Report No. 43596-XK Kosovo Youth in Jeopardy Being Young, Unemployed, and Poor in Kosovo A Report on Youth Employment in Kosovo September 2, 2008 Human Development Sector Unit Europe and Central Asia Document of the World Bank KOSOVO YouthEmploymentinKosovo CONTENTS ACKNOWLEDGEMENTS ................................................................................................................................. EXECUTIVE SUMMARY ................................................................................................................................ i1 i CHAPTER I THE CHALLENGEOF YOUTH EMPLOYMENT INKOSOVO . ............................. 1 GENERALBACKGROUND ............................................................................................................................. 1 MAINFocusOFTHEREPORT ...................................................................................................................... 7 REPORT'S SCOPE ....................................................................................................................................... 11 CHAPTER I1 . WHAT DO WE KNOW ABOUT YOUTH EMPLOYMENT INKOSOVO? .....12 YOUTHLABOR MARKETINDICATORS AND TRENDS .................................................................................. 14 QUALITY OFYOUTHEMPLOYMENT .......................................................................................................... 19 UNEMPLOYMENTDURATIONAND JOB SEARCH ........................................................................................ 24 WAGES AND RETURNS TO EDUCATION ..................................................................................................... 26 YOUTH INJEOPARDY ................................................................................................................................ 28 CHAPTER I11 . YOUTH LABOR POLICY AND INSTITUTIONSINKOSOVO ........................ 34 REVIEWOFEXISTINGPOLICIESANDPROGRAMS....................................................................................... 34 REFERENCES ............................................................................................................................................. 43 Boxes Box I1:Does a Large Youth Population Cause Conflict?.............................................................. Box 11.1:A brief descriptionof the data usedinthe report........................................................... . 8 Box 11.2: The Education Sector inKosovo.................................................................................... 13 18 Box 11.3: Youth Informality........................................................................................................... 20 Box 11.4: Voices of Vulnerable Youth........................................................................................... Box 111.1:Characteristics of Successful Labor Market Programs (LMPs).................................... 32 41 Figures Figure I1: Kosovo displays the highest youth unemployment rate inthe ECA region...................9 . Figure 11.1:Youngfemales participate very little inthe labor force compared to young males. and the few participants are likely to be unemployed.......................................................................... 15 Figure 11.2: Unemployment rates are slightly higher among higher-skilled youth. inpart because low-skilled youth are likely to be employed insubsistence agriculture........................................ 16 Figure 11.3: It takes about 10 years for young males to transition from school to work. as measuredby the time it takes to shift 50 percent of this population from being enrolled inschool to having employment ................................................................................................................... 17 Figure 11.4: While more frequent among male youth, unpaidemployment decreases more rapidly among males, especially once they reach adulthood..................................................................... 19 Figure 11.5: The share of workers infull-timejobs increases with age: from 60 percent at age 15 Figure 11.6: Underemploymenti s more frequent among unskilled young males.......................... to about 85 percent at age 45, and decreases thereafter untilretirement age................................. 21 22 opportunities" and "a better quality of life." ................................................................................. Figure11.7: The mainreasons why youth migratefrom Kosovo are to pursue"better economic Figure11.8: Long-termUnemployment,by Age Group, in Kosovo.............................................. 23 Figure 11.9:Most inactivefemales (bothyoungand adult) never have work experience.............. 25 24 Allocation of Youth Safety Nets.................................................................................................... Figure 11-10:Percent Decreasein Povertyand ExtremePoverty-Random Comparedto Targeted 29 Figure 11.11: Youth injeopardy drop out of school earlier than youth living in richer households. ....................................................................................................................................................... 30 Figure11.12:Young women andyouth inrural areas constitutethe majority of all youth who are poor andunemployedsimultaneously ........................................................................................... 31 Figure 11.13: Youth who have attained only primary education display a great risk beingpoor and unemployedat the same time Figure 111.1:Summary ofthe KYEAP: objectives, outcomes, and investments2007-2009.........33 ........................................................................................................ Figure111.2:Budget planned under the KYEAP vs. budget actually spent accordingto LMPs 35 inventory [Kosovo, 20071.............................................................................................................. 40 Tables Table I.1. Economic GrowthHas Stalled since 2003 ..................................................................... 2 EU- at 65 percent).......................................................................................................................... Table 1.2. In2006, the employment rate in Kosovo was at 29 percent(roughly half ofthat in the Table 1.3. Dynamicso fthe unemployedregistered at the PES in 2007: 12-monthcumulative..... 6 5 do, youth wages constitutea significant share of householdwage income................................... Table 1.4. While less than 10percent of all households benefit from youth wages, for those who Table 11.1.MainEmploymentIndicatorsIncludedinthis Chapter............................................... 10 12 Table 11.2. Youth account for 38.4 percent o fthe unemployedin Kosovo ................................... 14 Table 11.3.Approximately 8 out of 10young individualsinthe KOSOVO'S force are Table 11.4.Mitrovica is the regiondisplayingthe worst youth employment outcomes................14 unemployed................................................................................................................................... labor 18 Table 11.5. Self-employmentand firm ownershipaccount for less than 25 percent of all employment, at all age groups....................................................................................................... 20 Table 11.6.Mosttemporaryworkers are so due to a lack of permanentvacancies........................ 21 Table 11.7. About 23 percent of all young female workers work on a part-time basis because of their role as caregivers; this share increases as they enter adulthood............................................ 21 Table 11.8. On Average, youngworkers earn about 200 per month; which only about 20 percent .............................................................................. Table 11.9. Statistics on Youth in Jeopardy.................................................................................. less than what adult workers make on average 27 Table 11.10. Sample Size and Program Coverage UsedinMicro-simulations.............................. 28 29 32 Table 11.12.Incidenceof Youth in Jeopardy by Educationof the HouseholdHead..................... Table 11.11. RegionalDisparitiesin Vulnerability amongKosovoYouth.................................... 33 Appendix)...................................................................................................................................... Table 111.1, EmploymentPrograms Targetedto Youth inKosovo(For programdetails, see Appendix: Inventoryof ALMPs in Kosovo............................................................... 39 47 ACKNOWLEDGEMENTS This report was prepared by a team comprising Diego F. Angel-Urdinola (Economist ECSHD, Task Team Leader), Arvo Kuddo (Senior Economist, ESCHD), Sangeetha Malaiyandi (Junior Professional Associate, ECSHD), Flora Kelmendi (ETC, ECSHD), Sara Bin Mahfooz (Consultant, ECSHD), Lejla Sadiku (Consultant, ECSHD), Maria Florencia Dim (Consultant, ECSHD), and Diane Stamm (Consultant, ECSHD). Special acknowledgements are given to the European Training Foundation (ETF) team for its close interaction with the World Bank team: for helpful discussions and brainstorming in Torino, for their contribution with a background paper on Governance and Capacity of Employment Institutions in Kosovo, and for their valuable help during ajoint Mission to Kosovo in mid-January 2008. Muriel Dunbar (Director, ETF; for her support and guidance), Xavier Matheu de Cortada (Head M&E, ETF; for his hospitality and guidance), Lida Kita (Country Manager for Kosovo, ETF; for her inputs, motivation, and enormous contribution), Agnieszka-Majcher-Teleon (Operations Department, ETF; for her useful comments), and Siria Taurelli (Operations Department, ETF; who was our contact point with ETF). Helpfulguidance, comments, and discussions with the team were also provided by Tamar M.Atinc (Sector Director, ECSHD; who made possible our interaction with ETF), Arup Banerji (former Sector Manager, ECSHD), Gordon Betcherman (Sector Manager and Lead Economist, ECSHD, who provided mentoring and guidance), Ranjit Nayak (Country Manager, ECCKO), Michele Gragnolati (Senior Economist, ECSHD), Bruce J. Courtney (Senior Country Economist, ECCU4), , Andrew Dabalen (Senior Economist, ECSPE), and Elena Bardasi (Senior Economist, PRMGE). From our counterparts, we thank Avni Kastrati (Director, Statistical Office of Kosovo [SOK]) and BashkimBellaqa (Director Social Statistics, SOK) for sharing their data unsparingly. Ylber Shabani (Former Director, Department of Labor and Employment, Ministry of Labor and Social Welfare-MLSW), Shpetim Kalludra (MLSW), Hafiz Leka (Acting Director of Department of Labor and Employment, M L SW), Salih Morina (Acting Permanent Secretary; Department of Youth, Ministry of Youth Culture and Sports [MYCS]), Burim Leci (MYCS), Safet Fazliu (Director, Agency for Small and Medium Enterprises, Ministry of Trade and Industry [MTI]), for providing information and guidance for our research, Valli Corbanese (International Labour Organization [ILO]), Sokol Elshani (ILO), Fatmir Burjani (ILO), Levent Koro (UNDP), Jean-Luc Camilleri (Lux- Development), Majlinda Bajraktari (Swisscontact), Erich Gutman (KOSVET), Birgit Thomman (Project Manager, GTZ), Albana Koshi (GTZ)for their insights andexpertise. We also thank Sophie Beaumont (ECLO), Belma Bajrami (Business Start-up Center), Alban Ibrahimi (Director, Care International), Ilir Hoxha (WB PIU), Shaqir Arapi (International Organization for Migration), Gerold Schwartz (IOM), Panagiota Voidonikola (IOM), Nicole Farnsworth (Kosovo Women's Network), Luljeta Vuniqi (Kosovo Gender Studies Center), Veprore Shehu (Medica), Catherine Rothenberg (Mission Director, Mercy Corps), and Ardita Jahja Hoxha (Program Manager, Mercy Corps) for sharing valuable information, which has helped in making our report more complete. i EXECUTIVE SUMMARY 1. The main objective of the report is to provide diagnosis on youth employment, which can provide the basis for future policy design. Inrecent years, the topic of youth employment in Kosovo has been studied extensively.' There are reports produced by Provisional Institutions for Self-Government (PISG) and international organizations and donors which compile information about youth employment trends, skills mismatches, employment promotion, and labor demand constraints for this segment of the population. Nevertheless, studies fall short on addressing issues related to youth employment quality, regional differences in youth employment outcomes, and relationships between youth employment and household poverty. This report uses available micro-data (the Labor Force Survey, LFS; and the Household Budget Survey, HBS) and develops a more in-depth analysis of youth employment outcomes, trends, and determinants, focusing on the aforementioned information gaps. Our definition of youth includes individuals aged 15 to 24. 2. The Provisional Institutions for Self-Government developed the 2007-2010 Kosovo Youth Employment Action Plan (KYEAP), which includes a broad set of policy options to improve youth employment in the territory. The Ministry of Labor has expressed an interest in obtaining analysis on youth labor market outcomes that could facilitate design, implementation, and prioritization of this action plan. This endeavour will benefit from the diagnosis provided in this report. While this report does discuss general policy issues -- specifically pertaining to active labor market programs -- based on the analysis undertaken, it does not provide specific policy recommendations. OVERVIEW 3. Because of a very young population, Kosovo faces the imperative of integrating large youth cohorts into the labor market in the years to come. This heightens the overall challenge of youth unemployment. Kosovo has the youngest population in Europe. According to 2005 Labor Force Survey (LFS) estimates, individuals aged 15 to 24 account for about 30 percent of the working-age population, and 20 percent of total population (vs. 14 percent inEurope on average). Kosovo has the largest youth share of total population in Europe. It i s expected that roughly 200,000 young people will reach working age in the next five years, while the number of people reaching retirement age will be approximately 60,000. These combined phenomena will contribute to make more difficult the labor market situation faced by youth in the years to come. 4. High levels of unemployment overall remain a major challenge in the labor market. Historically, Kosovo was one of the regions with the highest unemployment rates in the former Yugoslavia. High rates of unemployment in Kosovo have become a matter of serious concern, especially because of their negative social and economic repercussions. 1Under United Nations Security CouncilResolution 1244(1999) .. 11 5. Kosovo has the highest unemployment rate in Europe and Central Asia (ECA) at 45 percent; followed by Macedonia (36 percent), Montenegro (31 percent), and Bosnia and Herzegovina (30 percent). Labor force participation in Kosovo (at 53 percent) i s substantially below the E C A average (at 65 percent) and the second lowest in the ECA region after Turkey (5 1percent). Since 2003, employment indicators inKosovo have improved slightly. Estimates based on data from the Labor Force Survey suggest a decline in overall unemployment rates and an increase inemployment rates between 2003 and 2006, while labor force participation remained roughly unchanged in the period of study:. WorkingAge Population (15-64) Employment Unemployment LaborForce Rate Rate Participation 2003 25.3 52.3 53.0 2006* 29.0 44.6 52.3 6. There are several structural, multisector and interrelated constraints to employment in Kosovo, including stagnant economic and labor demand growth, excess supply of labor, skill mismatches, and political uncertainty; all of which have substantially affectedthe labor market inrecent years: Sluggish labor demand: While many labor supply problems coexist in Kosovo, the main bindingconstraint to employment policy remains stagnant labor demand. The best way for the labor market to absorb workers i s by strengthening the dynamism of the demand for labor in general. Doing so requires a solid macroeconomy, and cross-sectoral efforts, including favorable legislation, a good investment climate, and political stability. As such, increasing labor demand in Kosovo will likely be a slow and far-reaching process. A Dutch Disease?: Inflows of foreign aid and UNMIK administration have been important sources of jobs for hotels, restaurants, translators, house keepers, nannies, drivers, independent consultants, consulting firms, and NGOs. There i s anecdotic evidence suggesting that the expatriate community has contributed to increasing reservation wages in Kosovo. To the extent this i s true, this would be contributing to employment problems. Low levels of investment: Delays in privatization, political uncertainty, and poor infrastructure are all barriers to investment in Kosovo. Even after current political uncertainties are overcome, new uncertainties will appear as investors test the credibility and assess the capacity of the government to secure their investment. Education: Duringthe period of conflict, Kosovo relied on an informal (and rather low quality) education system. During this time, massive layoffs of individuals from the public sector and long unemployment spells contributed to a rapid depreciation (and a slow renewal) of skills demanded by the emerging labor market. ... 111 THEYOUTHLABOR MARKETKosovo IN 7. An important feature of the difficult overall labor market situation is the very unfavorable labor market outcomes for young people. There are a number of reasons to focus on youth employment, including: (a) youth i s a crucial time of life, (b) high and rising unemployment levels among youth are associated with higher crime and social instability, (c) powerful demographic forces are working to expand the labor force, creating problems of unemployment among youth, (d) youth are particularly vulnerable to unemployment and poverty, and (e) youth account for 40 percent of the pool of unemployed in Kosovo. The majority of unemployed youth in Kosovo could be categorized as long-termunemployed. Lack of experience i s a common feature especially affecting young women. Youth in Kosovo display a very difficult transition from school to employment. Moreover, youth who are employed are so in jobs that display low quality, low returns, and highlevels of informality. 8. Kosovo has the highest youth unemployment rate in the ECA region. Recent improvements inemployment outcomes inKosovo didnot benefit youth. Estimates using LFS data indicate that unemployment, employment, and participation rates among youth remained roughly unchanged in the 2003-2006 period at 76 percent, 11percent, and 46 percent respectively (more details in Chapter 11).Indeed, youth employment outcomes in Kosovo are alarming compared to ECA standards. The youth unemployment rate in Kosovo i s still almost 5 times higher than the average for the European Union. F&te (%) Youth UnemploymentRate 4 MKD 50.0 20.0 ROM 10.0 0 1000 2000 3000 4000 5000 6000 7000 GDP per capita Source: World Development Indicators (2005). Data for Kosovo from World Bank Estimates using 2005 LFS. 9. Four out of every 10 youth who are unemployed have been so for more than one year. Long-termunemployment, as defined as beingunemployed for a periodlonger than 1year, i s common Kosovo. While this phenomenon generally affects adults, long- term unemployment i s also affecting youth. Indeed, about 44 percent of all unemployed youth inKosovo couldbe categorized as long-term unemployed. iv LongTerm Unemploymentby Age Group in Kosovo 100% - 90% - 80% - 70% - E 60% - g 50% - c 40% - 20% 1 .zI ye., 30% 1 t 57.8 15.24 25-34 35.54 55.M Source: World Bank calculations using 2005 LFS data. Estimates exclude first-time job seekers. 10. Although their situation is steadily improving, young women display the worst employment outcomes in the labor market. Employment outcomes for females are less favorable than those for males, especially among youth. For females, employment and participation rates are very low. However, while labor market indicators for young males have been stable (roughly unchanged) since 2003, labor market indicators among females (albeit worse than among males) improved between 2003 and 2006. 11. Youth in Kosovo have a long transition from school to employment. It takes about 10 years for young males to transition from school to work, as measured by the time it takes from when 50 percent of the population i s enrolled in school to when 50 percent of the population i s employed. InMacedonia, a country that also faces significant challenges in the labor market, using a similar definition it takes four to five years for young males to transition from school to employment. In developed countries, it takes even less time for new young entrants to get a stablejob. 12. Young workers in Kosovo are typically employed in very low-quality jobs. Rapid inflows of new young participants into the labor market and high unemployment rates are not the only problems faced by youth. In2005, about 20 percent of all employed youth didnot have an employment contract; 37 percent were not entitled to paidleave; 55 percent were not entitled to paid sick leave; and 73 percent were not registered in Social Security. Moreover, in 2004 around 21 percent of all young workers claimed to have worked for more than 50 hours a week. Low quality of jobs i s likely to affect youth from poor and vulnerable groups, mainly in agriculture-related activity, who generally accept (dueto necessity) the conditions offeredby existingjobs, albeit precarious: About one-third of all voung individuals engage in unpaid work. However, the share of unpaid employment drops quickly and steadily with age as young individuals reach adulthood. Unpaid work among youth i s more frequent among males than among females. V Over one-third of all young workers are employed on a part-time or temporary basis. About 30 percent of all youth are employed on a temporary basis, with contracts offering duration of less than 6 months. Also, 70 percent of all young workers who are employed work on a part-time basis. While part-time work i s common among youth as they combine work with study, this seems not to be the case inKosovo. Indeed, 72 percent of all youth working on a temporary/part time basis do so becausethey can not find permanentlfull timejobs. About one-third of all young workers are looking for a second iob or want to work more hours. About 40 percent of all young male workers claim to want to work more hours or to be searching for an additional job. Underemployment among young females i s lower than among young males at 20 percent. Underemployment i s more frequent among urban youth than among rural youth. Returns to education among: youth are positive but very low. Young workers with post-secondary education have an adjusted wage premium of only 13 percent, compared to otherwise similar young workers who have attained at most primary education. These rates of return are extremely low by regional standards (varying between 30 to 80 percent elsewhere). 