Papers by Mihail Arandarenko
European Journal of Comparative Economics, Jul 1, 2007
Creating effective employment policy to combat rising unemployment and widening regional labour m... more Creating effective employment policy to combat rising unemployment and widening regional labour market differences is a major task facing Serbian economic policy makers. In this paper we argue that the best results would be achieved if a differentiated approach to regional labour markets is adopted, resulting in regionally specific employment policies. Our paper presents an original methodology which uses relevant statistical data from various sources (altogether 21 indicators) in order to create compound indices which serve as means of a comprehensive regional labour market classification. The main composite indices contain indicators standardised and grouped so that they reveal multifaceted features of the regions. The first classification distinguishes between indicators depicting regional economic situation and development prospects, and the second between those of general economic conditions, labour market situation and restructuring dynamics. Finally, we suggest a simple two-dimensional taxonomy of regions with regard to their labour market situation and prospects. While regions with positive composite indices of both situation and prospects in general do not require additional intervention, regions in other three quadrants are recommended specific policy mix of employment policy measures and active labour market programmes tailored according to their characteristics revealed by the analysis.
Global Social Policy, Apr 1, 2004
This article describes and assesses the impact of evolving labour market institutions after the o... more This article describes and assesses the impact of evolving labour market institutions after the onset of transition in South-East Europe on economic performance and, at the same time, the impact of international advice on the direction and speed of institutional change. Institutions analysed include employment protection legislation, features of passive and active labour market policies and trade unions and collective bargaining structures. Countries of the region could roughly be divided into two groups – first, covering successor states of former Yugoslavia, with more rigid, and second, covering former centrally planned economies, with more flexible labour market institutions. This divide suggests the importance of institutional tradition. A simple test is undertaken to indicate whether the two groups differ significantly with regard to economic and labour market performance. No firm evidence is found to support the assumption that more flexible labour regimes induce better economic results, contrary to what has been the leading paradigm in the region, promoted by World Bank and IMF. Conditionality is only a partial explanation for their dominant influence; we argue that their agenda is better articulated and communicated than competing agendas of ILO and EU.
SEER, 2012
The impact of the economic crisis in Serbia has been rather mild in terms of impact on the contra... more The impact of the economic crisis in Serbia has been rather mild in terms of impact on the contraction of output, but it has been very severe in terms of job losses, which have seen an already difficult labour market situation deteriorate significantly. Under such circumstances, employment growth, alongside a reduction in absolute and relative poverty, needs to be defined as an explicit final objective of any development strategy for the next decade. Macroeconomic and sectoral policies and institutional reforms need to create an environment which is conducive to job growth. Labour taxes for low wage labour need to be substantially reduced, while making work pay policies need to be introduced. Education policy should improve the quality and efficiency of education and tackle the growing skills gap, while more funds are required for active labour market programmes. Social dialogue should be given more prominence, while collective bargaining in the private sector should additionally be encouraged.
Social Policy & Administration, Aug 22, 2022
In this article, we examine the evolution of minimum income programmes in the Western Balkans (co... more In this article, we examine the evolution of minimum income programmes in the Western Balkans (comprising Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia). During socialism, Yugoslavia developed a rudimentary minimum income protection programme, while Albania did not have one. As countries moved towards a market economy, socialism's legacy remained relevant, but especially since 2000, governments have taken more direct responsibility for the minimum income schemes—typically under the influence of the World Bank. The attention was paid to strict targeting accuracy rather than to adequacy or sufficient coverage of the lowest deciles. In essence, neither socialist nor neoliberal policymakers ever recognised anything but the poverty relief function of the minimum income. Both ideologies were hostile, or at best indifferent, to increasing the adequacy and generosity of minimum income programmes, perceiving them as impediments and distractions that slowed socialist and neoliberal transformations. Despite some reform initiatives supported by the World Bank and, more recently, the European Union, the generosity and adequacy of minimum income programmes remain low, and coverage keeps declining. There have been very few efforts to develop inclusion function of the minimum income, while the activation aspect has achieved very little, sometimes degrading into punitive programmes of unpaid community work. In this dismal picture, the European Pillar of Social Rights action framework could serve as a guide for a long overdue third phase in the Western Balkans' minimum income policy evolution.
