LONG-TERM UNEMPLOYMENT AND THE DEVELOPMENT OF HUMAN CAPITAL
Zhivko Nedev, Sofia

• REFERENCES

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LONG-TERM UNEMPLOYMENT AND THE DEVELOPMENT OF HUMAN CAPITAL
Zhivko Nedev, Sofia

For nearly a decade Bulgarian society has been going through fundamental changes. Their various pace and altering success in the different spheres of public life is constantly confronting Bulgarian citizens with new challenges. Their impact on the life of the people is perceived in a predominantly negative way. The assessment of the changes related to the development of economy is especially critical. The aftermath of the changes of the economic basis of public life is reflected in the mass consciousness mainly as a presence of strong and permanent social risks, such as high levels of unemployment, deepening division of society into rich and poor, and high crime rates.

The intensity of unemployment as a social risk is superseded only by that of crime. This is due both to its present dimensions and future perspectives. The implementation of the structural reform has merely started. Regardless of the shape it is going to take - privatisation, close-down of productions, etc. - it will substantially increase the number of unemployed in the country. Given the current state of the economy, the opportunities for job creation, especially for long-term employment, are rather limited.

So far the economic changes have been justified by the necessity to overcome the deficiencies of the economy, characteristic for the period before 1989 – limited opportunities for choice of workplace and labour mobility, low motivation for work, ineffective use of labour resources, maintenance of a relative over-employment, and hidden unemployment (Bulgaria 1995. Human Development Report, 1995: 30).

The achieved results are controversial. During the period 1994 – 1997 there has been a tendency towards a decrease in the

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unemployment rates (Demand and Supply of Labour Force, 1998: 8). The number of employed continues to decrease. Along with the ageing of the population, the structural reform, the narrowing of the internal market, and the insufficiency of investments for the development of the economy also have their contribution for this fact (Andreeva et al., 1998: 12).

Under these conditions, one of the most serious problems on the labour market is long-term unemployment. The data from national statistics reveal that during the period 1993 – 1997 the share of long-term unemployed has fluctuated from one-half to two-thirds of the total number of unemployed. (Baev, 1997: 20). Data from 1997 read that half of the unemployed have been looking for a job for more than three years (Demand and Supply of Labour Force, 1998: 21). Those are the people who form a large share of stagnation unemployment in the country.

The main part of the unemployed who form the stagnation unemployment are with a low educational and qualification level (The Labour Market in 1996, 1997: 43). Low education endangers the social groups who are most threatened by long-term unemployment - people over the age of 45, women, representatives of some minority groups, disabled (Demand and Supply of Labour Force, 1998: 18, 22, 23; Andreeva et al., 1998: 14).

The highly qualified cadres have lower chances of entering the group of long-term unemployed. The higher educational and qualification level provide better opportunities for finding work. It is generally accepted that the unemployed specialists have the greatest chance for finding work due to the high level of their qualification (The Labour Market in 1996, 1997: 53). This, however, does not mean that the work they find corresponds to their educational and qualification level. The hypothesis, based on statistical data, that specialists are more wanted on the labour market (Beleva et al.: 1996: 120), contradicts the data from more detailed sociological researches. They demonstrate a tendency

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towards a multi-aspect limitation of the share of high-qualified labour, and an expansion of low-qualified one. It is expressed not only in the limiting of the number of high-qualified employed, but also in the „flow" of unemployed specialists to types of labour which do not require high qualification.

It is more probable that the highly qualified specialists find a job faster due not to their specific professional knowledge and skills, but rather to the general cultural advantages provided by the possession and application of higher education and qualification. These general cultural knowledge and skills include the capability of effective information usage, the clear orientation in the changing social environment, the attitude of looking for broader opportunities for solving the problems, and the greater variety of communication skills on formal and informal level. This hypothesis is backed by data from the national statistics about the job-seeking methods. According to them, the unemployed with a higher educational level more often use active job-seeking methods, such as direct contacts with employers, publishing and responding to job advertisements. The unemployed with a lower educational level count more on passive job-seeking methods, like registering at the state employment agencies and seeking the support of relatives and friends (Employment and Unemployment, 1998: 78).