13. Many young workers rely on work inthe informaleconomyto cope with the risk of unemploymentand low earnings.The degree of youth informality, as measured according to whether social contributions were paid on their behalf, i s 67 percent. This high incidence of informality occurs primarily because of limited opportunities in the formal sector and i s coupled with poor enforcement and low awareness of the labor law. By getting informaljobs, however, youth do acquire labor market experience, which may contribute to eventually getting a formal job. 14. Migration is another important coping mechanism for youth to mitigate unemployment risks. There are about 500,000 individuals who were born in Kosovo who now live abroad. Migration flows have been significant in Kosovo in recent years. Youth are more likely to emigrate because the costs of leaving their home countries are lower than the economic and social gains of doing so. A recent survey conducted by UNDP found that 44 percent of all youth intendto migrate from Kosovo. Since most of the legal emigration routes to Europe from Kosovo are now closed, a large portion of its current youth emigration i s illegal. Nevertheless, poverty and high unemployment rates continue to make migration an attractive option for many people, especially the young. YOUTHIN JEOPARDY 15. Within the broader problem of youth labor market outcomes, this report pays particular attention to Youth in Jeopardy (Le. extreme poor and unemployed youth). The traditional focus for discussion of youth employment problems has been on unemployment. In addition, this report raises awareness of a group of vulnerable youth (or youth injeopardy). The government will need to focus and prioritize its youth policy agenda. Currently, there are 163,000 young individuals who are unemployed. As such, vi the government may consider the possibility to target interventions and limited resources to those who needthem the most through the creation of safety-netsfor vulnerable groups of the population. Youth injeopardy constitute an important group at risk and one that i s less likely than others to benefit from future improvements in labor demand. B y focusing on those in need, Kosovo can avoid creating an underclass of excluded groups, poverty traps, and intergenerational transmission of poverty: Twenty percent of all unemployed youth in Kosovo are extreme Door, defined as those living in households in the first [poorest] consumption quintile. This group i s at high risk to face social exclusion, long-term poverty, and lack of second chances. The majority of youth injeopardy are women and low-educated youth. Youth in the Mitrovica region display a higher risk of facing extreme poverty and unemployment at the same time. 0 Resources for youth policv are scarce: While youth in jeopardy i s a narrow population, it i s still larger that the total youth population that the government i s currently able to serve through labor market policies, given the current fiscal and institutional capacity (Chapter 111).Of course, this does rule out more investments and budget support for youth policy in the near future, which would enable to develop abroader scope and coverage of youth-related policies. Youth in extreme poverty display the worst employment outcomes: The unemployment rate for youth inthe poorest consumption quintile i s at 86 percent, while for youth in the richest consumption quintile, it i s at 68 percent (HBS 2005106 estimates). Employment rates for youth aged 20 to 24 are twice as high among those living in households in the highest quintile compared to those living inhouseholdsinthe poorest quintile(26 percentcomparedto 12percent). Youth "paid" employment i s a important safety net for households in extreme poverty: While only a small share of all householdshave "paid" employed youth, youth wages among households in the poorest quintile account (on average) for 61 percent of overall household wage income for those households with at least one employed youth. 16. Safety-nets targeted to youth in jeopardy can have an important impact in reducing extreme poverty. Using micro-simulation techniques, analysis in this report quantifies the impact on poverty of targeted interventions that provide households having youth in jeopardy with a transfer equivalent to the youth median monthly wage vs. the same transfer randomly allocated among households having unemployed youth. The transfer can be thought of as income assistance through a targeted income transfer and/or targeted employment assistance. Simulation estimates indicate reaching less than 20 percent of all youth in jeopardy (about 6,000 thousand individuals) can contribute to decrease extreme poverty by much more than a random allocation. vii YOUTHLABOR POLICY INKosovo 17. While the main constraint to youth employment is the low demand for labor, labor policy can potentially help improving labor market outcomes. Significant improvements in the economic situation and in the dynamism of the private sector requires a long-term and multi-sectoral strategy that largely falls outside of the labor market - e.g. maintaining macroeconomic stability, and improving the investment climate. Nevertheless, labor market policy can also contribute to a better environment for job creation. A potentially important issue to improve labor market outcomes for youth i s the government's capacity to deliver cost-effective active labor market programs (ALMPs).While employment services and training programs are of limiteduse in a labor market as slack as KOSOVO'S i s currently, they can play a useful role in enhancing the functioning of the labor market and improving the employability o f job-seekers and other disadvantaged workers, especially as labor demand picks up. Under the current labor market conditions, there are very strong reasons to consider ALMPs that could have more immediate impacts in terms of creating jobs, alleviating unemployment, and providing safety nets for extreme poor unemployed youth. 18. This report provides a new inventory of existing Active Labor Market Programs (ALMPs) in Kosovo. Prior to this study, there was no information compiled on youth ALMPs in Kosovo. As such, there was a general lack o f knowledge about how much Kosovo was spending on these programs and about the effectiveness of such spending. The World Bank team preparing this report interviewed several agencies, line ministries, NGOs, and donors, and compiled information scattered in various documents to produce an updated inventory of ALMPs. This inventory provides information on the scope, budget, coverage, and lessons learnedfrom several ongoing ALMPs. 19. The KYEAP (2007-2010)is the flagship document for youth labor policy. The plan i s the comprehensive strategy of the Government to improve the situation of young people by involving governmental and non-governmental institutions in exploring and meeting the needs of youth and by finding ways and mechanisms for youth participation inthe decision-making process inKosovo. The KYEAPhas 3 main objectives, each with its own budget allocation: 1) to promote employment among young people (4.4 million per year); 2) to increase decent work opportunities for young people (1.7 million per year); and 3) to prevent social exclusion of youth through targeted labor market measures (0.4 million per year). 20. The implementation of the KYEAP is falling behind, mainly due to institutional capacity constraints. Although the action plan was formally approved and budget was allocated for its implementation, the implementation mechanism was never established. This was mainly because the Youth Employment Action Plan requires strong institutional and administrative capacities (perhaps too ambitious given the level o f development of institutions) to oversee and steer the implementation process. In particular, the KYEAP planned for the establishment of an Inter-ministerial Committee on Youth Employment to oversee implementation and to report back to the respective ... Vlll ministries. Inpractice, the implementation structures foreseen by this document have not as yet been established. 21. Overall, the Ministry of Labor and Social Welfare (MLSW) faces capacity and financing constraints in implementing youth labor policy as specified in the KYEAP. The MLSW is the central institution mandated with employment policies and institutional arrangements to ensure their implementation. The MLSW Department of Employment and Labor and its respective Labor Division are in charge of youth policy design. The number of staff at the MLSW i s considered to be low and, according to their officials, there i s an urgent need to increase it. Personnel from the MLSW claim that the ministry lacks formal rules, guidelines, and procedures for programming ministerial activities. 22. The role of the main implementing agency (the PES) is undermined by institutional capacity constraints. Implementation of the KYEAP requires major institutional changes. This will require a greater emphasis on better coordination and improved brokerage/information services provided by the PES. Indeed; (a) the staff caseload of the PES i s too high given its capacity; (b) the level of educational qualification of PES staff i s modest; (c) the PES currently operates without a legal basis (which implies that a large share of its budget i s financed from donor contributions); and (d) the majority of young workers never registered with the PES and, among those who did, most didnot receive assistance. 23. Lack of donor coordination has contributed to the proliferation of small- scale employment programs targeted to youth. The involvement of international organizations i s substantial in terms of the preparation and implementation of employment policies and programs. The kind of involvement varies from advisory to policy desigdimplementation and budget support. Most programs targeted to promote youth employment in Kosovo are either financed or implemented by donors. As such, donors play a major role in defining the policy agenda. However, not all donors seem to have a common agenda in relation to programs and policies that should be implemented. Some donors seem to have higher preference towards VET-related programs while others seem to have higher preference for programs that promote employment (temporary or permanently), such as apprenticeships and entrepreneurship support. As a result, there i s aproliferationof expensive programs with limited scope and coverage. 24. About 7 million are spent on youth employment programs yearly, yet program coverage remains low. The level of yearly expenditure on ALMPs in Kosovo in 2007 slightly surpassed that envisioned in the KYEAP. However, in 2007 ALMPs benefited only 10 thousand youth per year (about 6.3 percent of all the pool of unemployed individuals in this age group). The youth employment program inventory compiledfor this report collected information on 19 ALMPs that have been implemented since year 2000, 12 of which still operate. In terms of cost and coverage, ALMPs currently being implemented have high unit costs (averaging 700 per beneficiary per year) and limited participation (10,300 out of a total pool of unemployed youth of more than 160,000). ix 25. In2007, mostALMPs resourceswere spent on promotingyouth employment through VET-related programs (3 million) and promoting/financing new small business start-ups (2.2 million). Spending on ALMPs to prevent social exclusion in 20007 (1.8 million) was higher than conceived underthe original plan. Most ALMPs are focused on strengthening vocational education and training (10 programs), on providing temporary employment (3 programs), and on promoting youth entrepreneurship (6 programs). 26. However, the success of VET-related programs is being undermined by the sluggish growth inlabor demand. Although most resourcesfor youth ALMPs are spent on VET-related programs, placement rates of trainees are very low. Indeed, the success of these programs i s heavily constrained by the general sluggish demand for labor. While investments in training can provide young labor market entrants with skills, which can improve their employability, training programs are not successful if labor demand i s weak. In 2007, only 40 percent of male graduates of PES training centers, and less than 30 percent of females' graduates found paid employment upon training completion. This i s much less than placement rates (at 70 percent on average) in most other transition countries. 27. For the government and donors it is important to carefully evaluate ALMPs and introduce interventions on the basis of what works in Kosovo. Unfortunately, youth employment programs implemented in Kosovo have not been carefully evaluated. There are many different types of evaluations: (a) process evaluations focus on how a program operates; (b) performance monitoring provides information on the extent to which specific program objectives are achieved; and (c) impact evaluations focus on whether a program has its intended impact. As such, future programs should try to use these available techniques in order to collect evidence of what policies work and don't work inthe Kosovocontext. 28. The report is structured as follows. Chapter Iprovides a general background of macroeconomic and employment outcomes in Kosovo. The chapter then explains the framework, scope, and limitations of this study (Why youth? Why youth injeopardy?). Chapter I1develops a youth employment profile using data from the 2003-2006 Labor Force Surveys and the 2006 Household Budget Survey; analysis includes a profile of youth injeopardy in Kosovo, employment trends, and assessment of youth employment quality and constraints. Chapter I11provides an overview of the current youth programs and policies being implemented in the territory in the context of the Kosovo Youth National Action Plan (KYNAP). X CHAPTERI. THE CHALLENGEOFYOUTH EMPLOYMENTINKOSOVO It's timefor policymakersnow to look beyond the silos, to begin recognizingthat consistent, cost-effective investment in childrenand youth canpayfor itselJ: Providing young people with the resources they need to compete in today'sglobal economy is notjust a moral imperative.It is an economic necessity, too. -James J. Heckman, NobelLaureateinEconomics Abstract This chapter provides a general background of macroeconomic and employment outcomes in Kosovo. The chapter then explains theframework, scope, and limitations of this study (Why youth? Why youth in jeopardy?). This report does not claim to be comprehensive. Indeed, this report focuses on providing a diagnosis of the youth labor market on which policy design can be based. Analysis suggests that sluggish labor demand, slow growth, and lack of investment are the main constraints tojob creation in Kosovo. Although supply side constraints coexists (such as lack of information and skill mismatches),in the medium and long-run, labor policies should focus on promoting growth, investment, and expansion in labor demand. In the short-run, there is a need to provide safety nets for the large pool of unemployed: and especially for those at higher risk (such as youth in jeopardy). On the analytical side, this report provides a new in- depth analysis of youth employment outcomes, trends, and determinants. GENERAL BACKGROUND 1. In recent years, the labor market in Kosovo has substantially suffered from sluggish economic growth, lack of investment, evolving demographics, political uncertainty, and political conflict. 2Kosovo is the poorest territory in South East Europe. In 1988, gross domestic product (GDP) per capita in Kosovo was just 67 percent of the average in Yugoslavia as a whole and just 44 percent of the average o f Slovenia, which i s considered the richest in the region. When Yugoslavia broke apart, Kosovo became even poorer and its economy was hardhit by conflict in the late 1990s and early 2000s. Duringthe time of conflict, individuals from Albanian origin were massively laid off from public employment, which contributed to raise unemployment and informality in Kosovo. Economic growth surged in the immediate post-conflict period, buoyed b y a large inflow of resources for reconstruction. Since then, and especially in the last four Under UnitedNations Security Council Resolution 1244 (1999) 1 years, growth has stalled (Table 1.1). Industrial output has not fully recovered and agriculture, which contributes a large share of the GDP and where the majority of the population earns their livelihood, remains a low-productivity activity. Inflation also remains low. Agricultural productivity i s significantly below neighboring countries. Kosovo receives little foreign direct investment and must rely on foreign assistance to help cover its massivetrade deficit, which was 51 percent of GDP in 2006 (PISG2007). Macroeconomic Trends Proj. NationalAccounts 2002e 2003e 2004r 2005- 2006r 2007p Real GDP growth -0.1 -0.5 2.5 0.5 3.3 2.3 GDPper head (in2002 euros) 1,141 1,147 1,156 1,143 1,161 1,168 ExternalAccounts Current account balance (% GDP)a -50.1 -41.6 -39.5 -40.7 -42.2 -40.5 Foreign assistance (% of GDP)b 42.7 32.4 25.5 22.6 20.7 16.2 Worker remittances (millions of euros)` 35 125 215 262 300 342 Prices CPI Inflation 3.6 1.3 -1.4 -1.4 1.5 2.0 2. There are several structural and "multisector" constraints to employment in Kosovo, but the main one seems to be lack of labor demand. While many labor supply problems coexist in Kosovo, the main binding constraint to employment policy remains to be the stagnant labor demand. The best way for the labor market to absorb workers i s by strengthening the dynamism of the demand for labor in general (Osmani 2002; Godfrey 2003). Doing so requires cross-sectoral efforts, a solid macroeconomy, favorable legislation, a good investment climate, and political stability. As such, increasing labor demand inKosovo will likely be a slow and far-reaching process: 0 -ish labor demand: (a) growth in demand for labor i s generally linked to overall macroeconomic performance and economic growth. According to World Bank (2007), to reduce the overall unemployment rate by half in the next 10 years, assuming an annual labor force participation growth rate of 1.9 percent and growth to productive employment elasticity of 1.6 percent, Kosovo would need to grow at about 6 percent per year. However, real GDP growth has averaged only 0.9 percent during 2002-07. (b) A recent study (PEM 2007) finds that while job creation in Kosovo has been improving and about 63 percent of a random sample of firms claimed to have expandedtheir labor demand inthe years 2005 and2006, the number of new vacancies is not growing at the pace of the inflow of the new participants. In 2006 the employment service of Kosovo registered only 8,561 new vacancies for 326,000 registered unemployed (95,000 of which are between 15 and 24 years of age). (c) The private enterprise sector in Kosovo i s very weak. The sector i s dominated by micro-enterprises, most of which are organized as sole proprietorships or partnerships employing less than five workers in low value added, low margin sectors (such as small scale food production, retailing and trade, restaurants and cafks). 2 A Dutch Decease?: Inflows of foreign aid and UNMIK administration have recently been important sources of jobs for hotels, restaurants, translators, house keepers, nannies, drivers, independent consultants, consulting firms, and NGOs. There is anecdotic evidence suggestingthat the expatriate community contributed to increase the level of wages in Kosovo. As UNpresence diminishes and foreign aid flows are reduced (IMF, 2008), labor demand in Kosovo (and wages) may actually suffer a contraction inthese sectors inthe short-medium run. 3 Low levels of investment: Delays in privatization, political uncertainty, and poor infrastructure are all barriers to investment in Kosovo. Despite a great potential to have a favorable investment climate (given KOSOVO'S low labor costs, proximity to the EU, and availability of natural resources and energy), flows of foreign direct investment (FDI) into Kosovo have been less than desirable (World Bank 2008). This has been mainly due to political uncertainty. Even after these uncertainties are overcome, new uncertainties will appear as investors test the credibility and assess the capacity of the new government to secure their investment. Most of the recent FDIinto Kosovo has been generated as result of the privatization process, which has picked up considerable since 2004. Despite i t s proximity to the EU, very few multinationalcorporations operate in Kosovo. Labor leaislation: Legislation seems not to be a main constraint to employment creation as the rigidity of the employment index i s one of the lowest in the region (Kuddo, 2008). The current employment protection framework provides only for the basic protection of workers not meetingEUstandards. The MLSW prepared a new Labor Law (2004), which has not been approved yet by the Kosovo Assembly. The proposed new law introduces more protection to workers (through generous severance payments and the introduction of a minimum wage; among others) that would increase overall labor costs. A few examples follow. The draft Labor Law restricts fixed term contracts in time and by type of work. Instead of health insurance (due to its absence), the burden of maternity leave payments for the first three months is put on employers which may lead to discrimination of young females in the labor market (especially by SMEs) who already have the worst labor market outcomes. Also severance payments of up to ten monthly wages proposed in the draft are the most generous in the region, partially due to absence of unemployment benefits. There are other restrictive aspects of flexibility, such a high wage premiums for overtime, limitations of work on weekends, and so on. These changes, while improving the employment quality of those with jobs, would likely contribute adversely to labor demand and to expand further the informal sector. 