Enhancing Job Opportunities in Transition Economies of Europe and Central Asia

This study, Enhancing Job Opportunities: Eastern Europe and the Former Soviet Union, focuses attention on the causes of these disappointing labor outcomes and points to the solutions. Why has the job creation record of transition economies been disappointing? One reason is that the size of the new private sector that generates jobs is still relatively small in many of the Region’s countries. And there is still enough room for firms to increase output through downsizing and retrenchment— what is sometimes termed “defensive restructuring.” For employment to grow, more firms need to engage in “strategic restructuring,” which requires investing productively, hiring more workers, and finding new production niches. And why do firms not engage in more strategic restructuring? Often, they are discouraged by the poor investment climate—substantial risks, barriers, and costs associated with doing business.