The narrowing of opportunities for finding a job with a higher qualification outlines the dynamics of the offered workplaces. The vacancies for unspecialised unemployed are increasing, while the workplaces for people with higher education and qualification are decreasing. Nevertheless, the vacancies are insufficient and a considerable reduction of unemployment among the low-qualified people cannot be achieved. (Demand and Supply of Labour Force, 1998: 4).

The structure of vacancies in different professions requiring high education is indicative. Teachers in foreign languages and

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tutors are most wanted. Engineers, technologists and managers are also episodically wanted. At the same time, the people with engineering and technical professions are among the high-educated people most affected by unemployment.

Among the specialists without high education the most wanted are the middle level medical staff. Among the working professions there are vacancies for tailors, cutters, construction workers, carpenters, cabinet-makers, vendors, turners, welders, guards, mechanics, technicians, etc. (Demand And Supply of Labour Force, 1998: 4-5, 31).

These data show a tendency towards a decrease in the educational and qualification level of the employed in the country. This is a logical consequence of the continuing decline of the formerly developed high-tech subdivisions of industry and the considerably industrialised agriculture. Along with the decrease of the number of state-employed, the share of the private sector in the economy is increasing. The share of people employed in it is already prevailing in the structure of employment according to the form of ownership indicator (Andreeva et al., 1998: 14). Apart from agriculture, private initiative unfolds mainly in the sphere of services. The newly created workplaces, however, are in branches which do not require high qualification - trade, transport, tourism, catering (Andreeva et al., 1998: 20-21).

Apart from the economic crisis, the lowering of the educational and qualification level of the labour force in the country is influenced by long-term unemployment. When the acquired professional knowledge and skills are continuously unused, they are irreversibly lost. This is specifically characteristic of the professions which require high and narrow specialised preparation. Thus the society loses not only the resources used for the preparation of cadres, but also the benefits, which the implementation of this preparation might have brought. The prolongation of the stay on the labour market

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increases the risk that the unemployed would not find work at all (Baev, 1997: 15).

Long-term unemployment leads to an increase in the stratification in society in the direction of a growing poverty and increasing distance between rich and poor (Bulgaria 1997: 35). Children and young people raised in poverty have less opportunities to receive the necessary education which would provide them with good chances on the labour market. That is why long-term unemployment creates prerequisites for its self-reproduction in the coming generations. Thus, long-term unemployment leads to isolation and self-isolation of the unemployed from society, to changes in their value-systems and the creation of a specific sub-culture. These changes turn the long-term unemployed into one of the sources for cadre provision of crime. Unemployment is most tightly related to encroachments upon property. However, it is also connected to crimes involving violence, to organised crime and to the development of the shadow economy (Mantarova, 1998: 290).

The attempts to cope with long-term unemployment in the country are mainly pointed at looking for opportunities for enrolment of the unemployed in labour or educational activities - through temporary employment, various forms of literacy and qualification courses, regional programmes for fostering of employment, etc. (Bulgaria 1997: 40).

The attempts to solve the problems of long-term unemployment in the country are limited by the weakness of the economy as a whole, and by the weakness of the state policy. There is a lack of a long-term state strategy in the field of employment. The reasons for this situation are well grounded. Some of them are based on the lack of resources, the withdrawal of Bulgarian production from its traditional markets, the lack of experience for resolving of the newly emerging problems of unemployment. One of the most significant reasons, however, is the lack of pragmatism in the implementation of the changes in

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the country. With the adoption of the slogan of Liberalism about the „change of the system", the predominant part of the governors pointed their efforts towards the demolition and, if possible, the obliteration, of everything connected with the period before 1990. The material values built during that period are considered not as a part of the national wealth, but rather as symbols of a historical period, all links with which should be broken. This fact pre-determined a political and ideological approach towards the material assets of the Bulgarian economy. It gave space for its draining by the fast emerging private groupings. This approach lies in the core of the far reaching corruption. It is in contrast not solely with the pragmatism, which is characteristic of the developed societies, but also with the way in which the changes are implemented in the Central European countries like the Czech Republic and Hungary.