0 Lack of Budget to Finance LMPs:. Most L M P s in Kosovo are financed from donor contributions. A draft law on Promotion of Employment and on Protection According to IMF(2008), foreign assistanceinKosovo i s expectedto halvebetween2007 and 2012 form 9 to 4.7 percentof GDP. So far, the process of privatization has yielded about 150million(World Bank, 2008) of Unemployed, submitted to the Kosovo Assembly in 2005, establishes the general framework for the design and financing of passive and active labor market measures (PISG 2006a). The draft Law lists the following ALMP measures: job counseling and mediation, labor market training and retraining, wage subsidies, public works programs, and self-employment and entrepreneurship promotion measures. Interms of the costs and coverage, ALMPs suggestedby the draft Law tend to be geared towards the programs with the highest unit costs and limited number of participation. The draft Employment Promotion Law anticipates that employment programs will be financed from the following: (a) employers' contribution equal to one percent of the gross wage for each employee; (b) workers' contribution equal to one percent of the gross wage; (c) 5 percent of privatization proceeding. The act has not been promulgated, mainly due to the lack of financial means and because it relies of contributions from firms and workers; which would increase labor costs and contribute adversely to labor demand and to further informalization of the economy. The draft law also envisages that no less than 30 percent of the funds available shall be disbursedfor ALMPs. Currently, most active labor market measures are financed by contribution from donors. A country with high unemployment or an undeveloped formal sector will need to depend, at least initially, on central budget support for most if not all employment programs. As the labor marketmatures, financing may be split between the central budget and employer/employee contributions. As full employment i s reached, all financing may be shiftedto employers and employees. Also indetermininghow different programs are financed, particularlyincountries with rapidly growing unemployment rates, it i s critical that a legal and budgetary distinction be made between the source of financing for income support and that for other employment programs. Without such distinctions, income support program expenditures will "crowd-out'' investments in employment service and other active programs (Kuddo, 2008). Education: Duringthe period of conflict, Kosovo reliedon an informal (and rather low quality) education system. During this time, massive layoffs from the public sector and long unemployment spells contributed to a rapid depreciation (and a slow renewal) of skills deemed necessary by the new labor market. Inadequate skill levels are normally associated with education and training policy. The education and training systems are currently unable to address the employability challenges faced by the working age population. The increase in the overall quantity of education and training was not matched by an increase in quality and relevance; and most importantly by the creation of new jobs. The coverage of training still remains limited compared to the unemployment dimension. Lifelong learningopportunities and the possibility for early school leavers to return to the education and training system are still limited both in terms of quantity and quality. School drop-out rates after lower-primary education are large especially among girls and in rural areas (LFS 2006); although secondary enrollment and completion rates remain comparable to ECA standards (Edstats, 2005). Furthermore, the lack of a qualificationframework and a perceived low quality of tertiary education complicates matters further. The lack of an accepted qualification system i s pushing employers to use highly experienced workers as a 4 proxy for occupational qualifications, thereby limiting employment opportunities for young people (albeit educated) to enter inthe labor market. UNEMPLOYMENT IN Kosovo 3. High levels of unemployment remain a major challenge in the Kosovo labor market. Historically, Kosovo was one of the regions with the highest unemployment rates in the former Yugoslavia. High rates of unemployment in Kosovo have become a matter of policy concern, especially because of their negative social and economic repercussions. Unemployment i s a waste of human capital and i s often associated with causing social andfinancial distress among individuals, families, and communities. 4. Kosovo has the highest unemployment rate in the ECA region at 45 percent; followed by Macedonia (36 percent), Montenegro (31 percent), and Bosnia and Herzegobina (30 percent). Labor force participation in Kosovo among the working age population (at 53 percent) i s substantially below the ECA average (65 percent) and the second lowest inthe ECA region after Turkey (5 1percent) (Angel-Urdinola and Macias, 2008). Since 2003, employment indicators in Kosovo have improved slightly. Estimates based on data from the Labor Force Survey (LFS) suggest a decline in overall unemployment from 52 percent in 2003 to 45 percent in 2006 and an increase in employment rates from 25 percent in 2003 to 29 percent in 2006, while labor force participation remained roughly unchangedinthe period of study at 53 percent (Table 1.2). Age Group 15-64 Employment Unemployment Labor Force Rate Rate Participation 2003 25.3 52.3 53.0 2006* I 29.0 44.6 52.3 Source: Angel-Urdinola and Malaiyandi (2008) using LFS data* Estimatesfrom SOK (2006). 5. By the end of 2007, the number of registered with the public employment services (PES) unemployed reached 334,600 individuals, showing a 2.6 percent increase compared with December 2006. Most registered unemployed were aged 25-39, (147,400 individuals) and 15-24 (98,700 individuals). 6. Public employment services (PES) have quite a low turnover of registered unemployed. In 2007, the inflow of newly registered unemployed equaled 7 percent of the total registered unemployed, while only 4.4 percent of the unemployed were erased from the records for various reasons in the same period; including only 1.8 percent of registered job seekers who were placed injobs (Table 1.3). These outflows rates are very low for international standards. For instance, in Macedonia, which i s the second country in the region with the highest unemployment rate, outflow rates reach up to 30 percent per year (Kuddo, 2008a). 5 Registered unemployed Inflow rate In % Outjlow rate In % Placement rate In % Total 7.01 4.43 1.80 Female 6.70 3.81 1.41 Youth 15-24 7.66 4.31 2.51 Albanian 6.87 4.62 1.87 Serbs 10.74 2.61 0.62 Other minorities 6.53 2.38 1.54 Unskilled 6.27 3.36 1.11 Semiskilled 4.81 2.26 1.25 Skilled 4.52 2.89 1.17 Secondaryschool 8.73 6.38 2.97 High school 17.19 21.24 6.59 University 36.48 34.61 21.21 7. The pool of the registered unemployed in Kosovo has the following main characteristics(2007): 0 Almost 47 percent o f the registered unemployed are females, 29 percent o f which are youth aged 15-24; 0 Around 91 percent of the registered unemployed are Albanians, 4 percent are Serbs andthe rest are from other minority groups; 0 Seventy three percent o f all registered unemployed have attained incomplete secondary education at the most. This group of less educated individuals display "registered" unemployment rates varying between 67 and 71 percent. On the contrary, individuals who have attained secondary general and higher education have unemployment rates of 6 to 7 percent. This confirms that individuals with a low level of education are more affected by unemployment; 0 About 91 percent of the registered unemployed are long-term unemploved. High levels of long-term unemployment (defined as unemployment spells longer than 1 year) are particularly detrimental from a social perspective, since the concerned individuals and their families are particularly threatened by poverty and social exclusion; 8. At the same time, the unemployment register is inflated by a highnumber of people who are not actively looking for work. The mandatory requirement o f the "unemployed status" for obtaining the status of social welfare beneficiary i s causing the Unskilled (SCED 0-2): not completed elementary school; semi-skilled (SCED 3): elementary school completed, 3-6 months in-service training; skilled (SCED 3A): secondary school not completed, 3-6 month technical training; secondary school (SCED 3C): secondary school completed, 4 years technical gymnasium; high school (SCED 4): university not completed, engineer graduation; university (SCED 5A or 6): university graduates or post-graduates. 6 registration of persons who do not classify as unemployed according to international standards. Since there i s no obligation to confirm periodically their (un)employment status and re-register themselves after initial registration, many job seekers stay on the roster while some of them are de facto working informally, emigrated or are economically inactive thus inflating the actual number ofjob seekers. MAIN FOCUSOF THE REPORT 9. Despite alarming employment outcomes for the overall population, this report focuses on youth: Youth i s a crucial time of life. Makinga good start inthe world of work can make it easier for many young individuals in Kosovo to become productive in their communities. In today's environment, younger generations are shaping society. Unemployment early in a person's working life has been shown to increase the probability of future joblessness and lower future wages. The start toward a working life i s considered by many social scientists as the most important marker of independence - and long spells of inactivity during youth as quite costly (World Bank; WDR 2007). Young people are important components in development and, in many cases, are catalysts for social, economic, and political change. 0 High and rising unemployment levels among youth are associated with higher crime and social instability. This fact i s particularly important in Kosovo, given i t s recent history of conflict and political change. The evidence on the association between large youth cohorts and violence and conflict i s striking. Countries in which young adults (aged 15-29) made up at least 40 percent or more of the adult population were more than twice as likely to experience an outbreak of civil conflict in the 1990s compared to those with fewer youth populations (Cincotta, Engelman, and Anastasion 2003) (Box 1.1). Powerful demographic forces are working to expand the labor force, creating problems of unemployment, especially among youth. Kosovo has the youngest population in Europe. According to 2005 Labor Force Survey (LFS) estimates, individuals aged 15 and 24 account for about 30.5 percent of the working-age population, and 20 percent of total population (vs. 13.9 percent in Europe on average). Kosovo has the largest share of population aged 15 to 25 in Europe (UNDP 2006). It is expected that roughly 200,000 young people will reach working age in the next five years, while the number of people reaching retirement age will be approximately 60,000 (PISG 2006a). Worse than that, many workers over retirement age are continuing to be engaged in the labor market as available pensions are significantly lower than average wages.6 These The average pension for retirees i s at 45 per month, while average wages are at 216 per month (see Angel-Urdinola and Malaiyandi, 2006) 7 combined phenomena are contributing to an increasing backlog of unemployed youth. Box 1.1: Doesa Large Youth Population Cause Conflict? Almost all of the countries with a young adult proportion of 50 percentor more are ineither Sub-Saharan Africa or the Middle East and North Africa. A decline inthe birthrate of 5 births per 1,000 would correspondto adecline of over 5 percentin the probability of civil conflict. Cincotta, Engelman, and Anastasion(2003) identify five stress factors that make states more vulnerable to instability and civil conflict: (a) a large youth population, (b) political volatility, (c) rapidurbanpopulation growth, (d) competition for cropland and fresh water, and (d) proliferation of HIV/AIDS.A youth bulge i s only one factor. Researchershave suggestedthat it is the presence of more than one factor at the same time that may create the conditions for conflict. This view is supportedby Henrick Urdal(2004), who finds that the risk of conflict i s heightenedby the combination of a large youth cohort, poor economic growth, and limited opportunities for migration. The studies highlight severalkey elementsregarding youth: (a) youth issues are cross-sectoral. The studies demonstratehow unemployment, migration, citizenship, and governanceare all interdependent with respectto conflicts involving youth; (b) youth are not inherently a threat to be contained, particularly inthe presenceof opportunities consistent with their expectationsandenergies; and (c) youth are a potential asset,as demonstratedby their preference for economic opportunities over violence, hererepresentedby the mitigatingeffects of migration on conflict. Sources: Cincotta, Engelman, and Anastasion(2003); Urdal(2004). Youth are particularly vulnerable to unemployment. Recent improvements in employment outcomes in Kosovo did not benefit the young population (15 to 24). Estimates using LFS data indicate that unemployment, employment, and participation rates among youth remained roughly unchanged in the 2003-2006 period at 76 percent, 11 percent, and 46 percent respectively (more details in Chapter 11). These are very unfavorable employment outcomes. Indeed, youth employment outcomes in Kosovo are alarming compared to ECA standards. The youth unemployment rate in Kosovo i s still about 4.8 times higher than the average for the European Union.7 Another statistic of concern i s that Kosovo has the highest percentage o f youth (46.5 percent according to 2005 LFS estimates) that are in neither education nor employment in South East Europe. This i s more than twice the percentage found in Serbia (22 percent) or Romania (19 percent) and higher than that in Albania, Bosnia and Herzegovina, and Bulgaria in the same year. Kosovo displays by far the highest youth unemployment rate in the ECA region (Figure I. 1). 'According to Eurostats, youth unemployment (15-24) inEU-27 countries was at 16percentinMay 2007 8 Figure 1.1: Kosovodisplays the highestyouth unemploymentrate inthe ECA region. 70.0 - 60.0 - 6 MKD 50.0 6 POL 30.0 - 6 HRV * G E o BGR 20.0 - M " A OM 10.0 0.0 0 1000 2000 3000 4000 5000 6000 7000 GDP per capita Source: World Development Indicators (2005). Data for Kosovo from World Bank Estimates using 2005 LFS . 0 Young individuals in Kosovo are poorer than average. Children and young people under age 24 are disproportionately likely to live in extreme poverty. Approximately 45 percent of the PO ulation lives in poverty and 17 percent in extreme poverty (World Bank 2007). Individualsunder age 25 comprise about 57 B percent of people facing extreme poverty, with young people aged 15 to 24 comprising 22.4 percent (UNDP 2006). 0 Forty percent of all unemployed in Kosovo are between 15 and 24 years of age. LFS estimates indicate about 30 percent of the WAP and about 38 percent of all the pool of unemployed inKosovoi s comprised of youth between 15 and 24 years of age. 10. Within the broader problem of youth labor market outcomes, this report Pays particular attention to Youth in Jeopardy (i.e. extreme poor and unemployed youth). The traditional focus for discussion of youth employment problems has been on unemployment. In addition, this report raises awareness of a group of vulnerable youth (or youth in jeopardy). The government of Kosovo will need to focus and prioritize its youth policy agenda. Currently, there are 163,000 young individuals in Kosovo who are unemployed. As such, the government may consider the possibility to target interventions and limitedresources to those who need them the most through the creation of safety-nets for vulnerable groups of the population. Youth injeopardy constitute an important group at risk in Kosovo and one that i s less likely than others to benefit from future improvements in labor demand. B y focusing on those in need, Kosovo can avoid creating an underclass of excluded groups, poverty traps, and intergenerational transmission of poverty: *The groups most at risk in terms o f income poverty include children, the elderly, female-headed households, the disabled, the unemployed, precarious job holders, residents of secondary cities, and non- Serb ethnic minorities. 9 Twenty percent of all unemployed youth in Kosovo live in extreme poverty (approximately 33,000 individuals), defined as living in households in the first [poorest] consumption quintile. These individuals (Le. youth in jeopardy) are likely to be vulnerable to social exclusion, long-term poverty, and lack of second chances in Kosovo. Youth injeopardy are less likely than the average youth to benefit from a pick up in the demand of labor and/or to cope with unemployment by migrating, studying, or receiving family support. Youth in extreme poverty display the worst employment outcomes. In Kosovo, youth living inextreme poverty display less-favorable employment outcomes than average (that is, lower employment and higher unemployment rates). One would expect that poorer youth in Kosovo would have higher employment rates and lower unemployment rates as it occurs in many other developing countries (Godfrey, 2003) because i)poor youth generally work in subsistence agriculture and ii)they a less likely to "afford" joblessness. However, this i s not the case in Kosovo. The unemployment rate for youth in the poorest consumption quintile i s at 86 percent, while for youth in the richest consumption quintile i s at 68 percent (HBS 2005/06 estimates). Employment rates for youth aged 20 to 24 are twice as high among those living in households in the highest quintile compared to those living in households in the poorest quintile (26 percent compared to 12 percent) (Angel-Urdinola and Malaiyandi, 2006). Furthermore, youth who live in extreme poverty and who do have jobs are generally engaged in low-quality unpaid subsistenceagriculture. Youth "paid" employment i s a important safety net for households in extreme poverty: While only a small share of all households have "paid" employed youth, youth wages represent a significant share of household overall wages, especially among the poor and extreme poor. HBS calculations indicate that while less than 10 percent of all households benefit from wage income brought by their young members, for those who do, youth wages constitute a significant share of household wage income (Table 1.3). Indeed, youth wages among households in the poorest quintile account (on average) for 61 percent of overall household wage income for those households with at least one employed youth. Socioeconomic Sample Size Percent of Households Youth Wageas Share Group with Youth Wage of Total Family WageIncome PoorestQuintile 2,506 7.07 61 42 3,811 8.89 52 Q3 3,706 8.05 48 Q4 3,600 6.89 45 Richest Quintile 6,494 10.01 46 10 0 Providing safety-nets through active labor market policies (ALMP) targeted to youth in ieopardy can reduce extreme Doverty three times as much as a random allocation, while having a similar impact on relieving unemployment. Micro- simulation techniques indicate that safety-nets targeted to youth in jeopardy can play an important role in reducing extreme poverty rates (more details in Chapter 11). 0 Resources for youth policv are scarce: While youth in jeopardy i s a narrow population, it i s still larger than the total youth population that the government i s currently being able to serve with Labor Marker Policies given the current fiscal and institutional capacity (Chapter 111). Of course, this does rule out more investments and budget support for youth policy in the near future, which would enable to develop a broader scope and coverage of youth-related policies. REPORT'S SCOPE 11. The main objective of the report is to provide diagnosis on youth employment on which policiescan eventually be designed. Inrecent years, the topic of youth employment in Kosovo has been studied. There are reports produced by PISG institutions, international organizations, and donors; which compile information about youth employment trends, skills mismatches, employment promotion, and labor demand constraints for this segment of the population. Nevertheless, studies fall short on addressing issues related to youth employment quality, targeted employment policy, regional differences in youth employment outcomes, and relationships between youth employment and household poverty. This report uses available micro-data (the Labor Force Survey, LFS; and the Household Budget Survey, HBS) and develops a more in- depth analysis of youth employment outcomes, trends, and determinants; focusing on the aforementioned information gaps. The Provisional Institutions for Self-Government (PISG) developed the 2007-2010 Kosovo Youth Employment Action Plan (KYEAP), which includes a broad set of policy options to improve youth employment in the territory. The Ministry of Labor has expressed an interest in obtaining analysis on youth labor marketsthat couldfacilitate design, implementation, and prioritization of this action plan. This endeavour will benefit from the analysis and diagnosis provided in this report (more details on the KYEAPin Chapter 111). 12. Finally, this report provides a new inventory of existing Active Labor Market Programs (ALMPs) in Kosovo (Chapter 111). Prior to this study, there was not compiledinformation on ongoing youth ALMPs in Kosovo. As such, there was a general lack of knowledge about how much Kosovo was spending on youth employment programs and about the effectiveness of such spending. The World Bank team preparing this report interviewed several agencies, line ministries, NGOs, and donors; and compiled information scatteredin various documents - to produce an updated inventory of ALMPs in Kosovo. This inventory provides information on the scope, budget, coverage, and lessons learned from several ongoing ALMPs. This information will allow policy makers get an idea what set of polices works/do not work in the Kosovo context when designing programs targetedto unemployed youth. 11 CHAPTER11. WHAT DOWE KNOWABOUT YOUTH EMPLOYMENTINKOSOVO? Abstract This chapter contains two main sections. The first section develops an employment profile for youth in Kosovo using 2003 to 2006 LFS data. Results indicate that youth labor market indicators in Kosovo are discouraging: first, the majority of unemployed youth in Kosovo could be categorized as long-term unemployed. Second, lack of experience is a commonfeature afecting unemployedyouth and young adults, especially females. Third, Youth in Kosovo display a very dificult transition from school to employment. Fourth, young workers in Kosovo are employed in jobs that display low quality, low returns, and high levels of informality. The second section develops a profile of youth in jeopardy in Kosovo using 2005/06 HBS data. Estimates indicate that approximately 20 out of every 100 unemployed youth in Kosovo live in extremepoverty. This group is mainly comprised by low-skilled,female, and rural youth. 