The Challenge of Economic Reform in Kosovo


By Zijadin Gashi

Southeast European Times
September 20, 2004

With a fast-growing population and shrinking job opportunities, Kosovo is in urgent need of economic transformation. In what is being described as a "first step" in a development plan for the province, authorities are implementing a job creation programme. The plan is being co-ordinated by the Economic Strategy and Project Identification Group (ESPIG), co-chaired by the Office of the Prime Minister and the UNMIK EU Pillar.

Kosovo's provisional institutions of self-government, together with UNMIK and representatives of international financial institutions, are working on a medium and long-term strategic development plan aimed at addressing the province's continuing economic problems and pointing the way forward. The plan is being co-ordinated by the Economic Strategy and Project Identification Group (ESPIG), co-chaired by the Office of the Prime Minister and the UNMIK EU Pillar.

According to the ESPIG, the top priority for economic policy is to "bring about a substantial process of convergence towards European living standards within the next generation." In a policy paper released in August, the group called for "the systematic transformation of Kosovo's manufacturing and agricultural sectors and the shift from a society in which a large part of the population relies on remittances and subsistence agriculture towards one in which an educated workforce produces competitive products and services that can be sold on European markets".

Kosovo, observers agree, faces grave economic challenges. Among the most urgent issues -- and one that particularly affects young people -- is the skyrocketing unemployment rate. According to government statistics, 50 per cent of the approximately one million people of working age in Kosovo are unemployed. However, officials say, the actual number could be as high as 70 per cent, since many of Kosovo's jobless do not register at the employment office.

The population of Kosovo is Europe's youngest. As many as 36,000 new entrants flood the labour market each year; meanwhile, opportunities have shrunk. With emigration cut off and funds from abroad on the decline, the province faces an escalating social crisis.

As an initial step towards addressing the problem, UNMIK and the Kosovo government, in collaboration with the UNDP, have launched a project to create 900 new jobs. The project is being implemented rapidly and is expected to achieve full capacity by October. UNMIK has earmarked more than 1m euros from its reserve fund for the project. "It's a new approach," Prime Minister Bajram Rexhepi said as the initiative was launched. "It is the intention of the government of Kosovo -- and we hope of the donors too -- to continue in this direction if the project proves successful."

The project will give priority to young people, said the UNDP's Kosovo chief, Christina Roth. "We will work in two fields -- one which includes workers older than 40, and another including youngsters between 18 and 31." The new jobs will be created mainly in the public sector, she noted.

UNMIK head Soren Jessen-Petersen said he understands the frustration young people are experiencing as they face poor social conditions and high unemployment. The project, he said, will show them that things are moving. "Security is the foundation upon which everything will be based. Security is what makes us move in the economic field as well. But, on the other hand, there will be no security without economic development in Kosovo. It is very important that we send messages of hope to the youth," he said.

"This is only the first step, and a very small step," Jessen-Petersen cautioned. "But it is the beginning of a basis … [for] a medium and long-term strategy of development in Kosovo."

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