In search of long-term sustainable resolutions, the global tendencies in the development of economy and society should be taken into consideration above all. The greatest attention should be paid to the changes - current and expected - in the most developed countries in the world. Such an approach is necessary because the problems with unemployment in general and with long-term unemployment in particular are a serious issue for them as well, although it does not have such dramatic dimensions and perspectives as in the case of Bulgaria. In the countries of the European Union, in the last two decades the long-term unemployment has varied between 40% and 55% of the total number of unemployed, 60% of the unemployed have stayed on the labour market for more than two years (Baev, 1997: 15 – 16; Dimitrova, 1997à: 63).

In search of solutions for long-term unemployment the most developed countries count to a great extent on short-term measures. Their greater resources, the developed social infrastructure and their richer experience, allow them to apply a wide range of measures for coping with unemployment. These

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include the possibilities of the new information technologies for creation of home-based jobs, development of small enterprises and self-employment, opportunities for employment in the sphere of culture, especially media, music industry, communications, new quality services, improvement of the cityscape, etc. (Dimitrova, 1997à: 64 – 67; Dimitrova, 1997b: 29). Unlike the practice in Bulgaria, in the countries of the European Union there is an ever wider search for opportunities for creation of new workplaces requiring high qualification in the traditional and newly emerging business spheres, mainly in the sphere of information technologies. Their development and spread is a result of the accelerating process of globalisation, which actually posits the basic characteristics of economic development under a new perspective. The development and implementation of the new information technologies points at a transition from the economy, directed by the idea about the information society, to the global society of knowledge. The competitiveness in the new global economy would mostly depend on the capability of the economic agents to produce knowledge and to apply it in any form of economic - and more generally human - activity by means of information technologies (Castells, 1996: 66).

The global spreading of information technologies leads to deep changes in the labour sphere. The change does not only stand for an increase in the requirements, which the new technologies impose on education and professional training of the labour force. The attitude towards human resources as a component of economic activity is also changing. The development of modern technologies radically changes the ratio of the various factors of economic development. A research held by the World Bank shows that in the most developed countries like Germany, Switzerland and Japan more than four-fifths of the national wealth already is a result of the activity of the human capital. The contribution of the means of production and

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the material infrastructure is manifolds less (Human Development Report, 1996: 64).

The idea that economic success is more and more based on non-material advantages, such as knowledge, development of human potential, and establishing of spontaneous co-operation, is being widely shared. These are unique resources, which cannot be readily acquiesced, copied nor replaced by another type of resources. This type of assets are one of the most substantial components of the human capital and are a result of a permanent and gradual accumulation of knowledge, qualification, and informal education (Mueller, 1996: 763). The developed human capital holds an increasingly greater share of the price of the successfully developing companies, compared to the value of the financial and physical assets (Byars/Rue, 1994: 6).

This change is related to the transformation of innovations from a relatively rare event into a daily round for all types of human activity. More and more people become involved in the creation and implementation of novelties in life. There is hardly a person who has not fallen under the influence of not only one, but of a variety of innovations. In a world where innovation is a mass and almost routine occurrence, the continuous intensive development of human potential becomes an increasingly important condition for incurring and adequately understanding and implementing of the innovations themselves. Human capital, stimulated for rapid development by the technological advancement, becomes a strong factor for the creation and spreading of new technologies and products (Foders, 1998: 8).

