Revitalising labour market in Moldova

Project completed
Two young women checking cables.

Trained by professionals, young participants are qualified to work as soon as they finish their training courses. © GIZ, Marin Cernea

With Moldova facing high unemployment and a slowdown in growth, the SDC is funding a project designed to offer young job seekers alternatives to emigration and to improve the country's economic situation. Switzerland is supporting reforms aimed at training a qualified workforce and improving the investment climate. This will not only promote demand-driven training but also help create new jobs in the private sector.

Country/region	Topic	Period	Budget
Moldova	Vocational training Employment & economic development Vocational training Employment creation Business support & economic inclusion	01.12.2017 - 31.08.2022	CHF 6’680’000

The project in brief

Background	Moldova's economic growth and poverty reduction have mostly been driven by remittances from migrants. Economic growth was jobless; the employment rate dropped from 55% in 2000 to 41 % in 2016. Due to a lack of attractive employment opportunities in the country, in 2016 26% of Moldova's economically active population was either working abroad or looking for jobs there (for those aged 15-24 the rate was 68.5%). To sustainably support poverty reduction and long-term inclusive economic growth, Moldova needs to stimulate private sector-led job creation. Companies need to become more competitive and create more and better jobs, and wages need to replace remittances as the main source of income growth for the population, offering alternatives to migration. Productive employment opportunities are especially needed in rural area and small towns. In order to create the tremendous amount of jobs needed to achieve the employment rate target of 44% set for 2021, Moldova must address two key bottlenecks: (1) a poor investment climate and (2) the deficit of skilled workforce.
Objectives	The project's objectives follow the general goal of the SOS Employment and Economic Development domain in Moldova: Better functioning market systems in selected sectors and localities increase the quantity and quality of jobs and provide net additional income to women and men, significantly benefiting excluded groups (rural youth, returning migrants, ethnic minorities).
Target groups	Public institutions at different levels (Prime Minister's Office, relevant ministries, parliamentary committee on economy, budget, and finance, Moldovan Investment and Export Promotion Organization (MIEPO), regional development agencies, and vocational schools), private sector (business associations, chambers of commerce, operators of industrial parks and free economic zones, local companies, companies with foreign and diaspora investment), and other development partners. Final beneficiaries of the Swiss-financed intervention are 2'000-2'500 warnen and men, who are either job-seekers, or in precarious (self) employment; and 2'000 young warnen and men aiming to enroll in VET. Special attention will be paid to excluded groups / persons and those with high poverty risk (rural population, warnen and youth, returning rnigrants, ethnic minorities, etc.).
Medium-term outcomes	1: Warnen and men, with a special focus on excluded ones, have new jobs and/or net additional income. 2: Public authorities promote policies and provide demand-driven services to stimulate employment boosting private sector investments. Vocational Education and Training NET) component: 3: Young warnen and men, especially from rural areas, acquire vocational skills in demand on the labor market and increase their employability. 4: The educational offer of the VET system matches the demand of the labor market.
Results	Expected results: IC component: - Public authorities equiped and committed to provide demand-driven services related to investment promotion; - lrnproved investment conditions on central and regional levels, thanks to public-private joint reform proposals; - Regional economic support structures capacitated to provide services and opportunities for persons with high povery risk. VET component: - An institutionalised national structure on dVET acknowledges and fulfils its role in shaping framework conditions for demand-oriented VET; - lncreased public and private sector engagement in the provision of dVET; - lmproved image of dVET. Results from previous phases: The GIZ program has made a significant contribution to job creation (as a result of GIZ interventions, 1'900 jobs created in 2016/17 and 4'000 more to be created during next years). lt has done so by strengthening the capacities of public institutions to deliver qualitative services to local and international investors and by providing technical assistance for regulatory reforms to improve the business climate. Thanks to GIZ support, the number of companies engaged in dual Vocational Education and Training (dVET) increased from 5 in 2015/2016, providing 190 apprenticeship places, to 49 in 2017/18, providing 860 places. Due to GIZ-driven policy dialogues and awareness-raising, the Ministry of Economy and lnfrastructure (MEI) · and the Ministry of Education, Culture and Research (MECR) are open to structural changes that would anchor dVET into the system and thus progress from piloting to mainstreaming.
Directorate/federal office responsible	SDC
Credit area	Swiss cooperation with Eastern Europe
Project partners	Contract partner Private sector Foreign state institution Foreign private sector South/East SDC Field Office Other partners GIZ
Coordination with other projects and actors	With regards to IC component, SDC will pursue synergies with like-minded development partners providing support for organizing of the private sector, raising competitiveness, and attracting foreign investments (USA, Sweden, EU, World Bank, IFC, UNDP). For the VET component, SDC will work with international Donor Committee for dVET (DCdVET) members Germany, Austria, and Liechtenstein, who are willing to join efforts to harmonize VET interventions and lead a joint policy dialogue with ministries. Synergies with other SDC domains of intervention will be explored, especially in terms of links between promotion of local economic development and dVET with improved local governance and local public service delivery.
Budget	Current phase Swiss budget CHF 6’680’000 Swiss disbursement to date CHF 6’585’316
Project phases	Phase 2 01.07.2022 - 30.09.2026 (Current phase) Phase 1 01.12.2017 - 31.08.2022 (Completed)

Further technical details

Sector according to the OECD Developement Assistance Commitiee categorisation	EDUCATION OTHER SOCIAL INFRASTRUCTURE AND SERVICES BUSINESS & OTHER SERVICES
Sub-Sector according to the OECD Developement Assistance Commitiee categorisation	Vocational training Employment policy and administrative management Business support services and institutions
Aid Type	Project and programme contribution
Project number	7F09304

Moldova is facing severe economic difficulties. For several years now, economic growth has been largely driven by the contributions of emigrants sending cash back home to their families. Remittances are declining, however, as more and more families join their relatives in the host country. Such 'jobless growth' has caused the employment rate to contract over the years – from 55% in 2000 to 41% in 2016. One of the biggest challenges to reaching the poverty reduction goal is the exceptionally high level of youth unemployment. With no job prospects or career opportunities, 26% of the working population and 68.5% of the 15-24 age group are working abroad or planning to do so. This outflow of labour resources is depriving the country of human capital, skills and innovation. The two main obstacles to social and economic development in Moldova are:

the lack of a suitably qualified workforce;
a poor investment climate.

Demand-driven training

The SDC contributes to the 'Sustainable Economic Development' programme run by GIZ. Dual vocational education and training (dVET) was introduced in 2014, with five companies offering a total of 190 positions. A further 49 companies joined them the following year, offering another 860 positions. The programme has already helped to create 1,900 jobs, with another 4,000 in the pipeline.

The goal is to raise the employment rate to 44% by 2021. There will be a particular focus on vulnerable or excluded groups such as the rural population, women and young people, returning migrants and ethnic minorities. The SDC takes the lead in this area. It works to formalise the procedures for cooperation among employers, job seekers, placement agencies, training institutions and public authorities. It encourages more private-sector involvement in the development of training programmes, drawing on the particularly successful strengths of the Swiss VET system.

Investment stimulation

Improving young people's skills is undoubtedly an important and necessary measure, but this only makes sense if the economy can follow up with jobs. The SDC actively promotes private sector development so that businesses can offer a competitive salary and stimulating work as an alternative to emigration. Thus, with a view to improving business environment and attracting private sector investment, the authorities are encouraged to:

introduce regulatory reforms conducive to local and international investment;
strengthen the capacities of state institutions to provide business investors with the services they need.