SLOVAK UNIVERSITY OF AGRICULTURE
FACULTY OF ECONOMICS AND MANAGEMENT
1129879
Unemployment as a social problem in conditions of EU
2011
Lucia Papanová
SLOVAK UNIVERSITY OF AGRICULTURE
FACULTY OF ECONOMICS AND MANAGEMENTNázov fakulty
Názov
práce Unemployment as a social problem in conditions of EU
Bachelor thesis
Study programme:
International business with agrarian
commodities
Study specialization:
6221700 International Economic Relations
Department:
Department of social sciences
Supervisor:
Mgr. Ing. Danka Moravčíková, PhD.
2011
Lucia Papanová
1
Declaration of originality
I, the undersigned Lucia Papanová, solemnly declare that the thesis “Unemployment
as a social problem in conditions of EU“ is a result of my own independent research and
was written solely by me using the literature and resources listed in Bibliography. I am
aware of legal conseqences in case the data are not true and correct to the best of my
knowledge.
Nitra,15 May 2011
Lucia Papanová
2
Acknowledgements
I would like to acknowledge my supervisor Mgr. Ing. Danka Moravčíková, PhD for
assisting me in during writing of my bachelor work. I am grateful to her comments,
information and valuable suggestions which helped me and supported in writing of my
thesis.
3
Abstrakt
Cieľom moje bakalárskej práce je zamerať sa na problematiku nezamestnanosti
nielen ako na ekonomický, ale aj ako na sociálny problém, ktorý sa v súčastnosti dostáva
čoraz viac do popredia. Tento veľký problém sa snažia pomocou spoločných politík riešiť
všetky krajiny Európskej Únie, medzi ktoré patrí aj Slovensko a Malta. Na príklade týchto
dvoch krajín chcem poukázať na sociálne dôsledky nezamestnanosti v spoločnosti ako aj
na jednotlivca. Táto práca je rozdelená na štyri hlavné časti. Prvá je teoretická časť, v
ktorej je obsiahnutý význam práce ako aj pre človeka tak aj pre spoločnosť, potom opisuje
hlavné teoretické znalosti a definície nezamestnanosti a sú tam rozobraté hlavné dôsledky a
problémy, ktorými trpí jednotlivec, ale aj spoločnosť. Druhá časť obsiahnuté hlavné ciele a
a tretia metodológiu práce. Štvrtá časť rozoberá situáciu v Európskej Únii, hlavné trendy a
vývoj nezamestnanosti spolu so sociálnou politikou ako aj podrovný popis a porovnanie
situácie na Malte a na Slovensku. Záver obsahuje dôležité zistenia, závery a porovnania
riešenia tohto problému v dvoch vybraných krajinách.
Kľúčové slová: práca, nezamestnanosť, sociálny problém, sociálna politika, uchádzači o
zamestnanie
4
Abstract
The aim of my bachelor thesis is to focus on problem of unemployment not only as
on economic, but also as on social problem, which becomes more actual in the recent time.
All countries of the European Union are trying to solve this big problem through common
social policies including Slovakia and Malta. On the example of these two countries I want
to show the social consequences of unemployment with impact on society and a person as
individual. My bachelor thesis is divided into four main parts. The first part is theoretical
background, in which there is included importance and meaning of work for individual and
for society, then main unemployment theories are described there, and main consequences
and problems which society and ordinary people suffer. In the second part aims of the
thesis and in third part methodology is included. The fourth part describes the situation in
the EU, the main trends and development of unemployment together with social policy and
detailed describtion and comparison of situation in Malta and Slovakia. Conclusions
summarize main findings, solutions, recommendations and comparison of solving this
problem in Malta and Slovakia
Key words: work, unemployment, social problem, social policy, job seekers
5
Table of contents
Table of contents……………………………………………………………………..….6
Introduction.......................................................................................................................7
1. Theoretical background…………………………………………………………........9
1.1 Importance and meaning of work…………………………………………….9
1.2 Unemployment theories and definitions…………………………………......12
1.3 Types of unemployment……………………………………………………..15
1.4 Marginalization and disadvantaged job seekers……………………………..16
1.5 Unemployment and social problems………………………………………....17
1.6 Mechanisms for solving problem of unemployment in EU……………….....21
2. Aims of the thesis…………………………………………………………………....25
3. Materials and methods……………………………………………………………....26
4. Results and discussion………………………………………………………………..27
4.1 Development and basic trends of unemployment in EU..................................27
4.2 Comparison of unemployment in Slovakia and Malta……………………….35
4.2.1 Slovakia……………………………………………………………..35
Demography…………………………………………………………….35
Labour market…………………………………………………………..39
Social policy…………………………………………………………….43
4.2.2 Malta………………………………………………………………..45
Demography…………………………………………………………....46
Labour market………………………………………………………….49
Social policy…………………………………………………………....54
4.3 Detailed development of unemployment…………………………………….55
Conclusions.......................................................................................................................62
Bibliography…………………………………………………………………………….64
6
Introduction
The issue of unemployment is very complex and it has got many interpretations. It
appeared at the beginning of the 19th century, but it was shown at that time just as a
temporary matter. But since that time this problem has appeared many times and many
various theories have been developed and described during centuries. Even now in the
modern period when this issue has been solved and there are many new approaches to this
problem, it is still a huge problem.
The aggregate unemployment rate of EU member countries increases almost
continuously from the early 1970s to the present. Europe is seeing the impact of the
econonomic crisis on its labour market. Unemployment has been rising sharply in the
European Union (EU) since March 2008 as a result of the global economic crisis. The
increase is felt in every Member State, although the severity varies widely between
countries and groups.
Unemployment effects country as a whole, country`s economy and society and also
it has got huge effects on the person as an individual. This problem has been debated and
interpreted for many decades, but nowadays when this issue began to be viewed also a
social problem, the mechanisms for solving this problem became necessities in almost
every country.
The situation on the job market still remains of the concern to all Europeans in
general. It is one of the greatest challenges for policy makers and many institutions have
been developed to fight against this problem.
In the economy unemployment is a loss of valuable productive resources. The
impact of job loss in rural and regional areas flows through the local community damaging
businesses as family expenditure is reduced. Further damage to local communities may
result from people leaving in search of work.
But apart of the economic impact, unemployment is a major life event. It can have
a devastating impact on people’s lives. It affects not just the unemployed person but also
family members and the wider community. The impact of unemployment can be longlasting. As unemployment becomes more long-term, its impact becomes more far reaching,
often affecting living standards in retirement. The loss of income by the parents can
damage the prospects of the next generation.
7
Globalization and technological advances have had a profound impact on labour
markets throughout the world, and workers have faced a number of challenges associated
with these developments.
When workers are unemployed, they, their families, and the country as a whole
lose. Workers and their families lose wages, and the country loses the goods or services
that could have been produced. In addition, the purchasing power of these workers is lost,
which can lead to unemployment for yet other workers.
As I have already mentioned unemployment has been interpreted usually as the
macroeconomical problem. Many works and books were written about it and many
researchs have been done about its huge economic consequences. But in my work I am
going to focus on this problem mostly from the social view.
I have chosen two countries which I am going to compare, it is Slovakia, as my
home country where are live and which I know well and Malta, which I have experienced
when I was working there for my internship during my studies. I have found it very
interesting to compare these two countries, not only because of my experience, but also
because these countries are very different. They vary in the size of the country, they vary in
the location and different climate and also by the number of inhabitants as well as by
different development and economy.
I want to show the situation of an individual in this busy world where not to have
a job doesnt causes just economic effects, but also big social problems which ordinary
people suffer. By discribing the situation in these countries, comparing demographic,
natural and infrastructural characteristics and describing situation of unemployment for last
4 years i am going to find out what social problems people face, what are the most
endangered groups of people in both countries, compare it, find out what are the
differences, find some links between demography, countryś potential and number of
unemployed and also what can each of these countries focus on in solving the situation.
8
1. Theoretical framework
Nowadays unemployment is not only a big macroeconomic, but also big social
problem, which are trying to solve all the countries. There still remains considerable
theoretical debate regarding the causes, consequences and solutions for this problem. It
brings negative economic and social consequences. It leads to loses in the life of an
individual but also for society, but can be seen as the main incentive to actions in society
and economy too.
In this part am going to describe theoretical background of this problem. As the aim
of my work is to focus on social consequences of unemployment in two selected countries,
to start to solve this issue it is important to introduce some general theories and key words,
describe social and economic effects and existing mechanisms for solving this problem.
1.1 Importance and meaning of work
Work is very important for people, it is necessary for people to work as they can
afford to live lives they want, to earn money to satisfy their need. It is also an important
activity which produces good and services. But it is far more than this. „Work, like love, is
a vital necessity to the development of the individual and of democratic society. Its scope
is material, social, economic, psychological, psychic and biological,“ as Sigmund Freud
affirmed. So it is necessary to know the meaning of work at first to continue with so big
problem of unemployment.
Work is generally defined as an expenditure of energy through a set of coordinated
activities intended to produce something useful (Shepherdson, 1984). It does not mater if it
is pleasant or unpleasant, or if it associated, or not associated with economic exchanges.
But as Fryer and Payne (1984) found out from interviews conducted by them,“work is a
useful activity, determined by a definite purpose beyond the pleasure engendered by its
performance.“
We can see the evidence that work has other than economical meaning from the
research made by Nancy n. Morse and Robert S. Weiss in their book The function and the
meaning of work and the job who found out that: „work is more than a means to an end for
the vast majority of employed men; that a man does not have to be at the age of retirement
or be immediately threatened by unemployment to be able to imagine what not working
9
would mean to him; and that working serves other functions that an economic one for men
in both middle class and working class occupations, but that non-monetary functions
served by working are somewhat different in these two broad classifications of
occupations.“ So importance of work for people is more than the obvious thing of earning
a living. „Working gives people a feeling of being tied into a larger society, of having
something to do, of having a purpose in life.“ Therefore if person is unemployed or
become unemployed it means that this situationis not only financial and material problem,
but also social problem.
(Morse and Weiss, 1955)
According to Heinz work was the main integrator in society. It has been unifying
society for many years. Work “secured co-operation in the individualistic society” and
“made possible society, democracy and freedom,” as Heinz quoted Beck.
Work have to be based not just on involving technical and economic requirements,
but must also involve relationships based on the human and social necessities which are
important for healthy development of society. The character which it has on relationships
of individuals then it influences their decision to engage in their productive activity and the
quality of their production.
(Morin, 2008)
So from the sociological view we can say that work has a higher purpose, it is more
than wages and profits, but it is appointed as a principle which is forming society. It mean
it creates the existence of the society and it holds the society and its members together. In
the thinking of sociologist it is self-preservation purpose, which is the main principle of
working society. Ordinary people can think that companies do work to maximize their
profits and that workers work for their wages, but at the same time they somehow
unconsciously carry out the functioning of society and reproduce its existence. But there
are still more meanings of work than those societal and economic.1
Work is often the most important determinant of position of people in the
stratification structure and so it influences their health, happiness, and lifestyle. We can
also say that work structures our lives. It determines things and habits such as what time
we wake up, what we do all day, who we do it with, and how much time we have left for
1
http://www.ruthlesscriticism.com/headproblem.htm
10
leisure. Thus the nature of our work and our attitude toward it can have a tremendous
impact on whether we view our lives as fulfilling or painful. If we are good at it, if it gives
us a chance to demonstrate competence, and if it is meaningful and socially valued then it
can be a major contributor to life satisfaction.
(Brinkerhoff, White, Ortega, Weitz; 2008)
Without work people can become physically unhealthy and mentally unhappy,
cause unused energy creates disordes. Time hangs heavy on our shoulders when there is no
work. It makes our life meaningful and peaceful. Even the work which is unpaid, unpleasat
and not important is better than no work. But for useful and happy work, two things are
necessary. They are skill and constructiveness. When a worker builds up something new he
feels encouraged and elevated and thus gets pleasure from his creative work. „Where there
is no work, there would be no joy in life“. (Sajid Majeed, 2011)
Some workers are more satisfied and some are less. We can say it depends on the
type of work. There are two kinds of rewards that are available from work. Intrinsic
rewards which arise from the process of work; you experience them when you enjoy the
people you work with and feel pride in your creativity and accomplishments. Extrinsic
rewards are more tangible benefits, such as income and security; if you hate your job but
love your paycheck, you are experiencing extrinsic rewards. Work would be most
satisfying if it provided high levels of both intrinsic and extrinsic rewards. (Mortimer,
1979) There is, however, a great deal of variability in the extent to which these attributes
are attached to jobs. Some jobs score high on all of them and some score low on nearly all
of them. But in general, to the most satisfied workers are included those in the learned
professions, people such as lawyers, doctors, and professors. They have more freedom to
plan their work, to be creative, and to work with others; furthermore, their extrinsic
rewards are substantial. The least satisfied workers are those who work on assembly lines.
Although their extrinsic rewards are good, their work is almost without intrinsic reward;
they do not have control over the pace or content of the work and are generally unable to
interact with coworkers. But in general professional and skilled workers demonstrate the
greatest satisfaction, and semiskilled, unskilled, and clerical workers indicate lower levels
of satisfaction. (Brinkerhoff,Lynn K. White; 1999)
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1.2 Unemployment theories and definitions
As we already described the meanings and importance of work, we can define basic
definitions connected with unemployment, and theories to have a clear what this problem
is about and what effects it can have mainly from the social point of view.
To understand what the term of unemployment meams, i tis also necessary to define
employment, which is,“an individual’s occupation defined by a set of rewarded activities
in an economically organized system.“ According to Fryer and Payne (1984), employment
involves institutionalized exchange relationships. Employment is also associated with a
reward in the form of pay. (D. Colander, 1993)
Employment is a critical necessity for most people. It determines their status in
their families and communities, it provides their income, and it structures their lives.
Unemployment, then, is a critical problem, and dozens of studies show that involuntary
unemployment has negative effects.
(Brinkerhoff, 1999)
The labour force includes the unemployed as well as those actually working. So it
is the sum of those employed and those unemployed. Thus, although the rate of labour
force participation stays relatively constant, the proportion actually working may change
significantly. A person who is neither employed nor unemployed, that is, not employed and
not looking for a work, is categorized as not in the labor force.
Unemployment is very complicated phenomenon and it is not possible to evaluate
it globally. It is necessary to have and dispose of all the information network of necessary
data for solving this problem. It includes for example where it exist or occur, how long it
takes, what is the rate of unemployment and it depends on a person concerned.
(Winkler J, Wildmannova M., 1999)
Employment plays major role from the sociological aspect in determining a
person’s level of income, defining a person’s status and social class and determines
chances of life.2
Unemployment according to International Labour Organization (ILO) Convection
no. 102/1952 refers to the “loss of earnings resulting from the inability to obtain suitable
2
http://tutor2u.net/sociology/work-meaning.html
12
employment by a person who is able to work and at the same time is available for the
performance of work.”
The new official definition of unemployed by National Statistical Coordination Board
(NSCB), adopted in 2004 states: Unemployed includes all persons who are 15 years old
and over as of their last birthday and are reported as:
1) without work, i.e., had no job or business during the basic survey reference period;
2) and currently available for work, i.e., were available and willing to take up work in