1. This chapter provides an employment profile of youth inKosovo using 2003- 2006 Labor Force Surveys (LFS) and the 2006 Household Budget Survey (HBS) (Box 11.1). Besides low employment, and high and predominantly long-term unemployment, youth in Kosovo are disadvantaged in many other ways: (a) a significant proportion of young people (especially rural poor youth and young women) are inneither education nor employment or training; (b) a significant proportion of young people leave school without a high-school degree, partly due to low returns to education; (c) the quality of employment among young workers i s less than desirable. Table 11.1. MainEmploymentIndicatorsIncludedinthis Chapter LABOR MARKET Calculation Description INDICATORS Labor force part.rate (%) LF(U+E) + WAP Share of WAP in the labor Employment rate (%) Unemployment rate (%) U + LF Share of unemployed inthe (U+E) labor force. Inactivity rate (%) WAP - LF + WAF' Share of WAP not inthe labor market. Joblessnessrate (%) U+ (WAP- LF) + WAP Share of WAP not working, - Enrolled excluding students. U=Unemployedpopulation; E=Employedpopulation. WAP =Populationaged 15to 64. LF=Population inthe labor force (employedor unemployed). 12 2. Our definitionof youth includesindividualsaged 15 to 24. Although there are alternative definitions of youth that are linked to certain rights and responsibilities provided by national law, this study uses the same definition as used by the United Nations Youth Program, which covers individuals aged 15 to 24. Box 11.1: A briefdescriptionof the data usedinthe report ~~ ~ ~ This report presents an employment profile for youth using data from 2003 to 2006 Labor Force Surveys (LFS) and from the 2006 Household Budget Surveys (HBS). The LFS is the core survey o f the Statistical Office of Kosovo (SOK) to monitor employment outcomes in Kosovo. The LFS was introduced by the Statistical Office o f Kosovo in 2001 in order to collect comparable information on employment and unemployment in the territory of Kosovo, and make them available to local and international institutions. The survey's sample i s stratified and nationally representative. Sampling includes the selection of 360-400 enumeration areas, which correspond to about 3200 households (19,000 individuals approximately). The LFS collects information on demographics, education, and labor market outcomes for individuals aged 15 and above. The HBS provides data to monitor poverty and inequality and collects some (albeit limited information) on employment. The survey's sample i s stratified and nationally representative. The main advantage of the HBS is that allows comparison o f employment outcomes by socio-economic groups. The major caveat concerning these two data sources is related to representativeness o f the samples. Kosovo has not had a reliable census since 1981. Therefore, the current surveys still use the 1981 population frame as the starting point for sampling despite likely changes in the population since then. Obtaining employment indicators in levels (i.e. population extrapolations) is likely to provide unreliable results. As such, most estimates presented in this article refer to population rates (and not levels). For years o f available data (2003, 04, and 05), main employment indicators were calculated and compared to those published in SOK publications. While most estimates are similar, there are milddiscrepancies as quantified inthe Table below. Employment Rates UnemploymentRates Inactivity Rates WB* SOK** HBS* WB SOK HBS WB SOK HBS Age Group15-64 2003 25.3 25.3 30.4 52.3 NIA 45.6 47.0 NIA 44.0 2004 28.6 27.9 29.1 39.6 39.6 51.6 52.6 53.8 39.8 2005 28.8 28.9 31.7 41.5 41.3 46.8 50.7 50.8 40.3 2006 NIA 29.0 29.7 NIA 44.6 49.0 NIA 41.1 41.7 Age Group15-24 2003 10.69 NIA 13.4 76.6 NIA 73.0 54.28 NIA 50.3 2004 12.65 11.3 11.0 63.9 66.5 19.3 64.99 NIA 41.1 2005 10.6 10.5 13.9 10.9 70.5 14.5 63.61 NIA 45.6 2006 NIA 11.5 10.3 NIA 15.5 18.1 NIA NIA 51.1 * World BankEstimates usingLFS andHBSdata. ** Estimatesfrom SOK reports. 3. For comparison, this study also includes analysis of other groups, namely young adults (aged 25 to 34) and working-age adults (aged 35-64). This study also provides analysis of two subgroups among youth-those aged 15-19 and those aged 20- 24411 order to make distinctions between youth in and out of secondary-school age. While most individuals aged 15 to 19 are expected to be in school rather than participating in the labor market, the opposite occurs with individuals aged 20 to 24. As such, these two groups are likely to display different employment outcomes, especially 13 Age group Percent of Total Unemployed Percent of the WAP 15-24 38.4 30.5 25-34 31.2 24.0 35-54 27.5 34.4 55-64 2.9 11.1 YOUTH LABOR MARKET INDICATORSAND TRENDS 4. Since 2003, employment indicators in Kosovo have remained rather stable, with some slight improvements in overall employment and unemployment rates. As mentioned in Chapter I,Kosovo has the highest unemployment rate inthe ECA region at 45 percent; followed by Macedonia (36 percent), Montenegro (31percent), and Bosnia and Herzegovina (30 percent). Labor force participation in Kosovo among the working age population (at 53 percent) i s substantially below the ECA average (65 percent) and the second lowest in the ECA region after Turkey (51 percent) (Angel-Urdinola and Macias, 2008). There was a decline from 52 percent to 45 percent in overall unemployment rates and an increase in employment rates from 25 percent to 29 percent for the working-age population between years 2003 and 2005. Labor force participation remained roughly unchanged during the period of study at 52 percent. These improvements, however, did not benefit the young population. Estimates for the young population indicate that unemployment, employment, and participation rates remained roughly unchanged between 2003 and 2006 at 76 percent, 11 ercent, and 46 percent, respectively. These are very unfavorable employment outcomes. r Age Group 15-24 Employment Unemployment Labor Force Inactivity Rate Rate Participation Rate 2003 10.7 76.6 45.7 54.3 2006" 11.5 75.5 46.9 53.1 Age Group 15-64 2003 I 25.3 52.3 53.0 47.0 2006" I 29.0 44.6 52.3 47.7 "Estimates from SOK (2006). Source: World Bank Estimates using 2003-2005 LFS data. Unemployment rates in Kosovo may be inflated as individuals do not seek for jobs actively although they claim so (Le. many rely on being registered inthe PES as the onlyjob search method). Also, many workers work from time to time in the informal sector, which i s not captured by the LFS questionnaire, which relies on a one-week recall period to calculate employment indicators. 14 5. Despite improvements since 2003, young females display the worst employment outcomesinthe labor market. Employment outcomes for females are less favorable than those for males, especially among youth. For females, employment and participation rates are very low, not only for young women but for the overall female working-age population. As expected, employment rates among female youth are lower than among females on average. However, while labor market indicators for young males have been stable (roughly unchanged) since 2003, labor market indicators among females (albeit worse than among males) improvedbetween 2003 and 2006 (Figure11.1). Figure 11.1: Young females participate very little inthe labor force comparedto young males, and the few participants are likely to be unemployed. Male Employment Rates 50'01 Female Employment Rates -15-24 -I- -15-64 40.0 30.0 4 30.04 21.2 10.2 11.9 11.9 'O'O 1 15.6 17.6 20.04 -15-24 - I- -15-64 4.4 5.6 "." %7 I 2003 2004 2005 2006. 2w3 2004 2005 2006' Male UnemploymentRates Female UnemploymentRates 100.07 -15-24 - 100.0, I- -15-64 90.0 - 80.9 ... 80.0 80.0 - + 77.7 64.1 67.9 70.0 - E.; . - , -. 53.8 80.0 - *.61.3 - - - - - .-- --I 60.6 64.7 A1 1 _... 50.0 - 40.04 m . . .... ... ..-- 30.9 -32.9 - - - - 34.3 .. 40.0 - - 30.0 30.0 - -15-24 I- -15-64 20.0 2w3 2004 2005 2 w 2003 2004 2005 2006. 80.0 , Male LaborForce ParticipationRates FemaleLabor ForcePartlcipatlonRates 80.0 ! - ~ I 70.0 -15-24 I- -15-64 50.0 30.0 - 20.0 - -15-24 - I- -15-64 .. 2003 2004 2W5 2006' Source: WorldBank calculationsusing 2003-05 LFS data. Estimatesfor 2006 from SOK (2006). * 6. Employment and participation rates are higher for young individuals with higher levels of education. Employment and participation rates are higher among youth aged 20 to 24 than among youth aged 15 to 19. This occurs because youth in the latter group are largely enrolled in secondary education. For youth aged 20 to 24, having 15 attained secondary education i s associated with higher employment and participation rates, as i s generally the case. Unemployment rates are higher among youth who have attained secondary education compared to those who have attained primary. This occurs because low-skilled young workers are more likely to be employed in low- uality subsistence agriculture (that is, unpaid work inthe agriculture sector) (Figure 11.2). % Figure 11.2: Unemployment rates are slightly higher among higher-skilledyouth, inpart becauselow-skilled youth are likely to be employed insubsistence agriculture. (%) 25.0 Employment Rate by Education (15-19) (Y Employment Rate byEducation (20.24) -Cempl.t. .......C0mpl.t. Primary eeoondary 15.0 3.3 1.9 0.0 4 0.0 5.0 1 2003 2004 2005 2003 2004 2005 (%) LaborForce ParticipationRate by Education(1519) Labor Force Participation Rate byEducation (20.24) 70.0 1 r4 ....57.2 ..............5a,3 30.0 30.0 10.0 10.7 9.5 10.0 0.0 4 0.0 i 2003 2004 2005 2003 2004 2005 UnemploymentRate by Education (15-19) 90.0 90.0 , UnemploymentRate by Education (20-24) 83.8 85.0 - ...,159...... 80.0 - 76.1 75.0 - ........ 70.0 - ........72.3 65.0 - 60.0 60.0 - 55.0 55.0 - 59.4 50.0 "_.", 2003 2004 2005 2003 2004 2005 Note: Employment inSubsistence Agriculture = Unpaid family work inagriculture. Source: World Bank calculations using 2005 LFSdata. 7. Youth in Kosovo display a very difficult transition from school to employment. Figure 11.6 plots the share o f individuals who are employed, enrolled in school, and jobless (that is, inactive or unemployed), by age and gender. Labor market problems faced by individuals during their young years are likely to accompany them into adulthood, especially among females. School enrollment decreases substantially between ages 15 and 19, especially among females, but drops in enrollment are not lo LFS estimates indicate that 81.2 percent of all youth with no education engage in subsistencelunpaid agriculture. 16 accompanied by similar increases in employment (that is, as students drop out of school they are likely to become jobless). Among young females, school-to-work transition i s scarce. It takes about 10 years for young males to transition from school to work, as measured by the time it takes from when 50 percent of the population i s enrolled in school to when 50 percent of the population i s employed (Figure 11.3). Inthe neighboring country of Macedonia, using a similar definition, Angel-Urdinola and Macias (2008) find that its takes four to five years for young males to transition from school to employment. In developed countries, it takes an average of about 1.4 years for new young entrants to get a stable job. The comparable time for less-developed countries is four years, more than twice as long. The lack of good employment opportunities has caused youth discouragement and idleness inKosovo. Figure 11.3: It takes about 10years for young males to transition from schoolto work, as measured by the time it takes to shift 50 percent of this populationfrom being enrolled in school to havingemployment. Males #males 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 15 16 17 18 19 20 21 22 23 24 25 28 27 28 29 30 31 32 33 34 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Age Age Yo Jobless Yo Employed Yo Enrolled Source: World Bank calculations using 2005 LFSdata. 8. There are important regional differences in youth employment indicators that are associatedwith the compositionof regional economic activities. Inparticular, estimates indicate that youth employment rates are higher and youth unemployment rates are lower in Gjakova, Gjilani, and Peja than nationally (the aforementioned are traditionally agricultural regions). According to Angel-Urdinola and Malaiyandi (2008), this is partly due to the fact that the agricultural sector is displaying a high demand for young low-skilled male labor. Labor force participation i s higher than nationally in regions with a large tertiary sector, such as Mitrovica and Prizren. Nevertheless, these regions display the highest unemployment rates and lowest employment rates nationally. These findings hold true by gender. Female employment rates are higher and female unemployment rates lower in regions with a more developed agriculture sector, while female participation and unemployment rates are larger in regions with a large tertiary sector. The secondary sector (that is, manufacturing) absorbs very little youth employment (at most 10 percent in regions where this sector i s more representative) (Angel-Urdinola and Malaiyandi 2008) (Table 11.4). 17 Box 11.2: The Education Sector inKosovo In 2000 Kosovo went into a period or reformof its educationalsystem. The reform introduced nine years o f compulsory education: five of primary education; two o f low secondary education: and two o f high secondary education. Secondary education includes general secondary education, which lasts for four years preparing students for university, and vocational secondary education which lasts generally three years. PrimaryEnrollment: Primary gross enrollment rates in Kosovo (at 95 percent) are comparable to those of other ECA countries given Kosovo's levels of development as proxied by per-capita GDP. Student teacher ratios at the primary level (at 20 students per teacher) are high for ECA standards (at 16 students per teacher). Secondary enrollment:Kosovo's gross secondary education enrollment rates (at 75 percent) are rather low for ECA standards (at 90 percent). Drop-out rates in upper-secondary education are large among females and inrural areas. Inparticular, secondary attainment rates inrural areas and among females (at 47 and 42 percent respectively) are below the national average (at 60 percent). Tertiary enrollment:Enrollment inpost-secondary education inKosovo (at 20 percent) is lower than that in the ECA region (at 47 percent). The lack of a qualification framework and a perceived low quality of education are two main challenges of post-secondary education in Kosovo. The lack o f an accepted qualification system i s pushing employers to use highly experienced workers as a proxy for occupational qualifications, thereby limiting employment opportunities for young people (albeit educated) to enter in the labor market. Source: Angel-Urdinola and Kutateladze (2008). SOK (2005). EDSTATS (2005). and HBS 2005/06 data. Table 11.4. Mitrovica is the region displaying the worst youth employment outcomes. Age Group 15-24 ~~ ~ Employment Unemployment Participation Total 10.6 70.9 36.4 REGION Gjakova 17.4 47.4 33.0 Male 27.8 38.3 45.1 Female 6.8 67.3 20.8 Gjilani 11.0 63.3 30.0 Male 12.6 61.3 32.6 Female 9.5 65.5 27.6 Mitrovica 7.0 84.8 45.8 Male 10.3 79.6 50.2 Female 3.3 91.9 41.0 Peja 16.5 52.8 35.1 Male 25.6 39.0 42.0 Female 6.6 76.0 27.5 Prizren 10.8 67.3 32.9 Male 18.6 59.8 46.2 Female 3.2 84.1 20.0 Prishtina 7.8 81.4 42.0 Male 9.8 78.1 44.7 Female 5.9 84.9 39.4 Ferizaj 8.4 70.1 28.1 Male 12.1 67.9 37.6 Female 4.4 75.2 17.8 Source: World Bank lculations using 2005 LFSdata. 18 QUALITY OF YOUTHEMPLOYMENT 9. Young workers in Kosovo are employed injobs that display low quality and high levels of informality. High inflow rates and high unemployment rates are not the only problems faced by the youth labor market. Anecdotal evidence suggests rapid increases in youth informality, especially in the construction and agriculture sectors. According to the Provisional Institutions of Self-Governance (PISG) and ILO (2006), in 2005 about 20 percent o f all employed youth did not have an employment contract, 37 percent were not entitled to paid leave, 55 percent were not entitled to paid sick leave, and 73 percent were not registered in Social Security. Moreover, in 2004 around 21 percent o f all young workers claimed to have worked for more than 50 hours a week. Low quality of jobs i s likely to affect youth from poor and vulnerable groups, mainly in agriculture-related activity, who generally accept (due to necessity) the conditions offered by existingjobs, albeit precarious (Box 11.3). 10. About one-third of all young individuals engage in unpaid work. Estimates from the 2005 LFS indicate that a large share of youth employment i s engaged in unpaid family work, especially between ages 15 and 19. However, the share of unpaid employment drops quickly and steadily with age as young individuals reach adulthood. Unpaid work among youth i s more frequent among males than among females (Figure 11.4). Unpaid employment among males decreases rapidly with age, but not so among females. At age 33 the share of unpaid females becomes larger than that of males and stays so untilretirement age. Less than 18 percent of all youth engage in self-employment or firm ownership activities (Table 11.5). Indeed, even at prime adult age, self- employment and firm ownership remain low, absorbing only about 20 percent and 10 percent, respectively, of overall employment. Figure 11.4: While more frequent amongmale youth, unpaid employment decreasesmore rapidly among males, especiallyonce they reach adulthood. I 70 Youth- *Adults 60 60 70! 50 E N t30 20 10 0 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 15 18 21 24 '27 30 33 36 39 42 45 48 51 54 57 60 63 Age Age Source: Angel-Urdinola and Malaiyandi (2008) using 2005 LFS data. Shares by age have been smoothed using apolynomialregression. 19 11. Many young workers and their families rely on work in the informal economy and on migrationto cope with the risk of unemployment and low earnings. About half of all youth employment can be found in the informal economy, defined as those without employment contracts and/or working in enterprises not formally registered. B y getting informal jobs youth acquire experience, which may contribute positivelyto eventually get a formaljob. Poor enforcement of the labor law, coupled with low awareness of rights at work, pushes many young workers into the trials of the informal economy. The degree of informality i s even more pronounced if appraised according to whether enterprises comply with the statutory provisions on working conditions-especially social security and hours of work. The degree of informality was higher if measuredaccording to whether payroll taxes were paid or withheld (67 percent of the respondents were informally employed based on this criterion (Corbanese and Rosas 2007). Box 11.3: Youth Informality Youth informal employment and violations o f fundamental labor standards remain pervasive in Kosovo. Unfortunately, the Labor Force Survey does not disaggregate information on the informal economy, and official estimates are not available. Nevertheless, based on a World Bank 2003 survey, about half of the employment in Kosovo was in the informal economy, according to the L O criteria o f whether employees had a signed contract and the enterprises were registered. The degree of informality was even more pronounced if appraised according to whether enterprises complied with the statutory provisions on working conditions+specially social security and hours of work. Less than 5 percent o f young people are employed in a career job, enjoying decent working conditions and social protection. Over half of working youth are dissatisfied with thejob they have and 34 percent want to change. Source: Kuddo (2008) Table 11.5. Self-employment and firm ownership account for less than25 percent of all employment, at all age groups. 15-24 48.5 6.3 11.9 33.2 25-34 56.3 6.0 16.3 21.4 35-54 63.8 8.4 16.5 11.3 55-64 64.7 5.1 12.2 18.0 12. Unpaid work is more frequent in agricultural activities, rural areas, and among younger workers with lower levels of education. According to Angel-Urdinola and Malaiyandi (2008), being a youth increases the probability of being engaged in unpaid work by 15 percent compared to adults of primeworking age (35-54). Controlling for other characteristics, secondary and tertiary school attainment i s associated with a 10 to 15 percent lower probability of being in unpaidwork. Workers engagedin the tertiary sector (mainly services and transport) are associated with a 50 percent lower probability of being engaged in unpaid work compared to workers in the primary sector (mainly agriculture and mining).Finally, workers in Gjakova, Gjilani, and Peja (all regions with a large primary sector) are associated with up to a 10 percent higher probability of being engagedin unpaidwork. 20 13. Over one-third of all young workers are employed on a part-time or temporary basis. Figure II.5 provides information on whether workers are employed on a full-time/part-time or a temporary/permanent basis. Results indicate that about 30 percent of all youth are employed on a temporary basis. This share i s even larger (between 40 percent and 50 percent) for adults of prime working age. Although the share of temporary work i s lower among youth than among adults, results indicate that youth engaged in temporary employment have very short (and thus unstable) contracts. Indeed, 30 percent of all workers aged 15 to 24 who are working intemporaryjobs have contracts with duration of less than 6 months (Table 11.6). About 70 percent of all workers are so on a part-time basis. While among females this partly occurs because of their role as caregivers, among men this mainly occurs because they cannot find a full-time job (see Table 11.7) Reasonsfor Not Having Permanent Employment 15-24 25-34 35-54 55-64 15-64 Training 10.47 6.49 6.74 9.28 7.24 Probationary Period 8.8 5.33 5.93 2.52 5.69 No PermanentVacancy Available 71.58 76.66 78.38 79.66 77.43 No ReasonGiven/ N.A. 9.16 11.53 8.96 8.54 9.65 Figure 11.5: The share of workers infull-time jobs increaseswith age: from 60 percent at age 15to about 85 percent at age 45, and decreasesthereafter untilretirement age. 'f -+ - Contract 7-12 months < than 6 months Contract 28 0 26 9 G 70 60 2oi 18.5 Terrporary w l o y m n r 1 I5l 30 I 5L 0 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 15-24 25-34 35-54 55-64 Age Age Group Source: Angel-Urdinola and Malaiyandi(2008) using 2005 LFS data. Table 11.7. About 23 percent of all young female workers work on a part-time basisbecause of their role as caregivers; this share increasesas they enter adulthood. 