The impact of financial support program in creation on farm jobs, Kosovo’s case

Abstract

Job creation is a top policy and political priority of the country, but the unemployment level is high and persistent, ranging up to about 35%. Youth and rural residents are among the most affected by the lack of gainful employment opportunities. Further modernization and development of the agri-food system in the country can generate a double win of job creation and economic growth, but rural areas of Kosovo face many structural and socio-economic challenges. Huge rural areas remain depopulated and their resources unutilized, with negative economic, social and environmental consequences.. Rural populations are stagnant or dropping in the country, at the same time, the rural employment base is narrow and dominated by extensive agriculture. All these factors limit rural and general employment and economic growth. Nevertheless, agriculture continues to hold an important role in the Kosovo’s socio-economic situation, yet, primary agricultural production remains caught in a low productivity – low income trap. Most agricultural producers are engaged in subsistence and semi-subsistence activities, and suffer from hidden unemployment and poor labor force mobility. These producers capitalize on their current competitive advantages, i.e. low labor costs and high-quality natural resources, but at the same time, they face low levels of labor productivity. An unfavorable age structure further compounds the sector’s challenges. Kosovo’s farmers are ageing, and 18% of farm managers and/or farm workers above 65. Young farmers are reluctant to enter the sector, given its low returns as well as land market distortions. Therefore, modernization and transformation of Kosovo’s agriculture are needed both for increasing the sector’s competitiveness and for maximizing its benefits from EU accession.