[Challenge:Future] A CONCERTED, COMPREHENSIVE GOVERNMENT EFFORT AS THE SOLUTION TO MACEDONIAS YOUTH UNEMPLOYMENT ISSUE
A CONCERTED, COMPREHENSIVE GOVERNMENT EFFORT AS THE SOLUTION TO MACEDONIA’S YOUTH UNEMPLOYMENT ISSUETeam name: Kumanovo2Country: MacedoniaLInstitut dEtudes Politiques de Paris; University of Cambridge
THE PROBLEM – TRENDSYouth unemployment in the Republic of MacedoniaOur team will focus on the problem of youth (15-24) unemployment in the Republic of Macedonia. As acountry with one of the most badly performing economies in Europe, it also has a fairly high unemploymentrate of around 30%. The ratio of unemployed youth to unemployed adult is 2:1. Both the rate ofunemployment and the ratio of young to older has remained more or less constant over the past decade orso.The chart below summarizes the prevalence of the problem of youth unemployment. Research conducted bythe think tank Reactor has come to the conclusion that youth unemployment equally affects not only malesand females (as the data confirms) but also members of most ethnic groups. The only markedly (further)disadvantaged group are the Roma youth.Youth Unemployment in Macedonia (source : Indexmundi ) Further problems not visible from the graph 1. A significant portion of unemployed youth is obscured by the prevalence of low-skilled jobs in the primary sector – thus fostering the underutilization of human capital 2. The problem of brain drain is a serious issue in Macedonia; 45% of Macedonia’s secondary school students see their future in another country in 10 years (http://www.ereporter.com.mk/mk- mk/Details.aspx?Title=15062) 3. The situation has not improved in the past decade, which leads to long unemployment spells for youth – who resort to either informal employment or become de- motivated to join the labour marker
CAUSESOverall economic environment Almost 30% of the Macedonian population live under the poverty lineThe unemployment rate stands firmly over 30%Studies show that the educational attainment and development of human capital does not improve an individuals’chances of finding work in Macedonia, it is rather the social status of their parentsMacedonia’s economy is characterised by a low demand for labour, and even jobs that are available severelyunderutilise human capital by placing people in low-skill positionsReferences:Economy Watch. Macedonia (Former Yugoslav Republic of Macedonia) Economic Statistics and Indicators . 2013.http://www.economywatch.com/economic-statistics/country/Macedonia/ (accessed February 2013).Korunovska Srbijanko, Jana, Neda Korunovska Avramovska, and Tanja Maleska. GENERATION “GETTING NOWHERE”:The transitions of unemployed youth in transitional Macedonia. Reactor – Research in Action, Macedonia, nd.Lehmann, Harmut. Macedonia’s Accession to the EU and the Labor Market: What Can Be Learned from the NewMember States? IZA Policy Paper Series, IZA, 2010.Skills mismatch Loss of motivation among job-seeking youthA major problem for youth seeking employment inA major problem for youth seeking employment in Since young people are rarely considered by employers Since young people are rarely considered by employersMacedonia is their lack of employable skills andMacedonia is their lack of employable skills and when seeking for their first job, the time spent waiting when seeking for their first job, the time spent waitingrelevant previous experience.relevant previous experience. by the 63% of the unemployed is longer than four years! by the 63% of the unemployed is longer than four years!The theoretical skills that graduates possess do notThe theoretical skills that graduates possess do not (http://www.wsws.org/en/articles/2011/08/balk-a23.html) (http://www.wsws.org/en/articles/2011/08/balk-a23.html)prepare them for work in the real world andprepare them for work in the real world and Furthermore, when youth do find jobs, it is usually in Furthermore, when youth do find jobs, it is usually inemployers recognize that. Thus, in the rareemployers recognize that. Thus, in the rare the informal economy or in a low-skilled position on a the informal economy or in a low-skilled position on aoccasions that a new job opens up, employers tendoccasions that a new job opens up, employers tend temporary, unregulated basis. Such job conditions and temporary, unregulated basis. Such job conditions andto prefer people who already have work experienceto prefer people who already have work experience lack of job security are demotivating and the lack of job security are demotivating and thein the field. The costs of training are not justifiablein the field. The costs of training are not justifiable involvement in the informal economy makes it harder to involvement in the informal economy makes it harder towhen they can employ someone they do not needwhen they can employ someone they do not need integrate into the formal labour market later on. integrate into the formal labour market later on.to train.to train. Thus, Macedonia’s youth are becoming demotivated Thus, Macedonia’s youth are becoming demotivatedThis way, recent graduates are passed up in theThis way, recent graduates are passed up in the about their prospects of finding work and either leaveemployment process. about their prospects of finding work and either leaveemployment process. the country or stop looking. the country or stop looking.