The development of the human capital brings benefits to the society and advantages to the individual. They are related to the opportunity to receive higher incomes due to better education, the possibility to improve or actualise one’s education and qualification and thus ensure a protection against the surprises which the technological development brings about. The

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opportunities for choosing a workplace, profession and career are widening (Zakhariev, 1998: 94). Some other positive consequences should also be considered, namely the improving of the problem resolution capability in the everyday routine, where new technologies and products are ever wider applied. A reasonable attitude towards personal health and the health of the relatives is being formed, a competence for the participation in various forms of civil activity in the local and national politics is being developed.

The increasing role of the human capital is related to a change in its perception and the perspectives for its development and social role. It is considered that the most valuable cognitive component of the human capital is not the contents of the acquired education and qualification, but rather the lifelong capability for education and re-qualification. The development of qualities, such as the achievement of a wide culture, combined with the capability to learn, are being underlined. Thus the individual can most thoroughly benefit from the opportunities provided by education. The development of skills to work independently, soberly and responsibly, to find adequate solutions under any circumstances, to work in a team, based on the understanding and appreciation of the others and on positive solutions to conflict situations, are also being stressed upon (Delore, 1997: 83, 95). Apart from the development of education and qualification, an increasing attention is paid to the creative component of the personality. Unlike knowledge, which ages and loses its relevance, the creative abilities can be increased and developed. Thus, the value of the human capital grows with the accumulation of experience. People with high education and accumulated professional experience in the accomplishment of complex, creative activities become increasingly valuable cadres in the course of time (Reech, 1992: 97 – 98). An equally important, though often underestimated, component of the human capital is the health condition of the individual. The

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biological and the psycho-physiological components of the individual are among the most vulnerable ones in the development of the human capital. They have clear-cut limits of development and endurance against the stress impacts of the environment. (Peccei, 1980: 267). Unlike creative abilities, the human body and psyche are to a far greater degree prone to wearing out. The effective development of the human capital requires a maximal slow-down of this process and prolongation of professional longevity. In this respect, the possibilities for mutual stimulation of the various components of the human capital should be underlined. The good physical and psychical state is a favourable prerequisite for a more active education and development of the creative abilities. On the other hand, the improvement of the educational level has positive effects on the improvement of the health condition. Research data prove the presumably paradoxical point that investments in education prove to be more important for the development of the human capital than the ones in health care (Lindenberg, 1993: 35). The data show that the development of effective health care has to go hand in hand with a considerable improvement of education in all forms and for all age categories. Hence, the investments in health care manifest their real effect only in the context of the overall development of the human capital.

The new horizons for development, however, do not suggest a problem-free inclusion of any firm, country or region in the global economy, based on production and use of knowledge, in the global spreading of information technologies and development of the human capital. The new globalisation involves a new world-wide stratification in the near future. It is connected to the distinguishing of types of labour which have different values in the world economy. These are productions based on highly qualified and highly paid labour, using information technologies; mass production, based on cheap labour force; production of raw materials, based on natural

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resources; and production of low-quality goods by low-qualified labour force (Castells, 1996: 147). The prevailing type of labour in a certain country would determine its position in the new world-wide division of labour, based on fierce competition. The success in it would determine the type of integration in the global economy which the country would achieve. So far the most probable option for a number of countries in Eastern Europe is the so-called negative integration. It focuses on the extraction and export of raw materials and on productions based on cheap and rather low qualified labour force. This is usually achieved by including the local productions as subdivisions of the international production networks established by Western companies. In these conditions the companies do not take interest in the transfer of modern technologies and management experience. Positive integration depends on stimulating the transfer of technologies and the intensive development of the human capital, which requires a deep cultural and social transformation for keeping up with the avant-garde of the development of the global economy of knowledge (Anders, 1997: 592 – 594).

What are the characteristics of the human capital in Bulgaria as a prerequisite for positive integration in the emerging global economy based on knowledge?

