Europe and Central Asia Reports

What can be done to create more and better jobs in Europe and Central Asia? And should there be specific policies to help workers access those jobs? The authors of this book examine these questions through the lens of two contextual factors: the legacy of centralized planned economies and the mounting demographic pressures associated with rapid aging in some countries and soaring numbers of youth entering the workforce in others. The authors find the following: • Market reforms pay off, albeit with a lag, in terms of jobs and productivity. • A small fraction of superstar high-growth firms accounts for most of the new jobs created in the region. • Skills gaps hinder employment prospects, especially of youth and older workers, because of the inadequate response by the education and training systems to changes in the demand for skills. • Employment is hindered by high implicit taxes on formal work and barriers that affect especially women, minorities, youth, and older workers. • Low internal labor mobility prevents labor relocation to places with greater job creation potential. Back to Work: Growing with Jobs in Europe and Central Asia asserts that to get more people back to work and to grow with jobs, countries, especially late reformers, need to regain the momentum for economic and institutional reforms that existed before the economic crisis. They should lay the fundamentals to create jobs for all workers, by pushing reforms to create the enabling environment for existing firms to grow, become more productive, or exit the market and let new firms emerge and succeed (or fail fast and cheap). They should also implement policies to support workers so that those workers are prepared to take on the new jobs being created, by having the right skills and incentives, unhindered access to work, and being ready to relocate.

Pension systems in Europe and Central Asia are facing unprecedented challenges. While many of the countries in the region have undertaken reforms when their economies encounter diffi cult times, these reforms are frequently reversed as soon as the situation improves. However, the demographic trends in the region require new, sustained efforts toward changing the pension system to provide adequate yet sustainable benefi ts. The Inverting Pyramid documents the progressive generosity of pension systems in Europe since inception, with current popular expectations based on recent generous promises, which are neither based on historically customary practice nor affordable over time. The increased generosity in the past was driven by the assumption of a demographic pyramid with an ever expanding base of young people, but the last decades have revealed that the pyramid is beginning to invert in some countries, with fewer young people at the bottom and many more elderly people on top, making that generosity no longer affordable. Returning to the generosity of the pension system of the 1970s will go a long way toward providing adequate and sustainable benefi ts in the future. However, a more sustainable system will also require labor market reforms, improvements in savings mechanisms, and in many cases additional public resources. The extent to which a country can undertake reforms in labor markets, savings, and public fi nances can infl uence the extent to which its pension system will need to change, with different solutions possible for different countries. But in all cases, the changes that need to be made have to be widely discussed and publicly accepted to prevent painful reversals. The book hopes to stimulate widespread public discussion of the issue so that countries can make sustainable choices with gradual plementation, before they face such daunting challenges that they have to undertake sudden harsh measures.

The region of Eastern Europe and Central Asia (ECA) is already experiencing the consequences of climate change: increasing variability, warmer temperatures, altered hydrology. Events such as droughts, floods, heat waves, windstorms, and forest fires are increasing in number and severity. The concentration of greenhouse gases already in the atmosphere guarantees that similar or greater changes are yet to come-even if the world were to completely stop emitting CO2 today. This region is particularly vulnerable because of its legacy of socioeconomic issues, environmental mismanagement, aging infrastructure and housing, and under-investment in hydrometeorological, rural, and health institutions. The resulting adaptation deficit will exacerbate climate risks and hamper the ability of sectors that could gain from climate change, such as agriculture, to reap the full benefits. 'Adapting to Climate Change in Eastern Europe and Central Asia' presents an overview of what adaptation to climate change might mean for the countries of ECA. It starts with a discussion of emerging best-practice adaptation planning around the world and a review of the latest climate projections. It then discusses possible actions to improve resilience organized around impacts on natural resources, health, the unbuilt environment of agriculture and forestry, and the built environment of infrastructure and housing. The book concludes with a discussion of two areas in great need of strengthening: disaster preparedness and hydrometeorological services. The next decade offers a window of opportunity for ECA countries to make their development more resilient to climate change. While some impacts of climate change are already being felt, they are likely to remain manageable over the next decade, offering the ECA region a short period of time to focus on actions that have numerous benefits both today and in the future.