The cure for unemployment in poor regions is an inclusive market, says think tank

The unemployment rate in Slovakia is decreasing, but less in the least developed regions, the Employment Institute think tank points out

There are several ways to help long-term unemployedThere are several ways to help long-term unemployed(Source: TASR)

Support for the least developed districts in Slovakia should change, as the fall in the unemployment rate in 12 such areas is trailing the fall in unemployment nationwide.

“Slovakia is experiencing high economic and employment growth,” said Michal Páleník, director of the Employment Institute (Inštitút zamestnanosti) think tank, adding that based on figures from job centres, the number of people out of work has dropped by 42 percent, and the number of the long-term unemployed has halved since June 2014. In the least developed regions, however, the decreases were less steep - 33 and 40 percent, respectively.

This results in a widening regional gap, which is evidenced by the fact that the Gelnica district (Košice Region) was added as a least developed region last week, said Pálenik.

The first half of this year saw the approval of a number of investment plans aimed at boosting employment, but only 3 percent of them target the least developed districts. On the other hand, the institute embraced the fact that special legislation and the Office of Government Proxy for the Least Developed Regions headed by Anton Marcinčin has been set up.

“Regrettably, the types of supporting measures to reduce regional disparities aren’t appropriate and the budget isn’t commensurate to the magnitude of the problem,” said Páleník.

Páleník noted that the proxy drafts action plans for development, but they only sum up activities within EU-funded operational programmes and the activities of public institutions and enterprises.

While legislation does provide for monetary contributions for underdeveloped areas, they are scanty and, to make things worse, involve a great deal of paperwork and aren't paid out until after each respective contract is signed - and reviewed individually.

“This way of supporting a cut in regional disparities is inadequate for slashing the unemployment rate within less than 200 years,” said Páleník. “This is why we suggest again that an inclusive [labour] market be introduced.”

The inclusive market is a form of positive discrimination. It is a separate parallel market of services and workers. Positive discrimination is hence not by subsidies but rather by sufficient demand for services, according to the IZ.

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