21 Reasonsfor WorkingPart Time 15-24 25-34 35-64 Male Female Male Female Male Female % could not find full-timejob 66.0 46.3 71.5 41.8 63.6 22.9 % neededto take care of family member 0.0 23.4 0.0 39.2 1.7 33.4 Total 66.0 69.7 71.5 80.9 65.3 56.3 14. About one-third of all young workers are looking for a secondjob or want to work more hours. According to Angel-Urdinola and Malaiyandi (2008), about 40 percent of all young male workers claim to want to work more hours or to be searching for an additional job. The same share decreases to approximately 30 percent (still a large share) for adults in prime employment age. Underemployment among young females is lower than among young males at 20 percent (compared to 40 percent among young males). Underemployment i s more frequent among urban youth compared to rural youth. While the share of young workers inurban areas that seek an additionaljob is at 40 to 45 percent, the same share i s 20 to 25 percent among young workers in rural areas (Figure 11.6). Figure 11.6: Underemploymentis more frequent among unskilledyoung males. 45% i g 40%- 39% rnMales +Females j n 36% 35%- 30%- ?i 25% - 20% .- 5 15%- 10%- z 5%- 15-24 25-34 35-54 55-64 0% T Age Group 15-24 25-34 35-54 55-64 Low-skilled: Complete primary or below; semiskilled: Complete secondary; Skilled: Some tertiary education completehncomplete. Source: World Bank calculations using 2005 LFS data. 15. Migrationis an important coping mechanismfor youth inKosovo to mitigate unemployment risks. Vathi and Black (2007) indicate that there are about 500,000 individuals who were born in Kosovo who now live abroad. Migration flows have been significant in Kosovo inrecent years. Youth are more likely to emigrate because the costs to them of leaving are lower than the economic and social gains of doing so. According to the authors, migrating youth in Kosovo has been quite heterogeneous in recent years: the youth migration flows resulting from the 1990sconflict was likely to have beenrather a skilled one (since repressive policies during the Milosevic regime targetedprofessionals and students) while in more recent years, lack of employment opportunities has provided incentives to both semi-skilled and high-skilled youth to migrate. Semi-skilledmigration generally leaves the territory illegally (given tight emigrations policies towards Kosovo by most EUcountries), while some very high-skilled students find ways to study abroad andor work ininternational organizations. 22 16. On the positive side, youth migration may reduce tensions in the labor market at the national level, decrease unemployment, increase incomes in the home country from remittances that contribute to decreasing deficits in the national current accounts balance and possibly to investments in human capital, and provide return migrants with skills and capital for investment." On the negative side, migration may result in "brain drain" and reduced productivity at the national level, it often removes youth from the social environment of family and friends, and it can put youth at greater risk of exploitation andor abuse and lead to increased exposure to health problems.12 A recent survey conducted by UNDP found that 44 percent of individuals aged 18 to 25, and 38 percent of individuals aged 26 to 35, intend to migrate from Kosovo (UNDP 2006). Since most of the legal emigration routes to Europe from Kosovo are now closed, a large portion of its current youth emigration i s illegal. Poverty and high unemployment rates continue to make migration an attractive option for many people, especially the young (Figure 11.7). Figure 11.7: The mainreasonswhy youth migrate from Kosovoare to pursue "better economic opportunities" and "a better quality of life." Reasonsfor Youth Migration Family Reasons Security PoliticaI Better Education 0pportunities For Better quality of life Economic Source: UNDPKosovo, Human Development Report (2006). l1According to the World Bank (2007), migration remains, by far, one o f the most effective mechanisms for reducing poverty inKosovo. Foreign remittances in Kosovo account for 13.5 percent o f Kosovo's GDP. Kosovo ranked fifth among transition economies and it i s among the top 20 countries inthe world in terms of highest total remittances received as percentage o f GDP. l2Vathi and Black (2007) argue that human trafficking inKosovo for the purpose of sexual exploitation has increased significantly since the end of conflict in 1999, affecting mainly female youth. 23 UNEMPLOYMENTDURATION JOB SEARCH AND 17. Large inflows of youth into participation, combined with stagnant job creation and low outflows of pension-aged adults out of the labor market, are expected to increase youth unemployment if no action is taken. Despite a decreasing trend in youth unemployment since 2002, estimates suggest that about 11,000 new youth continue to enter the labor market on a yearly basis, the majority of which join the pool of unemployed. Indeed, it i s expected that roughly 200,000 young people will reach working age in the next five years, while the number of people reaching retirement age will be only 60,000 ( L O 2006).13 These combined phenomena may contribute to an increase in the backlog of unemployed youth. A recent study (PEM 2007) finds that while job creation in Kosovo has been improving and about 63 percent of a random sample of firms claimed to have expanded their labor demand in 2005 and 2006, the number of new vacancies i s not growing at the pace of the inflow of new participants. For instance, in 2006, the employment service of Kosovo registered only 8,561 new vacancies for 326,000 registered unemployed (95,000 of which were aged 15 to 24). 18. Four out of every 10 youth who are unemployed have been so for more than one year. The majority of unemployed individuals in Kosovo could be categorized as long-term unemployed, as defined by having been unemployed for a period longer than one year. Long-term unemployment in Kosovo i s worrisome. As illustrated in the left side of Figure 11.8, about 38 percent of all unemployed youth has been so for a period longer than one year, and 4.4 percent have been so for longer than three years (estimates exclude first-time job seekers). Long-term unemployment does not get any better as individuals enter adulthood. Indeed, long-term unemployment i s a phenomenon affecting mainly adults of prime working age. Figure 11.8: Long-termUnemployment,by Age Group, inKosovo 100% 90% 80% 70% i 30% 4 243 20% - 0% 15-24 25-34 35-54 55-64 Source: World Bank calculations using 2005 LFS data. Estimatesexclude first-time job seekers. 13Inmaturemarket economiesinEurope, the situation is the opposite: the shrinking number of new labor market entrants will have a significant impact on labor supply and the structure of the working-age population, which may encourage out-migration of youth from Kosovo as well. 24 19. Long-term unemployed youth are more likely to undertake a "passive" job search. Active job search i s one of the key requirements to be considered unemployed. According to Angel-Urdinola and Malaiyandi (2008), only 55 percent of all unemployed youth and 63 percent of young adults are engaged in "active" job search. As such, these individuals have characteristics that make them more "inactive" than truly "unemployed." If these individuals were considered "inactive," unemployment rates in Kosovo would likely decrease. Finally, the authors find that the more time individuals spend inunemployment, the more likely they are to engage inpassivejob search.14 20. The registered number of unemployed is inflated by the high number of people who are not actively looking for work (Kuddo 2008). Also, the mandatory requirement of the "unemployed status" for obtaining the status o f social welfare beneficiary i s causing the registration of people who do not classify as unemployed according to international standards. Since there i s no obligation to periodically confirm their (un)employment status andre-register themselves, after initial registration, manyjob seekers stay on the roster, while some are de facto working informally, have emigrated, or are economically inactive, thus inflating the actual number ofjob seekers. 21. Lack of experience among the unemployed remains an important factor at adulthood, especially among women. By age 24, more than 95 percent of all unemployed workers have not had any work experience. Estimates indicate that about 90 percent of all unemployed women and 98 percent of all inactive women at age 35 are likely not to have any previous work experience (Figure 11.9). The share i s lower among unemployed and inactive males, at approximately 70 percent and 80 percent, respectively. Figure 11.9: Mostinactivefemales (both young and adult) never have work experience Females Bze 2z 5 i Youth- f + Adults 2o 15 18 21 24 27 30 33 36 39 42 45 48 51 54 15 18 21 24 27 30 33 36 30 42 45 48 51 54 Age Age Source: World Bank calculations using 2005 LFS data. Shares by age have been smoothed using a polynomialregression. 14Active search means that unemployed individuals applied for a job, advertised histher availability in newspapers, or participated in job placement examstinterviews in the four weeks prior to the survey. Passive search i s defined as being registered in the Public Employment Service (PES) or at any other employment agency. 25 22. Young job seekers are per se in a difficult position because they are newcomers with little experience and reduced productivity. Another factor i s the reluctance of employers to recruit inexperienced young people and to invest in their training. Moreover, youth in Kosovo are trapped in precarious and temporary employment, which prevents them from moving into permanent work arrangements. Low pay i s also a rather common feature o f jobs performed by young people. Unemployment early in a person's working life has been shown to increase the probability of future joblessness and lower future wages. WAGES AND RETURNS TO EDUCATION 23. Although data on wages is limited; HBS provides some useful informationto analyze wages across age, gender, and education groups. Unfortunately, LFS data does not collect information about workers' wages. HBS does collect information on monthly wages for the sample of employed wage earners. Nevertheless, data on wages collected in the HBS are limited and must be used with care due to high rates of non- response. As illustrated in Table II.8, 50 percent (30 percent) of all wage earners in the sample inthe 2002103 HBS (2005/06) survey have missing data on wages. As such, it i s difficult to provide disaggregated wage analysis with the available data. Unfortunately, data do not provide enough observations to do disaggregated analysis by educatiodgender for young workers only. Estimates in Table II.8 indicate that there i s not much dispersion on average wages across age groups, strata, gender, and education. Nevertheless, and as expected, average wages are higher in urban areas, among males/adults, and among individuals with higher levels of education. 24. Returns to education among youth are positive but low. Angel-Urdinola and Malaiyandi (2008) run a basic Mincer-model of wage determination for youth and for the overall WAP in Kosovo. The authors find that returns to having primary and secondary education vs. having no education are not significant for the WAP; while returns to tertiary education, albeit positive and significant, are low at 12.5 percent. Results in relation to education returns are similar for youth. In particular, young workers having attained post-secondary education are associated with 13 percent higher wages than similar young workers who have attained at most primary education. These rates of return are extremely low by regional standards (varying between 30 to 80 percent) (Yemtsov, Cnoblach, and Mete, 2006). While results demonstrate that the returns to higher levels of schooling are substantial and significant, Kosovo displays rather "low returns to education". A number of other countries in the region have much higher returns, including some of the leading reformers like Hungary and Poland (with returns to tertiary education oscillating between 60 and 77 percent inthe early 2000s). 25. Controlling for education, ethnicity and region are other important determinants of wages. The authors find that gender i s not an important determinant of wages among youth. However, for the overall working age population, being a male i s associated with a 10 percent higher wage vs. being a female. Age (which i s a proxy for experience) i s also a significant determinant of wages for the working age population but 26 not for youth. This i s not surprising, since the dispersion in acquired experience among workers in ages 15 to 24 i s little. Estimates indicate that every additional year of experience (after the average working age) i s associated with an expected wage increase of 1.4 percent. Young workers of Albanian origin display wages that are 20 percent lower than young workers of non-Albanian (mainly Serbian) origin. This constitutes ethnicity one of the main determinants for wage determination among youth. For the overall wage population, workers of Albanian origin display wages that are 10 percent lower than workers of non-Albanian origin. Urban workers as well as workers living in the Peje, Ferizaj, and Prizren regions are associated with 5 to 7 percent higher wages as compared to workers living inrural areas andinthe Mitrovicaregion respectively. Table 11.8. OnAverage, young workers earn about 200per month; which only about 20 percent lessthan what adult workers make on average. Sample % with Weighted Average Sample %with Weighted Average Size of missing Sample Wageper Size of missing Sample Wageper Wage wage Size w/o worker Wage wage Size w/o worker earners missing Per earners missing Per month" mnnth* Total [l S-241 2002103 3,023 54.5 174,734 223.56 416 86.1 9,271 160.28 2003104 2,864 37.6 233,293 213.22 332 49.7 23,140 215.98 2004105 2,968 39.7 235,735 225.64 395 58.5 25,589 203.32 2005106 2,792 33.3 241,472 216.21 292 47.3 20,117 194.21 Women 125-351 2002103 529 50.3 28,661 206.75 928 73.2 30,034 295.21 2003104 546 18.3 50,340 197.92 902 42.8 71,363 218.06 2004105 579 21.4 51,008 201.34 889 43.5 70,437 243.27 2005106 531 15.6 47,224 198.54 903 35.2 77,590 221.00 Men [36-541 2002103 2,494 55.5 146,073 226.86 1,679 36.5 135,429 212.01 2003104 2,318 42.1 182,953 217.43 1,630 32.3 138,791 210.26 2004105 2,388 44.1 184,662 232.37 1,684 33.2 139,709 220.84 2005106 2,259 37.5 194,217 220.51 1,597 29.6 143,765 216.71 Rural Primary 2002103 1,259 67.4 89,216 212.64 815 68.3 36,573 191.67 2003104 1,316 48.4 118,721 199.73 683 59.4 38,109 173.14 2004105 1,316 51.4 114,528 210.46 701 66.5 34,981 188.99 2005106 1,213 42.0 131,390 201.75 618 51.6 48,083 188.75 Urban Secondary 2002103 1,761 45.3 85,518 234.96 1,599 56.8 89,738 219.99 2003104 1,548 28.4 114,572 227.19 1,579 36.5 134,447 209.38 2004105 1,647 30.1 121,206 239.99 1,601 37.1 130,301 208.51 2005106 1,578 26.5 110,081 233.48 1,647 32.1 140,463 212.95 Vocation-University 2002103 563 26.6 47,088 254.73 2003104 559 11.6 58,387 248.60 2004105 628 13.4 69,577 276.70 2005106 496 13.1 51.534 252.67 Source:Angel-UrdinolaandMalaiyandi(2008) using2002103 to 005106HBSdata.* Europer month 27 YOUTHINJEOPARDY 26. This sub-section provides a profile of youth injeopardy, that is, unemployed youth who are extreme poor. The 200906 Household Budget Survey (HBS) i s the primary data source for this analysis and provides key poverty measures and dimensions to labor force data that are not available in the Labor Force Survey (LFS).Profiling youth injeopardy is used to illustrate how targeted interventions (through transfers and safety- nets) to this group can have a significant impact on overall poverty levels compared to randominterventions targeted to any unemployed youth. 27. Twenty percent of all unemployed youth in Kosovo live in extreme poverty, defined as living in households in the first consumption quintile. These vulnerable youth account for approximately 33,000 young individuals (generally low-skilled, female, and living in rural areas). These individuals are likely to be a group vulnerable to social exclusion, long-term poverty, and lack second chances inKosovo (Table 11.10). Table 11.9. Statistics on Youth inJeopardy Unemployed Youth Youth in Jeopardy Youth in Jeopardy TOTAL 163,467 33,085 20.2 100 Gender Male 75,362 14,714 19.5 44.0 Female 88,105 18,371 20.9 56.0 28. Safety-nets targeted to youth in jeopardy can have an important impact in reducing extreme poverty. Using micro-simulation techniques, analysis in this report quantifies the impact on poverty of targeted L M P s that provide households having youth injeopardy with a transfer equivalent to the youth median monthly wage (about 106.7 per month) vs. the same transfer randomly allocated among a sample of households having unemployed youth. The transfer can be thought of as income assistance through a targeted income transfer andor targeted employment a~sistance.'~Simulation estimates indicate reaching 6,000 youth in jeopardy with such an intervention can contribute to decreasing extreme poverty by 12 percent (that is, can contribute to getting up to 41,000 individuals out of extreme poverty, which are those living in households with a young beneficiary) while the effect of arandomly allocated LMPwould contribute to decreasing extreme poverty by only 3 percent (Figure 11.10).l6Implementingsuch a program would l5Simulations assumeperfect targeting, which inreal life i s not possible to achieve. Nevertheless,there are methods such as proxy means-testingmodels and geographic targeting that may identify beneficiaries that are more likely to be in poverty. However, as in any targeted program, there will be misallocation of resources because some non-poor individuals may end up benefiting from the program (errors of inclusion) and some poor may end up being excludedfrom it (errors of exclusion). According to World Bank (2006), 17 percentof the population inKosovo lives inextreme poverty (about 340,000 people). 28 cost approximately 11.5 million per year (which i s slightly above the budget envisioned inthe KYEAP) (Table II.9).17 Figure 11.10: Percent DecreaseinPoverty and Extreme Poverty-Random Compared to Targeted Allocation of Youth Safety Nets Effecton Poverty Effecton Extreme Poverty 14.0 1 14.0 7 12.1 P2 Targetted allocation 0 Random allocation 12.0 12.0 - 10.0 1 mTargettedallocation 0 Randomallocation 9.4 n 10.0 - .-C Y 8e!8 8.0 - -ca r"8.0 - 6.5 6.0 - 4.0 - 2.7 2.1 0 g 2.0 - O*' 0.6 1.4 1.0 2.0 1.5 0.0 m, 1500 3000 45w 6000 1500 3000 4500 6000 ProgramSize Program Size Source: WorldBank calculations using HBS 2005/06.Lines inbars display confidence intervals (Bootstrap with 100repetitions). Table 11.10. Sample Size and Program Coverage UsedinMicro-simulations Total Youthin Jeopardy: 33,085 Number of youth given atransfer inmicro-simulations 1,500 3,000 4,500 6,000 As % of vulnerablepopulation 4.5 9.1 13.6 18.1 Estimatedinvestmentinmillion Europer year a 1.92 5.76 8.64 11.52 29. Young individuals who are poor display worse employment outcomes. Generally, it i s not clear whether unemployment i s a phenomenon affecting poorer or richer youth. Indeed, international evidence i s mixed in this respect (Godfrey 2003). In Kosovo, youth living in poorer households display less-favorable employment outcomes (that is, lower employment and higher unemployment rates). The unemployment rate for youth in the poorest consumption quintile i s about 86 percent, and for youth in the richest consumption quintile it is 58 percent (lower but still high) (Figure 11.11).Employment rates for youth aged 20 to 24 are twice as high among those living in households in the highest quintile compared to those living in households in the poorest quintile (26 percent compared to 12 percent). Youth participation rates are higher for youth in the poorest consumption quintiles. This i s because the poorest youth are less likely to be in school. While 20 percent of all youth (20 to 24) in non-poor households are enrolled in school, only 13 percent of youth inthe same age group living inpoor householdsare enrolled. l7 Although not presentedin this report, the impact of a targeted transfer is also relevant for decreasingthe poverty gap, the square poverty gap, and inequality (as proxied by the Gini Coefficient). Results are available upon request. 29 Figure 11.11: Youth injeopardy drop out of school earlier than youth living inricher households. Unemployment Rates,2005/06 Employment Rates,2005/06 80 *. 8 70 60 58.9 50 Poorest Q2 Q3 Q4 Richest Poorest Q2 Q3 Q4 Richest Quintile Quintile Quintile Quintile -[15-19] ....... [20-241 -[15-19] .......[20-24] %EnrolledbyPovertyStatus [20-24] PartlclpatlnRates,2005/06 ". 30 - - - - 25 - ;:'1 77.9 m......?:?...... 77.1 w ......69.8 63.0 20 - 19.1 w..... I...... 15.5 I 60- 8 15- 10 - 10.0 8.9 5 - 8.0 10- 04 0 4 2002/03 200304 20W05 200Y06 Poorest Q2 Q3 Q4 Richest Quintile Quintile - b r - - - - N o n b r -[15-19] ....... [20-241 Source: World Bank calculations using 2002103 to 2005106 H B S data. PROFILEOF YOUTHINJEOPARDY 30. "Incidence" and "population shares" are the two main indicators used inthis report to profile youth injeopardy. The report provides a profile of youth injeopardy by different subgroups, such as strata, region, and education. Inthis section, incidence (or risk) is quantified as the proportion of youth injeopardy in a subgroup compared to the total number of unemployed youth in that subgroup. Population shares are calculated as the number of youth injeopardy in a given subgroup divided by the total number of youth injeopardy. The former indicator is useful to targeting particular groups, while the latter i s usefulto designpolicies that maximize the coverage of policy interventions. 31. The majority of youth injeopardy are women and live in ruralareas. Six out of every 10 youth experiencing extreme poverty and unemployment simultaneously are women. As mentioned, this gender bias i s evident in other labor market indicators as well, with 77.7 percent of young women aged 15 to 24 being unemployed in 2006 compared to 67.9 percent of young men in the same age group. However, the incidence (or risk) of young males and females being in jeopardy i s similar for young males and females, at approximately 20 percent. Almost two-thirds of youth injeopardy live in rural areas. Despite this, the incidence of being poor and unemployed simultaneously i s higher for urban youth than for rural youth (26 percent in urban areas compared to 18 percent in rural areas) (Figure11.12). 