Labour Developments in Moldova

Abstract

The paper studies labour developments in Moldova during transition period. The questions addressed are the size and character of labour market adjustment. Established data sources have been complemented by the results of available surveys to get more precise estimates of the effective employment. Wage data was adjusted for the stock of arrears. We conclude that adjustment to the new market order in Moldova has been done trough prices, which is similar to other FSU countries. Real wages, if adjusted for arrears, amount to only 14% of the pre-transition level. On the other hand, only small labour shedding is observed. Registered unemployment rate is one of the lowest in the FSU and CEE countries. Such way of adjustment has a number of negative consequences, the most important being the phenomenon of unpaid leaves. It appears, that only formal affiliation with enterprise remains, leaving those people effectively unemployed. Survey evidence report double-digit open unemployment rates, with widespread under-employment. With no system of unemployment benefits in place, a  substantial number of labour force is involved in survival informal activities.