paid employment or self employment during the basic survey reference period, and/or
would be available and willing to take up work in paid employment or self employment
within two weeks after the interview date; AND,
3) seeking work, i.e., had taken specific steps to look for a job or establish a business
during the basic survey reference period; OR not seeking work due to the following
reasons: (a) tired/believe no work available, i.e, the discouraged workers who looked for
work within the last six months prior to the interview date; (b) awaiting results of previous
job applications; (c) temporary illness/disability; (d) bad weather; and (e) waiting for
rehire/job recall.
During unemployment the economy is suffering, „unemployment means loss of
goods and services that could be made by the unemployed workers. "A state can
experience the consequences of unemployment by low demand of residents for goods and
services, leading to a weakening of state and position of entrepreneurs.
(Martincová M., 2005)
An operational definition of unemployment generates the data that indicate the
general unemployment rate, the unemployment rates among people of different age and
socioeconomic backgrounds, the unemployment trends and effects of policy on
employment rates.
(Sharp, 1992)
When there is a debate about what the unemployment problem is, it is`n surprising
that there is also a debate about how to measure it. When talking about unemployment,
economists usually refer to the “unemployment rate”. It is determined by dividing the
number of unemployed individuals by the number of people in the labor force. The
unemployment rate is the percentage of the labour force that is unemployed. The
13
unemployment rate is the best single number to use in describing the state of the labour
market.
(P. Wachtel;1989)
The unemployment rate is considered to be a lagging indicator. When there is an
economic downturn, it usually takes several months before the unemployment rate begins
to rise. Once the economy starts to pick up again, employers usually remain cautious about
hiring new staff and it may take several months before unemployment rates start to fall.3
The natural rate of unemployment is the level at which the economy tends to in
the long run. Over the long run, there are some wage and price adjustments and
equilibrium is in the labor market. This equilibrium is at the natural rate of unemployment.
But it can change as a structure of the economy changes.
(P. Wachtel, 1989)
The unemployment rate is not just economic, but also social indicator. Rise in
unemployment causes loss of income for those individuals affected, increased pressure
with respect to government spending on social benefits, and a reduction in tax revenue.
From an economic perspective, unemployment may be viewed as unused labour capacity.4
This corresponds with what Beňová M. reasons in her book “Cesta z
nezamestnanosti/Road from unemployment), who says, “the high unemployment rate
means high expenditures on social services, on support in unemployment, it means also
less people with stable and sufficient income. So it means lower income taxes, lower
purchasing power, lower sales and lower sales of domestic entrepreneurs, traders.”
(Beňová, 2008)
According to the Baron (1984) “unemployment depends on two sets of factors:
individual factors (education, race, skill) and structural factors.” Minorities and blue-collar
workers are the most vulnerable to unemployment. The degree of their vulnerability,
however, varies by economic sector. Unemployment is more often in peripheral sector than
in industrial core often due to quitting or being fired, and we find more evidence of racial
discrimination. (Brinkerhoff, Lynn K. White; 1999)
3
4
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Unemployment_trends
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Unemployment_trends
14
1.3 Types of unemployment
There are different types of unemployment and because it has more dimensions
each type is susceptible to different type of policy. Hendersen and Poole (1991) say the
same,”Remedies that might be appropriate for one type might not be for another type.”
Today`s view is that you don`t use the macro policies to deal with certain types of
unemployment; instead you use micro policies. To determine whether microeconomic
policies are appropriate as a supplement to macroeconomic policies, economists break
unemployment down into a number of categories and analyze each category separately.
These categories include how people become unemployed, demographic characteristics,
duration of unemployment, and industry.(D. Colander, 1993)
Except of long-term and short-term unemployment there are following types:
Voluntary - choosing unemployment because of low wages: a situation in which workers
choose to become unemployed because the wage level has declined below an acceptable
level
Involuntary - When workers are prepared to work at the going wage rate but cannot find
jobs.5
Cyclical unemployment is unemployment that arises from the business cycle. "Cyclical
unemployment occurs when the unemployment rate moves in the opposite direction as the
GDP growth rate. So when GDP growth is small (or negative) unemployment is high."
Frictional Unemployment
Frictional unemployment is the transitional or temporary unemployment that arises
because unemployed persons may take a few weeks to find a new job Sources of frictional
unemployment include the following: People entering the workforce from school.People
re-entering the workforce after raising children.People changing unemployers due to
quitting or being fired (for reasons beyond structural ones).People changing careers due to
changing interests.People moving to a new city (for non-structural reasons) and being
unemployed when they arrive. 6
5
6
http://encarta.msn.com/dictionary_561548362/voluntary_unemployment.html
http://economics.about.com/od/typesofunemployment/p/three_types_of_unemployment.htm
15
Structural unemployment
Structural unemployment is unemployment that arises from changes in the geographical or
industrial structure of the economy. Shifts in the geographical or industrial structure cause
a certain degree of unemployment because people often take substantial time to move from
declining to expanding regions and industries.
Seasonal unemployment
Seasonal unemployment is unemployment that arises as employment conditions change
over the seasons of the yearSeasonal unemployment is also form of structural
unemployment, as the structure of the economy changes from month to month.
(Henderson & Poole, 1991)
1.4 Marginalization and disadvantaged job seekers
Marginalization in the labour market mean limited access to employment, lack of a
chances to participate in the labor market, exclusion from meaningful participation in
society.
Determinants of marginalization are individual characteristics of labour force like
lower education level, health state, age – old people, or symbiosis of these characteristics.
Inappropriate regulation (institucional or legislative) of labour market processes as for
example demotivating regulation of social protection, level of minimum wage, high level
of total labour costs. And it can be also effect of dicriminatory behaviour, for example
because of age, gender, ethnicity reasons.
This can lead except of long-term unemployment also to exclusion from labour market,
social exclusion or poverty.
(E. Hanzelová, 2009)
There are also some groups of people which are disadvantaged in the labour market
and this people are called disadvantaged job seekers. Highly disadvantaged job seekers can
include young people, people with disability, people who are currently homeless or at risk
of homelessness, people with mental illness and people from culturally and linguistically
diverse backgrounds.
Disadvantaged job seekers refer to:
16
- school graduate – a citizen under the age of 25 who finished continuous vocational
training for employment in daily study programe before less that 2 years and didn`t find
his/her first regular paid employment
- citizen older that 50 years old
- long-term unemployed – citizen registered in job seekers` registerfor the period of 12
months at least from past 16 months
- citizen who has been employed or has not been preparing for job in some further
educational system or have not participater in the training for occupation of job because he
could not reconcile work commitments with the performance of parental duties,
- citizen who is a parent or person taking care about three or more children, or lone citizen
caring for a child
- a citizen who has lost his ability to perform his/her current job because of health
problems, but is not a person with disabilities
- citizen who moves or has moved within the territory of Member States of the European
Union, or a citizen who is resident in the European Union Member State for the purpose of
employment
- citizen, a person with disabilities
- foreigner who was granted asylum7
1.5 Unemployment and related social problems
As I have already mentioned unemployment causes a lot of problems which can be
seen from different perspectives. As my work is focused on unemployment as a social
problem it is needed to point out the costs of this problem as from economic view, so from
the view of the society as whole and what impact it has on individual as a member of
society.
Permanent losses of output of goods and services are caused by unemployment.
The unemployed are face financial insecurity, which results in poverty and indebtedness.
Certain kinds of criminal activity are related to this problem. Unemployment have been
linked to family disruption, suicide, ill health (physical and mental), drug addiction,
homelessness, malnutrition, poor prenatal care, school dropouts, racial and ethnic
antagonism, and other social problems in many studies.(Jahoda, 1982)
7
http://www.podnikam.webnoviny.sk/zamestnanci-a-mzdy/prispevok-na-podporu-zamestnavaniaznevyhodneneho-uchadzaca-o-zamestnanie/18300
17
As unemployment is larger and longer, the deeper and more complicated social and
economic problems are caused in society. People lose professional qualifications as they
are not part of labour life and labour environment. This means a loss of economic and
social gains and no return of investments in society. In reintegration of unemployed into
working life new investments are required. Unemployed people represent a vulnerable
economic and social group. As they try to survive they incline to join the shadow economy
and to conduct criminal and violent behaviour. Moreover, unemployment causes
psychological and behavioural deformations of personality.8
Short-term unemployment of individual experiences initial stress, pressure from the
family, friends and from surrounding to return to the working environment. This can even
lead to health problems and the feeling of inferiority.
For long-term uneployed it is natural that the degree of frustration is greater.
Motivation to re-find a job can be lost, people become apathetic and become set aside from
the society. Loss of financial security and loss of a certain standard may result in crime and
problems with the law.
As people are long-term unemployed, they can lose their skills, which cause a loss
of human capital. The life expectancy of workers can be reduced by about 7 years. Longterm unemployment is one of the main concerns of policymakers. It can negatively affect
not just personal life of individual but it affects social cohesion and can hinder economic
growth.9
But on one side low unemployment can encourage xenophobia and protectionism,
because workers fear that foreigners are stealing their jobs. It may consequently cause legal
barriers against "outsiders" who want jobs, obstacles to immigration, or tariffs and similar
trade barriers against foreign competitors in preserving existing jobs of domestic workers.
Unemployment has impact in increase in poverty and so it increases growth in
social exclusion of large part of population. Poverty in not only about lack of financial
services, but „it means also powerlessness, lack of access to sufficient food supplies,
education and healthcare, natural resources and drinking water, land, employment, no
opportunities to obtain a bank account,
no access to information, services, lack of
infrastructure and the right to influence political events.“ But it is average income which
quantifies risk of poverty.
8
9
http://www.unesco.org/most/p86doc3.htm
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Unemployment_trends
18
(Korimová G.,2008)
Unemployment also affects differently certain sectors of the population, so that
disadvantaged people or minorities can suffer moch more that others.
The
research
about
unemployment
upon
psychological
health
shows
that.”Considerable important have been the age difference and it was found out that middle
aged people suffer from greatest ill-health. (Daniel, 1974, Hepworth, 1980) Also length of
unemployment has been found to be positively associated with ill-health, at least up to
around six moths without a job. (Jackson and Warr, 1984) Another important mediating
factor can be social class, there have been many conflicts with interpretations about the
evidence of this relation, it is not useful to focus on it more. In the Sheffield University
research on Social class and psychological health during unemployment were found
financial differences: The working-class group report more financial problems and greater
financial worries.10
So as from some previous examples it is obvious that social consequences means
mainly impacts of unemployment on social situation, behaviour and attitudes of
unemployed individuals and on their social life. These consequences can vary in its
intensity and extent because every person can experience and perceive it differently.
Sometimes it means human tragedy in lives of people, and sometimes it can be possesed by
smaller or greater negative effects which can be felt in various fields of personal and social
life. The most important social consequences can be divided as follows:
Impact on standard of living – unemployment means loss of income from work and
so to live just from the unemployment benefits always results in decreased standard of
living and significant financial so for unemployed as well as for his family. Surveys
indicate that incomes from unemployment benefits are usually less than half of the
previous income from work. Long-term unemployment leads to poverty, social isolation or
at least to the reduction of social contacts.
Impact on family – unemployment doesn`t causes just lower income for family, but
it also leads to disruption of daily
family habits, changes position and authority of
unemployed in family, it can break relationship of partners, influences birth rate ( women
on the other hand often solve unemployment by pregnancy), limits social contacts in
family and limits its educating function and etc.
10
http://onlinelibrary.wiley.com/doi/10.1111/1467-9566.ep10778241/pdf
19
Impact on structuring and perception of life – unemployment disrupts everyday
routine regime, time structure of day and changes perception of time. Time is no more
important for enemployed, it doeant have its meaning, so unemployed people are bored,
passive and spend time by socially undesirable activities ( losing time by sleeping, by
purposeless watching of television, crime, alcoholism and ect.). Disruption of day is very
dangerous especially for young people who haven`t experienced time regime with working
habits yet.
Impact on physical and psychical life – unemployment is higly traumatic for many
people. It means loss of social status, prestige, which is usually connected with certain
personal characteristics and dispositions. People can feel unnecessary, useless, and also
incapable or they lose selfconfidence. Stress, which results from unemployment, almost
always effects health of individuals. Results of some surveys indicate according to the
change in rate of unemployment the rate of diseases of immune, vascular, brains and
cardiovascular system and rate of psychical health and problems change.
Except all above mantioned costs of unemployment, there can be some other which
we call socio-economic consequences which include growth in rights for social transfers,
income compensation programs from employment like unemployment benefits and
benefits other financial assistance. Then it can result can be limited resources for other
social programs, pressure on insurance funds and possibility of creation „cultural“
dependency on social system and also younger generation can be influenced by this
„culture“.
(Henzelová E., 2010)
We can see unemployment causes many problems in society, economy, country,
and to unemployed individuals. There are various consequences of this biggest economic
and social problem, and these consequences vary between different groups of people and in
different situation, but each of these consequences should not be underestimated and is
required to solve it by existing mechanisms which have been founded to help to improve
this problem.
20
1.6 Mechanisms for solving problem of unemployment in EU
Globalisation and technological progress have an ever-increasing effect on daily
life, and the demand for different types of labour and skills is changing at a rapid pace.
While enterprises try to improve their productivity and become more competitive and
innovative, they may well seek to pass on risk to the labour force through greater flexibility
– both in relation to those already in employment, as well as those searching for a new job.
Within the context of the European employment strategy (EES), there are a number of
measures that are designed to help encourage people to remain in work or find a new job,
including: the promotion of a life-cycle approach to work, encouraging lifelong learning,
improving support to those seeking a job, as well as ensuring equal opportunities.11
The EU is working to create more and better jobs, particularly through the European
Employment Strategy.
The European Commission facilitates joint action by national
governments, with input from trade unions, employer's organisations, local authorities and
other partners.
The EU also provides financial support for action in this area through the European Social
Fund and the PROGRESS programme.
PROGRESS is the EU's employment and social solidarity programme. It was
established to support financially the implementation of the objectives of the European
Union in employment, social affairs and equal opportunities, as set out in the Social
Agenda. It also contributes to the achievement of the EU 'Lisbon' Growth and Jobs
Strategy. For modernisation in five areas: Employment, Social inclusion and protection,
Working conditions, Non-discrimination, Gender equality.
The European Social Fund (ESF) is one of the EU's Structural Funds, set up to
reduce differences in prosperity and living standards across EU Member States and
regions, and therefore promoting economic and social cohesion. Uses means to create more
jobs.
The ESF is devoted to promoting employment in the EU. It helps Member States make
Europe's workforce and companies better equipped to face new, global challenges. In
short:
11
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Unemployment_trends
21