30 Figure 11.12: Young women and youth inrural areas constitute the majority of all youth who are poor and unemployed simu~taneously. Incidence of Youth inJeopardy byGender PopulationShare of Youth inJeopardy m Non-Vulnerable 0 Vulnerable byGender 100 80 60 Male 44% 40 Female 20 56% 0 Incidence of Youth inJeopardy byStrata PopulationShare of Youth inJepardy rn Non-Vulnerable Vulnerable byStrata Urb 38 Source: World Bank calculations using 2005/06 HBS data. 32. Youth in Mitrovica ay a higher risk of eing extreme poor an loyed simultaneously than in any other region. Almost half of all youth in jeopardy (54 percent) live in Mitrovica and Prishtina. As such, targeted interventions in these two regions may potentially cover the majority of the youth population at greater risk (see last column inTable 11.11).Mitrovica alone i s home to 34.3 percent of all youth injeopardy inKosovo (11,497 vulnerable youth). At 33.4 percent, the incidence (or risk) of being poor and unemployed simultaneously i s also higher inMitrovica than nationally (at 20 percent). Continued ethnic conflict and tension continue to hamper growth, political stability, and employment opportunities in the region. Interventions targeted to low-skilled individuals in the Mitrovica region are likely to benefit a vulnerable and disadvantaged segment of the youth population in Kosovo. Ferizah i s the second region inKosovo with the highest incidence of youth injeopardy, at 27 percent (see Box 11.4). 31 Unemployed Youth Youthin Jeopardy Youthin Jeopardy Youth in Jeopardy Incidence % Pop. Share in % TOTAL 163,467 33,085 20.2 100 Region Mitrovica 34,465 11,497 33.4 34.7 Prishtina 40,928 6,372 15.6 19.3 Ferizaj 18,283 5,022 27.5 15.2 Prizren 22,808 3,881 17.0 11.7 Gjakove 19,222 3,124 16.3 9.4 Peje 10,751 1,893 17.6 5.7 Gjilani 17,010 1,296 7.6 3.9 Box 11.4: Voices of Vulnerable Youth Ferizaj region: Two focus groups have been the subject of a survey in the Ferizaj region. The Roma, Ashkali, and Egyptians (RAE) from the Dubrava village were interviewed, which represent the most disadvantagedgroup. The second group involved the illiterateRAEcommunity inFerizaj. Youth from minority groups are rarely offeredjobs. Of 14 interviewees,only 2 receiveda temporaryjob as part of the United Nations Development Programme's (UNDP's) employment-generationproject. The rest registered with Regional Employment Centers (RECs) and Municipal Employment Offices but never received any feedback about their employment status. Moreover, even in the formulation of policies at the central and local level, they were never invited to contribute to the ongoing debate. They were active in the community and performed voluntary work init. The meetings and interviews with focus groups involving youth, women, and minorities led to several conclusions. Generally, relevant government institutions dealing with employment and employment services (such as regional PES and Vocational Education. Training [VET] centers) offered no help for this category of people. Youth from the RAE community persistently seek jobs, but there i s little space for finding one. Women are in an especially difficult position. Women from rural areas are deprived of information, and job offers are very rare for them. Questionnaire results suggest that no special programs and plans were arrangedto attract this disfavored group, and consequently, the biggest number of women remainunemployed, with littleprospect for future employment. Source: ETF (2008). 33. Education attainment is strongly associated with being in jeopardy, with lower-educated youth displaying a much higher risk of being unemployed and extreme poor at the same time. Illiterate youth display a high incidence (and therefore a high risk) of being in jeopardy at 74 percent compared to lower incidence levels of 14 percent among youth who have attained secondary education and 1.6 percent among youth who have attained tertiary education. In terms of population shares, 58 percent of all youth in jeopardy have completed primary education and 38 percent secondary education (these two groups account for 96 percent of all youth in jeopardy). These findings indicate a very important link between education achievement and labor marketjpoverty outcomes, whereby youth with lower levels of education face much higher incidence of poverty and unemployment (Figure 11.13). 32 Figure 11.13: Youth who have attained only primary education display a great risk being poor and unemployed at the same time. lndicence of Youth inJeopardy by Education PopulationShare of Youth in Jeopardy bbn Vulnerable0Vulnerable by EducationAttainment Illiterate 4.0% voduniv Primary 0.1% 57.4% Secondar 38.5% Illiterate Primary Secondary VodUnlv Source: World Bankcalculations usingHBS 2005106. 34. Higher educational attainment of the head of the household is negatively associated with youth's vulnerability to unemployment and poverty, whereby youth living in households with an illiterate head have a higher incidence of being injeopardy (at 36 percent) than youth living in households with a head who has attainedpost-primary education (at 16 percent). Because youth aged 15 to 24 may still be in the middle of their education cycle, the characteristics of the head of household are a good proxy for assessing youth vulnerability, especially for those in the younger age cohort. Finally, estimates indicate that about 63 percent of all youth injeopardy live in households where the head of householdhas attained at most primary education (Table 11.12). Unemployed Youth Youth in Jeopardy Youthin Jeopardy Youth in Jeopardy Incidence % Pop. Share in % TOTAL 163,467 33,085 20.2 100.0 Educ. of Head Illiterate 16,396 5,929 36.2 17.9 Primary 71,861 14,903 20.7 45.0 Secondary 58,687 9,632 16.4 29.1 Vocmniv. I 16,392 2,621 16.0 7.9 Source: World Bankcalculations usingHBS 2005106. 33 CHAPTER 111.YOUTHLABORPOLICYAND INSTITUTIONSINKOSOVO Abstract This chapter provides an overview of the current youth programs and policies being implemented in the territory in the context of the Kosovo Youth Employment Action Plan (KYEAP) - the main national strategy on youth employment. While significant investments are made in Kosovo on ALMPs targeted to unemployed youth on a yearly basis (even larger than those originally conceived under the KYEAP), coverage remains low and the impact of programs remains limited and ofen un-assessed. This mainly occurs because institutional capacity remains low and because lack of donor coordination seems to have contributed to the proliferation of programs with limited scope and coverage. REVIEW OF EXISTING POLICIES AND PROGRAMS 1. The KYEAP (2007-2010) is the flagship document for youth labor policy in Kosovo. The plan i s the comprehensive strategy of the Kosovo Government that aims at improving the situation of young people of age 15-24 by involving governmental and non-governmental institutions inexploring and meeting the needs of youth andby finding ways and mechanisms for youth participation in the decision-making process in Kosovo. The KYEAP (Figure 111.1)has 3 main objectives, each with its own budget allocation: 1) to promote employment among young people (4.4 million per year); 2) to increase decent work opportunities for young people (1.7 million per year); and 3) to prevent social exclusion of youth through targetedlabor market measures (0.4 million per year). Each objective has a set of outcomes and activities based on a policy mix that envisages both preventive and curative approaches to address labor demand and supply constraints to youth employment. Note that the first objective (Le. promote employment among youth), which i s heavily focused on investment in education, training, and skills; i s the one where the largest share of the budget i s allocated. The regional PES are the main institutions that will bring these set of policies to beneficiaries through job mediation, training, and support to young entrepreneurs. 2. The implementation of the KYEAP is falling behind, mainly due to institutionalcapacityconstraints. Although the action plan was formally approved and budget was allocated for its implementation, the implementation mechanism was never established (ETF, 2008). This was mainly due because the Youth Employment Action Plan was designed to have strong institutional and administrative capacities (perhaps too ambitious given the level of development of institutions) to oversee and steer the 34 implementation process. In particular, the KYEAP planned for the establishment of an Inter-ministerial Committee on Youth Employment to oversee implementation and to report back to the respective ministries. The Inter-ministerial Committee on Youth Employment would consist of at least one representative of key line ministries-MLSW; MEST; Ministry of Finance and Economy; Ministry of Trade and Industry; Ministry of Agriculture, Forestry and Rural Development; and the Ministry of Energy and Mining. The Office of the Prime Minister would provide overall coordination for the implementation of the KYEAP. Local government would also participate in this process mainly by identifying policies and also by assisting with planning and implementation. Civil society organizations would be called on to monitor and evaluate progress in implementation. In practice, the implementation structures foreseen by this document have not as yet beenestablished (ETF, 2008). Figure 111.1: Summary of the KYEAP: objectives, outcomes, and investments 2007-2009 Obejective1: PromoteEmpolymentAmong Young People Objective2: IncreaseDecentWork Opportunities for Young People I I 1 I A.4 increseaccess to ; B1 Reduceyouth career informationand 2,003,030 2 E informaiity i 52 Increaseentreprise 1 1,545,030 I g A3. Improve quaiificatims creation + ` Ii a8E amongout-of-schooiywth 250,000 750,000 1,250,0001,750,0002,250,000 Euro A2 increase vxational educatim retention. 1,500,000 i I Objective 3: Preventthe Social Exclusionof Youth throughTargeted Labor MarketMeasures Ai. Reducedropout rats k 2 . l 2,loo.000 C1. increase the number in basic education. 2 of disadentaged ywth participatingin AMPs 250,000 750,000 1,250,000 1,750,0002,250,000 2,750,0003 Euro C2. Illcrease% d youth * w emDloved in infrastructure 200,000 400 000 600,000 800000 0 FromBudget 0 FromDonors development Euro Source:Kosovo Youth EmploymentAction Plan. A mid-termpolicyframework (2007-2010) MAININSTITUTIONALKYEAP CONSTRAINTSTO IMPLEMENT THE 3. Overall, the MLSW faces capacity and financing constraints inimplementing youth labor policy, as specified in the KYEAP. The MLSW i s the central institution mandated with employment policies and institutional arrangements to ensure their implementation. The M L SW Department of Employment and Labor and its respective Labor Division are in charge of youth policy design. The number of staff at the MLSW i s considered to be low and, according to their officials, there i s an urgent need to increaseit (ETF 2008; and Kuddo 2008). Personnel from the MLSW claim that the ministry lacks formal rules, guidelines, and proceduresfor programming ministerialactivities. 4. The role of the main implementing agency (namely the PES) is undermined by institutional capacity constraints. Implementation of the KYEAP requires major institutionalchanges inKosovo. For the most part, this will require a greater emphasis on 35 better coordination and improved brokerage/information services provided by the PES. The PES operates with tight capacity and budget constraints. The system of public employment services in Kosovo i s organized and managed18by the MLSW. Generally there are 7 regional centers, 23 municipal offices, and 6 employment municipal sub- offices." The PES administrative and institutional capacities are perceived to be very weak (Kuddo 2008): 0 Staff caseload in Kosovo-the ratio of clients to employment counseling staff-is a critical constraint to PES performance. Inearly 2008, the PES had a staff of 180 with a clientele of 334,600 registered unemployed. Of the total PES staff, only 106 employees, or 59 percent, are frontline employment counselors/advisors, while by comparison, in the Czech Republic and Estonia, 84 percent and 83 percent, respectively, of PES staff are caseworkers. On average, in Kosovo one job counselor/advisor has to deal with 3,200 registered unemployed, and in some local offices, such as in Mitrovica, the caseload i s about one-third higher, making it the heaviest workload of a PES inthe region. The level of educational qualification of PES staff is modest. Forty-six percent have university degrees and one-fifth have vocational education diplomas. O f 91 employment advisors, 27 have only high-school diplomas. Therefore, upgrading of staff skills, competence, and motivation i s an important area of reform. 0 The PES currently operates without a legal basis. The PES budget for labor policy implementation i s financed from budgetary transfers and donor contributions (for an overview on PES financing, see PISG 2006a.).The draft law on Promotion of Employment and on Protection of Unemployed, submitted to the Kosovo Assembly in 2005, establishes the general framework for the design and implementation of passive and active labor market measures (PISG 2006a). The draft law lists the following Active Labor Market Policy (ALMP) measures: (a) job counseling, (b) training, (c) wage subsidies, (d) public works programs, and (e) entrepreneurship promotion measures. ALMPs suggested by the draft law tend to have high unit costs and limited coverage. The act has not been promulgated, mainlydue to the lack of financial means. In 2006, 84 percent of young workers never registered with the PES and, among those who did, about 88 percent received no assistance, 5.3 percent received information on job vacancies, while only 5 percent were given help finding a job (Kuddo 2008). The fact that young people routinely use family connections and social networks to get a job reflects negatively on PES and highlights the need to strengthen its capacity (Carbonese and Rosas 2007). While the private sector in many countries contributes to the provision o f labor market l8The term "management" is used here to describe the MLSW's legal responsibility to manage and monitor the work of PES. However, because o f MLSW's limited resources, PES management and monitoring were often left inthe hands of international organizations. l9MLSW's internal document onPublic Employment Services inKosovo. 36 services, such as training and job brokerage; the role of private placement agencies inKosovo i s currently negligible.20 0 Labor market information systems need to be further developed, through better management of administrative records, short-term qualitative surveys, and regular employer and household surveys. Having current labor market information i s essential to monitoring changes in employment and anticipating labor supply needs. Many transition countries are conducting customer satisfaction surveys of the clients of PES - not only usedto measure performance of individual employment offices but also the effectiveness of specific policy interventions or major labor market reforms. InKosovo, as part of the L O Youth Employment Project, a labor market information database was set up to link the network of employment offices and match job applicants with vacancies. At the same time, the Chamber of Commerce set up a youth entrepreneurship desk to provide information and assistance, as well as mentoring and coaching services to young entrepreneurs. However, labor market information system needs further improvement. In particular, employer-based surveys of current and projected labor market conditions could focus on actual and planned job creation and job destruction, and on key determinants of hiring and firing. It would also be useful to keep track of graduates some years after graduation, as part of labor market monitoring. 5. Lack of donor coordination has contributed to the proliferation of small- scale employment programs targeted to youth. The involvement of international organizations in Kosovo i s substantial in terms of the preparation and implementation of employment policies and programs. The following international actors have been directly or indirectly involved in employment policies in Kosovo: European Commission (EC), European Training Foundation (ETF), International Labour Organisation (LO), United Nations Children's Fund (UNICEF), UnitedNations Development Programme (UNDP), United Nations Population Fund (UNFPA), International Organization for Migration (IOM), and World Bank among others. Coordination among the aforementioned agencies remains a major challenge. Most programs targeted to promote youth employment in Kosovo are either financed or implemented by donors. As such, they play a major role in defining the policy agenda. However, not all donors seem to have a common agenda in relation to programs and policies that should be implemented. Some donors seem to have higher preference towards VET-related programs while others seem to have higher preference for programs that promote employment (temporary or permanently), such as apprenticeships and entrepreneurship support. As a result, there i s a proliferation of expensive programs with limited scope and coverage (Table 111.1).ALMPs targeted to The practice in other countries shows that the private agencies are often more efficient and effective in the provision o f services o f employment mediation than public sector, bearing in mind that they can secure services within smaller and targeted segments of labor market (comparing the costs), and are to a larger extent oriented towards the employers' requirements than the needs of the unemployed. Private agencies will likely address only a few labor market niches but will offer more proactive employment policy by tailoring policy towards labor demand (Kuddo, 2008) 37 unemployed youth couldbe more effective if there were fewer and larger programs. More effective donor coordination i s neededto achieve such apurpose. INVENTORY OF YOUTHALMPS INKOSOVO 6. This sub-section aims at providing information on the scope, budget, coverage, and lessons learned of ongoingALMPs targeted to youth inKosovo.When analyzing what policy options may be suitable for youth in Kosovo given its current context, it i s useful for policy makers to compile information on ALMPs targeted to youth currently being implemented in the territory (refer to the appendix for a more detailed description of each ALMP included in the inventory). Prior to this study, there was not compiledinformation on ongoing youth ALMPs inKosovo. As such, there was a general lack of knowledge about how much Kosovo was spendingon youth employment programs and about the effectiveness of such spending. A compilation of this information will allow policy makers get an idea what set of polices workddoes not work in the Kosovo context when designing programs targeted to unemployed youth. 7. About 7 million are spent on youth employment programs yearly, yet program coverage remains low. A recent inventory of youth employment programs in Kosovo compiled by the World Bank for this report, collected information on 19 Active Labor Market Programs (ALMPs) that have been implemented in Kosovo since year 2000, 12 which still operate in Kosovo (Table 111.1). The majority of these programs are financed and/or executed by donors, while some are financed by donors but executed by public institutions (generally the Ministry of Labor and Social Welfare [MLSW] through the Public Employment Service [PES]) and vice-versa (some programs are financed from public budget and implemented by donors, such as UNDP). 8. According to the compiled inventory, ALMPs inthe inventory benefited only 10 thousand youth in2007 (about 6.3 percent of all the pool of unemployed individuals in this age group). In terms of the cost and coverage, ALMPs currently being implemented in Kosovo have high unit costs (averaging 700 per beneficiary per year) and limitedparticipation (10.3 thousand out of a total pool of unemployed youth of more than 160 thousand). About 2 million per year are spent on ALMPs that target to vulnerable youth, mainly public works and apprenticeships, benefiting about 6 thousand individuals per year. About 4.9 million per year are spent on non-targeted ALMPs, mainly VET and micro-creditlentrepreneurshipassistance, benefiting about 4.3 thousand individuals per year. Most programs in the inventory are focused on strengthening vocational education and training (10 programs), on providing temporary employment (3 programs), and on promoting youth entrepreneurship (6 programs) (Table 111.1). 9. According to the information compiled in the inventory, the current level of yearly expenditure on LMPs in Kosovo slightly surpasses that envisioned in the KYEAP. Figure 111.2 provides information on spending on ALMPs in Kosovo in year 2007 and compares it with planned budget for the same year under the KYEAP. Results indicate that actual spending in L M P s was slightly higher than that planned under the KYEAP. 38 z"z" 2 2 $1 2 8 8 o* z B hl a 0 141 d .-eo E E=" C .C 2cd C 0 x .e Y cd 0 U3 W 10. In2007, most ALMPs resourceswere spent on promoting youth employment through VET-related programs (3 million, which relate to objective 1inthe KYEAP) and on increasing decent work opportunities through programs promotinglfinancing new start-ups (2.2 million, which relate to objective 2 in the KYEAP). Spending on ALMPs to prevent social exclusion in 20007 (1.8 million, which relate to objective 3 in the KYEAP) was higher than conceived under the original plan. Nevertheless, it is worth noting that some of these L M p s were implemented outside the framework of the KYEAP. Funding for these activities may or may not continue as they rely on outside funding. In order to assure sustainability of labor market policy in Kosovo, public institutions (mainly the MLSW and the PES) need to play a more important role in financing and implementing ALMPs as originally conceived inthe KYEAP. Figure 111.2: Budget plannedunder the KYEAP vs. budget actually spent according to LMPsinventory [Kosovo, 20071 0 Budgetperyear as plannedin Objective3: Prevent social KYEAP exclusion 1.8 rn Budget peryear in LMP Inventory Objective2: Increasedecent 1.7 work opportunities Objective 1: Promote youth I 14.4 employment 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Millions of Euro Source: World Bank own compilation. 