Policy brief -- Roma and the labour market

ROMA AND NON-ROMA ON CENTRAL AND SOUTHEAST EUROPEAN LABOUR MARKETS

Policy brief Niall O’Higgins, Università di Salerno

The Roma are arguably both the largest ‘minority’ ethnic group in Central and Southeastern Europe and the ethnic group that has suffered most from transition to the market.

Recent survey data show that, while some progress was made during the 2004-2011 period—particularly in terms of reducing the gaps between Roma and non-Roma school participation rates, wages, and joblessness—Roma continue to experience pronounced labour market disadvantages.

Roma face structural barriers to employment. Moreover, many of the factors contributing to continuing high Roma unemployment rates cannot be explained by gaps in education or qualification. Gender gaps are particularly important both in employment as well as wages.

Figure 1: Ratio of Roma to non-Roma jobless rates, 20113 SK RS RO MK ME MD HR H

1,4

1,7 1,5 1,6 1,4 1,4 1,4 1,6 1,5 1,4 1,6 1,7 1,8 1,3

1,5

BG BA AL

1,5 1,4 1,5 1,3 1,4

Women

2,2 2,7

CZ

Data from the UNDP/World Bank/European Commission regional Roma Survey 2011 suggest that the relative situation of Roma as measured by joblessness improved—slightly— between 2004 and 2011. However, these data also show that Roma continue to experience unemployment and jobless rates far above—and employment rates and wages far below—those of majority populations. For example, these data suggest that Roma face jobless rates that exceed the rates facing non-Roma survey respondents living in close proximity to Roma communities by 30% to 250% (Figure 1).2

Men

1,7

3,5

Source: Calculated from the UNDP/WB/EC regional Roma survey 2011.

Note: The jobless rate is defined as the proportion of the gender-/ethnicspecific working age (15-64) population which is neither in education nor employment.

A ratio of 1.0 implies no difference in Roma versus non-Roma jobless rates.

1/ This brief is based on a broader research paper elaborated in the context of the UNDP background paper series on Roma inclusion.

The series includes also thematic reports on education, health, poverty, gender, migration and civil society. The individual papers will be released in the course of December 2012 – February 2013 and once released, can be accessed from the Roma- section of UNDP BRC website: http://europeandcis.undp.org/ourwork/roma/.

2/ The jobless rate is used rather than the unemployment rate as an indicator of labour market problems here. In this context, the jobless (or NEET) rate—the proportion of the working age population that is neither in education nor employment—is preferred to the unemployment rate because it includes also discouraged workers. The downside is that, although its relevance is being increasingly recognised internationally, the jobless rate is not yet widely reported in national statistics, which prevents comparison with the data reported here.

3/ For visual clarity, the following abbreviations were used in the graphs: AL (Albania), BA (Bosnia and Herzegovina), BG (Bulgaria), H (Hungary), HR (Republic of Croatia), CZ (Czech Republic), MD (Moldova), ME (Montenegro), MK (FYR of Macedonia), RO (Romania), RS (Republic of Serbia), and SK (Slovakia). The abbreviations are following the country codes used by EUROSTAT, http://epp.eurostat.ec.europa. eu/statistics_explained/index.php/Glossary:Country_codes

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ROMA AND NON-ROMA ON CENTRAL AND SOUTHEAST EUROPEAN LABOUR MARKETS

Figure 2: Roma/non-Roma ratio of median wages, 2011 0,59

AL BA

CZ 0,62

H

0,67 0,71

CZ

0,5

40 25

0,67

MD

11

ME

11

50

39 18

MK 0,67

0,8

56

17

56 26

SK

0,6

52

16

RO

0,57

60

51

0,45

Men

62

H

0,67

RS

SK

50 32

0,71 0,5

0,35

18

0,72

0,33

RO

59

HR

0,59

MK

RS

BG

0,53

MD ME

0,67

48 14

BA

0,5

HR

9

AL

0,75

0,54

0,5

BG

Figure 3: Educational participation rates, 2011

0

20

53 40

non-Roma

Women

60

80

Roma

Source: Calculated from the UNDP/WB/EC Regional Roma Survey 2011.

Source: Calculated from the UNDP/WB/EC regional Roma survey 2011.

Note: A ratio of 1.0 implies no difference in Roma versus non-Roma wages.

Note: The educational participation rate is defined as the proportion of young people (15-24) who are still in education.