Funding is spread across the Member States and regions, in particular those where
economic development is less advanced.

It is a key element of the EU's strategy for Growth and Jobs targeted at improving
the lives of EU citizens by giving them better skills and better job prospects.

Over the period 2007-2013 some €75 billion will be distributed to the EU Member
States and regions to achieve its goals.
The ESF strategy and budget is negotiated and decided between the EU Member
States, the European Parliament and the Commission. On this basis, seven-year
Operational Programmes are planned by Member States together with the European
Commission.
These Operational Programmes are then implemented through a wide range of
organisations, both in the public and private sector.
The European Global Adjustment Fund (EGF), which was devised to help
redundant workers get back to work. It provides one-off, time-limited individual support
geared to helping workers who have suffered redundancies as a result of globalisation.
The European Union has set up a new European Progress Microfinance Facility
providing microcredit to small businesses and to people who have lost their jobs and want
to start their own small businesses.
Promoting employment
The EURES jobs portal provides support for jobseekers who want to take up the
right to work in another European country.
The “new skills for new jobs” initiative aims to improve the way Europe analyses and
predicts the economy’s future skills requirements. This will help to match people to jobs
more efficiently and provide an insight into training needs.
The European Employment Strategy, which is one of the pillars of the EU’s
Strategy for Growth and JobsEvery year, these national governments (through the
Employment Committee) and the European institutions produce the "employment
package":

the guidelines for national employment policies, proposed by the Commission and
agreed by the national governments, set out common priorities and targets
22

the national reports delivered by the national governments and describing their
employment policies, which are analysed by the Commission for compliance with
the Europe 2020 targets and flagship initiatives

a Commission report, accompanied if appropriate by recommendations to national
governments.
The European Commission has adopted a "shared commitment for employment",
which puts forward key priorities and actions to preserve jobs and help those facing
difficulties while paving the way for recovery.
The Commission has been in close contact with representatives of employers and
trade unions to discuss the impact of the economic and financial crisis, including a highlevel tripartite summit on 19 March 2009.
The EU played a leading role in the G20 Summit in London on 2 April 2009, which
agreed international action to stimulate the economy and improve regulation of the
financial sector. Commission Vladimir Spidla discussed the social dimension of the crisis
with his counterparts from the G8 countries at the G8 Labour Ministers meeting on 30
March 2009.
Employment Summit: May 7, 2009 - reinforcing efforts to promote employment and social
inclusion in the light of the financial crisis.12
List of EU policies:

European Employment Strategy (EES) – Employment Guidelines

Social Protection & Social Inclusion

Education – Education and training programmes 2010 and 2020

Information society – i2010 – A European Information Society (EIS) for growth
and employment

Gender equality – A selection of indicators showing the situation of women and
men in Europe

12
Youth policy – The EU Youth strategy 2010-2018 and related indicators
http://ec.europa.eu/social/main.jsp?langId=en&catId=418
23
Eligible regions
Asi t is stated in the site of ESF, the level of ESF funding differs from one region to
another depending on their relative wealth. EU regions are actually divided into four
categories, based on their regional GDP per head compared to the EU average (EU with 25
or 15 Member States).
The convergence objective includes:
Convergence regions: with a GDP per head of less than 75% of the EU-25 average (in the
period 2007-2013); Phasing-out regions: with a GDP per head of more than 75% of the
EU-25 average but of less than 75% of the EU-15 average (in the period 2007-2013).
The regional competitiveness and employment objective includes:
Phasing-in regions: with a GDP per head of less than 75% of the EU-15 average (in the
period 2000-2006) but of more than 75% of the EU-15 average (in the period 2007-2013);
Competitiveness and employment regions: applies to all other EU regions.13
13
http://ec.europa.eu/social/main.jsp?langId=en&catId=86
24
2. Aims of the thesis
The main objective of my bachelor thesis is to focus on social consequences of
unemployment of two selected EU countries, Slovakia and Malta. Unemployment is not
only a big macroeconomic problem, but also a big social problem, which are trying to
solve all the countries including these two what I have chosen. By comparison of these two
countries I am going to come to solutions, compare it, describe specific social features of
these countries connected with unemployment and highlight similarities and differences in
the approach and in solving this problem.
To fulfill the main goal I am going to start with describing of development of
unemployment in EU firstly in general, define some basic trends and features.
I will continue with comprehensive overview of nations` economy, description of
actual economic, demographic and infrastructural situation in these countries and aspects
of employment and economic development and describing social policies of these
countries. I have chosen to write about the main mechanisms and concrete institutions
which solve this problem of unemployment in both countries which will help to define
similarities and differences in approaches.
And then I am going to continue by detailed description of the situation of
unemployment from the social point of view in both selected countries from the year 2007,
when economic crisis started, until nowadays, to the year 2010.
So i have chosen following indicators as a partial goals which will help me to fulfill the
main objective that is to compare development of unemployment for past 4 years detaily.
So those indicator are:

applicants for job according to gender

according to the reached degree of education

age structure of registered unemployed

structure of registeder unemployed according to the classification of job or
employment

