Determinants of Labour Market Segmentation in Transition Countries with Particular Reference to Macedonia

Abstract

The process of transition in the former socialist countries, which started at the beginning of the 90s, has had a tremendous economic, political and social impact. Transition is a multidimensional process which includes systemic change in a number of spheres in society. In the economic sphere, the transition has been characterised by a change in the ownership of capital, liberalisation of goods and capital markets, liberalisation of foreign economic relations, a radical change in the role of the state in the economy, and the creation of a less regulated labour market. In the sphere of social life, the transition has led to rising poverty and income inequality, a weakening of the middle class and the exclusion of vulnerable social groups. Politically, the transition has been accompanied by the creation of a democratic society, differentiation of power into legislative, executive and judicial branches, the creation of a pluralistic political system and the implementation of public and democratic elections (Pechijareski and Rocheska 1998). The initial transitional recession has inter alia manifested salient effects on labour market performance. Generally, the transitional reforms initially had negative effects on the labour markets, which resulted in declining participation rates and persistent high unemployment. The processes of ownership restructuring and sectoral reallocation assumed a large-scale transformation of state-owned firms into privatised ones and a reallocation of a substantial part of the labour force from the manufacturing and agricultural sectors towards the expanding service sector (Blanchard 1997). The experience in almost all transition countries shows that the creation of new jobs in the emerging private sector was not initially strong enough to absorb the mass of workers laid off from the restructured state-owned firms. At the same time, the mismatch between the skill requirements of newly created jobs and the actual skills of the workers has become DER DONAURAUM