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