according to the long-term unemployment
25
3. Materials and methods
Methodology of this bachelor work arises from the main and minor or patial goals
of the work. Main aim of the work is to find similarities and differencies in solving and
approach to the problem of unemployment in two countries, so the method of comparison
is the most important.To find to some conclusions the first step was describing the theory
and main definitions focused on social aspect of unemployment to make us more familiar
with and to understand basis of this issue.
The steps and development of the work are methodologically proceeded in
following parts:
In preparatory period i started to study the available sources to collect information
for theoretical background, sources which have been used are from materials of domestic
and foreign authors.
Described bacis key words and their meaning, some opinions and fidings of
sociologists and economists and describing the existing mechanisms for solving
unemployment and its policy.
Then analytical part followed where two countries were introduced with description
of their actual situation and characteristics. Basic trends and social policies were presented.
The next step was the analysis of situation of unemployment with the focus on individual
and societal perception on this problem in both countries. To compare develpment of
unemployment in these countries through the indicators sucha as
I was using quantitative statistical methods to calculate rate of unemployment according
chosen indicators. The main source in for this part was Eurostat statistics. Also graphical
method was used to visualized obtained data plus content analysis and document analysis
were used.
In final part evaluation of obtained data followed. It was necessary to connect all
parts of the work and formulate findings, so method of deduction, analysis, synthesis and
comparative methodology were used to deal with the data. And so main findings,
conclusions and recommendation were formulated.
Many books, papers and perodicals and reports exist as a source of information which
i could use, and together with internet source i could find many sufficient informations for
this work.
26
4. Results and Discussion
4.1 Unemployment in EU, development and basic trends of unemployment (20072010)
The European economy has more than 731 million people living in 48 different
states. The wealth of Europe's states varies like in other countries, although in GDP terms
and standards of living the poorest are well above the poorest states of other. The EU is
one of largest and welthiest in the world and is the first trade power in the world, trade
within the Union accounts for more than one-third of the world total. European continent
was the first continent to industrialize – it started in 18th century by the United Kingdom
and so it has become the richest continent in the world today.
From a primarily economic union, the EU has evolved to an increasingly political
one. European Union has nowadays competence over number of increasing policies,
political power has tended to shift upwards from the Member States to the EU.14
Even the fact that economy of European Union is one of the wealthiest in the world
labour market has been effected by changes in the economy and by financial crisis. From
the table 1 we can see the trend annual of unemployment rate in European Union from the
year 2001. I have chosen this year because i wanted to show how unemployment rate has
been changing even before the crisis started and because trend of development of rate of
unemployment is better to see in long run. So we can better see development of
unemployment and the effect of economic crisis. Data from table 1 show that from 2001 to
2004 there was tendency of rising unemployment rate, but as more countries began to
develop and improved thier policies the unemployment rate began to fall slowly in 2005.
So in three following years rate of unemployment had tendency to decline which has been
changed after the world financial crisis. It is also clear from the table that unemployment
rate did not begin to rise exactly in the time when financial crisis started in the US, but
a year later. EU has been effected by crisis little bit later. EU have not been effected by
crisis as much as the USA, but the tendency of decreasing unemployment rate have been
changed to big increase in unemployment rate. It was very difficult situation, huge losses
of jobs and it took some time until the situation started to improve. Then the employment
14
http://ec.europa.eu/social/BlobServlet?docId=6674&langId=en
27
increased by 0.2 % (equivalent to 400000) in the second quarter of 2010 from a year earlier
and closed to a seasonally adjusted 221.5 million (222.8 million non-seasonally adjusted)
in the third quarter. Most of the members of EU had emerged from recession by the first
quarter of 2010, including all larger Member States.
Tab. 1 Development of unemployment rate (annual) in EU-27 in years 2001-2010
Year
Unemployment
rate
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
8.5
8.9
9.0
9.1
9.0
8.2
7.2
7.1
9.0
9.6
Source: Eurostat EU, own data processing
Chart 1
Development unemployment rate in EU-27
12
10
8
6
unemployment rate
4
2
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Unemployment rate is more detaily displayed in the table 2 bellow. Even though it
is obvious from the Table 1 that finacial crisis effected in huge EU unemployment rate
later, in 2009, but from the quaterly data of unemployment rate we can see that
unemployment has been rising even before some time before the year 2009.
Tab. 2 Development of unemployment rate in EU-27 quaternaly from 2007-2011
2007Q1 Q2
Q3
Q4
2008Q1 Q2
Q3 Q4
2009Q1 Q2
Q3 Q4
2010Q1 Q2
Q3
Q4
7,5
7,1
7
6,8
7,1 7,5
8,3
9,3 9,5
9,6
9,6
9,6
7,3
6,9
8,9
9,7
28
Tab.3 Unemployment rate in EU-27 according to gender, age, long-term and very longterm unemployment
Years
Male
Female
Less than 25
years
Between 25
and 74 years
Long-term
unemployment
rate
Male
Female
Very longterm
unemployment
rate
2001
7.8
9.4
2002
8.3
9.7
2003
8.4
9.7
2004
8.5
9.8
2005
8.3
9.8
2006
7.6
9.0
2007
6.6
7.9
2008
6.6
7.6
2009 2010
9.0
9.7
8.9
9.6
17.4
18.0
18.2
18.6
18.7
17.4
15.6
15.7
20.0
20.9
7.2
7.6
7.7
7.8
7.7
7.1
6.1
6.0
7.6
8.3
3.9
3.5
4.4
4.0
3.6
4.5
4.1
3.8
4.5
4.2
3.9
4.6
4.1
3.8
4.5
3.7
3.5
4.0
3.1
2.8
3.3
2.6
2.4
2.8
3.0
2.9
3.1
3.8
3.9
3.7
2.3
2.3
2.4
2.4
2.4
2.2
1.8
1.5
1.5
1.8
Table 3 describes unemployment rates in the EU in last decade even more detailed.
We can see that in 2001 there were differences between male and female unemployment
rate, but in the last year the rates for women and men were almost equal and it was the
same with long-term unemployment rate. On the other hand differences between
unemployment rate of older and younger generation are very similar, there is still high rate
of unemployment under the age of 25 and lower unemployment rate of people from 25 to
74.
In Eurostat statistics explained, there is not information about unemploymet rates,
but the trend of unemployment (in number of people) in EU is described. There were less
than 20 million persons unemployed in the EU-27 in 2000, which was slightly below 9 %
of the total labour force. This figure fell to around 19 million (or 8.5 %) in early 2001
before it rised back in the middle of 2002 by 21 million persons, and it has been in the
same level through until the middle of 2005. From that time there was a period of several
years in which unemployment was steadily decreasing. At the beginnig of 2008, EU-27
29
unemployment had hit a low of 16 million persons (equivalent to a rate of 6.7 %) before its
sharp rise of the effect of the financial and economic crisis.15
Article from laboureconomics.worldpress says that, the EU unemployment rate has
stagnated, the number of people out of work falls. The unemployment rate in euro area
remained in November 2010 to 10.1 percent. The number of people without work fell of
the 39.000th. Throughout the European Union, unemployment remained at 9.6 percent and
the number of unemployed fell by the 35.000th. In November it was in the entire European
27 23.25 million without work people, which is about 606,000 more annually. EU
unemployment is troubling especiallypeople younger than 25, which is 21 percent without
work, so every fifth young person.
While fears of unemployment at EU level have eased considerably over the past
year and a half, unemployment has only started to stabilise since the spring of 2010 and
decreased slightly in January. It remains to be seen when the effects of the recovery in
economic activity – which has been picking up recently, but remains uncertain - and
confidence will feed through more strongly to the labour market.
Chart 2 Unemployment rates EU, US, Japan; seasonaly adjusted
Source: Eurostat EU
15
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Unemployment_trends
30
Developments on the labour market
Population trends
The impact of demographic ageing within the EU is likely to be of major
significance in the coming decades. So low birth rates and higher life expectancy will most
probably change the transition to a much older polulation, which is already becoming
apparent in several member coutries. Policymakers have considered ways of creating more
flexible working opportunities that may encourage elderly persons to remain within the
labour market, while increased longevity and healthy life years have led some
administrations to consider raising statutory retirement ages. In Eurostat yearbook 2010 it
is predicted that, persons aged 65 or over will account for 30.0 % of the EU-27’s
population by 2060, compared with a 17.0 % share in 2008. The importance of the very old
(80 years or more) will be considerable by 2060, when this age group is likely to account
for 12.0 % of the EU-27’s population
Families, births and labout market
Population growth in the EU-27 amounted to 2.1 million persons in 2008,
comprising a 1.5 million net increase from migration and a 0.6 million increase from
natural change. These numbers are in accordance with recent developments, as the main
driver of population change in the EU-27 was from 2002 migration. European leaders
decided to establish an alliance for families, which aims at encouraging family-friendly
policies and fostering cooperation across the EU. Accessible and affordable childcare is in
connection with flexible working patterns.
Recent social trends says that even if unemployment has stabilised, there would be
still evident the marked impact of the crisis on young people, migrants and the low-skilled.
Even if there would be overall trend of stabilisation in labour markets it remains the case
that certain groups of people continue to suffer mor effected from the crisis than others.
Unemployment of persons with lower skills have increases their unemployment since the
crisis started. Their rate rising 4.2 pps compared to rises of 2.3 pps and 1.5 pps for the
medium- and high-skilled respectively. But their situation together with the situation of
medium-skilled has improved over the recent quarter, but for high-skilled have remained
constant.
31
Since the crisis nationals of other EU Member States than the one in which they are
resident have also seen stronger rises in the unemployment rate than nationals, although to
a lesser extent than non-EU nationals.
Educational qualifications
Educational classifications could help job-seekers, as unemployment rates tend to
decrease the higher the level of education attained as it was noted in almost every Member
State in 2009. The average unemployment rate in the EU-27 was much higher for those
having attained at most a lower secondary education was 12.8 % than the rate for those that
had obtained a tertiary education qualification (4.5 %). It was found out that during periods
of recession it is common for well-educated persons to accept jobs for which they would
generally be considered as over-qualified.
(epp.eurostat.ec, 2011)
Youth unemployment trends
Unemployment rates of youths are generally much higher than unemployment rates
for the whole of the population. The fact that so many young people are not part of labout
force is because many of them are studying full-time and so are not working, nor looking
for a job.But it and perhaps suggests that many of the young unemployed have become
discouraged and left the labour market. In European Union youth unemployment rate in the
EU-27 was about twice as high as the unemployment rate for the total population
throughout the last decade.
In Europa EUMonthly Monitor 2010 we can see than there have been only slight
improvement in labour market for young people, but impact of the crisis on the young
people still remains significant. The youth unemployment rate has broadly stabilised at just
over 20 % since autumn 2009, when it ceased its rapid rise, but shows no sign yet of
starting to fall. Indeed, the rate remains practically unchanged (down only 0.1 pp) from one
year earlier
Situation in the labour market for young people during the crisis, which partly
reflects their high exposure to temporary work contracts, youth unemployment has become
32
a serious problem in many Member States. Indeed, the young have borne the brunt of the
decline in employment, especially in those Member states with strongly segmented labour
markets, what reflects the expansion in temporary work during the previous period of
economic expansion.
The gender perspective
Women have been more likely to be unemployed than men during the history. In
European Union in 2000, the women unemployment rate was around 10 %, while the rate
for men was around 8 %. This gender gap had narrowed in two years to around 1.3
percentage points and between 2002 and early 2007 the gap remained more or less
constant. In recent years the situation has changed, by the second quarter of 2009 the male
unemployment rate was even higher.
However, since early 2010, unemployment is relatively stable, the strong initial rise
in unemployment in the first two years following the crisis still mean there are around 2.6
million more women and 4.5 million more men in unemployment than before crisis in
March 2008. But overaly, men are still accounted for almost two-thirds of the total increase
in unemployment since March 2008. The employment rate of women increases but
remains lower than men's, although women represent a majority of students and university
graduates. Women continue to earn on average 17.8% less than men for every hour worked
and this figure remains stable. Women are still very under-represented in economic and
political decision-making positions, although their share has increased over the last decade.
The risk of poverty is higher for women than for men.16
Long-term unemployment and inactivity
The longer-term effects of sharply rising unemployment during the crisis have led
to a dramatic rise in long-term unemployment back to around the levels observed in the
early 2000s. Since it troughed at a low of 2.5 % just before the crisis hit, the long-term
unemployment rate in the EU has risen sharply over the second half of 2009 and early
2010, but, like the overall unemployment rate, has also shown signs of stabilising more
recently.
16
http://ec.europa.eu/esf/home.jsp?langId=en
33
Over recent quarters the activity rate has remained very stable for the working age
population as a whole. But differing developments for men and women and across
different age groups. For men participation rates have declined marginally year-on-year
while for women they have continued to increase slightly, although the pace has been
slowing in recent quarters. The most noticeable divergence, however, is between
developments in participation rates for older people, for whom the rate has increased yearon-year at a roughly similar pace as before the crisis (although it has been slowing in
recent quarters), while it has decreased noticeably for the young.
Long-term unemployment is one of the main concerns of governments and social
planners/policymakers. Besides its effects on personal life, long-term unemployment limits
social cohesion and, ultimately, hinders economic growth. Some 2.6 % of the labour force
in the EU-27 in 2008 had been unemployed for more than one year; slightly more than half
of these, 1.5% of the labour force, had been unemployed for more than two years. Male,
youth and long-term unemployment appear to be more susceptible to cyclical economic
changes than overall unemployment.
(Balogh I., 2010)
Financial and economic crisis lead to decrease in commerce and an increase in
unemployment worldwide.
Nowadays there is demand for different types of labour and for more skills in the
labour market. It is mainly the consequence of technological progress and increasing
globalisation. . While enterprises need to be more and more innovative and productive,
some of their risk may be passed on to the labour force, as increased flexibility is
demanded both from those in employment as well as those searching for a new job.
The fastest growing group of job finders in Europe are manufacturing workers. In
