World Bank Support for Employment Policy in Kosovo

In Kosovo, despite continued economic growth over the last two decades, the rate of unemployment – along with other labor market indicators - remains the weakest in the Western Balkans region, posing one of the biggest challenges for the country.

Less than one third of Kosovo’s adult population holds a job – with nearly nine out of ten women not working and around fifty percent of country’s young people unemployed. Employment opportunities are limited and the quality of existing jobs is low - increasing the risk of poverty, reducing labor productivity, and fostering discontent, especially among the many youth who enter the labor market every year.

To improve this situation, the World Bank has been providing multi-pronged support to Kosovo in the area of labor market and employment policy. A series of activities were implemented between 2017-2019 as part of the Technical Assistance on Strengthening Kosovo’s Social Protection and Labor System, funded by the Multi-Donor Rapid Social Response Trust Fund.

Enhancing the understanding of labor market issues

Improving labor market outcomes in Kosovo requires a better understanding of the barriers to opportunities for more, better, and inclusive jobs. Following the Jobs Diagnostic report published in 2017, the World Bank continued to invest in a variety of research studies to analyze different dimensions of Kosovo’s labor market and to uncover underlying constraints that limit the improvement of  the current employment situation.  

• Job creation: Using an innovative dataset from Kosovo’s four major private job portals, this study presented the characteristics of jobs posted in 2018 in terms of sector, type of contract, geography, and required level of experience, among others. The findings showed that the skills that are most in demand are socioemotional skills, foreign language skills, and computer skills. The importance of these skills is transversal: they cut across occupations and industries and are universally demanded in all education fields. Job platforms are used almost exclusively for filling high-skill occupations, especially in Kosovo’s capital city Pristina, whereas many low- and medium-skill jobs and jobs outside the capital are filled through informal channels. Overall, online data can be a useful tool for policy makers and other stakeholders to help align career services, training programs, and educational curricula with the skill needs of firms in real time.
  
• Skills needs: A Kosovo Skills Towards Employment and Productivity (STEP) study, based on household-level and firm surveys, was conducted. It provides information on skills from both the supply and demand side. The study found that a majority of recruiting firms in Kosovo find hiring new workers challenging because applicants have neither the skills nor the work experience they require. These skill gaps have negative consequences for firm growth and job creation in Kosovo and impede productive employment in dynamic firms. Conscientiousness, problem solving, and working well under pressure were found to be skills that are most needed and valued by employers. The findings from the STEP survey were further complemented by the job vacancy analysis mentioned above.
• Perceptions from university students: Over 80% of Kosovo’s youth attend university but finding a good job upon graduation remains a major challenge. In order to better understand students’ hopes and fears in their transition to work, the World Bank organized a blog and video contest among university students across the country. Main highlights emerging from analysis of over 120 submissions include: (i) approximately half respondents felt that university does not prepare them for the labor market, while the other half were satisfied with the links between university and the world of work; (ii) most respondents indicated that classes are often too theoretical; and (iii) most students felt that nepotism is widespread in hiring decisions.

Supporting policy dialogue

The World Bank also directly supported the Ministry of Labor and Social Welfare through several activities related to higher-level policy discussions, strategies and reforms.

• Supporting key policy documents: The World Bank provided comments on the “Sectoral Strategy 2018-2022” and supported the development of the “Policy for the Public Employment Agency 2019-2021”.
• Informing policy dialogue on minimum wage reform: Given increased policy interest in raising the country’s minimum wage, the World Bank prepared a technical paper presenting an ex-ante evaluation of the impact of a minimum wage increase on labor market outcomes in Kosovo. The paper was updated in 2020 and finds that in the most extreme scenario (an increase to 250 euros), the simulated unemployment rate would increase by 0.5 percentage points in the short term and about 0.7 percentage points in the long term. The youth unemployment rate (ages 15-24) and, unemployment among the unskilled (with primary school or less), on the other hand, would increase more. Even if raising the minimum wage is long overdue due to decreasing real wages, the evaluation showed that the policy needs to strike a fine balance between protecting workers and ensuring that employment is not negatively impacted.
• Informing policies on maternity and parental leave: Maternity, paternity and parental leave policies and associated benefits play a significant role in ensuring women’s’ financial protection, and in shaping their ability to get a job and to remain in the labor market after starting a family. In order to guide the reform on maternity and parental leave in Kosovo, this note summarizes the main principles of extending maternity, paternity and parental leave and benefit policies, and compares key characteristics such as leave duration and financing in European countries.

Barriers for social assistance recipients: As part of a broader analysis of Kosovo’s Social Assistance Scheme, the World Bank also analyzed the factors impeding the integration of social assistance beneficiaries into the labor market. The study highlights challenges at several levels, including i) disincentives to work resulting from design features of the scheme, ii) limited institutional capacity to provide activation measures for this group, as well as iii) low educational attainment and very long unemployment spells among social assistance beneficiaries. 

