[challenge:future] semi finals - a concerted, comprehensive government effort as the solution to...
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A CONCERTED, COMPREHENSIVE GOVERNMENT EFFORT AS THE SOLUTION
TO MACEDONIA’S YOUTH UNEMPLOYMENT ISSUE
Ivana Jordanovska/Damjan Denkovski
20% of population under poverty line
CNN cites Macedonia as the country with the worst unemployment rate in the world (31,2% overall, 54% for youth)
2 unemployed youths for every adult
Over 70,000 people (24% of the unemployed) in shadow economy
Average time spent waiting for a job is 4 years
Social status is more relevant than skills to get a job
27,6% of the employed youth are part of the primary sector
31,8% of the employed youth are employed in ‘vulnerable work’
There is a strong skills mismatch between the youth and the employers
0
10
20
30
40
50
60
70
2002 2004 2008 2009
Overall
Male
Female
THE PROBLEM
Youth unemployment figures
Why the current policies don’t work
- A significant problem is the miniscule proportion of the unemployed people these policies affect: 5,713 individuals in various categories in 2012, or 1,9% of the total number of over 300,000 unemployed
- Moreover, these policies do not target the young explicitly (except for the training policies – the first one targets people of up to 27 years of age, the second one people up to 33 years of age), which points to the conclusion that the Macedonian government has not made youth unemployment a priority
- The operational plan does not include substantial public employment service (PES) reform to streamline and facilitate the formation of relationships and contact between youth and employers.
- While the laws in place may be good in theory, in our interviews the opinion that these laws are badly implemented was prevalent. For example, the sustainability of the policies is brought in question when evidence of people who have gone through training falsifying business activity to avoid paying back the grants surfaces. Furthermore, the ALMPs seem to stimulate the creation of non-existent jobs created purely to attract government funds as evidenced by the high rate of termination of newly employed workers once subsidies stop.
- The plan underutilizes funds available (for example, the Agency of Youth and Sport spends none of its budget on youth, yet it earmarked c-ca 5 million EUR for the construction of 100 tennis courts around the country in the past several years, and the government spent 880,000 EUR on 33 sculptures in one municipality in the capital). While there may be compelling arguments for these expenditures, we believe that the issue of youth unemployment has priority.
Active Labour Market Policies
(ALMP) (2012)
Training and re-training (2012) Facilitation of labour market entry
(2012)
Promoting self-employment
Training and providing subsidies
to 980 people to start a business
Promoting wage-employment:
Subsidizing firms to open 90 new
places
Subsidizing the employment of
600 unemployed people
Subsidizing firms to employ 233
new interns for c-ca
80EUR/month for a period of six
months
Subsidizing 600 unpaid
internships for a period of six
months
Subsidizing firms to train 600
people in order to facilitate labour
market entry
Training 216 people to alleviate
the skills mismatch (for low-
skilled positions)
Training 2000 people to start a
business
Our
solution
Collaborative project between relevant social actors to ensure the long-term
sustainability, feasibility and applicability of the proposal
-Active Labour Market policies
-Transition assistance
-Education and training
Multi-pronged approach
National Youth
Council
Government
Employers
Education & Training
Transition assistance
and security
ALMP
We put ourselves in the position of government policy makers
or advisors. Our plan has two key features: multi-prong
approach and tripartite collaboration
A detailed explanation of our solution
ALMPs
The relevance of such
policies in Macedonia is
that its labour market is
characterised by low
outflow and low labour
demand. The economy
is unable to create
enough jobs and old
jobs are not open to
people with long
unemployment spells or
lack of experience.
Two types proposed:
Promotion of self-
employment (prioritised)
Subsidizing wage-
employment
Our plan builds on policies currently in place, adapts and expands them with the goal to ensure maximum impact
and long-term sustainability. Unlike the current government operational plan, our solution makes youth
unemployment a key priority.
Transition assistance
Facilitating the transition into the labour market has two aspects to it: providing a link between youth and employers (by modernising and streamlining the Public Employment Service (PES) and providing a safety net for youth (similar to the EU Youth Guarantee). Our original submission only considered the former, but we have seen through interviews that the second aspect is also relevant, especially considering the problem of low-job security.
Education and Training
Key points:
Restructuring the
educational curricula (a
model we suggest is the
‘dual’ apprenticeship
system currently in place
in Germany, Austria and
other countries (has
been linked with low
levels of youth
unemployment) where
the youth acquire
practical skills and job
experience
Redrafting the legislation
on internships to
facilitate part-time and
summer work as well as
graduate work
experience schemes
Feasibility:
- The policies currently in place indicate political will, but even if not, these policies are effective regardless
- The human capital of Macedonia is highly educated, yet without practical skills or the opportunity to gain them
- As a candidate for EU Membership, Macedonia is entitled to IPA assistance as well as the PROGRESS fund and
Twinning prorgrammes, the EU prioritizes youth unemployment and Macedonia can capitalise on those funds
- The UNDP and USAID are both engaged in combating the problem both financially and by providing technical
knowledge and expertise
- If youth unemployment is prioritised, the Agency of Youth and Sport will spend more than 0% of its budget on youth (it
recently constructed 100 tennis courts, building only 50 would have released funds to subsidize the creation of 1672
jobs. The government currently spends 0,2% of the budget on employment measures and 1,6% on the Skopje 2014
project (http://www.balkaninsight.com/en/gallery/skopje-2014 ) . The construction of a Triumphal Arch cost the same as
creating 3,411 new jobs (5,1 million EUR)
Run ALMPs, establish career centres in schools, implement the ’dual system’ of apprenticeship
4 to 5 years
Draft new laws for internships and part-time work
12 months
Reform and modernise the PES
6 months
Initiate work groups between social actors
Up to 24 months
Impact
-7500 through self-employment schemes and
15000 through subsidized wage-employment
within 5 years
Education/training reform will affect larger
numbers, but has a slower response time
Total number of unemployed youth (up to 30
years old) is 60,000. More than a third will be
affected by ALMPs alone within a decade
Our solution solves the ‘Catch 22’ of youth
with no experience, the safety net we
propose fosters creativity and decreases the
proportion of people in the shadow economy
which stimulates overall economic growth
Even if the people employed by our ALMPs
leave their jobs within a year, they will still
have the benefit of a year of professional
experience, which is a very significant start
towards resolving the problem
TIM
EL
INE