Similarly, Roma wage levels are consistently below those of non-Roma living in close proximity: for Roma men, median wages in 2011 were between 45% and 80% of wages for non-Roma men (Figure 2). For women, the gap is even larger: female Roma wages were between 29% and 59% of male non-Roma wages. Roma women therefore bear a ‘double burden’ arising both from their ethnicity and from their gender. Roma women’s wages are, on average,4 only 45% of non-Roma men’s wages and 54% of the wages of non-Roma women. Roma women are therefore more disadvantaged than both Roma men and non-Roma women. Moreover, while the wage penalty Roma women face has both an ethnic and a gender component, the ethnic factor seems more important than the gender factor.

els of educational attainment than for Roma (Figure 4). This suggests that education levels are not the sole explanation for Roma labour market difficulties.

Figure 4: Jobless rates by educational attainment levels, 2011 24

Post-secondary

40 40

Upper secondary

52 51

Lower secondary

Two major explanations for Roma labour market disadvantages are commonly offered: (a) lower levels of educational achievement; and (b) labour market discrimination, as employers may be less willing to employ, and pay equal wages to, Roma compared to similarly qualified non-Roma.

66 61

Primary

69 76 80

None

These survey data show that educational participation rates continue to be much lower amongst young Roma than amongst their non-Roma counterparts (Figure 3). However, jobless rates fell much more for non-Roma with higher lev-

Roma

non-Roma

Source: Calculated from the UNDP/WB/EC regional Roma survey 2011.

Note: The jobless rate is defined as the proportion of the gender-/ethnicspecific working age (15-64) population which is neither in education nor employment.

4/ Unweighted average for the countries covered in the survey.

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ROMA AND NON-ROMA ON CENTRAL AND SOUTHEAST EUROPEAN LABOUR MARKETS

Changes during the first half of the Roma Decade (2004 -2011)

Figure 6: Percentage point changes in jobless rates of Roma and non-Roma men, and in the ratio between them, 2004-2011

Fortunately, the survey data do point to some improvements in the status of Roma during the 2004-2011 period.

For one thing, educational participation rates amongst young (15-24 year old) Roma increased significantly (Figure 5). Roma/non-Roma jobless ratios also fell during this time for both men and women, in all countries surveyed except for Romania (Figures 6, 7). However, in many countries surveyed, this ‘improvement’ actually reflected the fact that increases in joblessness amongst Roma were proportionately smaller than those afflicting non-Roma. (Deterioration for both groups can presumably be explained by the generally unfavourable labour market trends in these countries that took hold with the post-2008 economic crisis.)

-160 AL -15 -20

BA

-77 -108 -13

3

2) The ratio is defined so that equality = 100, to facilitate comparability. Changes in this ratio show the percentage point change in the likelihood of a Roma man being jobless compared to a non-Roma man.

Figure 7: Percentage point changes in jobless rates of Roma and non-Roma women, and in the ratio between them, 2004-2011

1,0

5 1,2

BG

13 2,5 -6

MK

RO

3,0

-50 -27

7

7

7 -4

2 1 5

RO -79 RS

3,5

non-Roma

10

-38

MK

8

16

14

5 Roma

22

non-Roma

Source: Calculated from the UNDP Regional Roma survey 2004 and the UNDP/WB/EC regional Roma survey 2011.

Source: Calculated from the UNDP Regional Roma survey 2004 and the UNDP/WB/EC regional Roma survey 2011.

Notes: 1) The educational participation rate is defined as the proportion of young people (15-24) who are still in education.

Notes: 1) The jobless rate is defined as the proportion of the gender-/ethnicspecific working age (15-64) population which is neither in education nor employment.

2) The ratio is defined so that equality = 100 (as opposed to 1 used above) in order to facilitate visual comparability. Thus, the change in the ‘ratio’ expressed in this way, is the percentage point change in the relative likelihood of a young Roma being in education compared to a young non-Roma.

20

7

-4

ME

9

-6

Roma

15

8 2,6

18

-32

HR

2

RS

8

BA

-19 ME

-37

AL

7,2 -3

non-Roma

Notes: 1) The jobless rate is defined as the proportion of the gender-/ethnic-specific working age (15-64) population which is neither in education nor employment.

17

HR

14 17

Source: Calculated from the UNDP Regional Roma survey 2004 and the UNDP/ WB/EC regional Roma survey 2011.

