The global financial crisis that started in 2008 severely contracted the Gross Domestic Product and employment in European and Central Asian (ECA) countries. To support affected households, the governments of the region began scaling up labor market and social assistance programs. The depth and breadth of the crisis, however, brought about unprecedented social consequences. Thus, ECA countries were eager to learn from other middle-income nations around the world that had successfully improved policies to address gaps in anti-crisis employment programs. Through the Global Development Learning Network (GDLN), World Bank staff connected government representatives from Kosovo, Moldova, Serbia, Turkey, and Ukraine with a representative from the government of Argentina and Bank experts. The objective was to help ECA policy makers increase their technical knowledge to strengthen safety nets and implement counter-cyclical employment strategies.
The ECA participants, who were grappling with the social consequences of the financial crisis, learned directly from policy makers in Argentina who had faced a labor market crisis a decade earlier. The exchange helped ECA officials understand that they faced common challenges and setbacks in implementing safety nets to mitigate the impact of the crisis. Participants were especially interested in public works programs because of their potential to provide beneficiaries with needed income while also maintaining links to labor markets when job opportunities were scarce. The exchange therefore enhanced the network of public sector professionals both within ECA and among Argentine experts. The exchange also enhanced participants’ knowledge and skills in designing and implementing sustainable public works and health insurance programs.
The Global Development Learning Network (GDLN) supported the knowledge exchange though a series of videoconferences and electronic interactions. Claudia Berra, the Senior Advisor to the Secretary of State for Employment in Argentina’s Ministry of Labor, described the 2001 crisis in Argentina and presented the flagship safety net, the Jefes de Hogar (Heads of Household) and Employment Insurance Training Programs currently in use in Argentina. Ms. Berra also talked about designing and implementing employment policies that target the general population and vulnerable segments such as youth and women. Kalanidhi Subbarao, a global expert on public works, presented information about public works programs from his work around the world. Ihsan Ajwad, Senior Economist at the World Bank and author of “The Jobs Crisis: Household and Government Responses to the Great Recession in Eastern Europe and Central Asia,”2 provided ECA-specific information and then facilitated an interactive discussion based on each country’s experience.
The learning sessions concentrated on five sets of major technical questions.
The knowledge exchange participants requested a number of Bank technical reports, including the policy notes emanating from the just-in-time crisis monitoring effort in ECA, the evaluation of Argentina’s public works program, and a number of country-specific reports (e.g., Latvia) as supplements to the learning activities.
The 2008 global financial crisis hit Europe and Central Asia (ECA) severely. During 2009, across the region the average Gross Domestic Product (GDP) contracted more than 5 percent, with 20 out of the 29 economies registering negative growth. Households felt the crisis through labor market deterioration: firms laid off workers and stopped hiring new employees to reduce their wage bills. Year over year increases in unemployment in ECA countries averaged 30 percent —an absolute increase from 9.4 million to 12.2 million between December 2008 and December 2009. In the face of sharp GDP contractions, many countries implemented or scaled up policies and programs to protect and create jobs, as well as to provide unemployment benefits. Support for affected households included scaling up passive and active labor market programs, strengthening social assistance, and maintaining or increasing minimum pensions. The World Bank has been working closely with the governments in ECA to design tools to mitigate the impact of the crisis on households.1 Bank staff identified a recurrent demand: to learn about the policy responses and experience of both other ECA countries and middle-income countries in other regions.
Using funding provided by the World Bank Institute, Bank staff organized a knowledge exchange between Kosovo, Moldova, Serbia, Turkey, and Ukraine and experts from Argentina to learn about anti-crisis employment policy responses. Argentina was chosen because it is a middle-income country similar to the participant countries and because it had suffered a crisis a decade earlier. In addition, the exchange aimed to address several gaps in technical knowledge, such as how to design effective counter-cyclical employment strategies, how other countries with similar profiles dealt with labor market issues in times of crisis, and how to choose and design the right tools that lead to meaningful policy reforms.
The exchange enhanced the knowledge and skills of the participants in designing and implementing sustainable public works programs. It raised awareness of some of the common issues and setbacks when implementing public works programs. The participants also improved their understanding of certain related topics, such as health insurance and wage setting. The knowledge exchange also enhanced the network of officials in the participating ECA countries, so they may continue to share experiences and overcome challenges in implementing public works. By talking to other policymakers, the participants understood that their problems are not unique and that they can in fact learn from each other’s successes and failures.
The videoconferences paved the way for more information sharing between World Bank experts and the participating officials. Upon request, Kalanidhi Subbarao sent out several reports on Public Works and Social Audits in India to the ECA officials. Similarly, Polly Jones, who is a principal Operations Officer at the World Bank, shared information about health and accident coverage in Argentina. The ECA participants understood that they have to be prepared for future crises and thus need to have the capacity to design and implement responsive and scalable employment programs. They also need sufficient reserves to draw on in case of a crisis.
Overall, the discussions enhanced the debate about public works in the region, which is crucial for ECA because of its weak history of public works. Having a policymaker who had managed the Argentine program as a resource person was thus very beneficial. In addition, having one recipient country answer the questions posed by another recipient country was very effective because it gave the sense that all participants work together to overcome common challenges rather than receiving advice from outsiders.
A number of aspects of the event could be sustainable. For example, setting realistic objectives, design and targeting criteria as well as outcomes and monitoring came out very strongly and are likely to lead policymakers to take particular account of these factors in the future. In addition, participants understood that public works can be used effectively as a counter-cyclical tool, another realization crucial for responding to future crises.
The knowledge recipients were senior officials from the governments of Kosovo, Moldova, Serbia, Turkey, and Ukraine in charge of public works programs and post-crisis labor market response.
1 Especially through the Technical Assistance on the Human Development Impacts of the Financial Crisis project. The objective of this work is to support ECA clients in responding to the crisis. The project includes monitoring and analyzing impacts on households (social assistance tracking, labor market monitoring), analysis of microsimulations (in poverty, employment, education, and health consumption), policy responses with social safety nets and employment programs, and social sector public expenditures.2 To read the report, please go to: http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/0,,contentMDK:22840795~pagePK:146736~piPK:146830~theSitePK:258599,00.html