ATTEMPTED SOLUTIONS AND THEIR PROBLEMSALMP What went wrong?Promoting self-employment There are several significant problems with the There are several significant problems with the Training and providing subsidies to 980 operational plan of the government. operational plan of the government. people in 2012 to start a business While it does involve significant social forces While it does involve significant social forcesPromoting wage-employment: (employers), it does nothing to ensure universality (employers), it does nothing to ensure universality Subsidizing firms to open 90 new places of qualifications or incentivising employers to give of qualifications or incentivising employers to give in 2012 proper training to trainees proper training to trainees A significant problem is the miniscule proportion A significant problem is the miniscule proportion Subsidizing the employment of 600 of the unemployed people these policies affect. of the unemployed people these policies affect. unemployed people in 2012 Specifically regarding youth unemployment, Specifically regarding youth unemployment,Training and re-training these policies do not target the young explicitly these policies do not target the young explicitlySubsidizing firms to employ 233 new interns forSubsidizing firms to employ 233 new interns for (except for the training policies – the first one (except for the training policies – the first onec-ca 80EUR/month for a period of six monthsc-ca 80EUR/month for a period of six months targets people of up to 27 years of age, the second targets people of up to 27 years of age, the secondSubsidizing 600 unpaid internships in 2012 for aSubsidizing 600 unpaid internships in 2012 for a one people up to 33 years of age) one people up to 33 years of age)period of six monthsperiod of six months The operational plan does not include substantial The operational plan does not include substantial public employment service reform to streamline public employment service reform to streamline further job search among the people who are further job search among the people who are affected by the policies affected by the policiesFacilitation of entry into labour markerSubsidizing firms to train 600 people in 2012 inorder to facilitate labour market entry Thus, the main problem with the current approach Thus, the main problem with the current approachTraining 216 people in 2012 to alleviate the skills is that it relies on disjointed policies, does not target is that it relies on disjointed policies, does not targetmismatch (for low-skilled positions) youth specifically, does not address the failings of youth specifically, does not address the failings of the education system in preparing graduates for the the education system in preparing graduates for theTraining 2000 people to start a business in 2012 labour market and it underutilizes funds available labour market and it underutilizes funds available(http://www.zvrm.gov.mk/WBStorage/Files/OPzanaVlada2012.pdf)
PROPOSED SOLUTION - 1Our approach A multi – pronged approachIn proposing our solution, we are envisioningourselves either as persons responsible fordeveloping governmental policy or proposing policysolutions to the Macedonian government.Thus, our approach will focus on what thegovernment can do to alleviate the problem ofyouth unemployment. The main reason behind thisis that the problem is so widely spread that smaller-scale solutions will simply not make any meaningfuldifference.Tripartite collaboration Outline of the approach Our approach is different from what is currently in place in Macedonia because it avoids pitfalls which usually arise. It focuses on developing a multi-pronged, mutually reinforcing policy package which will address several of the key problem areas related to youth unemployment (diagram above). The approach is in line with ILO reccomendations It relies on the involvement of social forces in ‘tripartite collaboration’ which will ensure the compatibility of the policies both with the employers and employees (diagram left) It makes full use of the resources available to the Macedonian government, realising that youth unemployment should be a priority issue considering the impact of resolving even a part of the problem
EDUCATION & TRAINING Education & Training Some countries focus their training policies exclusively Some countries focus their training policies exclusivelyOne of the main causes of the low level of youth on education curricula reform, while others focus on on education curricula reform, while others focus onemployment is the skills mismatch between what work-based training. work-based training.applicants can offer and what employers are Both of these approaches, however, only address one Both of these approaches, however, only address onelooking for. A common reason for rejecting the aspect of the problem. aspect of the problem.applications of first-job seekers is that they have do What we propose is the following: What we propose is the following:not satisfy the condition of having prior relevant A combined school/work approach to developing A combined school/work approach to developingexperience. However, this causes a cycle where employable skills among Macedonia’s youth employable skills among Macedonia’s youthapplicants have no experience and cannot gain A good example of a successful combined A good example of a successful combinedexperience because they do not have it already. model is Germany’s dual system which, model is Germany’s dual system which, studies have shown, is comparatively more studies have shown, is comparatively more effective than other models (O’Higgins 2001, effective than other models (O’Higgins 2001,Thus, concerted governmental action is needed to ILO) ILO)facilitate the entry of first time applicants and The model would require a standardisation and The model would require a standardisation andyoung job-seekers into the labour marker by nationwide recognition of qualification certification inproviding them with opportunities to develop nationwide recognition of qualification certification in order to a) make monitoring easier and b) increase order to a) make monitoring easier and b) increaseemployable skills. A significant portion of applicants receptiveness of employers receptiveness of employershave general secondary education and/or a The model hinges on the involvement of social The model hinges on the involvement of socialuniversity education with little to none practical partners (workers’ associations, the government and partners (workers’ associations, the government andexperience. employers) to ensure a constant relevance and employers) to ensure a constant relevance and applicability of the curricula applicability of the curriculaCreating graduate entry schemes and reforming the The costs would be shared between employers, the The costs would be shared between employers, theeducational curricula will allow for the systematic government and youth government and youthdevelopment of employable skills, thus fostering The model should be explicitly targeted to recent The model should be explicitly targeted to recentgenerations of young people with relevant, graduates and highly educated young people in the first graduates and highly educated young people in the firstmarketable skills. instance to secure maximum market penetration instance to secure maximum market penetration