2

-8

BG

9 14

-30

RS

0,8 -2

4 2

RO

18

BA

13

-6

Roma

AL -17

15 20

MK

Figure 5: Percentage point changes in educational participation rates among young Roma and non-Roma, and in the ratio between them, 2004-2011

11

2

HR

In any case, relative improvements in Roma jobless rates must be set against the trends in the employment data, which are quite discouraging. In most of the countries surveyed, Roma/non-Roma ratio of employment rates fell during 2004-2011—pointing to further labour market deterio-

26

-63

BG

ME

15

5

2) The ratio is defined so that equality = 100, to facilitate comparability.

Changes in this ratio show the percentage point change in the likelihood of a Roma woman being jobless compared to a non-Roma women.

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ROMA AND NON-ROMA ON CENTRAL AND SOUTHEAST EUROPEAN LABOUR MARKETS

Figure 8: Percentage point changes in employment rates of Roma and non-Roma men, and in the ratio between them, 2004-2011 35

Overall

32

31 30

28

Roma women/non-Roma women

27 23

Roma women/non-Roma men

18 12

11 7

6

6

7

5

1

2 -1 -2

-10 MK

AL

ME

RO

BA

-17

HR

-1

-2

RS

BG

-21 Source: Calculated from the UNDP Regional Roma survey 2004 and the UNDP/WB/EC regional Roma survey 2011.

Notes: 1) The employment rate is the number of persons (aged 15-64) in employment relative to the population 2) The ratio is defined so that equality = 100, to facilitate comparability. Changes in this ratio show the percentage point change in the likelihood of a Roma man being employed compared to a non-Roma man.

Figure 9: Change in employment rates for Roma and non-Roma women, and in the ratio between them, 2004-2011 2

-10

AL -27 BA

-17

-7

-15

-13 -11 -10

ME

3

On the other hand, although there is much regional variation, the Roma/non-Roma wage gap narrowed during 20042011 in six of eight countries surveyed (Figure 10). Although Serbia and Bulgaria were the outliers, wage gaps for Roma women in these countries (as well as in Albania, Bosnia and Herzegovina, and Romania) declined—in some cases, markedly so.

-9 -9 -6 -7

MK

-2 -3

-15 -12 -14

RO RS

8

-4

BG HR

ration for both Roman women and men (Figures 8, 9). Only in Albania do the survey data point to relative labour market improvements for both Roman women and men. The apparent improvements in joblessness enjoyed by Roma workers can therefore be attributed to increased educational participation rates, rather than improved employment prospects.

That is, unemployed or discouraged Roma workers shifted from joblessness to education. While this shift could ultimately prove to be beneficial, it did little to raise Roma incomes during 2004-2011.

-20

Roma

Drivers of disadvantage

3 -7

Multiple regression analysis results suggest that, controlling for educational levels and potential employment experience,5 Roma men on average face an employment penalty of 8 percentage points (in terms of reduced chances of finding employment), and a wage penalty of 21% of non-Roma wages.6 For Roma women, the employment penalty is higher (28 percentage points) and the wage penalty lower (8%).

These results support the argument that educational differ-

non-Roma

Source: Calculated from the UNDP Regional Roma survey 2004 and the UNDP/WB/EC regional Roma survey 2011.

Notes: 1) The employment rate is the number of persons (aged 15-64) in employment relative to the population.

2) The ratio is defined so that equality = 100, to facilitate comparability.

Changes in this ratio show the percentage point change in the likelihood of a Roma woman being employed compared to a non-Roma woman.

5/ The survey does not contain a full record of respondents’ labour market history. Consequently (in common with most studies of this kind) we use potential (as opposed to the unobserved, actual employment experience—defined as the time since leaving full-time education) to control for experience related productivity and wage gains.

6/ That is, Roma men on average earn 79% of what non-Roma men earn controlling for their education and (potential) employment experience.

4

ROMA AND NON-ROMA ON CENTRAL AND SOUTHEAST EUROPEAN LABOUR MARKETS

Figure 10: Percentage point changes in Roma/nonRoma wage ratios, 2004-2011 30 31

AL

23

BA 7 2

BG -2 -1

HR

1

-21 ME -17

MK

28

Conclusions and policy implications

11

These survey data show that, as the end of the Roma Decade approaches, Roma continue to face extensive labour market disadvantages. There have been some gains since 2004: educational enrolment rates for Roma students have risen substantially, reflecting in particular greater participation in upper secondary and tertiary education. Some relative improvements (vis-a-vis non-Roma living in close proximity) are apparent in terms of median wages and jobless rates.

Still, significant gaps across these variables remain. Moreover, gains in education have not been matched by significant reductions in wage and employment gaps, relative to non-Roma living in close proximity.