European Job Mobility Bulletin were mentioned top five jobs which are finances and sales
associated professionals, shop sales persons and demonstrators, personal care and related
workers, stall and market sales persons, modern health associated professionals. Further
jobs with rising demand are: cashiers, tellers and related clerks, sales and marketing
managers, as well as finance and administration department managers, housekeeping and
restaurant services workers, office clerks with general clerical duties and electrical and
electronic equipment mechanics and fitters.
34
The financial and economic crisis has weakened much of the progress achieved in
Europe since 2000. But The Europe 2020 strategy sets out a vision designed to lower
unemployment rates (mainly youth) through a range of policies, including proposals aimed
at education and training institutions, or measures for the creation of a (work) environment
conducive to higher activity rates and higher labour productivity; there are also initiatives
aimed at improving the entry rate of young people into the labour market.17
4.2 Comparison of unemployment in Slovakia and Malta
4.2.1 Slovakia
The Slovak Republic is a landlocked country in Central Europe, which is bordered
by the Czech Republic and Austria to the west. Poland to the north, Ukraine to the east and
Hungary to the south.
Area: 49,034 km2
Capital: Bratislava
Population: 5,429,763
Population density: 111/km2
Currency: Euro
Year of entry to EU: 2004
Population structure and demography
On 31 December 2007 there lived 5 400 998 inhabitants in the Slovak republic. In
that year demographic develpoment did not follow all the trends of the previous period,
there was reached narural increase again, the natural population growth decreased in
comparison to 2006. The crude mortality rate has remained under 10 per mille. There was
17
http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-CD-10-220/EN/KS-CD-10-220-EN.PDF
35
reached little higher life expectancy at birth, which was 70.5 years and it showed a year-toyear decrease by females, but has stayed above the age limit of 78 years. In the years 2005
and 2006 increasing intensity of marriage stopped which was typical for years afer 2001.
The marriage showed an increasing tendency again in 2007, by a year-to-year increase.
And there was a slight year-to-year decrease in divorce rate, there were 44 divorces per
100 concluded marriages.
Age structure of population
As the age structure of population affects key socioeconomic issues of nations it is
important to describe its trend and mention it.
From the review of Social Trends in the Slovak Republic from 2008 Edition we can
see that the structure of the population by basic age groups shows an ongoing decrease in
the pre-productive population (aged 0-14 years), as a result a decline of a long-term birth
rate. Productive population number, who are people aged of ages 15-64 increased by 20
thousand in 2007, which is the share of 72% in population of Slovakia. So there was the
decrease in 0-14-year olds and the increase in 65-and-over-year olds, so it ment the aging
index continued to rise. And in Slovakia there is the trend of gradually increasing share of
the non-productive population compared to the decrease of the productive population.
(Social Trends in the Slovak Republic, 2008 Edition)
According to the newest estimated data in 2011 age structure is as follows: 15.6%
of people aged from 0-14 years, with more males 437,775 and 417,797 females. In the
group of people in age of 15-64 there is 71.6% of population, with more females – 417,797
and 437,755 males. The group of 65 years and over creates 12.8% of estimated population
in Slovakia, where female population is almost double to male, with 438,538 females and
262,363 males.18
Unemployment and population structure
“One of the main problems on the labor market in the SR is unemployment of
young people. In 2007 20.2 % of the total number of unemployed consisted of young
people aged 15-24. The percentage of youth unemployment was higher for men (23.7 %)
than for women (16.8 % of unemployed women). In comparison with 2003 the proportion
of unemployed persons in 2007 decreased by 6.7 p.p., the decrease being larger for women
18
http://www.indexmundi.com/slovakia/age_structure.html
36
(by 8 p.p.) than for men (by 5.1 p.p.). The decrease particularly affected the unemployed of
age group 20-24, whose share in total unemployment dropped from 19,8 % in 2003 to 15
% in 2007.”
(Social Trends in the Slovak Republic, 2008 Edition)
Educational structure
Educational attainment is another indicator of socio-economic wellbeing, so i have
included it in this part and it will later help me in comparison of countries`
competitiveness. Moreover it is related to earning potential and income levels of country,
and there is strong link between employment growth, educational attainment and
demographic trends.19
After the change of regime, there have been a change in educational structure in
Slovakia which ment higher recognition of persons with high schol education and
graduates of universitie. We ca see youngest age groups as new qualitative change of
educational structure of Slovakia. So the main trend that we can see in youngest
generations is higher share of persons with full high-school education, university graduates
and so decrease persons with elementary education. Another important change is that
differences between the genders in the group of persons with full high-school education are
smaller and nowaday women have a higher education. And nowadays educational structure
has changed, which resulted from all changes of educational system, from a view on the
role of reached education in both personal and professional lives, changes in economic
trend after 1989. These changes have brought and will further bring growth in share of
persons with full high-school education and significant strengthening of weigh of
university graduates among youngest generations.
(by Branislav Šprocha, 2010)
The share of people with tertiary education is increasing. This positive development
trend is underlined by the fact that Slovakia reaches one of the highest levels in secondary
or higher education (95%) and one of the highest shares of University educated workforce
(15.2%) from among all EU countries. And more than 60% of all secondary school
graduates (19 years of age) continue with their university education what ranks Slovakia
among the top countries in the world of secondary school graduates attending
university.(data from 2008)20
19
20
https://opm.gov.mt/file.aspx?f=2443
http://www.irishchamber.sk/publications/WHY_INVEST_IN_SLOVAKIA.pdf
37
In terms of vulnerability in the labour market, persons with low skill-levels of skills
comprise a significant risk group. Out of the total number of unemployed persons in 2007,
those with the lowest level of education (i.e. persons with basic education and secondary
vocational without maturita) accounted for 65.6 % of the total unemployment and their
share is still rising.
Educational structure, highest attained level of education in 2010:
Primary education
12,38% of population
Secondary education
46,72% of population
Tertiary education
21%
Migration
Internal migration is moving to shorter distance, as from one municipality to the
other one in the same district. This prevailing migration represents 47 % of the total
internal migration. Migration in the same region, from one district do another, represents
29 % of the total internal migration, 24 % of the total internal migration is reached by
moving from one region to another. This is caused from the reason of housing (37%) and
accompanying relative (27%) and 7% persons change their place of permanent residence
for the reason of marriage.
In the terms of the international migration (migration turnover) between the Slovak
Republic and foreign countries it reached 10.5 thousand persons in 2007. Number of
immigrants to Slovakia was 8.6 thousand persons and the number of emigrants was slightly
above the 1.8 thousand persons limit in 2007 (in 2006, it was 1.6 thousand persons).
Regional disparities, unemployment and commuting to work
In Slovakia there are quite big disparities between the regions. And so for the
unequal development of regions there are large differences in regional registered
unemployment rate. There are big differences in job offers between east and west of the
country. The highest level of unemployment in Slovakia is in the east of the country, where
it is around 20%, where jobs are not paid well or even job offers don`t exist. Many of
people who live in these region have to commute to work. They usually commute to capital
38
city, Bratislava, more that 75 000 people daily, or to Hungary. Many Slovak people also
travel for work to the Czech Republic, Germany, Austria, England and Italy. Commuting
to work within Slovakia also depends on distance. Even when Slovaks prefer to commute
to work there is the problem that they are not keen on relocating, they are bounded to their
families and community and also because of high real estate prices and fewer incentives
for relocation. But labor mobility differs within Slovakia too, but highest labor mobility is
typical for Eastern and central worker.21
Infrastructure
Another factor which can influence labor marke tis infrastructure. Good
infrastructure can attract foreign investments but also can be a factor which influences
commuting and accessibility to work.In general in Slovakia the infrastructure is developed
quite well. There is not problem with transport, even buss and train transportation are
developed in the same level as other neighbouring countries` transportation.
Slovakia has got very good geographical location, it is located in the centre of
Europe where many transport corridors are passing through. The infrastructue in SR has
been developing and modernising. Many road have been modernised and has helped in
accessibility, but there is still priority to connect with a highway west and east of Slovakia
by the end of year 2015, or 2016.22
Labour market
The labor productivity index mean what labour produces in terms of GDP per hour
worked. In Slovakia labor productivity growth is very strong. The growth is much higher
not only in comparison to the 15 original EU countries but more importantly it is higher
than in the neighboring countries like Hungary, Poland and Czech Republic which have
similar conditions.23
The minimum wage in Slovakia is set at 307,- € per month, the average salary for
year 2009 is 744,5 € per month. The level of unemployment in 2009 rose to 12.1% after a
period of decreasing unemployment.
21
http://laboureconomics.wordpress.com/2011/04/22/commuting-to-work-from-eastern-slovakia/
http://www.sario.sk
23
http://www.irishchamber.sk/publications/WHY_INVEST_IN_SLOVAKIA.pdf
22
39
(Cervenkova L., 2009)
Main sectors
As there have been changes in employment, there were also changes in its structure.
Nowadays data of main social and economic activities include:
GDP – composition by sector: agriculture: 2.6%, industry: 34.4%, services: 63%.24
The most workers are employed in public sector, which refers to about 19 %, then
in real estate and business. In tertiary sector is employed more than 80% of workers. In
2007 the share of the services sector increased from 55.8 % in 2003 to 56.4 %. During the
past decade Slovak service sector grew rapidly and now it employs about 69% of the
population and contributes to GDP with over 61%.25
(laboureconomics.wordpress.com, 2011)
There have been a strong rise in manufacturing, construction, business activities,
wholesale and retail trade, hotels and restaurants and real estate and renting. Slovakia's
tourism has been rising in recent years, and even in the years between 2001 and 2005
income has doubled.
Slovakia is proud of its industrial heritage. During the last 6 years, a large number
of key world investors have invested in Slovaki. There have been announced huge projects
in the automotive and electronics industry, including companies like KIA, PSA Peugeot
Citroen, Samsung and Sony. Their arrival has attracted a large group of their suppliers to
Slovakia
Computer, electronics and optical products have also grown to become one of the key
areas too.
During the period under survey made in 2007, there was employment decline in
public sector by 21.3 % and the private sector grew by 28.3 %. “This was reflected in
changes in overall structure of employment by types of ownership. Whereas in 2003 the
share of the private sector in total employment in the SR stood at 60.4 % in 2007 it was
71.2 %.”
24
25
http://sf-energyinvest.eu/?id=16
http://laboureconomics.wordpress.com/2011/04/22/commuting-to-work-from-eastern-slovakia/
40
Decreases in employment were observed particularly in agriculture, mining and
quarrying and electricity, gas and water supply. In 2010, agriculture accounted for 2.7% of
GDP (compared to 6.9% in 1993) and occupied about 3.5% of the labor force (down from
10.2% in 1994). Over 40% of the land in Slovakia is cultivated. The southern part of
Slovakia (bordering with Hungary) is known for its rich farmland. Growing wheat, rye,
corn, potatoes, sugar beets, grains, fruits and sunflowers. Vineyards are concentrated in
Little Carpathians, Tokaj, and other southern regions. The breeding of livestock, including
pigs, cattle, sheep, and poultry is also important.
From the point of view of branches of activity, the highest number of unemployed
were those who in their last job were employed in industry, trade, construction, agriculture
and other community, social and personal service activities. The share of unemployed who
had their last job in these branches represented 39.7 % of the total unemployment in 2007.
In 2003 there was a considerable increase in unemployed persons last employed in the
other community social and personal service activities (their share in the total number of
unemployed persons stood at 10.1 % and decreased again to 3.2 % in 2007). This can be
attributed to the employment of persons for public works who subsequently return to
unemployment. This aspect of labour market policy also influenced the structure of
unemployed by the reason for leaving last job. Among the most frequent reasons for
unemployment of persons who had previously been employed – dismissed due to
redundancy, employers stopped their activities and personal reasons – the additional reason
was added – a job of limited duration has ended.
FDI
Slovakia has cheap and skilled labour and together with a 19% flat tax rate for both
businesses and individuals, no dividend taxes, a weak labor code, and a favorable
geographical location are Slovakia’s main advantages for foreign investors. And so foreign
direct investments have increased dramatically.
Disability to work
Number of estimated cases of disability to work per 100 thousand insurants
decreased, in 2007 there were 30 169 cases, that is by 31 620 cases less that in 2003. The
highest share in disability to work had cases due to respiratory diseases, musculoskeletal
system and connective tissue diseases, that formed 59,7 % of all cases. Injuries, poisoning
41
and certain other consequences of external causes out of work, digestive system diseases,
circulatory system, diseases of genitourinary system, etc follow them.
The number of cases of disability to work due to disease decreased in 38.4 % on
701 541 cases. In 2004 recorded its minimum 572 932 cases. The number of work injuries
was decreasing. The average daily disability of work persons in the monitored period
declined till 2005, then increased (by 18.9 % less than in 2003).
The Employment Service Act (5/2004) and the Labour Law (Codex 311/2001) are the
main pieces of legislation concerning the measures to support disabled workers in
Slovakia.
Disabled people who move from social welfare to employment can apply for
additional training and coaching to prepare for the job and they may receive extra financial
assistance during the early period of their new work contract. Disabled workers are entitled
to adjustment in their working conditions and they can apply for funding whenever to
undergo professional training and further their skills. Cases of redundancy must be
approved by the Office for Labour before being processed.
In addition, disabled workers are entitled to reduced health insurance fees as part of
the Health Insurance Act (580/2004), and in some cases they may be eligible to retain their
full disability pension payment when moving into employment as per the Social Insurance
Act (463/2003).26
Incentive measures to employ workers with disabilities.
Initiatives to further the professional inclusion of the visually impaired in Slovakia
include information campaigns and awareness raising amongst recruiters and employees as
well as various events where disabled job seekers and employers can meet. The
government offers a range of incentives, schemes and funding programmes to further the
employment of disabled people in both the private and the public sectors.
Variations of unemployment in Slovakia:

12% of unemployed are ethnic Hungarians

High number of unemployed in agriculturally based regions, which do not have the
developed industrial sector
26
http://www.euroblind.org/convention/article-27--work-and-employment/nr/134
42

The majority of unemployed people can be found in peripheral and economically
weak regions with an undeveloped infrastructure, unqualified labour force as well
as a negative demographic development.”
„In Slovakia, the automotive, machinery and textile industries and their suppliers
have been most affected by the crisis and the jobless rate in these industries confirms this.
The crisis is also further widening employment gaps between regions.“ (Cervenkova L,
2009) The tendency for 2009 and 2010 is not positive either. According to official
statistics, at least 35 job seekers are applying for each vacancy. However it is expected to
increase since layoffs have not bottomed out yet. It is estimated that as many as 60 percent
of the new job seekers are people who had worked abroad.
Social policy
European Social Fund in Slovakia
The main focus of ESF in Slovakia is to increase the competitiveness and
performance of its regions as well as performance of economy. Aimed to improve
structural unemployment and regional disparities in employment throughout the country
with main focus on Bratislava region.
This strategy will be implemented through two Operational Programmes which are
Employment and social inclusion and second is education. For Employment and social
inclusion it si Community funded by 881 801 578 euro and by National Counterpart by
155 612 045euro.
And in Education Community funding is by 617 801 578 and by
National counterpart by 109 023 811 euro.
Employment and social inclusion
To increase employment it is aimed to invest in the workforce and reducing the
biggest problems of unemployment and long-term unemployment. Reduce structural
unemployment in remote regions. It is also focused on Improving skill levels, mainly to
those who are socialy excluded and mainly to the Roma communities. And it will help to
reduce intra-regional disparities in the level of unemployment. So new job and
sustainability have to be achieved by increasing adaptability of workers, businesses and the
43
promotion of entrepreneurship. Moreover, it will support actions addressing work/life
balance and childcare needs – to aid the integration and reintegration of parents into the
workforce. Supporting employment, social inclusion and capacity building in the
Bratislava region and to improve public administration there. I tis arranged to adapt to a
competitive knowledge-based society. Next aim is to improve improve the quality of
human resources in public services and non-governmental organisations, and the quality of
the services they provide. So the quality management systems will be introduced in public
administrations and NGOs active in the employment and social policy fields.
Education
The main focus in this operation programe will be on completing reforms in the
education system and building the learning culture needed for a more mobile, educated and
skilled workforce able to generate high, sustainable economic growth and meet the needs
of a knowledge-based society.27
This will be achieved by giving a higher level to the
content and teaching
processes, to teach what school leavers will need according to what is demanded on the
labour market. Human resources in the area of R&D will be supported in order to move
towards a knowledge-based society. Lifelong learning is next part of the programe as the
basic principle of a knowledge-based society. Support people with special educational
needs, mainly on the Roma people which are magrinalised in the society.To improve key
competences, mobility and skills to raise the competitiveness of the Bratislava region in the
long term.
The levels of ESF funding are different from one region to another, it depends on
the relative wealth of regions. Slovakia, with the exception of Bratislava region is eligible
under the convergence objective, with a GDP per head of less than 75% of the EU-25
average. With a GDP per head of more than 75% of the EU-25 average, the Bratislava
region is eligible under the regional competitiveness and employment objective.28
4.2.2 Malta
Malta is a group of seven islands located in the Mediterranean Sea. The three of
them, the largest Malta, Gozo and Comino, are inhabited. The nearest neighbouring
27
28
http://ec.europa.eu/esf/home.jsp?langId=en
http://ec.europa.eu/social/BlobServlet?docId=6674&langId=en
44
country Italian territory Sicil, located 97 kilometer to the south and second is Africa, 288
kilometers to the north. Malta is at the crossroads of Africa, Europe, and the Middle East.
Area: 316 km²
Capital: Valletta
Population: 408,333 (July 2011 est.)
Population density: 1,274 /km2
Currency: Euro
Year of entry to EU: 2004
Malta performs well under traditional measures of workforce such as mastery of basic
skills and trades.29
Population structure and demography
Population density in Malta is one of the highest in the world. Population trend of
population increase has levelled off since mid of the 20th century, and considerable
decline continued in the birth rate. But the death rate has remained fairly stable, having
fallen only slightly, while the infant mortality rate has dropped significantly. 30
Since 2000 the Maltese population has grown 9.5%, outpacing the European
Union’s (27) average by 5.7%.“From the Malta Demographic Profile of 2010 we can see
that the annual population growth rate was 0.4%, so it has positive tendency. „Employment
growth since 2000 is 11.6%, competitive with several benchmarks and 4.8% above the
European Union’s (27) average over the same time period.31
Life expectancy has increased during the past century, in 2009 it was 78 for males
and 82 years for females and in comparison with year 2008 it also increased. The estimated
life expectancy of males and females was almost 80 years for 2011.32
Demographic development was affecting the age of the population, the number of
workers, pensions and consumption, expert Maja Miljanic Brinkworth told the Social
Affairs Committee.
29
https://opm.gov.mt/file.aspx?f=2443
http://www.britannica.com/EBchecked/topic/360532/Malta/279534/Demographic-trends
31
https://opm.gov.mt/file.aspx?f=2443
32
http://www.d-transition.info/countries-glance-3/malta-202/
30
45
Dr Miljanic Brinkworth said that fertility in Malta had dropped to 1.3 births per
woman and women were constantly delaying having children. A rate of 2.1 births for every
woman was needed for the country to be demographically sustainable, she said.
(More women delaying having children, 2009)
For 2011 the structure of population according to age is estimated as follows: age
gruoup of 0-14 years: 15.7% (male 32,829/female 31,198), population aged between 15-64
years: 68.5% (male 142,006/female 137,803), and for population of 65 years and over:
15.8% (male 28,305/female 36,192). From this data we can see that the most people is in
group of age from 15-64 years, i tis the majority, but in this group highest number of
population is from 40-64 and second highest is from 25-39 years old. According to the
gender population structure is almost qual, just few males are prevailing.33
„Women are under-represented in the workforce, especially in management
positions. In addition, women are often paid less than men in similar occupations.
Furthermore, the traditional nature of Maltese society leads many women to stop working
after marriage.“
The latest findings indicate that there is a change in attituted towards paid work in
the group of younger female generation. It is mentioned that if women chose to stay
working, in the labout market nowadays, it is more likely that they will remain there once
their children are older.34
Inctivity of Maltese men is represented by only 34.4% , but there is high incativity
rate of females, only small number of wemen are working in formal economy.
Sustainability of the welfare state is directly effected and especially for the pensions.
Moreover, it is believed that a considerable number of women are working in the informal
economy.
Reasons for inactivity
Majority of women (54.5%) who were not active in the labour market attributed
this to personal or family reasons (LFS 2006). By contrast, very few men (3%) cited
personal or family reasons for their absence from the labour market. This shows that
33
34
http://www.indexmundi.com/slovakia/age_structure.html
http://www.eurofound.europa.eu/ewco/surveyreports/MT0810019D/MT0810019D.pdf
46
traditional gender stereotypes are prevailing and that women still find it difficult to
reconcile work and family responsibilities.
In terms of the duration of unemployment, htere is a tendency for women to spend
less time in unemployment than men and nearly half (48.1%) of women find employment
in less than five months. Some 21.4% of women and 14% of men spend between six and
11 months looking for a job, while 30.5% of women and 46% of men take longer than 12
months to secure employment.
In Malta demography 2009 population predictions and projections were produced
which say, the total population is expected to decrease to 380,242 in 2050. Projections also
reveal a continuously ageing population, with the share of elderly persons increasing in
comparison with their younger counterparts. In fact, in 2050 the percentage of persons
aged less than 20 is expected to decrease from 22 per cent, as recorded in 2009, to 17 per
cent. On the other hand, the share of individuals aged 65 and over is expected to increase
significantly in the coming forty years to 24 per cent from the 15 per cent recorded for the
year under review.(Malta demography,2009)
Population and educational structure
According to the 2001 NSO Labour Force Survey, The Maltese labour force is
relatively less educated/skilled than their EU counterparts, with some 69.5 percent of the
labour force having completed secondary or lower education and 28.1 percent were at the
post-secondary diploma or first-degree university level. Only 1.5 percent of the labour
force was at the post-tertiary level of education.35
Even when we know that labour force in Malta is relatively less educated and
skilled, there has been increase in educational attainment in the last decade. „The
percentage of Maltese that has completed at least upper secondary education has increased
by 51.9% since 2000, the largest increase of any benchmark country. So some
improvements have been achieved, but it is still behind other countries, it has one of the
lowest level of completion of upper secondary education. Yes, there have been progress in
percentage of population with finished upper secondary level, but it still lags in higher
levels of upper secondary levels. But instead of this fact Maltese tertiary education is
competitive with several countries in the European Union.“22% of Malta’s population has
received a tertiary degree; only 7% below the European Union’s (27) average. Tertiary
35
http://www.epasi.eu/CountryReportMT.pdf
47
education participation rate continues to grow in Malta. Between 2000 and 2007 it has
grown 7.4% versus 5.1% in the European Union.36
Migration
Malta is very small Island and so internal migration means just to move from one
municipality or city to another, or from one inhabited island of Malta to another, usually
between Malta and Gozo. As area of Malta is very small to commute from one part of the
island to another is very common. When people migrate internaly they move to the area of
capital city and surrounded towns. But domestinc people do not have to migrate because of
high accessibility and low distance between all parts of Malta. In the terms of international
imigration,“ a total 8,147 persons were estimated to have immigrated during 2009. More
than half (58 per cent) of these persons were males. Of these, 15 per cent were returned
migrants, 42 per cent were nationals of the European Union and a further 44 per cent were
third-country nationals. A total of 9,708 individuals emigrated during the year under
review with a resulting net migration of -1,561. Nearly 60 per cent of the persons
emigrating were males, and a quarter were aged over 50. Of all emigrants 18 per cent were
Maltese nationals, 64 per cent were citizens of the European Union and 18 per cent were
third-country nationals.“ But in 2010 there has been a huge decline in number of
immigrants compared to past few years, just only few hundreds people imigrated to Malta
in that year.
(Malta: Year In Review, 2010)
Infrastructure
From the 1990s several programs to make the infrastructure of Malta comparable to
other EU nations were designed. The result is the new telecommunications system, and a
new international airport that can handle increased passenger and cargo traffic. Road
constructions are completed, but there is a need of new highway improvements. The
Freeport cargo terminals were improved, which now handle an average of 1.2 million
containers per year and are trans-shipped to other markets globally. In Malta there are 2
important ports, one is in Velletta and other in typical Maltese Marsaxlokk and one major
36
https://opm.gov.mt/file.aspx?f=2443
48
airport. Infrastructural projects are planned in Malta, one for extension of power station
and the second one to build interconnection to Sicily.
Labour market
Labour productivity index
The financial crisis and also the ensuing global economic recession, had a very
significant negative impact on world trade and as a result of this adversely affected growth
and labour productivity in the Maltese economy. Labour productivity index is not high in
Malta, during past decade it had also different trends, but nowadays it still quite low.
According to The Lisbon Assessment Framework (LAF) the quality of Malta’s labour
resources as a cause for concern, reflecting relatively low educational attainment and skill
levels of the Maltese labour force.37
Minimum wage
Wages in Malta are low compared with other European nations. The nation's
minimum wage is set for all employees regardless of whether a worker is a Maltese or
foreign National. According to Legal Notice 378 of 2009, „Malta’s national weekly
minimum wage for 2010 is €142.67 for employees aged under 17 years, €145.51 for
employees aged 17 years, €152.29 for employees aged 18 years and over.“ Minimum wage
levels are applied in majority of EU countries to salaries and earnings. In Malta with under
€660 per calendar month it is higher than approximate levels found in some other countries
including Slovakia with just €307.
In Malta there are legally enforced annual bonuses and generous vacation periods. And the
standard working week is 40 hours, but some industries are allowed to operate 43 to 45
hours per week.
Maltese workers have comfortable lifestyle, despite the wages are low, the cost of