11. However, the success of VET-related programs is being undermined by the sluggish growth in labor demand. Although most resources for youth ALPMs are spent on VET-related programs, placement rates of trainees are very low. Indeed,the success of these programs may be undermined by the general sluggish demand of labor in the territory. While investments in training provide young labor market entrants with skills, which make them easier to employ; training programs are not successful if labor demand i s scarce.. This seems to be somehow the case in Kosovo today. The MLSW Department of Employment and Labor runs a network of 8 regional vocational trainingcenters (VTC) and coordinates vocational training capacities of external allied training institutions. In 2007, 3,022 registered unemployed entered a vocational training through the PES, of which 2,381 trainees graduated (79 percent of the entries). Only 40 percent of male graduates of PES training centers, and less than 30 percent of females' graduates found paid employment upon training completion (Kuddo, 2008). This is much less than placementrates (at 70 percent on average) inmost other transition countries. 40 12. VET-Programs have limited coverage and generally serve less vulnerable sectors of the population. Training programs are still serving less than 1percent of all registered unemployed. Almost half of the trainees were inthe 15-24 aget group. Over 60 percent of them have upper secondary education, and over 5 percent university degrees. As such, trainees are generally are not among the most vulnerable groups of job seekers (Kuddo, 2008). 13. For the government and donors it is important to carefully evaluate ALMPs and introduce interventions on the basis of what works in Kosovo. Unfortunately, most youth employment programs implemented in Kosovo have not been carefully evaluated. There are many different types of evaluations: (a) process evaluations focus on how a program operates; (b) performance monitoring provides information on the extent to which specific program objectives are achieved; and (c) impact evaluations focus on whether a program has its intended impact (World Bank 2002) (Box 111.1). Inparticular, the central questions for ALMP impact evaluations are: (a) What are the impacts o f program participation on the future labor market outcomes of participants? (b) What i s the cost-effectiveness of programs? Evaluations must determine whether subsidized jobs would have been created anyway in the absence of the subsidy (deadweight effects) or whether subsidized jobs have displaced, or have been substituted for, unsubsidizedjobs. Inmost ALMP evaluations, the key impact indicators are post-programemployment rates and earnings. Box 111.1: Characteristics of SuccessfulLabor Market Programs (LMPs) A background paper for the 2006 Organization of Economic Co-operation and Development (OECD) Employment Outlook includes a useful summary of what features of ALMPs appear to work for youth in member countries (Quintini and Martin2006; Betchermanand others 2007): Programs should come into play early-after a period of unemployment of at most six months. Job-search assistance programs are found to be the most cost-effective for youth, with wage and employment subsidy programs having a positive short-term impact but a less positive impact on the longer-term employment prospects of participants. Inorder to connect training programs to local and national labor market needs, the private sector and local communities need to be mobilized and involved inproject design. Targeting of programs i s crucial, distinguishing between teenagers (who should be helped to remain in school and acquire qualifications) and young adults (who need help in acquiring work experience), and focusing on school dropouts. Programs should insist on tight work-search requirements, in the interest of an early exit from unemployment. Integration o f services into a combined, comprehensive package seems to be more successful than separate provision. Effectiveness o f programs is increased by greater involvement o f social partners and of public authorities at all levels. Source: Kuddo (2008). 41 14. Nevertheless, information compiled in the inventory provides some valuable lessons learned inthe process o f implementation of the various LMPs: 0 VET-related programs constitute the most popular ALMP for youth in Kosovo. Although most ALMPs on training and skills development have not been carefully evaluated, evidence on the success of training programs i s mixed. A trainingprogram sponsored by Swisscontact staff found that about 40 percent of all beneficiaries found employment after participating in the program. This placement rate i s close to that of VET-related programs implemented by the PES (which as mentioned before, i s below that of most training programs in transition countries at 70 percent). However, a program on skills development implemented by ILO achieved a placement rate of approximately 80 percent, which would make this program a quite successful one. However, the coverage of the program was very limited (368 beneficiaries per year). 0 Programs financed b y donors by implementedby the PES seem to have enhanced institutional capacity of the PES; 0 ALMPs providing on-the-job training (Le. apprenticeships and or internships) displayed placement rates after program completion of approximately 25 to 30 percent (similar to those o f VET-related programs); 0 Public works programs displayed the largest coverage (and the lowest cost per beneficiary) among all reviewed ALMPs - they provided short term employment for 3160 low skilled jobseekers and assisted in longer term employment o f about 2200 jobseekers per year;. However, the impact of these programs in the probability of findingajob after program completion remains un-assessed. 0 Most programs financing start-ups seem to have been successful as proxied by the share of new enterprises that remain in the market after 2 to 3 years after their creation (about 80 percent). However, these programs are associated with very highcost per-beneficiary andvery limitedcoverage. 42 REFERENCES Angel-Urdinola, D. and Kutateladze N. 2008. "Have Education Outcomes in Georgia Improved for the Poor since the Education Reform?" World Bank, Washington D.C. Angel-Urdinola, D., and Macias V. 2008. "Macedonia Employment Profile: 2004-2006" World Bank, Washington, D.C. Angel-Urdinola, D. and Malaiyandi, S. 2008. "What Do We Know about Youth Employment inKosovo?" World Bank, Washington D.C. Betcherman, G.; Godfrey, M.; Puerto, S.; Rother F.; and Stavreska A. 2007. "A Review of Interventions to Support Young Workers: Findings of the Youth Employment Inventory." Social Protection Discussion Paper No. 0713. World Bank, Washington, D.C. Betcherman, G.; Olivas, K.; and Dar, A. 2004. "Impacts Of Active Labor Market Programs: New Evidence from Evaluations with Particular Attention to Developing and Transition Countries". Social Protection Discussion Paper No. 0402. 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"Support to VET System in Kosovo-Phase 111, Report-Sector Skills Needs Survey inKosovo, July. PISG (Provisional Institutions of Self-Government). 2006. "The Kosovo Youth Policy andAction Plan2007-2010." Working draft. Prishtina. , (ed.) 2007. Kosovo Employment Strategy. Pristina, Kosovo. Quintini, G., and Martin, S. 2006. "Starting Well or Losing their Way? The Position of Youth in the Labor Market in OECD Countries." OECD Social, Employment and MigrationWorking Papers, No. 39. OECD Publishing, Paris. SOK (Statistical Office of Kosovo). 2006. "Labour Market Statistics 2006." Prishtina, Kosovo. UNKosovoTeam. 2007. "Youth EmploymentandMigrationinKosovo." UNDP (United Nations Development Programme). 2006. A New Generationfor a New Kosovo. Human Development Report. Pristina,Kosovo. Ravallion, M. 1999. "Appraising Workfare" The World Bank Research Observer 14(1): 31-48 2000. Ravallion, M.2000. "Monitoring TargetingPerformancewhen DecentralizedAllocations to the Poor are Unobserved", The World Bank Economic Review: May, pp.3311- 45. Rawlings, L. and Rubio, G. 2005. "On Evaluating the Impact of Conditional Cash Transfer Programs", The WorldBank Research Observer, 20(l), pp. 29-55. Subbarao, K.1997. "Public Works as an Anti-Poverty Program: An Overview of Cross- Country Experience" American Journal of Agricultural Economics 79 (May): 678-683. Subbarao, K. 2003. "Systemic Shocks and Social Protection: Role and Effectiveness of Public Workfare Programs" SP DiscussionPaper 302, World Bank Institute, The World Bank. Urdal, H. 2004. "The Devil in the Demographics: The Effect of Youth Bulges on Domestic Armed Conflict, 1950-2000." Social Development Papers, Conflict PreventionandReconstruction.World Bank,Washington, D.C. 45 Van Reenen, J. 2003. "Active Labor Market Policies and the British New Deal for the Young Unemployed Context". NBER Working Paper Series No. 9576. Cambridge, Massachusetts. Vathi, Z., and Black, R.. 2007. Migration and Poverty Reduction in Kosovo. Issuedby the Development Research Centre on Migration, Globlisation and Poverty. Falmer, Brighton,U.K. World Bank. 2004. "Kosovo Climate." Washington, D.C. .2005. WorldDevelopment Indicators. http://devdata.worldbank.org/wdi2OO5. . 2006. World Development Report 2007: Development and the Next Generation. Washington,D.C. .2007. Kosovo Poverty Assessment Update. Report No. 39737-XK. Washington, D.C. .2007. WorldDevelopment Report. Washington,D.C, . 2007a. Youth-An UndervaluedAsset: Towards a New Agenda in the Middle East and North Africa Progress, Challenges and Way Forward. Middle East and North Africa Region. Washington,D.C., September. .2007b. Timor-Leste: A PolicyNoteon SafetyNets. WashingtonD.C. .2008. InterimStrategyNotefor Kosovofor the PeriodFY08. WashingtonD.C. 46 APPENDIX Invent0y of ALMPs in Kosovo Organizations I Program- Active LaborMarket 1. UNDP 2. MLSW Report 2007 3, ILO (capacity building of Public EmploymentService) PROJECTDESCRIPTION/ OBJECTIVES The Active Labor Market Programbuilds on the lessons learnt from two previousyears of the so- called EmploymentGenerationProject (EGP) financed by UNDP. In 2007, the EGP changed into the "Active Labor Market Programfor Youth". The project envisionedfive typologies of measures: on-the-job training; pre-employment training; employment subsidies; internship schemes; and during 2007, introduced a fifth scheme, vocational training offered by a private provider (Don Boscotraining center). The programwas implementedover 12 months.The main objectives of the program were to: 1) provide youth with skills and experience required for the labor market; 2) strengthen the capacity of the PES to organize their interventionsalong the lines of an individual case management; and 3) providedirect assistanceto unemployedyouththrough a number of active measures, rigorouslydesigned, implemented, monitoredand evaluated. COVERAGE The project envisaged in the beginning to cover 1100 jobseekers. However, the number was increasedto 1500jobseekers registeredin Municipal and RegionalEmploymentOffices: Sixteen percent of the beneficiaries are 15-19years of age; 49 percent, 20-24 years of age, and 34 percent, 25-29years of age. Forty nine percent females, 15 percent minorities, and 79 percent unskilled with only primary or less then secondary education.There was an equal distribution of beneficiaries inurbanvs. rural areas. Twenty two percent of the beneficiarieswere from the Prizrenregion; 19 percent from the Gjilan region; 16 percent from the Prishtinaregion; 12 percent from the Ferizaj region; 10 percent from the Pejaregion; and less then 8 percent from the Mitrovica region. EXPENDITURE During 2007 the Project spent about US$1,300,000. Beneficiariesreceivedabout US$965,000 and capacity building of PES counselors, admin and other cost were US$335,000. To employ/train one jobseekerthe project cost net US$657 per person (gross, US$$898per person): Total Fundingof Project(2004-2007) US$4,501,678 Total Expenditure(2004-2007)US$4,000,365 Total Available Funds(2008) US$501,313 RESULTS/ACHIEVEMENTS The Project strengthened the capacity of employment counselors of regional employment centers and municipal employment offices to 1) conduct effective individual counseling sessions, 2) develop appropriate individual employment plans, 3) sequence and grade the intensity of services to be provided to the individual client, 4) monitor and evaluate individual progress. The On-the-Job Training scheme seemed to be the most favorable for employers. As a result, 80 percent of the beneficiarieswere on this scheme. e During2005 and 2006, the project placed300jobseekers. 48 Organizations Employment 1. UNDP 2. Ministry of Labor and Social Welfare Generation Project- Report2006 IPROJECT DESCRIPTION/ OBJECTIVES The Employment Generation Project (EGP) is designed to ease unemployment and stimulate job creation. The EGP has two main components. The first component is public works and targets unemployedwith secondary or lower education. The second component is an employment subsidy and is suitable for young graduates of the vocationaltraining centers. The employers, however, are required to offer them a contract for one year. Internships: 100 fresh graduates will work for a maximum periodof 4 months in different companies.The main objectives of this project were to: i) support sustainable employment for 1500 young people; ii)assist the targeted youth to engage in usefulwork with their own communitiesthrough public works. COVERAGE Component 1:PublicWorks 0 Forty percent of the beneficiariesare 15-24 years of age; 22 percent, 25-30 years of age; and 38 percent, over 3 1years of age 0 Sixty percent of beneficiaries were with elementary school, 40 percent with secondary education (16 percent minorities and 3 percent females) Component 2: Sustainable employment Forty eight percent of the beneficiariesare 15-24years of age; 32 percent, 25-30 years of age; 17 percent, 31-35 of age; and 3 percent over 36 years of age Minorities are represented at 7 percent and women at 32 percent Fifty one percent of internshipscheme's beneficiarieswere female EXPENDITURE ~ Total funding: US$3,3 17,435 Total expenditure:US$2,930,596 Re-budgetedfor 2007: US$300,000 Projectexpenditures 2006: USD$1,972,124 US$733,994.16 were spent in component 1 and $1,238,838.05 in component 2. RESULTS/ ACHIEVEMENTS 0 In two years, EGP provided short term employment for 3160 low skilled jobseekers and assisted in longerterm employmentof about 2200jobseekers. 0 In 2005, 80 percent of beneficiary companies were monitored. 79 percent of the beneficiarieswere working, 17 percent were not and no datawas availablefor 4.3 percent 0 38 public works projects were implementedduring 2006 and workers who were a part of the socialassistance scheme generated28 percent moreincome 0 88.5 percent of the companies were monitored. 92 percent of the workers were still working 0 At the time ofthe report, 22 from 124 interns inthe programbecameregularemployees 49 Organizations Strengthening 1. Lux Development 2. MLSW Vocational Training I PROJECTDESCRIPTION The GrandDuchy of Luxemburghas launched a support programaimingto strengthenthe capacity of public, private,and not-for-profit sectors to provide pertinentvocationaltraining in Kosovo. By the end of 2007, the project has been restructuredto focus on the basic needs of the Vocational Training Centers (VTCs): skill training, modernization of obsolete equipment, workshops rehabilitation, and transport subsidies for poor trainees in rural areas. The main objective of the program is to contributeto the long-termreductionof poverty by providing fair and impartial access to quality training. COVERAGE The mainbeneficiariesofthe project are youngunemployedpeople between 16-25years of age. Vulnerable groups: Seven hundredtrainees will benefit from training in managementand business administration Seven hundredbeneficiarieswill undergo on thejob training with local companies. EXPENDITURE Total financing approved for the project between 2006 and 2010 is 3.5 million. 1,009,092.00 are availableto be injected in the economy when seen fit, mainly through constructionand equippingof VTC-s. The private training provider, Don Bosco, has also received around 1 million from the project so far. About 140,000 have been budgeted for 1400 beneficiaries from vulnerable groups (100 person/month).The yearly break ofthe budget is as follows: 2006:121,253.00; 2007: 460,000.00 2008: 1,089,225.00; 2009: 496,380.00 2010:324,050.00 RESULTS/ACHIEVEMENTS The project plans to achieve the following three key resultsthroughthe underlyingtasks: 1. Responseto adult training needs i s more efficient: a. Introductionof a Performance Management Systemto VTCs b. Introductionof a Quality ManagementSystem in the VTCs c. Introduction of subsidy schemes to stimulate the response of the private sector to adult training needs 2. Increase inthe accessibilityto training by vulnerable groups: a. Extensionof service provisionto remoteareas and minority groups 3. Enhancementof the capacity of the DonBoscotrainingcenter 50 IOrganizations BusinessDevelopment 2. Mycs 1. World Bank for Youth 3. Partnerorganization The project plans to improve inter-ethnicrelations in Kosovo and create employment by helping young people set up their own business. The project component puts special emphasis on cooperation betweenyoungAlbanians and Serbs. The Project ImplementationUnit (PIU) will work together with a partner organization that has experience in business start ups for young people. The project aims to generate 750 applications from youthbetween 18 and 35 years of age. Selectedcandidatesthat will undergoa 3 week training intensive program and will present a business plan at the end of the training. The 250 most successful applicants who will establish their businesses will also receive extra 10 hours of personalizedconsultancy. OBJECTIVES 0 Improveethnic relationsamongprogram beneficiaries Reduceyouthunemploymentthroughenhancing self-employment. Train 500 young people inbusinessdevelopment skills 0 Support 250 young entrepreneurs to start a business 0 Evaluatethe impact of the activities COVERAGE Fromthe total volume of applications, 500 candidates will be randomly selectedto participatein a 3 week intensive training program. 250 most successful applicants will be offered grantsfloans. The target group is youth between 18 and 35 years of age, with a focus on female, rural and minorityyouth. EXPENDITURE 250 best selectedbusinessplanswill be granted2,000 each. RESULTS/ACHIEVEMENTS N/A 5 1 Promotion ofyouth employment through ALM 2. MLSW measures 4. MEST PROJECTDESCUPTION/OBJECTIVES This project will last 2.5 years and will start in January 2009. The project builds on the knowledge and experience of the UNDP-led "Employment Generation Project" and the "Youth Business Development Program" implemented by the MYCS (funded by the World Bank). The PES will provide counselingand advisory services to unemployedyouth in the form of the individual action plans and will identify employers who are willing to train or recruit beneficiaries.The programwill offer on-the-job training, vocational training, temporary employment, self-employment opportunities, and internshipsto beneficiaries. The mainobjectivesofthe programare to: increase employability of youngpeoplethrough business skills training, ii)support entrepreneurship in Kosovo, iii)provide support and follow up coaching to newly established businesses; iv) develop quality and capacity of public and private training providers; v) strengthen capacity of PES front line officers; and iv) provide individualized and integratedcounselingand guidance service to beneficiaries. The first three services, as outlinedabove, target low skilled segmentsofjob seekers includinghigh school drop outs. Meanwhile,the last scheme targets youngjob seekers who are higher skilled, such as universitygraduates. The project foresees at least 10thousand youngjobseekersto benefit I directly. Projectaims to have at least a 50 percent female participation, as well as adequate participationof disadvantagedgroups (including RAE) EXPENDITURE EC funding: 2,300,000.00 0 On thejob training: 50 percent of the budget 0 Vocational and other trainings: 15 percent ofthe budget 0 Temporary employment: 10percent ofthe budget 0 Self-employmentscheme: 50 percent 0 Internships:5 percent Kosovo Employment Offices are expected to fund some of the activities, but there is nothing definitevet. I RESULTS/ACHIEVEMENTS I N/A 52 I Organizations Regional Economic Growth 1. CARE- KOSOVO and Stability Project I- 2, KEp ICCED in Kosovo 3. EPI in Macedonia (Oct 2007) PROJECTDESCRIPTION/OBJECTIVES The overall project objective is to increase employment by creating a business environment that promotes economic growth and investmentopportunitiesat the local level. The REGS project was designedto last for a periodof 5 years, with a pilot of 2 years. Extensionof the pilot will depend on the success of the first phase. In its implementation phase, the project has opted for a sectoral approach, whereby a number of promising sub-sectors of the economy would be targeted. The project also targets to benefit the rural working poor. The project supports the following sub- sectors: a) broiler production, b) non-timberforest products, c) bee-keeping, d) strawberries, and e) rural tourism. COVERAGE The project component which focuses on institutionaldevelopmenthas identifiedthree maintarget groups: 1) municipalities;2) businesscommunityas a whole; and 3) individual enterprises, includingorganizedrepresentatives. By September2007, 170jobs were created inthe 3 aforementionedsub sectors. The report gives the following projectionsforjob creation inKosovo: remainingin 2007, 257jobs; in 2008, 628jobs; in 2009,920jobs; and in2010, 1140jobs. The total budget for REGS-1 is 1,717,358, of which 1,508,914 were providedby the Netherlands Ministry of Foreign Affairs and 208,444 contributed by CARE and partner municipalities and businesses.Fifty two percent of the budget is for staff and runningcosts and 48 percent for project inputs: surveys, training, technicalsupport and investments in micro projects. For grants, a total amount of 102,197 has been disbursed, along with matched contributions of 34,798 from the beneficiariesthemselves. RESULTS/ACHIEVEMENTS In2007 the following resultswere achieved ineach sector: Broiler production: four farmers were suppliedwith chickens Bee-keeping: 11 farmers receivedtrainings on the productionof high value by-productsand on the multiplication ofthe queen bees(1 1 additionaljobs were created). Non-timber forest products: around 15,400 is the generated income for both Kosovo and Macedonia.Collectorswere trainedfor species recognitionand methods of sustainable collection. Offseason strawberry cultivation: 5 farmers have cultivatedoff season strawberries in Kosovo and around 19,000 was the generated income in both Macedoniaand Kosovo. Village tourism: contacts have been establishedand deals madewith the families providing for food and lodgingas well as tourist attractionsinthe Novo Brdo municipality. As a part of the institutional development component, the municipalities were involved in the planningand implementationprocess. 