Contributions to economics, 2015
The shadow economy is a multi-dimensional, multi-faceted phenomenon, which inevitably accompanies... more The shadow economy is a multi-dimensional, multi-faceted phenomenon, which inevitably accompanies formal economies throughout the world. However, its characteristics and dimensions can be vastly different: from relatively benign, stable, and acceptable to extremely destructive to the economic tissue and longterm economic growth. In countries where shadow economies are present to a large extent or where they show upward trends, these informal sectors are invariably a symptom of deeper disturbances in the economic structure, regulation, and institutions. In an environment dominated by the economic crisis-present in Serbia since 2008 both statistically and, particularly, in the public's perception-the need to deeply understand the shadow economy and find ways to reduce it through formalisation grows acute. In times of crisis it becomes more apparent that the shadow economy can be not only a consequence but also a cause of greater decline in the gross domestic product, and can spread the crisis further. The shadow economy becomes part of a vicious circle where one of the consequences of recession is flight from formal to shadow trading, which reduces tax revenue, thus increasing the fiscal deficit. The growing deficit must, in turn, be compensated for by higher tax rates: higher taxes drive more companies and workers into the shadow economy, or, even more devastatingly, out of the economy altogether. This downward spiral keeps repeating itself, always at a lower level of GDP and employment. The empirical mechanisms behind this vicious circle are complex, and include the impact of inflation, declining real wages, and growing unemployment on the increase of the informal economy, and vice versa.
between the second quarter of 2017 and the second quarter of 2018. Despite stronger economic gr... more between the second quarter of 2017 and the second quarter of 2018. Despite stronger economic growth in 2018 than in 2017, the Western Balkan countries' labor markets improved at a slower pace in 2018 compared with a year earlier. During this period, Western Balkan countries created 68,000 new jobs and employment rose a modest 1.1 percent, ranging from a decline of 4.5 percent in Kosovo to an increase of 3.3 percent in Montenegro. More than half of the employment increase in 2018 was due to an increase in female employment. The quality of employment seems on the rise, with most new jobs created in the Western Balkans being formal, waged jobs, while informal employment, especially self-employment, is on the decline. Regionally, the number of self-employed declined by around 125,000 people (down 8 percent). Unemployment reached new historic lows in most Western Balkan countries. The number of unemployed fell by 65,000 between the second quarter of 2017 and the second quarter of 2018, compared to 169,000 the previous year. Youth unemployment was high and persistent in the Western Balkan countries. Although the rate fell to 35 percent in 2018, it was twice as high as the EU average. More than one fifth of the youth population was not in employment, education or training (NEET), which was less than a year earlier, but still high by international standards. Wages and labor costs were significantly lower in the Western Balkans, compared to the EU and there was no clear convergence in recent years. When compared to productivity, the apparent labor cost advantage of the Western Balkan countries disappears and the two most direct EU competitors, Bulgaria and Romania, with similar or even lower labor costs than some Western Balkan countries, seem significantly more competitive. The taxation of labor income in the Western Balkans is skewed towards relatively high social security contributions (combined with a lower and relatively flat personal income tax), which results in a relatively high labor tax level for the lowest wage earners. Low wage earners are at a particular disadvantage in the formal labor market in terms of their low net take home pay and the relative high cost of hiring them versus medium or high wage earners.
Ekonomika preduzeća, 2016
between the second quarter of 2017 and the second quarter of 2018. Despite stronger economic gr... more between the second quarter of 2017 and the second quarter of 2018. Despite stronger economic growth in 2018 than in 2017, the Western Balkan countries' labor markets improved at a slower pace in 2018 compared with a year earlier. During this period, Western Balkan countries created 68,000 new jobs and employment rose a modest 1.1 percent, ranging from a decline of 4.5 percent in Kosovo to an increase of 3.3 percent in Montenegro. More than half of the employment increase in 2018 was due to an increase in female employment. The quality of employment seems on the rise, with most new jobs created in the Western Balkans being formal, waged jobs, while informal employment, especially self-employment, is on the decline. Regionally, the number of self-employed declined by around 125,000 people (down 8 percent). Unemployment reached new historic lows in most Western Balkan countries. The number of unemployed fell by 65,000 between the second quarter of 2017 and the second quarter of 2018, compared to 169,000 the previous year. Youth unemployment was high and persistent in the Western Balkan countries. Although the rate fell to 35 percent in 2018, it was twice as high as the EU average. More than one fifth of the youth population was not in employment, education or training (NEET), which was less than a year earlier, but still high by international standards. Wages and labor costs were significantly lower in the Western Balkans, compared to the EU and there was no clear convergence in recent years. When compared to productivity, the apparent labor cost advantage of the Western Balkan countries disappears and the two most direct EU competitors, Bulgaria and Romania, with similar or even lower labor costs than some Western Balkan countries, seem significantly more competitive. The taxation of labor income in the Western Balkans is skewed towards relatively high social security contributions (combined with a lower and relatively flat personal income tax), which results in a relatively high labor tax level for the lowest wage earners. Low wage earners are at a particular disadvantage in the formal labor market in terms of their low net take home pay and the relative high cost of hiring them versus medium or high wage earners.
