Social Cohesion in Eastern Europe and the CIS

1. United Nations Economic Commission for Europe Social Cohesion in Eastern Europe and the CIS Marek Belka Executive Secretary of the UN Economic Commission for Europe Under-Secretary-General of the United Nations June 2007 Santiago, Chile

2. Economic Overview of the ECE Region: 56 countries of Europe, Central Asia and North America • Rapid Economic Growth and Favourable Prospects • Tremendous Diversity: Region Has the some of the Richest and Poorest Economies • Future Growth Will Need to Be in Knowledge Intensive Industries-UNECE Has a New Program • A Major Challenge from Globalization Is How to Preserve the Social Welfare State

3. Solid Real Growth in the ECEAfter a Difficult Decade (1990s) There Is Now Solid Growth in the Transition Economies especially since 2002

4. Per Capita Income in the UNECE Region:Significant Diversity

5. Social Cohesion in Eastern Europe and the CIS Basic Dimensions of Social Exclusion in the Region: • Poverty • Unemployment • Gender Discrimination • Ethnic Inequalities and Discrimination • Migrants, Refugees, Internally Displaced

6. Inequality in the Transition ECEAbove Western Europe, Below Latin America Latin America 50+ U.S. France Nordics

7. Inequality Increased during the TransitionTwoDifferent Patterns of Increasing Inequality:Poland Typical of NMS, Russia of CIS

8. Poverty in the ECE RegionHighest in Central Asia, Caucasus 40 Million ($2.15PPP) and 150 million ($4.30PPP)

9. Central Asian and CaucasusAs Poor as Many African Countries

10. Poverty: The Vulnerable Groups • Rural Areas • Unemployed • Ethnic Minorities • Retired, Elderly • Unskilled • Single Parent Households • Health Problems

11. Poverty Varies Significantly Within Countries --GeographicallyKyrgyzstan Note: Poverty is generally lowest in capital cities Source:UNDP

12. Unemployment in the Transition Economies • Quite high during the 1990s, but has been declining; still very high in southeast Europe • A significant percent are long-term due to large structural changes (2 to 3 times western levels) • Likely to result in poverty since weak safety nets, tight eligibility, limited funds for active labor market policies • Large informal sectors with no benefits • Youth unemployment often twice the overall rate

13. Gender Pay Gap: Worsened During the TransitionPercentage Women’s Pay Is Less than Men’sRed=Transition Economy

14. Ethnic Problems and RefugeesThere are 530,000 Refugees in Europe • Significant number of ethnic minorities in a number of countries • Especially a problem in southeast Europe • Redrawing of borders and creation of new states have created new minorities, changed national languages, created ongoing conflicts • Citizens often speak different languages • Example: Georgia: 30% don’t speak one of the several Georgian dialects (9% Russian, 7% Armenian, 6% Azeri, 7% Turkish, etc.) • Approximately 7 million Albanians live outside its borders in neighboring states • Bosnia: 48% Bosniak, 34% Serb, 15% Croat

15. The Ethnic Dimension of PovertyThe Roma of Southeast Europe Source: UNDP

16. Improving Social Cohesion • Economic growth must be maintained; stick with economic reforms, don’t backtrack • Improve social safety nets • Resolve political conflicts • Address ethnic and gender discrimination • Improve access to education and health resources • Encourage creation of SMEs, self-employment • Keep borders open; benefits of trade and migration