Employment support for disadvantaged groups

Building on its diagnostic work, the World Bank has also provided practical guidance on how to improve labor market outcomes, especially for the most disadvantaged groups such as youth, women and the long-term unemployed. Successfully supporting these groups requires addressing their specific needs and barriers, while building on successful practices from Kosovo and abroad.

• Improving the labor-market integration of women: Women’s employment outcomes in Kosovo are significantly worse than in other Western Balkan countries. Reasons include family responsibilities in combination with limited access to quality and affordable child and elderly care; conservative social norms and discrimination; low levels of education and work experience; barriers in the labor law (e.g., high cost of maternity leave for employers); and limited access to assets and productive inputs. Building on local and international experiences, as well as dialogue with key stakeholders in Kosovo, this report highlighted a broad range of promising strategies, including better outreach of employment services to women, making on-the-jobs and soft-skills training a priority, as well as accommodating schedules and accessibility of training locations – among others. 
• Making programs more “youth-friendly”: A review of international experiences and good practices in Kosovo highlighted a range of promising approaches to operationalize a youth-sensitive program design, including the importance of building socioemotional skills, creating positive adult-youth relationships, and peer-to-peer engagement.
• Supporting the integration of the long-term-unemployed: Older workers, people with low levels of education and outdated skills, migrant workers, ethnic minorities, as well as people with health problems or disabilities are more vulnerable to long-term unemployment. This note summarizes international experience in supporting the long-term unemployed, highlighting the need for prevention, individualized support and partnerships with employers and other institutions to effectively support this group.
• Enhancing the practice-orientation of higher education: The World Bank has reviewed practices in universities across the world intended to improve early practical orientation and experience during higher education studies. The review showed that there are multiple ways to increase practice-orientation, both inside and outside the university (e.g. mentoring, visits by firms, career clubs, practical projects with firms, practical thesis, competitions, internships, etc.). Many of these strategies can be implemented relatively easily and at low-cost.
• Promoting demand-responsive training: Several reports suggest that the private sector faces substantial skills gaps, negatively affecting business growth, efficiency and operating costs. Against this background, the World Bank conducted a mapping to better understand existing models for demand-responsive training in Kosovo and analyze their potential for scaling-up. The analysis found that many firms have already developed their own training programs to compensate for skill gaps among (potential) new employees. These programs are typically short (3-6 months) and focus heavily on on-the-job training. Firms would benefit from more incentives and support to train new entrants and from training partnerships and cost-sharing arrangements with other companies, industry associations and third-party training providers.
• Building partnerships with non-public providers: This review of international experiences suggests that the public sector may benefit from external support to ensure the provision of quality employment support services to different groups. Public Employment Agencies around the world are engaging in different types of partnerships, which either involve cooperation (e.g., information exchange) or out-contracting of selected services or active measures to qualified providers. Indeed, besides collaboration with other public bodies, partnerships with non-public labor market actors such as private employment agencies, private training providers, and NGOs have become an increasingly important instrument for public employment agencies to increase coverage, quality, and efficiency of services. Complementing the above analysis, this mapping of non-public providers of employment services and activation measures in Kosovo shows that while a large number of providers exist, the majority tend to be cover a limited number of beneficiaries  and be dependent on donor funding.

Fostering dialogue across stakeholders

Better understanding existing challenges and identifying possible solutions requires cultivating a continuous dialogue among all stakeholders: government, private sector, civil society, education and training institutions, think tanks, development partners and the people of Kosovo. To this end, the World Bank organized several events to convene stakeholders and discuss practical options for improving employment outcomes. These included:

• Panel discussion at the University of Pristina (March 2019): This interactive panel discussion convened private sector representatives, university staff, education experts and students. Issues affecting the education to work transition raised by the panelists ranged from the gap between industry skills needs and the fields students are studying (e.g. saturation of social sciences), an overemphasis on theory and memorization, the lack of career guidance services, overcrowded classrooms, insufficient infrastructure (e.g. laboratories), and firms’ recruitment practices that favor connections over skills. In order to improve the transitions from higher education to the labor market, panelists recommended to better anticipate future labor market needs, enhance career guidance and mentoring, and strengthen the practice-orientation of classes taught at the university (e.g. internships from the beginning and higher quality, firm visits, practical assignments and projects).
• Conference on youth employment (May 2019): Under the title of “Working together to Boost Job opportunities for Youth in Kosovo”, the event convened a broad range of stakeholders to discuss recent research and initiatives that can inform policy and practice. The conference featured sessions on aligning education and training with labor market needs, strengthening human resource development in firms, and improving labor market information. A detailed description of the conference can be found here.

The Way forward

The World Bank will continue to engage with the Government of Kosovo and all other stakeholders to address the barriers to employment in the country, especially for young people. To this end, the World Bank is exploring concrete entry points for future policies and programs that have the highest potential to improve labor market outcomes in the country.