PRAGUE, October 27, 2008—The Czech Republic’s labor market has been performing strongly in recent years, and high labor demand has driven down unemployment to record low levels. Yet, according to a new World Bank study, Czech Republic: Improving Employment Chances of the Roma, over half of Czech Roma of working age (15-64) are out of the labor force.

“At this scale, the joblessness of Roma is an economic challenge and carries substantial unnecessary costs,” argues Orsalia Kalantzopoulos, World Bank Director for Central Europe and the Baltic Countries, pointing to the financial costs of welfare benefits and the loss of a productive contribution to the economy of long-term unemployed Roma. “Given that the Czech Republic, like most of its neighbors, will face an ageing population, it is in its economic interest to tackle current and prevent future long-term unemployment, including among the Roma population.”

The World Bank report finds that many Czech Roma living in marginalized localities are jobless often because of a dramatic skills deficit.  This skills deficit affects their chances in the labor market and has led to widespread discouragement in searching for work.

“Unemployment in the Czech Republic has fallen to below 5 percent in early 2008,” says Christian Bodewig, a senior economist at the World Bank and the main author of the study, “and the employment rate is approaching the European Union’s Lisbon target of 70 percent by 2010.  However, only 27 percent of working age Roma in the marginalized localities are employed, compared with a national average of 66 percent.” 

Analyzing the results of a special labor force survey conducted in marginalized Roma localities in the Czech Republic in April 2008, the study finds that Czech Roma are often discouraged by previous unsuccessful job searches – roughly three in four Roma men and one in two women say they are out of the labor force because they could not find a job.

A lack of skills leads to Roma joblessness

The vast majority of Roma in marginalized communities suffer from low education levels and a lack of functional literacy and numeracy skills – 60 percent have only a primary education and 14 percent attended special school for children with learning disabilities. At the same time, there are few available jobs for low-qualified workers in the Czech Republic.

As a result of unsuccessful job search, a majority rely on traditionally generous social welfare benefits, whose levels have until recently been high relative to wages for low and unskilled occupations, acting as a barrier to labor market participation.

In turn, widespread indebtedness of Roma households in marginalized localities is a barrier to formal employment. Once formally employed, a sizable share of their wage becomes subject to debt collection, making informal employment and welfare receipt a more obvious coping strategy.

A plan to tackle unemployment of Roma

Kalantzopoulos says the World Bank welcomes recent measures by the Czech Government to tackle social exclusion of the Roma, through the creation of an Agency for social inclusion and the decision to conduct this in-depth study on barriers to Roma employment. However, more needs to be done.

The study proposes a dual approach of addressing current joblessness – through employment activation policies – and reducing future joblessness by improving education for Roma.

Employment activation policies – increasingly pursued across many countries in the European Union – involve increasing work incentives for welfare recipients, while at the same time developing new approaches in the Labor Offices to deal with highly disadvantaged job seekers. In a first step, the Czech Republic has recently tightened access to social benefits, which will help reduce welfare dependency. But, as the study shows, this will not be enough.

“Simply cutting social benefits will not get jobs for often poorly skilled long-term unemployed at a time when there are few jobs for the low-skilled,” says Bodewig. “They also need a helping hand and an individualized approach from the Labor Office and social services and support in raising skills.”

Based on international best practice, the study proposes measures to modernize the Labor Office and provide it with the tools to effectively address long-term unemployment – an agenda important for the Czech Republic in general, not just to tackle Roma joblessness. This involves cooperating with qualified NGOs who have the trust of Roma communities and who could be subcontracted under performance-based contracts. The study proposes that, given the skills challenge, Labor Office interventions need to focus more on skills and training, in particular literacy training.

But, as the study argues, it is clear that the biggest effect will come from prevention and a focus on the youth. Urgent efforts need to be undertaken to ensure greater access of Roma to quality education from kindergarten onwards, and to reduce the risk of early school leaving, including through conditional cash transfers targeted at low income youth to encourage them to stay in education and training beyond the age of 15. While Czech pupils have consistently performed well in international student assessments, there is evidence that the education system does not make up for unequal starting positions resulting from socio-economic inequities.

“Schools do not appear to manage to help Roma children catch up to break out of social exclusion,” says Bodewig.

The report is the result of a joint research program by the World Bank and the Office of the Government of the Czech Republic over the past 12 months.

For more information, please see the website:
www.worldbank.org/eca
# # #