18

-10

12

RO

6 5

RS

35

Roma women/nonRoma men Roma women/nonRoma women Overall

7

-2

Extensive Roma involvement in the informal economy could be a second possible explanation for these gaps. While the survey data show much cross-country variation, in some countries a Roma woman is thirteen times more likely to be employed informally than a non-Roma woman; a Roma man is seven times more likely to be employed informally than a non-Roma man. Analysis using the matching decomposition technique confirms that, for Roma men, much of the wage gap can be explained by Roma participation in the informal sector. However, for Roma men, much of the wage gap in the formal sector remains unexplained.

-1

27

32

6

Source: Calculated from the UNDP Regional Roma survey 2004 and the UNDP/ WB/EC regional Roma survey 2011.

Note: The Roma/non-Roma ratio is in each case defined so that equality = 100, to facilitate comparability. Changes in these ratios show the percentage point change in Roma wages relative to comparator groups.

It is to be hoped that, in the longer term, gains in education participation and attainment rates will reduce these employment and wage gaps. However, the analysis summarised here strongly suggests that increasing educational participation in itself will not resolve the labour market problems.

And while school quality appears to play a role, differences in this variable are not in themselves sufficient to explain the employment and wage gaps.

ences between Roma and non-Roma cannot fully explain observed employment or wage gaps. However, such analysis is based on the assumption that the Roma and non-Roma labour market characteristics are broadly similar—which is clearly not the case when it comes to educational levels.

However, a more sophisticated non-parametric approach using one-to-many perfect matching in order to account for the lack of ‘common support’ (differences in educational participation rates between Roma and non-Roma) confirms the existence of Roma/non-Roma differentials in employment and wages which cannot be explained by differences in individual characteristics in general, or by differences in educational levels in particular.

While these data show much cross-country variation, on average, around one-half of the employment gap and twothirds of the wage gap between Roma and non-Roma men cannot be explained by differences in individual characteristics. Similarly, for women, over two-fifths of the Roma/nonRoma employment and wage gaps cannot be explained by differences in individual characteristics.

On the other hand, the analysis points to informal employment as a key determinant of otherwise unexplained gaps in wages. This suggests that programmes to encourage Roma business start-ups through the provision of micro-credits may not be useful, as these may perpetuate the marginalisation of Roma in the informal sector. Initiatives such as the self-employment and business formalisation programme operated in the Former Yugoslav Republic of Macedonia could be more fruitful, as they encourage income- and employment generation the formal sector (although difficulties in encouraging Roma participation in such schemes have been noted). More generally, programmes that promote employment generation in the formal sector would seem to have stronger potential for improving Roma employment and wage prospects than do measures which, explicitly or implicitly, encourage informal employment.

What then is driving these gaps? One possibility is that Roma attend lower quality schools—particularly via mechanisms that track them into ‘special schools’. However, while controlling for school quality reduces the size of the unexplained gaps in wages and employments between Roma and non-Roma, it does not eliminate them.

Roma labour market integration problems are multi-dimensional and can vary by country, location, and gender. Action to address them is needed on several fronts. This analysis suggests that, while efforts to raise educational participation must play an important role in addressing these problems, by themselves they are not sufficient. Measures to improve

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ROMA AND NON-ROMA ON CENTRAL AND SOUTHEAST EUROPEAN LABOUR MARKETS

school quality, to support Roma employment in the formal sector, and to combat discriminatory practices (which are present to varying degrees in both the formal and informal sectors) are all needed to improve Roma employment and wage prospects. However, more work is needed to identify more precisely the underlying causes of these differentials, in order to find adequate remedial measures. It is clear that the measures adopted thus far have not been sufficient to significantly reverse Roma labour market disadvantages.

more effective in improving Roma employment and wage prospects. Initiatives aimed at promoting Roma (or non-Roma) employment need to undergo rigorous impact evaluation. It is only in this way that more successful approaches can be accurately identified and replicated/scaled up. Until this becomes the norm, questions of what works and what doesn’t work in employment promotion for Roma will remain a matter of conjecture and opinion.

The dearth of impact evaluations of the initiatives introduced under the Roma Decade are a central problem in determining which initiatives have been, or are likely to be,

United Nations Development Programme Regional Bureau for Europe and CIS Grösslingova 35811 09 Bratislava, Slovak Republic Phone: (421–2) 593 37-111 Fax: (421-2) 593 37-450 http://europeandcis.undp.org The views expressed in this publication are those of the author and do not necessarily represent those of the United Nations, including UNDP, or their Member States.

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