53 Organizations KOSVET I 1. European Agency for Reconstruction 2. MLSW PROJECTDESCRIPTION/OBJECTIVES The Phase Iof the European support for VET focused on piloting innovative approaches and developing human resource capacity and ran between 2002 and 2004.The approach adopted was based uponthe principlesthat the system should be demand-led and responsive to the needs of the labor market and at the same time, learner-focused with an emphasis on increasing the employability of VET learners. A majority of the teachers who were trainedreceived no fewer than two whole weeks oftrainingand some receivedmore than three. The overall objective of the program was to develop an EU-compatibleVET system capable of meetingKOSOVO'S long-termsocio-economic needs. COVERAGE The beneficiary ministries of this project were Ministry of Labor and Social Welfare (MLSW) and the Ministry of Education, Science and Technology (MEST). The project providedtraining for 295 teachers. 55 trainers and 66 stakeholders. mainlv MEST and MLSW officials. EXPENDITURE Total amount of the project was 3 million. 1 million were provided for the construction and equippingthe PrishtinaVTC in run by the MLSW RESULTS/ACHIEVEMENTS Increase human resource capacity: three and a half times more teachers and trainers were trainedthan originally envisioned, resultingin visible changes inthe applicationof teaching and learningstrategies in VET providers. However, a significant number of trainers found betterpaidjobs. Enhancephysical capacity of schools and training centers: 13 schools were includedin the final selection. Schools were able to increasetheir stock of equipment by 25 percent. Develop training standards: The chosen model for the specification of curricula included the identificationof explicit learningoutcomes and performance criteria. Develop and implement new curricula: A modular, outcome-basedcurricula was developed between April 2003 and January 2004. It included practical applications of skills and knowledge, and an overallcurriculum framework for each profile. Develop and implement assessment and certijkation procedures: Each module was expressed in terms of learningoutcomes. Attached to each learningoutcome were a number of performance criteria and an explanationofthe assessmentinstruments. Develop and implement career guidance and education arrangements: Activities included: a) preparation of resource packages for young people and jobseekers, b) trainings for stakeholders, c) starting a network of pilot schools and employment offices in Prizren and Prishtina. Increase the capacity of the vocational training center at Doljane 54 Organizations KOSVET I1 1. European Agency for Reconstruction PROJECTDESCRIPTION/OBJECTIVES This report addresses phase I1of the KOSVET project (September 2004 and September 2006). The program was implementedon the basis of a memorandumof understandingbetweenthe Minister of Labor and Social Welfare, the Minister of Education, Science and Technology, the Chief Executive Officer of the Statistical Office of Kosovo (SOK), and the European Agency for Reconstruction. This memorandum set out detailed implementation arrangements for the project, including the working group structure and implementationtimetable. The overall objective of the KOSVET I1 program is to support economic development by assisting development of a long term, EU compatible VET system. The three project components had the following objectives, respectively: 1) support the development of an appropriate legal and institutional framework to underpin development and implementation of strategies for VET system development; 2) enhance human resources capacities of identifiedVET institutions and providersto develop, implement and deliver VET provisions; and 3) support the development of career guidance and labor market information svstem. COVERAGE The beneficiaries of the project were the MEST and the MLSW. Also, the Statistical Office of Kosovo (SOK) benefitedfrom activitiesassociatedwith labor market information: Component I;99 peopletrained Component II;546 peopletrained Component III;27 technical experts and stakeholder representativestrained Intotal, 738 personswere trainedunder the three components(205 females and 533 males). I EXPENDITURE I Total I amount ofthe projectwas approximately1 million. I RESULTS/ACHIEVEMENTS Component I: the projectplayed an important role in reviewingthe laws on adult education and training and the VET law. A draft Law on qualifications was presented to the MEST ~ and is expected to enter legislative process; support was provided in the drafting and dissemination process of the report covering National Qualifications Framework and NationalQualificationsAssessment. Component IL materials regarding curriculum and standards were translated; standards were embedded in 13'h grade curricula (business and IT/electronics); a report on training profileswhich should be offered (based on a labor market analysis in Prishtina)at the VTC Prishtinawas prepared and amended. Component III: a career education and guidance module was developed and piloted with MEST. 55 I Organizations I n CommunityStabilization 1. EAR 2. IOM(implementingpartner) ProgramIV PROJECTDESCRIPTION/OBJECTIVES This program was established in November 2002 and is still running. CSP IV ran between December 2005 and May 2006. CSP works throughout Kosovo and targets the most disadvantaged and vulnerable minority populations, focusing on sustainable income generation. The program funds production based activities to a maximum of 5 thousand, service based activities to a maximum of 3 thousand, trade-based activities up to 2 thousand and community development projects up to 40 thousand. Grants are mainly used for the purchase of equipment, machinery and start-up raw materials. The overall objective of the program is to stabilize the situation in ethnic minority communities, to enable vulnerable communitiesto build up sustainable livelihoods; and to assist returnee communities. .. COVERAGE Phase I,2, 3 and 4: Of 813 direct beneficiaries, 116are female 1,208 primary direct beneficiaries, 1,492 secondary direct beneficiaries and 175,027 indirectbeneficiaries EXPENDITURE CSP IV: 270 projects were supported for a total amount of 1,062,917, including contributions from beneficiariesof955,105. When the number of primarydirect beneficiaries is compared to the providedfunding the cost per job is 2,016. Ifsecondary direct beneficiaries are included,the cost per job is 1,340. The aforementionedfigures, however, do not include community development projects and made RESULTS/ACHIEVEMENTS 0 During the first three phases of the project between 2002 and 2006, 532 projects were funded, of which 297 (55 percent) were in production, 163 (31 percent) in services, 24 (5 activities). percent) in trade and 48 (9 percent) others (minor infrastructure,cultural, or psycho-social 0 In the last Grant Approval Meeting support was approved for 270 projects: 163 start-ups, 107 existingenterprises (228 were individual projectsand 42 community projects) 0 The bulk of the funding went to the Serbian community (71 percent), 9 percent to the RAE community and 7 percent to the Bosniakcommunity. 0 Around 80 percent of the enterprises established since the inception of the CSP are still operating. The report also notes that the program has helped stem the net outflow of communitiesin Kosovo, despite difficult economic conditions. 56 BusinessStart Up 2. Ministryof Trade and Industry Center 3. MEST 4. MYCS 5. Universitvof Prishtina PROJECTDESCRIPTION/OBJECTIVES The total duration of the program is 24 months, starting in October 2005. The center provides practicaltraining and direct financial assistance to young people (18-35) for start ups and prepares youth for the labor market. The program sponsors "business ideas" competition, and "business plan" competitions. The center provides free one-week training on business plan writing for 80 participants and free IO-weektraining to 50 participantsper cycle. Ten business plans, which are selected through a competitive process; receive micro-loans, two years of membership in the Kosovo Chamber of Commerce, and 100 hours of consultancy. The center' overall objective is to establish 30 new small enterprises in Kosovoand train 400 business minded entrepreneurs over the periodof two years. COVERAGE Sixty eight percent of the participants were students, 21 percent college graduates, 6 percent entrepreneurs and 5 percent youth with high school education. 19 percent of the total number ofapplicantswas female. Seventy four youth participated in business plan development training (67 received certificates) 0 In the business plan competition, 82 percent of the applicants were male (18 percent female) Forty four youth participated in the Business Skills Training (under Business Plan Competition); 42 receivedcertificates. Nineteen competed in the Final Business Plan Competition, 11 were selected and 10 appliedfor a micro-credit. EXPENDITURE Total amount of base revolvingfund capital100,000 Total amount contributedby BSCK partners36,000 Total amount providedby the Governmentofthe Netherlands1,000,000 RESULTS/ACHIEVEMENTS 0 By now, BSC hastrained330 individualsbetweenthe ages of 18-35. 0 Inthe first cycle, out of 10 winners of the business plan competition, 7 were awardedwith micro-credits. So far 24 full time jobs have been created and about 20 indirectjobs. 17 morejobs are expectedto be created inthe nearterm. 0 Inthe followingthree years 60 morenewjobs are expected. The second cycle has been completedand the 10 winners were announced. They are in the processof establishing their businesses. 0 A second phase of the project is envisioned (BSC II), will continue until 2010. This which projectis expectedto havea totalbudget of2 million. 57 I Organizations - I General overview 1. MedicaKosova 2. Heifer International of A-B-C project 3. BMZ 4. MedicaMondialeGermany PROJECTDESCRIPTION/OBJECTIVES The organization was established in 1999 by the organization Medica Mondiale from Koln, Germany. Untilthe end of 2003, the organizationfunctionedas an internationalNGO. InNovember 2004 it registered as a local NGO providing psycho-social, gynecological and judicial care for women who were traumatizedduringthe war; with a special focus on women victims of rape during the war. In January 2006 the organizationstarted a projectto develop agricultural, cow breedingand bee-keepingactivities. The project will close inNovember2008. The main objectives of the project are: i) building capacity of women farmers, ii) establishing the women farmers and beekeepers association, and iii) provide employment opportunities for a marginalizedgroupofthe society. COVERAGE In2006 the number of direct beneficiarieswas 90: meanwhile.in2007 it was 145. EXPENDITURE The total funding available for the project was 600 thousand, of which 100 thousand were designatedfor capital investments (tractors, bees and cows) I RESULTS/ACHIEVEMENTS 0 Eight groups of women in the Gjakova and Decan municipalities received 3 tractors and accompanyingequipment, 187 received"bee families", and 42 receivedSimmental cows. 0 The number of women farmers has significantly increased in the villages of Krelan, Koreniceand Dobrosh. 0 Women farmers have the opportunity to sell their milk for 0.25-0.30 to a dairy producer from Gjakova. Women beneficiaries of this project earn on average 180-220 per month from their produce. The organization assisted the honey producers to establish commercial operations with the PrishtinaInternationalAirport (they provideto the facility about 100kg of honey monthly). 58 IOrganizations VocationalEducation 1. Swisscontact Support PROJECTDESCRIPTION/OBJECTIVES The project began in 2001 and is foreseento end in 2009. The first two phases of the programhave been completed and the third phase is in progress. Swisscontact designs and supports the implementationof learning projects in 7 partner schools in order to train students and non-formal learners with high quality standards. Phase I provided job-oriented modular training for adults. Training was offered in technical professions; such as plumbing and tailoring. A significantportion of the resources was allocated to buy school equipment and for curriculum development in vocationalschools. Phase 11and 111provided training in vocational schools (mainly suitable for girls). Students in 3 schools had a chance to be employees of a virtual company. Other training to electricians and mechanics was provided. Two new courses are being implementednow; they are: "greenhouse as a business" and "sales assistant for food products". These courses are still intestingphase. COVERAGE Phase I 0 In 2002, 316 adults attendeddifferentkinds of training 0 In 2003, 238 adults enrolled and 226 graduated from the program (75 percent were male and 25 percent were female) 0 In2003: 32 percent of the beneficiarieswere below 20 years of age; 28 percent between20 and 24 years of age, 16 percent between 25 and 30 years of age, and 24 percent over 30 years of age Under Phase 11and 111,3 thousand students annually are expected to attend schools supported by the Swisscontact. 0 The first generationof 600 students graduated in 2007 0 Eight hundred students were enrolled in the academic year 200412005 and 1600 in 200512006. EXPENDITURE The total cost of the Droiectbetween2001 and 2009 is about 6.537.129. RESULTS/ACHIEVEMENTS Phase I Two tracing studies were conducted. Inthe first tracing study, Swisscontact staff found that out of the total number of graduates in 2002, 40 percent were employed. In the second tracing study for the same group, 34-35 percent reported to be employed. One of the reasonsfor this differencewas employmentseasonality. Phase 11 and 111 0 The first generation of students graduated in May 2007. Currently, Swisscontact staff is contacting every graduate to find out what their status is (employed, unemployed, seeking employment, or student). 59 Organizations DonBosco Center for 0 Italian Government Vocational Education Lux Development 0 Governmentof Germany 0 CongregataSalezione PROJECTDESCRIPTION/OBJECTIVES Don Bosco is a private provider of vocational training. It has been constructed, equipped and constantly supported by a number of donors. Don Bosco VTC has been operating since October 2003. Don Bosco provides training for adults in eight different professions. Starting from June 2008, the center will offer a course in fruit and vegetable processing, targeted to young females from rural areas. The center organizes a lice' for students who want to receive vocational education. Studentsattendingthe lice' pay 840 annually.The lice' beganto operate in fall 2007. COVERAGE About 1000students have graduated inthe training center since 2003. 0 30 percent ofthe studentswere self-financed. 0 70 percent supportedby differentprojects 0 Average age: 20-30 50 percent female TheLice 0 2007- total of 56 students(30 students with scholarships) 0 2008- total of 75 students Note: Estimates providedby Anton Gojani, General Manager ofthe Center EXPENDITURE(SUPPORT) Congregata Salezione:60thousand per year 0 The ItalianGovernment:3 millionfor building constructionand equipment GTZ: 500 thousand, of which 350 thousand are for equipment and buildingconstruction 0 Lux Development:1.2 million 0 VIS: 250 thousand for constructionand training programs RESULTS/ACHIEVEMENTS The center plans to begintracing its students in 2008. 60 Organizations Internship Scheme 1. Ministry of Trade and Industry 2. Partner companies PROJECTDESCRIPTION/OBJECTIVES The Ministry of Trade and Industry plans to start an internship program in 2008. The program targets students and youth between 18 and 35 years of age. The programwill be an opportunity for students to gain work experience. The selection criteria has not been establishedyet as the program i s still being drafted. The main objectives are: 1) to facilitate the transition from university to the labor market; 2) to familiarize students with the working environment; and 3) to assist in the creation of a more favorable attitude towards students and/or young graduates as potential COVERAGE a At this time, 50 students are expected to benefitfrom this scheme EXPENDITURE The program is expected to cost approximately 10,000; however, this is a tentative amount since project has not been finalized yet. The number of beneficiaries could be subject to modifications too. I RESULTS/ACHIEVEMENTS I Dependingon the results achieved in the first year, the program could gain more support from the government, the ministry, donors, and other stakeholders. 61 1 Organizations Skills Development for the 1. ILO Reconstruction and 2. MLSW Recovery of Kosovo PROJECTDESCRIPTION/OBJECTIVES Between2001 and 2004 the first phase of the project focused on building institutional capacity (in the MLSW), while the second phase focused on development of a Youth-Employment Action-Plan (2004-mid 2007) and on piloting ALMPs targeted at disadvantaged youth. The first phase (Skills development) aimed to tackle the depleted stock of human capital resulting of the conflict and to help authorities to establish a vocational training system. ALMPs, in turn, aimed to address: 1) the specific disadvantages of young labor marketentrants; 2) the capacity of the government and social partners in youth employment policy development, and 3) the introduction of pilot programs to enhance the emdovabilitv of disadvantagedvouth. COVERAGE Phase I:by June 2004, 850jobseekers were trained in self-employmentand 173 completedfully- fledgedtraining programs and havepreparedbusinessplans 0 The four LO-sponsored vocational training centers provided competency-basedcourses to 1,609 unemployed; 0 Six hundreddisadvantagedyouth participatedin school-to-work programs (apprenticeships, internships,and in-companytraining), with 50 percent female participation. 0 Almost 1 thousand youth betweenthe ages of 15 and 24 participatedin ALMPs (53 percent were men and 47 percent women). EXPENDITURE Total funds available for the pro-ject:$2,617,028 - - YouthEmployment Between June 2005 and May 2006 the fund had disbursed a total of 290,956 (185,160 from the ILO and105,786 from the MLSW) RESULTS/ACHIEVEMENTS Apart from successfully setting up training and employment infrastructure in the MLSW, the . projectcontributedto the drafting of labor/educationlaws, policies, and strategies Skills Development: Ofthe 1,609 individuals who were trained in the four ILO assisted VTCs, approximately 80 percent subsequently found work. At the time of the final evaluation of the project, the overall number of people who had participated to competency-based training courses ...totaled 14thousand individuals. Youth employment: The placement rate for ALMP participantswas 46 percent overall Sixty percent of the disadvantaged youth who participated in school-to-work programs found employment; Two sets of training material (employment counseling and self-employment for young people) are availablein local languages. 62 I Organizations I Shelters for Women 1. KosovoWomen Network PROJECTDESCRIPTION/OBJECTIVES The Kosova Women's Network (KWN) providesshelters for women who experience gender based violence.In2007, Kosovo had 8 shelters. The institution is currently undertakingan assessmentthat focuses primarily on four shelters that were UNFPA-financed. KWN plans to use the recommendationsin this assessment to develop an advocacy campaign to raise funds and secure longer term support for Kosovo shelters. COVERAGE Since their openingand upto September 2007, shelters have providedprotectionto morethen 1,958 women and children. Altogether, shelters in Kosovo have the capacity to shelter 101 clients at a time. EXPENDITURE In 2007, the MLSW made a commitment to the shelters totaling 18,810, It is not clear whether the MLSW continued to provide financial assistance to the shelters in 2008. For 2008 and 2009 operation, shelters need approximately 225 thousand per year. At the time when the report was written 53,190 and 170,000 for 2008 and 2009 remained to be raised. RESULTS/ACHIEVEMENTS Employment Programs Three of the four shelters supported by the UNFPA had informal programs helpingwomen clients find employment opportunities.The assessment provides an example in Gjakova, where sheltered women learnedto make facial creams from beeswax. Individuals who wishedto support the shelter could do so by giving donations in exchange for the produce. Since the product was not licensed, it could not be sold in the market. 63 I I Organizations I Summer Employment 2. Bundesagenturfur Arbeit Program 3. Zentralstellefur Arbeitsvermittlung PROJECTDESCRIPTION/OBJECTIVES The Summer Employment Program (SEP) has been running since 2004. The program offers seasonal employment to univers%y students between 18 and 35 years of age, who are willing to spend 2 to 3 months in Germany. One of the main eligibility criteria is knowledge of the German language.Interestedstudents haveto be registered asjobseekers and apply for the program through the regional employment centers. The short-listedcandidates go through an interview, after which the final list is prepared.The studentspay for their own trip and do not receive any allowances (but do receive wages and tips). The main sectors where they find employment are catering, agriculture, production, cleaning and industry. Students do not pay income taxes in Germany, but in Kosovo; thus generatingadditionaltax revenuefor Kosovo. COVERAGE .. In2004 (2005) 20 (30) studentsparticipatedinthe program. In 2006, 17 percent of the beneficiarieswere 18 to 20 years old; 65 percent, 21 to 24 years . old; and 18 percent were 25 to 35 years old (74 percentof the participantswere male and 26 percentfemale) In 2007, 92 students participated in the program: 17 percent of the successful applicants . were between 18 and 20 years old; 65 percent, 21 to 24 years old; and 18 percent, 25 to 35 years old. In2007, female participationincreasedto 41 percent. In 2008, approximately 250 mediations are expected, of whom 150-182 will be new beneficiaries.Ofthe successfulapplicants, 38 percentwill be 18 to 20 years old; 55 percent, 21 to 24 years old; and 7 percent, 25 to 35 years old. EXPENDITURE The averagecost of the program is estimatedto be 6,000 per year. RESULTS/ACHIEVEMENTS .. Students save upto 3,000 in a periodof 3 months. 9 In 2007, the average monthly income students generated was 1,242. In 2008 this sum is expectedto becomehigher The successful implementationof this program has paved the way for similar programs with other EUcountries 9 In 2008, the cumulativeincome for all beneficiariesfor the 3 month period is expectedto reach about 1 million, which should in turn provide tax revenue for Kosovo of approximately 50 thousand. 64