LABOUR MARKET TRANSFORMATION IN TRANSITION ECONOMIES

As the system of command economy broke up, profound changes took place in Central and Eastern Europe. The output changes involved a sharp decline followed by a recovery. Being virtually zero in the previous system, unemployment reached double-digits and in some countries it has stabilized at high levels, with the young and low-educated people being the hardest-hit groups. Due to the enterprise restructuring, many people moved from state to private sector with unemployment as the buffer zone. This study provides evidence that there is no fit- for all policy to handle unemployment during transition. The economic growth is the only long- term solution to unemployment. Examining the case of Albania and Bulgaria, the study finds that the current unemployment rate is determined not only by economic conditions within the country, but also by emigration of the labour force and non- participation. The existing policies fail to produce the desired results, due largely to a lack of coordination with the labour demand. The study provides a brief review of the labour market in Kosova and also develops some policy recommendations.