living are low too. Moreover, the government provides housing subsidies for low-income
families. Free education and health care are available for most Maltese, though medical
services are limited. With quite low unemployment and the standard of living relatively
37
http://finance.gov.mt/image.aspx?site=MFIN&ref=NRP%20with%20Consultation%20Document
49
high, Malta was ranked 27th in the world in the United Nations Human Development
Report 2000.38
Materials
Malta has limited supplies of fresh water, has only a few domestic energy sources,
and it produces only about 20% of its food needs. So a lot of materials asre imported.
Mainly oil and other fossil fuels are imported. The global crisis and high prices of
electricity and water hurt Malta's real economy, which is dependent on foreign trade,
manufacturing - especially electronics and pharmaceuticals.
Main sectors
In general we can say that Malta is in the process of economic restructuring
nowadays. Manufacturing industry is slowly declinig, but the services sector is in
considerable expand, is caused by the advent of call centres, online gaming and the growth
in the financial services sector. At this the government is trying to reduce the size of the
public sector with the aim to make it working more sustainable and effectively. Even big
changes take place in this sectors nowadays Maltese unemployment rate is one of the
lowest among EU countries.39
Labour force occupation was estimated in 2009 in following sectors: in agriculture
1.6%, in industry 22.8% and majority in services by 75.6%.
The industrial sector experienced some growth in the 1990s, as the low cost of
labor attracted light industries such as electronics, textiles. While the Maltese economy
continues to be dominated by manufacturing and tourism, substantial growth in Financial
Intermediation, Information Communication Technology (ICT), Real Estate and Business
Activities and other sectors suggest increasing diversification.
In recent years Malta's financial services industry has been in growth and in year
ago it escaped from the damage of crisis, mainly because this sector is centered on the
indigenous real estate market and is not highly leveraged. „Since 1995, financial services
38
http://www.novelguide.com/a/discover/wene_04/wene_04_00219.html
39
http://www.eurofound.europa.eu/ewco/surveyreports/MT0810019D/MT0810019D.pdf
50
have grown by 40 percent.“ Malta's banking system has huge assets, and the nation has a
small stock market, which lists mainly local companies.
Nowadays this sector represents a major force in the Maltese economy, with 12% of
contribution to the GDP and 8,900 people are employed in this sector.40
Services are also another fastest growing sector in the nation`s economy, even the
data from about decade ago shows the same, that the service sector is employing 71
percent of Maltese workers and producing 71.7 percent of GDP in 1999. Wholesale and
retail services account for about 11 percent of the nation's GDP.
One of the pillar sectors of Maltese economy is tourism. Because of the fact that
this country has small area all tourism can be categorised as coastal tourism. Government`s
policy target was was to develop accomodation of large four and five star hotels and this
goal have been achieved abd the growth occured. Malta attracts 1% of total number of
tourists to the Mediterranean basin.“ This sector is also component of service sector and
source of foreign currency too. Every year more than million of tourists go there. 41
Malta has mild climate, sunny days almost all year around, quite low prices and
tourist and historical attractions are main reason for attractiveness. The total contribution
of Travel & Tourism to employment, including jobs indirectly supported by the industry, is
forecast to rise by 2.0% pa from 42,000 jobs (26.1% of total employment) in 2011 to
51,000 jobs (30.8%) by 2021.
In maritime sector about 35,600 people were employed in 2004. Coastal tourism
generated 28,000 jobs. Also other maritime sectors provided just over 7,600 jobs.
For Malta, the Accommodation and Food Service Activities and the Information and
Communication sectors are much more important than for the European Union as a whole.
Malta has diverse economy and in contrary sectors sucha as Agriculture, Forestry
and Fishing and Human Health and Social Work activities are less important for Malta
compared to EU. Agricultural sector is very small in Malta because of relatively poor soils,
so contribution to the GDP is very little. The total percentage of women working in
agriculture, hunting and forestry is less than 1%, while no women are reported to be
working in fishing, mining and quarrying, or in extra-territorial organisations and bodies.
The percentage of men working in these last three categories is also extremely low.
40
http://www.articlesbase.com/recruitment-articles/employment-opportunities-in-the-maltese-financialservices-sector-over-delivering-jobs-in-the-face-of-market-adversity-4152679.html
41
http://www.epasi.eu/CountryReportMT.pdf
51
In consideration of economic activity according to the sector, for women the top
economic activities are,“ education (16.9%), wholesale, retail and repairs (15.4%), health
and social work (12.9%) and hotel and restaurant work (10.7%).“ Women are highly
represented in education from certain reasons, but important is that as they are employed as
teachers it will permit them to have full-time job, because as they are working less hours as
teacher they can can have time for thir children too. Men are usually found in the
manufacturing sector (17.5%), wholesale, retail and repairs (15.8%), and construction
(10.8%).42
FDI
Maltese economy is dependent on foreign trade, and the government supports
export-based companies through tax breaks and other incentives. It also lookes for foreign
investment by offering similar incentives. Internet and e-commerce businesses were
established by several international companies in Malta.
FDI is a very important source of externally‐derived capital to fuel expanded
economic development activity, and Malta has been very successful. FDI in Malta has
declined 8.64% between 2003 and 2008, and grew in the EU-27 1.1% over the same
period. This may have represented a temporary shift of FDI to the newer member countries
in the EU.
In Malta many international firms and also franchises have been established. North
American fast-food chains such as Mc-Donald's, Burger King, T.G.I. Fridays, and Pizza
Hut or Hard Rock Café.
Disabled people
The rate of employed disabled people was considerably lower than that of nondisabled people where only 14.6% (3,295) were employed in contrast to 48.0% (150,188)
in the non-disabled population. In addition, the unemployment rate of disabled people was
2% (443) compared to that of non-disabled people, which stood at 3.4% (10,740). Such
lower unemployment rates within the disabled population might indicate that disabled
people are reluctant to seek employment as suggested by a qualitative study conducted by
the Employment and Training Corporation (ETC 2005).
42
http://www.eurofound.europa.eu/ewco/surveyreports/MT0810019D/MT0810019D.pdf
52
Disabled people working in similar occupations to non-disabled people, were
under-represented in every area in 2005. Moreover, disabled people tended to work in
elementary occupations with 20.5% (689) of the working population in this category
compared to 11.3% (16,958) within the non-disabled population. The rate for disabled
people in crafts and related trade was 14.7% (495) while for non-disabled people it was
13.5% (20,333). In all other areas, disabled people tended to be under-represented.
Disabled people had a greater presence in public administration, social security and
defence with 11.5% (385) working in this area compared to 8.5% (12,716) of non-disabled
people. Higher rates of disabled people were found in health and social work with 10.7%
(361) and hotels and restaurants with 8.6% (290) compared to rates for non-disabled
people of 7.3% (11,000) and 8.3% (12,434) respectively. The majority of disabled people
were involved in manufacturing (15.5% or 521 people), wholesale and retail (12.3% or 521
people).43
Employment and unemployment situation
Some 9.47% of all jobs (15,155 out of the total 159,875) in 2008 were part-time
positions in the terms of types of employment. In that year 69% or 10,455 of part-time
workers were women. In addition, some 3,186 women were working full time with
reduced hours compared with only 412 men. In fact, the sample of men working full time
with reduced hours is underrepresented. This is because of the traditional division of
domestic work, whereby more women than men opt to work reduced hours so that they can
balance work and family responsibilities.
It is important to note that while workers in the public sector have the facility to
work reduced hours, those in the private sector tend not to have this option; instead,
mothers are expected to return to full-time employment after a short maternity leave of just
14 weeks. Both parents have a right to an additional three months’ parental leave.
However, this is not paid leave and it is at the discretion of the employer when to grant this
leave.
Despite the negative impact of crisis and problem of uneployment in certain groups
of population Malta still has a strong asset base on which to build. Maltese competitive
resources will serve country well as it transitions successfully to where it should be aimed,
43
http://www.disability-europe.net/en/countries/mt/MT-2-factsEN.jsp
53
to a knowledge‐based economy. In Malta there are some areas of deficiency that can
impede its economic growth and transformation, but it has a lot of strenghts too which are
aimed to improve its unemployment situation. 44
Social policy
The European Social Fund in Malta
European Social
Programme in Malta is focusing on issue of employment,
education and training to help country`s economic and social situation by enhancing its
human resources skills. Main focus is on improving access to labour market so objective is
to invest in people and their skills and knowledge through lofe-long-learning and trainings.
The main focus is on opportunities for women and on training in information and
communication technologies.
ESF priorities in Malta for years 2007-2015
Maltese ESF programme is aimed at boosting participation in education and
training and so building the skills and knowledge and to adapt to market needs. So it is
focused on anti-discrimination, childcare and re-training when returning to work, all with
a view to steadily building up female employment rates.
As Malta has less university students than other EU countries, and many of them
are unemployed, so people will be encouraged to get higher degree of education, mainly in
the fields of science, engineering and ICT, which are valuable for economy and needed for
modernization.
The priorities of the Maltese Operational Programme for ESF funding are:
Improving education and skills
It includes greater participation in education across all levels and subjects and so upgrading
the knowledge and skill levels of the labour force. Increasing participation of student rates
in science, technology and ICT in higher education and improving the quality and
relevance of education and training. With community funding of 31 790 000 euro, and
with national counterpart by 5 610 000 euro.
44
https://opm.gov.mt/file.aspx?f=2443
54
Investing in employability and adaptability of the workforce
Improving the situation, so that companies and employees can adapt to the needs of the
economy: upgrading skills and broadening perspectives and increasing participation rates
in lifelong learning. Community funding for this priority is 26 345 750 euro and with
national counterpar of 4 649 250 euro.
Promoting an equal and inclusive labour market
With aim to promote stable and quality employment among the long-term unemployed,
helping women into work and providing special assistance to disadvantaged groups, while
addressing distortions in the market.With funding of 31 365 000 euro
by
community
funding and 5 535 000 by national counterpart.
Strengthening of institutional and administrative capacity
To reinforce the institutional capacity and the efficiency of public administrations, of local
government, social partners and civil society. Strenghten the efficiency and effectiveness
of the public sector. Focuse on to develop effective partnerships in a wide range of policy
areas. Planning and coordination within the Office of the Prime Minister. Funded by
community funding of 18 194 250 euro and by national counterpat with 3 210 750 euro.
Technical assistance for these programme is 4 305 000 euro by community funding and
759 705 by national counterpart.
Malta is eligible under convergence objective with a GDP per head of less than 75% of the
EU-25 average.45
4.3 Detailed development of unemployment in Malta and Slovakia according to
chosen indicators
Despite some basic trends and development of unemployment rate according to
certain indicators are already included and described in previous part of this work, it is
important to compare development of unemployment and its rates with more detail to
come to clearer conclusion. So in this part more detailed development comparison is done
according to certain chosen indicators.
45
http://ec.europa.eu/esf/home.jsp?langId=en
55
Tab. 4 Unemployment rates in Malta and Slovakia in the years 2007-2010
(Percent)
Malta
Slovakia
Year
2007
6,4
11,1
2008
5,9
9,5
2009
7
12
2010
6,8
14,4
Source Eurostat EU, own data processing
Chart 3 Development of unemployment rates in Malta and Slovakia in the years
2007-2010
Development of unemployment rate in
Malta and Slovakia (percentage)
20
15
10
5
14.4
11.1
6.4
12
Slovakia
9.5
5.9
7
6.8
Malta
0
2007
2008
2009
2010
Source Eurostat EU, own data processing
Malta has generally one of the lowest rates of unemployment among EU countries. In
the Chart 3 we can see that the unemployment rate in Malta is much lower than in Slovakia
during the whole period we study. In 2007 unemployment rate in Slovakia was 11,1% and
in Malta 6,4%, during the next year unemployment rates in both countries were decreasing,
with sharper decrease in Slovakia, it decreased by 1,6% in one year, almost 3 times greater
decline in unemployment as in Malta. From this year there was the tendency of increasing
unemployment rate, as impact of financial and economic countries, in 2009 in was even
higher than in 2007 in both countries and in Slovakia unemployment rate continued to
increase very high level of 14,4% in 2010. In Malta there was the opposite tendency and
unemployment rate was slowly decreasing to 6,8% in 2010. So even when in these
countries tendencies of unemployment rate development were similar until 2009, after this
year it showed that both of these countries was affected differently by crisis.
56

