In this new 6-part article series, we look at several critical dimensions of a pilot welfare-to-work programme targeting young people. The Government of Montenegro and the social partners are currently piloting this programme with the technical assistance of the ILO.
In part 1, we review the rationale behind the political decision of undertaking this type of public intervention. We also try to identify crucial success factors that should guide policy-makers.
The introduction of welfare-to-work programmes is expected to help Montenegro meeting its commitments under the Economic Reform Programmes (ERPs).ERPs prepare the enlargement countries like Montenegro for their future participation in the EU’s economic policy coordination procedures. They also play a key role improving conditions for inclusive growth and job creation. The ERPs are a key element of the «fundamentals first» approach in the EU’s enlargement strategy. With regard to employment and social policies, the ERP for Montenegro recommends to ensure better coordination between employment activation measures and social benefit schemes.
The current labour market situation in the country warrants some consideration in this respect.
In Montenegro, the labour market is characterized by persistently low employment and activity rates, especially among young p men and women. Youth with only primary educational attainment can take up to 61 months to complete the school-to-work transition. In 2018, one out of every five young Montenegrins 15 to 29 years old was not in education, employment or training (NEET). Youth, especially from rural areas, are frequently in vulnerable employment. Women in the workforce earn less for work of equal value and face difficulties in balancing work and family responsibilities. Available data show that in 2018 there were 9,319 families on income support (31,066 individuals)². Approximately 45 per cent of all material benefit recipients are of working age and able to work (that, is they are neither disabled nor in education or training). Of the roughly 14,000 work-able beneficiaries, 26 per cent were employed, albeit mainly in subsistence agriculture (31 per cent) or in elementary occupations (38 per cent), while over 44 per cent were unemployed (6,200 persons). Two-thirds of all income support beneficiaries had only primary educational attainment, which negatively affects labour market outcomes. Over 80 per cent lived with a child below 15 years of age. Income support beneficiaries include a high proportion of out-of-school youth relative to the general population (23 per cent and 16 per cent, respectively).
Against this backdrop, the Sustainable Development Goals Fund has entrusted the ILO with the implementation of a component of the project “Activate! Youth in Montenegro”. The ILO will support the Ministry of Labour and Social Welfare and the Employment Agency of Montenegro to bring young welfare beneficiaries back to gainful employment through more effective activation services and programmes.
In general, activation strategies make income support conditional on active job seeking and participation in active labour market measures, and employment services that promote return to work. These strategies usually combine the provision of unemployment insurance, unemployment assistance, and related welfare benefits with active labour market policies and conditionality. A key feature of activation is that able-to-work unemployed individuals receiving income support are required to attend mandatory interviews with employment counsellors, look for job vacancies and apply for jobs. They are expected to accept offers of suitable work, formulate an individual action plan, and participate in training or job-creation programmes.
Non-compliance with active job search requirements triggers "sanctioning", which consists of the progressive decrease or suspension of benefit payments. The obligations of the unemployed are complemented by the commitment of the public employment service to provide effective labour market integration services and measures (often called mutual obligation). In recent years, the use of strict sanctioning mechanisms as a key feature of activation strategies has been called into question, as it could lead to poor matching and placement in low quality jobs, often unrelated to jobseekers’ qualifications. This could undermine future employment and earning prospects, and result in dissatisfaction with work and even withdrawal from the labour force.
The rationale for mandatory activation is multifaceted.. The conditioning of income support on job search and engagement in work-related activities can work as a screening device to separate the truly needy from those who are not; it helps also to decrease welfare caseloads in both the short and the long term. In a broader perspective, it may prevent beneficiaries (especially the younger cohorts) from falling into welfare and inactivity traps; and it can boost the productivity and earnings potential of participants and contribute, in the long run, to their employability.
In this context, the tripartite partners of Montenegro organised a meeting in Podgorica on 29 January 2020, with the participation and technical facilitation of the ILO. They reviewed the key elements of activation strategies implemented in the European Union countries, screened the lessons learnt in this policy area, and discussed the welfare-to-work programme to be piloted in the country.
In part 2, we will review the key design features of the welfare to work programme targeting young welfare beneficiaries in Montenegro and the challenges it presents.
¹ W. Eichhorst W and U. Rinne: “Youth activation policies”, ILO (Geneva, 2015). This paper contains an appendix with a comparative table that summarizes the youth activation strategies of 33 countries, /wcmsp5/groups/public/---ed_emp/documents/publication/wcms_322411.pdf
² Statistical Office of Montenegro (MONSTAT): Users of material benefits, social and child protection (2018).