Sociologicky Casopis-czech Sociological Review, Jun 1, 2012
Ekonomika preduzeća, 2021
Zahvaljujući politici velikodušnih podsticaja usmerenih ka privlačenju direktnih investicija, Srb... more Zahvaljujući politici velikodušnih podsticaja usmerenih ka privlačenju direktnih investicija, Srbija je poslednjih godina postala jedna od vodećih destinacija za SDI. U ovom radu bavimo se efektima koje je politika podsticaja direktnih investicija imala na tržište rada, najpre sa sektorskog i regionalnog aspekta, a zatim i sagledavanjem celine njenog uticaja na tržište rada i na ekonomski razvoj. Naši rezultati pokazuju da je politika podsticaja doprinela ukupnom sektorskom rebalansiranju tržišta rada povećanjem zaposlenosti u proizvodnji. Takođe, ova politika doprinela je rebalansiranju regionalnih tržišta rada, naročito poboljšanju kvaliteta zaposlenosti u manje razvijenim regionima i u stabilizaciji udela regionalnih platnih fondova. Ipak, međuregionalne obrazovne i infrastrukturne razlike, kao i razlike u tržištima rada, i dalje ostaju veoma velike. Transformacioni potencijal srpskog tržišta rada još uvek nije u potpunosti iskorišćen, zbog čega Srbija i dalje treba da zadrži visok nivo investicija u radna mesta u industriji, istovremeno podržavajući postepeno okretanje ka visokotehnološkim investicijama.
European Journal of Operational Research, Aug 1, 2020
Multiple criteria decision aiding as a predicition tool for migration potential of regions,
Emerald Publishing Limited eBooks, Nov 29, 2019
Large regional disparities lead, among other things, to significant internal migration flows. Int... more Large regional disparities lead, among other things, to significant internal migration flows. Internal migrations, on the other hand, reinforce existing regional disparities by causing a lack of human capital in underdeveloped regions. In this chapter, we apply the Multiple Criteria Decision Aiding (MCDA) sorting method, ELECTRE Tri-C, to determine the current internal migration potential for districts in Serbia. The method will provide four classes of migration potential, ranging from strong emigration to strong immigration potential, based on the main drivers of internal migration. The main determinants of internal migration flows fall into three groups: (1) economic and labour market indicators, (2) demographic indicators and (3) housing market and amenities indicators.
Contributions to economics, 2015
In this section we will summarise the findings presented in the previous chapters on the key caus... more In this section we will summarise the findings presented in the previous chapters on the key causes of the shadow economy in Serbia and the mechanisms that contribute to its development. We will also present the results of an estimate of the extent of the shadow economy in relation to GDP, estimates of various forms of the shadow economy in the sectors of businesses and entrepreneurs and their characteristics, and an estimate of the effects that formalising the shadow economy can have on the government budget and economic growth. Finally, we will summarise findings that relate to the administrative and institutional capacity of government institutions tasked with overseeing the operation of business entities. 9.1.1 Causes of the Shadow Economy Some of the fiscal causes of the shadow economy are the relatively high fiscal burden on labour, complex and expensive tax procedures, a complex and opaque tax system, the lack of organisation, training, and equipment at the Tax
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Papers by Mihail Arandarenko
This book presents recent research into the role of labour force skills in underpinning future economic growth in the Western Balkans. It sets out the most recent thinking on the relation between skills and the labour market and between education systems and skill formation. It concludes with a set of policy recommendations that could be readily implemented given the political will to do so. It also reflects on the ways in which countries of the region can benefit from greater regional cooperation in the development of this vitally important aspect of their societies. The book, written by members of the LSEE Research Network on Social Cohesion in collaboration with the Foundation for the Advancement of Economics (FREN) at the Faculty of Economics in Belgrade has been conceived in response to this growing need.
Most of the chapters in the book were presented at an international conference on “New Skills for New Jobs” organised by the Regional Cooperation Council in Sarajevo in October 2011 and were further presented and debated at a research workshop organised by LSEE and FREN and held at the Faculty of Economics in Belgrade in May 2012. We are grateful to both the Friedrich Ebert Stiftung and to LSEE for providing generous support for the participation of researchers from the LSEE Research Network at these events. We are also grateful to the European Training Foundation for providing support for background research for some of the chapters within the context of the European Training Foundation MATCH project and for helpful debate and discussions at European Training Foundation workshops in Turin. We are especially grateful to Jelica Minić and Nand Shani at Regional Cooperation Council for their encouragement and support for the activities of this regional network.