Gender indicator
Tab. 5 Unemployment rate in Malta and Slovakia according to the gender in years 2007-2010
Year
Gender
2007
2008
2009
2010
( Percent) Malta
Slovakia Malta
Slovakia Malta
Slovakia Malta
Slovakia
Total
6,4
11,1
5,9
9,5
7
12
6,8
14,4
Males
5,9
9,9
5,6
8,4
6,6
11,4
6,6
14,2
Females
7,6
12,7
6,6
10,9
7,7
12,8
7,2
14,6
Source: Eurostat EU, own data processing
Chart 4
16
Development of unemploymet rate according to gender
(percentage)
14
12.7
12
10
8
6
10.9
9.9
7.6
5.9
8.4
6.6
5.6
12.8
11.4
7.7
6.6
14.2
14.6
7.2
6.6
Males Malta
Females Malta
Males Slovakia
4
Females Slovakia
2
0
2007
2008
2009
2010
Source: Eurostat EU, own processing
We have already found that the unemployment rate in Slovakia is more than two times
higher than in Malta and trend of quite similar development was changed in the last year.
Gender is the next indicator and from this perspective in Table 5 we can see that in both
countires females have higher unemployment rate during whole time period. This is due to
family responsibilities of women, mainly in Malta, where women are seen as housewifes
and also because women are not as much demanded on higher positions that men. In 2008
all unemployment rates in both countries for males and female decreased. After the
recession there was change and unemployment rate changed in opposite way, it increased,
but also with the same tendency in both countries for men and women. Despite during past
three years there were the same development trend in both countries, finaly in 2010 it
57
changed and we can see the differences. While in Slovakia the trend for the same as in
previous years and male and female unemployment rate continued to increase, in Malta, in
contrary unemployment rate of females even began to fall and for men unemployment rate
was the same as in 2009. The reason of fall in women unemployment can be because of
recent changes, as Malta is restructuring and women changed their thinking and found out
that they can apply for jobs wih less working hours so that they can fulfill both work and
family responsibilities. We can take to consideration also part-time jobs, which hepl
women to come back from family life to work more easily.

Age indicator
Tab. 6 Unemployment rate in Malta and Slovakia according to the age in period of 2007-2010
Year
2007
2008
2009
2010
Malta
Slovakia Malta
Slovakia Malta
Slovakia Malta
Slovakia
6,4
11,1
5,9
9,5
7
12
6,8
14,4
Age
Total
Less than
25
From 25 74
13,8
20,3
11,8
19
14,4
27,3
12,9
33,6
4,7
10
4,7
8,4
5,4
10,4
5,7
12,5
Source: Eurostat EU, own data processing
Chart 5
40
Unemployment rate according to the age
Percent
30
Less than 25, Malta
20
Less than 25, Slovakia
More than 25, Malta
10
More than 25, Slovakia
0
2007
2008
period
2009
2010
Source: Eurostat EU, own data processing
Age plays important role in unemployment rate too. Different group categories
find it differently to be employed. It depends on the need of country`s economy and
culture which groups of people are beeing employed. I wanted to include more age groups,
but records abut Malta are missing in some years for certain group,so i will just compare
younger and older population`s unemployment rate. Younger people who are aged under
58
the 25 years are usualy reported that their unemployment rate is higher as many of them
still go to school, or work just for part-time or seasonaly. From Chart 5 it is obvious that
young people aged under 25 have higher unemployment rate as the older group. In 2007 in
Slovakia there were not such big differences between these two age groups, but
continuosly because of lack jobs for young people, their unemployment rate rose in 2010
to 33,6% from 20,3 in 2007. It is huge difference and another reason is more young people
continue in tertiary education. In Malta the situation is different, not so many youg people
continue to finish higher education and chose to work sooner. In Malta there the
development of unemployment among young people has been relatively stable, so as for
their older group of population.

Indicator of highest level of education attained
Tab. 8 Unemployment rate in Malta and Slovakia according to the highest level of education
attained in years 2007-2010
Education
Years
2007
2008
2009
2010
Malta
Slovakia Malta
Slovakia Malta
Slovakia Malta
Slovakia
6
10,4
6,4
8,7
7,4
13,9
6,9
13,9
Total
Preprimary,
primary
and lower
secondary
education
Upper
secondary
and postsecondary
nontertiary
education
Tertiary
education :
7,8
4,5
44,4
9,1
34,7
9,6
45,3
9,1
43,2
8,8 :
7,8
4,8
13,3
4,9
13,8
3,7 :
2,9 :
5,5 :
5,8
Source: Eurostat EU, own data processing
As some data are missing in the Table 8 because of lack of records from Malta, it is
not useful to show this situation graphically. But this table is enough to compare the
situation of unemployment in Malta and Slovakia according to the highest level of
education. In both countries we can see that the higher level of education is attended the
lower unemployment rate. We can also see that as the crisis started people with lower
59
education level have higher unemployment rate as before and it grows quicker than
unemployment rate of people with tertiary education.

Long-term unemployment rate indicator
Tab. 7 Long-term unemployment rate in Malta and Slovakia (total plus gender) in years 20072010
Years
2007
2008
2009
2010
Malta
Slovakia Malta
Slovakia Malta
Slovakia Malta
Slovakia
Total
2,6
8,3
2,5
6,6
3,1
6,5
3,1
9,2
Males
2,8
7,5
2,6
5,8
3,2
5,8
3,3
9
Females
2,4
9,3
2,4
7,6
2,6
7,4
2,7
9,5
Source: Eurostat EU, own data processing
Chart 6
Long-term unemployment rate in Malta and
Slovakia (total, plus gender) in percent
10
9
8
7
6
5
4
3
2
1
0
Total, Malta
Males, Malta
Males, Slovakia
Total, Slovakia
Females, Malta
Females, Slovakia
2007
2008
2009
2010
Source: Eurostat EU, own processing
Long-term unemployment can say a lot about the labour market of any country, i tis
very important indicator. I did not include here another indicator of unemployment rate
which is period of evidence, because for Malta not sufficient data were recorded for this
period 2007-2010, but long-term unemployment indicator can be enough to find out the
basic trend we need. From the Table 7 we can see very interesting information, but i start
with total long-term unemployment rate. It is shown that in Malta this rate is relatively low
and even in comparison with Slovakia. In both countries long-term uneployment is higher
after the crisis, but this rate is more stable than the unemployment rate described in overall.
60
In the long-run crisis unemployment rates did not increase as mucha s overal
unemployment rates.
Interesting data appeared in the long-term unemployment rate for men and women
and we can see that females in Malta have lower unemployment rate in long-term than
males which was recorded as lower in whole period of 2007-2010. In 2010 female longterm unemployment rate is 2,7% and for males it is 3,3%. But this development is different
in Slovakia, where during the whole perion lower long-term unemployment rate was for
males. But in 2010 it was just 0,5 percnent difference.
61
Conclusions
In this work I have dealt with the issue of unemployment as a social problem in the
conditions of the European Union.
Work plays important role in this world, it is not needed just to create goods and
services for economy to be working efficiently, but it is also a great integrator of society. It
has been unifying society for many years, it secures cooperation, it creates existence of
society and it holds its members together. Work also structures and determines lives of
people, their standard of living, position in society, their lifestyle, happiness, health and
relations with other people. In the theoretical background the meaning and importance of
work have been defined, but for this thesis the most important thing was defining of
consequences of the situation when people do not have a work. Those people suffer
various problems and so this issue became the challenge for the EU to solve this huge
problem of unemployment and overcome problems which people suffer from. The
financial and economic crisis of the year 2008 have had a huge impact on labour market
and vulnerable groups of people such as young people with age under 25 or school
graduates, citizens older than 50 years old, disabled people and many more were effected
very negatively and more people began to be excluded from the labour market and so
socially excluded too. So this financial crisis together with the change in demand for
different types of labour and changing skills from the rise of globalization and
technological progress were the reasons to form new strategy to fight with unemployment.
The EU strategy is designed to to help encourage people to remain in work or find a
new job by the approach of five areas where the biggest defficiencies are: emplyment,
social protection and social inclusion, education, information society, gender equality and
youth policy. Recent social trends says that even if unemployment has stabilised, there
would be still evident the marked impact of the crisis on young people, migrants and the
low-skilled.
Even if there would be overall trend of stabilisation in labour markets it remains the case
that certain groups of people continue to suffer more effected from the crisis than others.
The tendency of these goups of people vulnerable to unemployment was found out
also in the last part of this work, in comparison of unemployment in Malta and Slovakia.
From their demographic reviews, labour market descriptions and detailed comparison of
unemployment we found out that the groups with highest level of unemployment rate are
62
young people less than 25, females and people with pre-primary, primary and lower
secondary education finished. Problem of gender unequality have been reality in both
countries even during their history. Less women on higher managerial positions and
women seen as housewifes caring family, especially in Malta. However, until 2009 the
unemployment rates of females were higher in both countries, but by contrast in Malta in
2010 there was marked the change and unemployment rate of women declined and was
lower than for men. The reason could be the recent changes, as Malta is restructuring many
programmes from European Social Fund were aimed to higher the participation of women
in workforce.
In Malta the operational programmes of ESF are also focused on education and
especially on increasing participation of student on tertiary education, because Malta has
low number of university students. But in Slovakia more than 60% of all secondary school
graduates continue with their university education. So Slovak operational programe from
ESF is focused mainly on improving quality of education.
There have been found more differences in social aspect of uneployment in both
countries as they are very different, but the most important findings are as follows: In
Malta as people have lack of the skills, there is a need of greater participation in higher
education and improvig quality of skills and knowledge of the workers. As Malta has
strong assets on which to build, the transitions to a knowledge‐based economy could be
competitive advantage. In Slovakia the number of university students is high, and so labour
force is highly skilled what is the advantage of Slovakia, but there is a need for technical
developed. Another thing which is aimed to increase employment in Slovakia is to invest
in the workforce and so reduce the biggest problems of unemployment and long-term
unemployment and reduce structural unemployment in remote regions.
The predictions for the demographic development in Malta and Slovakia are the
same, there is a tendency of continuously ageing population and as demographic
development can affect the age of the population, the number of workers, pensions and
consumption, the social policy of unemployment will be probable focused on older people.
63
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