Active Labour Market Policies
Active Labour Market Policies (ALMPs) are what governments traditionally do to show that they are doing something to combat youth unemployment. Some of the programmes are remarkably effective:
Job guarantee schemes: Finland has had a job guarantee scheme since the 1990s. The European Commission (EC) drew on its success to create its €7 billion Youth Guarantee scheme, designed to ensure that all Europeans under the age of 25 receive a good-quality offer of employment, continued education, or an apprenticeship within four months of leaving school. According to the EC, “14 million [young people] have entered the scheme since January 2014 and 9 million have found jobs.” Massive though this scheme sounds, the EU feels it is cheap at the price, because it has estimated that the cost of lost economic productivity due to youth unemployment at €153 million.
German/Austrian/Swiss – dual system of education: Sometimes the oldest paths to youth job creation are the best, and Germany, Austria and Switzerland have some of the lowest youth unemployment rates in the world. For centuries, they have operated a dual system of education, where roughly half the country’s students are educated in college – and the half in the workplace. This means that, like the guilds of medieval times, students get hands-on training from skilled craftspeople while also being paid a small salary and learning useful workplace habits and attitudes. The UK has set up a similar programme with its studio schools, project-based learning academies where students spend more and more time in the workplace as they reach the end of their school careers. However, please note: efforts to export the dual system to other countries have not always met with success. There is no one-size-fits-all solution to entrepreneurship education. All we know is that school is where the seeds of entrepreneurship must be sown. Review what’s worked in other countries, then create your own solution, tailored to the needs and cultures of your own community and country.
RWANDA – improving business regulation systems: In many LEDCs there are severe disincentives to registering your company, be they in terms of time, cost or complexity. In Rwanda, the Office of the Registrar General has set up an online business registration service to combine all registration requirements under one roof. With one application you register your business and obtain a company code that also serves as tax identification number (TIN). There is no minimum share capital required for company incorporation, and no taxes to pay.
NAMIBIA – A Systems Approach: In Namibia, the government has set up a National Youth Directorate with the goal of empowering youth through entrepreneurship training, skills development and active youth participation in responsive youth programmes. The Directorate includes the Namibian Youth Credit Scheme (NYCS), a loan guarantee programme aimed at providing loans of N$ 2 000 to N$ 20 000 to youth that do not have adequate collateral to access credit from the mainstream banking system. Operated through both individual and group lending systems, the loans are paid back with interest of no more than 20%, and beneficiaries are offered follow-up training, counselling and mentoring in business management practices. The Directorate delivers one-year training courses to out-of-school, unemployed young people who do not meet the basic entry requirements of conventional vocational training centres. A tuition fee of N$ 300 to N$ 700 is payable upon registration.
Australia – a Systems Approach to skills-matching: Originally designed as a way of encouraging immigration, the ‘Points-based Australia’s Skill-Matching System’ is used to match suitable skillsets to jobs available. The online assessment calculates whether each applicant has enough points to be eligible to immigrate to Australia under one of the Skilled Visa classes.
UN-Exxon Road Map: It is common knowledge that when women are economically empowered, whole communities benefit. Stats such as “women produce half the world’s food” and “women spend 90% of their income on their families where men spend markedly less” have been known for a long time. But we still don’t know the most effective interventions to advance women’s economic empowerment. This Road Map is designed to fill that knowledge gap. Updated again in 2016, it confirms that the fields of entrepreneurship, farming, waged employment and young women’s employment are where the most promising high-impact, high-potential interventions lie. Among those interventions, perhaps surprisingly, saving money emerges as a top-value intervention. Owning title to a property is another necessity, especially for women. A third area of effective intervention for women is childcare, especially in urban areas.
Job relocation and managed industrialisation: At both the local and national levels, governments have immense opportunities to attract business to their districts and countries. With a substantial German-speaking population, the leaders of Spartanburg, South Carolina, heard BMW were looking to set up a manufacturing plant in the USA. With their dying textile industries threatening to turn them into a ghost town, a team of them went to Munich and, in their excellent German, persuaded BMW consider their town. Spartanburg now has the second-biggest BMW plant in the world, employing thousands of people. With China looking to relocate 85 million jobs in the next 15 years, this is a golden opportunity for African governments to attract inward investment to accelerate the industrialisation of their countries. Helen Hai, an industrialisation consultant, has already brokered the establishment of factories in Ethiopia and Rwanda, creating tens of thousands of jobs. Millions more are in the pipeline.
Historically, the largest and arguably most successful ALMP was Roosevelt’s New Deal in the USA. Under the deal the Works Progress Administration and Civilian Conservation Corps employed millions of unemployed people, mostly in construction projects, which resulted in the government becoming the country’s largest employer, delivering new schools, bridges, parks, woodland trails and other infrastructure to thousands of communities across America. The New Deal was credited with ending the Great Depression in much the same way as the post-war Marshall Plan helped employ thousands of demobbed soldiers in the effort to rebuild Europe. The indisputable success of such schemes is why Germany is currently talking about a “Marshall Plan for Africa.”
Other large direct government intervention schemes include:
- India’s Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), which has provided 12 billion workdays since 2007 mostly in rural areas by providing wage subsidies.
- South Africa’s Expanded Public Works Programme (EPWP), which is designed to ensure 6 million public employment work opportunities by 2019. The South African government is proud of the success of the scheme. “The SA Stats survey… found that by March 2015 1.24 million work opportunities had been created, against a target of 1.04 million – a 119% achievement. Also, in 2014, 70% of those who participated in the EPWP were employed – up from 56,9% in 2011. And, 4 out of every 5 of those employed had a formal sector job,” according to an EPWP report.
Governments driving Green Jobs
Given that this generation’s challenge is to transition from a brown to a green economy, governments and policymakers should focus their job creation efforts on this very promising sector. Plan International and Hand in Hand already do this (see their case studies below.) Without any prompting, YBI and IYF find that many of the business initiatives youth bring to them fall into the green economy category.
Governments should do more to encourage this by:
- Encouraging the inclusion of education about the green economy and the SDGs in their national education provision.
Supporting citizen-led green economy initiatives such as Clean Tech Open (CTO). CTO has trained more than 1,200 early-stage clean technology start-up entrepreneurs in the U.S through its annual business accelerator. 70% of CTO alumni have survived, raised $1.2 billion and created more than 3,000 clean-economy jobs. The EU’s Sustainable Energy Week and the UN’s Sustainable Energy for all by 2030 project perform some of the same functions.
Developing Green Investment Banks to support investments in green technology. The UK’s green investment bank, started in 2012, has already mobilised £11 billion worth of investment in green energy and other green technology start-ups – £2.7 billion from government and £8.3 billion from private investment partners. In 2016, the government started the process of privatising it completely. It projects a 10% return on its investments, allowing it to market under the slogan ‘Green and Profitable’.