The transformation of formerly planned economies into market economies has had several social consequences, including a substantial reduction in employment.   Despite significant reform successes, high long term unemployment and a relatively slow pace of job creation, combined with wide skill mismatches and regional disparities continue to have adverse consequences for poverty and social cohesion in South Eastern Europe . 

The Stability Pact, together with the OECD, the Irish EU Presidency and the Romanian SEECP Presidency, held a conference in Bucharest on 26-27 May 2004 aimed at addressing simultaneously the improvement of the business climate and the enhancement of social cohesion. It emphasised the need to bring about a vivid change in South Eastern Europe , establishing a culture of entrepreneurship and small and medium sized enterprises (SME) development combined with improved employment, education and training policies. 

The Conference which was opened by the Romanian Minister of Labour, Social Solidarity and Family, Elena Dumitru encouraged a further use and a greater convergence of the Stability Pact instruments already available to promote these objectives, such as the OECD led Investment Compact, the European Charter for Small Enterprises, the private sector development programmes led by the EBRD and other International Financial Institutions, as well as the Council of Europe/ILO led review of employment policies and of the performance of employment services of the SEE Countries further to the Employment Ministerial Conference of end October 2003 in Bucharest.

Special Co-ordinator Erhard Busek noted in his opening statement that: “Among the many factors contributing to sustainable employment, the entrepreneurial spirit and the development of SMEs have a key role to play.   South Eastern Europe is not yet exploiting this potential to full capacity”. 

Participants who were drawn from all sides of the economic/social spectrum were encouraged to pool their knowledge and expertise and to learn from previous international experience. Garret Fitzgerald, the former Prime Minister of Ireland, urged the countries to use the EU accession process to prepare their domestic industry for the intense competition of the EU.   He also highlighted the role of the “social contracts” between government, employers and the trade unions in Ireland ’s successful economic development. 

Participants agreed on a number of specific actions that will be taken under the different initiatives to ensure that the strong political support for SME development and fostering sustainable employment is translated into tangible results.

Attachment:            Introductory Remarks by SC Busek