the local authorities organize job clubs, labour exchanges and employment fairs—places where employers can meet potential employees, currently unemployed.

In a few countries, the mass media by law dedicate at least one hour weekly (which can be broken up into as many as four segments of 15 minutes each) to unemployment, with features such as the dissemination of information, a televised labour exchange and a televised entertainment show where employers offer a job to a winner.

More advance economies in transition link, by means of a Wide Area Network (WAN) or Intranet with firewalls, the National Employment Bureau, the Health Fund, the Pension and Disability Insurance Fund and the Social Security Office. This means that information from all these bureaux can be cross-checked and compared on a real-time basis (to specifically cater to the needs of an unemployed person) and on a periodic basis for supervision and control purposes.

The Macedonia National Employment Bureau maintains a regular presence in employment fairs abroad. Many fairs are global and work is obtained in them for Macedonian workers (especially the more skilled ones). But the modernization effort is only nascent.

A national employment contract

A National Employment Contract was signed between the government, the trade unions and the employers (Chamber of Commerce). All parties to it undertook certain obligations.

In many countries in transition (a prominent example being Poland) the employers guaranteed the formation of new work places against a freeze on employee compensation, a separate treatment of part time labour (exclusion from collective bargaining), flexibility on minimum wages and with regards to job security, hiring and firing procedures, social and unemployment benefits, indexation of wages and benefits, the right to strike and the level of salaries.

The employers obligated themselves to fixed employment quantitative targets over a number of years against the receipt of the unemployment benefits of the newly hired (or another form of subsidy or tax incentive) and/or a discount in social contributions.

A successful national employment contract should aim to constrain inflation by limiting wage gains to productivity gains (for instance, through dividends on the shareholdings of the workers or through stock options schemes to the workers).

In return, the trade unions are granted effective control of the shop floor. This is the neo-corporatist approach (with many elements of the Dutch and the Rhine economic models).

It means that the tripartite social contract will increase employment by moderating wage demands but the unions will control policies regarding unemployment insurance, employment protection, early retirement, working hours, old age pensioners, health insurance, housing, taxation, public sector employment, vocational training, regional aid and subsidies to declining and infant industries.

In Croatia, Macedonia, Yugoslavia, Bosnia-Herzegovina and—to a much lesser extent—the countries of Central Europe and Russia—(as is the case in the "socially conscious" countries of Sweden and Germany) there is co-determination. Workers have a quasi-constitutional shop floor representation even in non-wage related matters (such as the work organization).

Many countries in transition instituted an "incomes policy" intended to ensure that employers, pressurized by unions, do not raise wages and prices. Among the most emulated are Sweden, Germany and Holland. In Sweden, for instance, both labour and management organizations are responsible to maintain price stability. The government can intervene in the negotiations and it can always wield the whip of a wage freeze, or wage and price controls. In Holland the courts can set wages. Wages and unemployment benefits are perceived as complementary economic stabilizers (contra the business cycle).

Another possibility is a guaranteed wage plan—employers assure minimum annual employment or minimum annual wages or both to those employees who have been with the firm for a minimum of time.

Firms and trade unions often forego the seniority treatment (firing only the newly hired—LIFO, last in first out). The firm is given a free hand in hiring and firing its employees regardless of tenure.

Labour disputes settlement

Future collective agreements are all to be subordinated to the national employment contract. Due to constitutional complications (the right to strike is enshrined in the constitution), all these agreements do not include a compulsory dispute settlement through mediation and arbitration, as they should. But all labour contracts include clear, compulsory and final grievance procedures. Possibilities include conciliation (a third party to bring management and labour together to try and solve the problems on their own), mediation (a third party makes nonbonding suggestions to the parties) and arbitration (a third party makes final, binding decisions), or peer review panels—where the management and the employees together rule on grievances.

Out-of-court settlement of disputes arising from the dismissal of employees through arbitration, an employees' council, trustees or an employer-employee board are allowed.

Sam Vaknin, 26 February 2001

The final part of this series of six articles will appear in next week's CER

The author:

The author is General Manager of Capital Markets Institute Ltd, a consultancy firm with operations in Macedonia and Russia. He is an Economic Advisor to the Government of Macedonia.

DISCLAIMER: The views presented in this article represent only the personal opinions and judgments of the author.

Moving on:

After the Rain cover

After the Rain:
How the West Lost the East

Sam Vaknin's book on sale from CER as a print book and as an ebook

Read an external review


Robin Healey
Prague's Intelligentsia

Brian J Požun
The Future of Otpor

Sam Vaknin
Macedonia's Unemployed

Mel Huang

Ivana Košuličová
Cesta z mešta

Štěpán Kotrba
Sow and Reap

Brian J Požun
Shedding the Balkan Skin

Martin D Brown
Czech Historical Amnesia

Dejan Anastasijević (ed)
Out of Time

Gusztáv Kosztolányi
Hungarian Oil Scandal

Sam Vaknin
After the Rain

Press Reviews:
Oliver Craske
Thinking the Unthinkable

Andea Mrozek
Odd Man Out


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