The changes in Bulgarian society in the beginning of the nineties led to the devaluation of significant components of the social experience, acquired during the previous decades. A large part of the well-tried skills and models of behaviour in the economic sphere proved to be inapplicable in the new conditions. The change of conditions dramatically preceded the opportunities for adapting to new models of behaviour. Devaluation is characteristic both for the professional preparation of specialists and the whole sphere of daily economic activity. The problems are aggravated by the fact that the previous type of economy was not replaced by an economic

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organisation, similar to the one in the developed market societies. On the contrary, a combination was formed, comprising of components from the previous economic system, elements of the contemporary market economy, and economic relations and practices which are peculiar „mutants" of both the former order and the market economy. This blending of heterogeneous components produces its own rules and models of behaviour, which gradually fill in the deficits in the social experience of the people. Nevertheless, they are unsuitable as an intellectual, valuenormative and behavioural resource for the positive integration of Bulgaria in the globalising economy.

At the same time, Bulgarian economy shows a tendency towards increasing of the share of innovation-conservative branches of production and services in the state-owned sector, and especially in the private sector. The technological and organisational level achieved in the last decades has considerably deteriorated. A particularly striking example in this respect is the state of agriculture (Bulgaria '96. Socio-economic Development, 1997: 26). Thus the spheres for application and development of the human capital are narrowing.

The institutional, personnel and financial potential of Bulgarian science was substantially reduced during the 1990s. The working conditions and the opportunities for conducting competitive research and developments are considerably worsened. Science lost its former high prestige in society. Less and less young people orient towards science. Bulgarian science gravely suffered from a powerful wave of „brain drain". The most affected spheres of science are the ones with long-term traditions in international co-operation. „Brain drain" affects mainly the most perspective part of the scientific cadres - scientists in their most productive age, with wide range of contacts in the scientific circles, with high publishing activity, high self-esteem, initiative and ambitions for self-realisation (Kadinova, 1997: 281 – 282). The processes taking place in

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Bulgarian science are one of the gravest illnesses of the human capital of the country and a reduction of its innovative potential.

There are controversial tendencies in the sphere of high school and university education. The number of students in the high schools is decreasing. This is due to the low birth rates for the country as a whole, to the incapability of a part of the households to meet the expenses for their children’s education, and to some cultural peculiarities of the Roma and Turkish communities. The situation is especially grave in the Roma community, because 40 to 70 per cent of the children and the young people do not attend school (Zakharieva, 1997: 297). The drop-outs enter the labour market without the necessary educational minimum and professional qualification. Those are the future representatives of long-term unemployment in the country. At the same time, the general educational schools attended by 4/5 of the students do not provide for professional preparation. These young people also face difficulties on the labour market after graduation. A growing discrepancy between school education and the requirements of the economy is developing (Bulgaria 1996: 116). In the sphere of high education a withdrawal from the formerly preferred engineering, medical and agricultural disciplines can be observed. A surplus of specialists with legal, economic and pedagogical qualification is expected in the future, along with a deficit in cadres with high education in the spheres of industry and agriculture.

There is a lack of state policy for the development of the human capital in the country as a factor for the economic development, for its effective integration in the global economy and for the effective coping with long-term unemployment. There is a lack of feasible ideas in this respect on behalf of the major political forces in the country and the syndicates. The practice in the developed countries shows that the resolution of the problems with unemployment requires an active and future-oriented strategy, which cannot be formulated and implemented

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through market mechanisms alone. It is impossible without the active participation and partnership among the state, the structures of civil society, and private business.

Without such a policy the still existing strong points of the human capital in Bulgaria would be wasted - namely the relatively high educational and general cultural level of a considerable part of the active population, and the maintained will of the Bulgarian people to provide the best possible education for their children.

The processes affecting the human capital in Bulgaria and the lack of an adequate reaction on behalf of the state and society face the country with the greatest strategic risk. After continuous changes, accompanied with grave deprivations, the Bulgarian society can once more lag behind the developed countries in the world (Nedev, 1998).

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