TRANSITION Transition assistanceA significant problem of the Macedonian To provide proper transition assistance to youth,A significant problem of the Macedonian the Macedonian government needs to expand botheconomy is the long period of transitioneconomy is the long period of transition the range and reach of the policies currently inbetween obtaining a degree/qualification andbetween obtaining a degree/qualification and place.entering the labour market. A comprehensiveentering the labour market. A comprehensive In our view, the main tenets of a successfulapproach must cover this crucial phase.approach must cover this crucial phase. transition policy are the following: Establishing government funded career centres at educational institutions (universities and vocational schools) where students would receive advice on preparing CVs, cover letters and job applications while simultaneously having access to a list of available positions Facilitating job searching by streamlining the Public Employment Service which would provide said list (this is a relatively minor investment with a high return rate) Creating a youth employment market where employers specifically seeking youth would be able to recruit them The success of transition assistance policies is contingent on effective nationwide research and targeting
ACTIVE LABOUR MARKET POLICIES 1 Providing wage employmentActive labour market policies are aimed at making Promoting wage employment is usually achievedActive labour market policies are aimed at makingthe market more receptive to new people. Policies through state subsidies provided to companies.the market more receptive to new people. Policiesusually go down along one of two paths: providing These subsidies are meant to cover part of theusually go down along one of two paths: providingwage employment and promoting self-employment. wages or the costs of re-training, if necessary.wage employment and promoting self-employment.Both approaches depend on:Both approaches depend on: The relevance of such policies in Macedonia is thatCarefully defining the problemCarefully defining the problem its labour market is characterised by low outflowLocalised and decentralised implementation, and low labour demand. The economy is unable toLocalised and decentralised implementation, create enough new jobs and old jobs are not openkeeping in mind the often discrepant nature of skillskeeping in mind the often discrepant nature of skills to people with long unemployment spells or lack ofneeded and offered (the approach Chile took in theneeded and offered (the approach Chile took in the relevant experience.late 1990s could be an example)late 1990s could be an example) Thus, ALMPs that deal with providing wageUniversal qualificationsUniversal qualifications employment are the way forward, as opposed toIntegrated policiesIntegrated policies direct job generation in the public sector.MonitoringMonitoring
ACTIVE LABOUR MARKET POLICIES 2 Promoting self-employment An effective policy on promoting self-employmentConsidering the state of the MacedonianConsidering the state of the Macedonian cannot rely simply on providing grants. Our teameconomy , simply facilitating wage employmenteconomy , simply facilitating wage employment considers the following policies necessary:and helping youth find such jobs is not enoughand helping youth find such jobs is not enough Expanding the range of policies currently in placeto solve the problem. Promoting self-to solve the problem. Promoting self- to reduce bureaucratic obstacles to starting aemployment is a way to tackle both the lack ofemployment is a way to tackle both the lack of businessjobs and the issue of youth unemployment.jobs and the issue of youth unemployment. Further promoting schemes that provide start-up funds in the medium term, while simultaneously working on reforming the banking sector to independently accept grant applications for promising projects Establishing training centres for prospective business owners and support centres that would minimise the risk of people successfully completing the courses and failing to start a business Promoting self-employment as viable, attractive alternative and developing skills at an earlier stage This step should be taken by co-opting self-employed professionals to hold talks and by encouraging firms to sponsor competitions designed around creating business models by youth
CONCLUSIONS FeasibilityThe approach we propose is a marked improvement of the disjointed policies currently in place. While itwill require significant amounts of work, it is feasible.Macedonia has the human capital to further develop and implement these reformsThe funding is available from the following sources As a candidate for EU membership, Macedonia is entitled to IPA assistance and funding from the PROGRESS funds as well as Twinning programmes – the EU prioritises youth unemployment The Agency of Youth and Sport in Macedonia currently focuses on sport alone; diverting some funds to youth unemployment will make a significant difference Diverting government spending from inefficient policies, considering the high priority of youth unemployment as an issue will provide further fundsImpact TimelineThe impact of our policy proposal is a crucial aspect Obviously, the progress will be in increments. Whatof the innovative approach. Current policies in we hope our policies would achieve is exponentiallyMacedonia target a mere fraction of the decrease youth unemployment by creating an initialunemployed youth. pool of trained, experienced young professionalsOur proposal aims to target at least 15,000 people and new business owners, which in turn wouldannually through direct training programmes and create new jobs and stimulate the overall economyALMPs, while the dual system of education and thus enabling it to create more jobs on its own.training will reach most students in secondaryeducation as will the reforms for PES. The impact will not be visible for several years, butThe multi-pronged approach paired with the active we consider it crucial to persist in the investmentinvolvement of social forces is designed to ensure and development of good policies which will bemaximum impact and effectiveness of the policies. effective.