Report No: AUS0002602 September 2021 ALBANIA Country Economic Memorandum Background note on supporting an adaptive and resilient labor force ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force © 2021 International Bank for This work is a product of the staff of The World Bank with external Reconstruction and Development / contri-butions. The findings, interpretations, and conclusions The World Bank expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they 1818 H Street NW, represent. Washington DC 20433 Telephone: 202-473-1000 The World Bank does not guarantee the accuracy of the data included Internet: www.worldbank.org in this work. 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Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. ii ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Acknowledgments This background note has been prepared by Stefanie Brodmann, Sarah Coll-Black, and Cornelius von Lenthe (World Bank Social Protection and Jobs), with inputs and comments from Zoran Anusic, Vlad Grigoras, Lorena Kostallari, Gozde Meseli Teague, Juna Miluka, Efsan Nas Ozen, Ana Maria Oviedo, Gonzalo Reyes, Jamele Rigolini, Hilda Shijaku, and Christoph Ungerer. This is a background note for the 2022 World Bank flagship Country Economic Memorandum (CEM) led by Christoph Ungerer and Hilda Shijaku. The team is grateful to the Government of Albania for sharing feedback and views on findings and recommendations. In particular, the team is grateful to Deputy Minister of Finance and Economy, Dajna Sorensen, General Director of the National Agency for Employment and Skills, Elira Demiraj, and General Director of the Social Security Institute, Astrit Hado, for their insights and guidance throughout the process. The team would also like to thank representatives of the Ministry of Health and Social Protection, the National Agency for Employment and Skills, the Social Security Institute, RisiAlbania, Swiss Contact, the European Union, the United Nations Development Programme, and GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit) for their generous sharing of information. Special thanks to Liliana Hasani for the cover image “Jungle”, and Elizaveta Tarasova for the design and formatting of this background paper. The preparation of this note benefited from support provided by the World Bank–SECO Sovereign Disaster Risk Financing and Insurance Program for Middle-Income Countries. iii ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Albania Country Economic Memorandum Background note on supporting an adaptive and resilient labor force Contents: EXECUTIVE SUMMARY vi 1. Introduction 1 2. Supporting job transitions: role of labor market programs 5 3. Mitigating the impacts of job loss: extending unemployment benefits and protection from severe income shocks 15 3.1 Unemployment benefits 16 3.2 Social assistance 21 4. Reform recommendations 25 Boxes: Box 1: Capacity constraints at the Ministry of Finance and Economy impact labor market policy reforms 5 Box 2: Access to childcare as a lever for labor force participation 11 Box 3: Examples of short retraining courses for displaced workers 12 Box 4: Seasonal workers program examples 13 Box 5: The changing nature of work will challenge Governments to promote risk sharing outside of formal employment contracts 15 Tables: Table 1: ALMP beneficiaries in 2019 and 2020, total and as percent of registered jobseekers 31 iv ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Figures: Figure 1: Unemployment among the lower-skilled is much lower in Albania 1 than in other countries in the region Figure 2: Only a third of the unemployed is low skilled, compared with over 60 1 percent of those employed informally Figure 3: Occupations are predominantly of elementary nature 2 Figure 4: In Albania, almost the entire agricultural sector is informal and more 2 than half of all employed Figure 5: Labor productivity has stagnated in recent years 3 Figure 6: Labor productivity in Albania has consistently been lower than for 3 regional counterparts Figure 7: Households whose heads are unemployed or self-employed are 4 concentrated amongst the poorest Figure 8: Spending on labor market programs as percent of GDP declined 8 between 2015 and 2018 Figure 9: Albania’s spending on labor market programs compared to 8 benchmarking countries is very low Figure 10: The coverage of unemployed with active and passive labor market 8 programs remains low Figure 11: Registered jobseekers and new unemployment beneficiaries 9 increased in 2020 while the number of registered vacancies and intermediations dropped Figure 12: Unemployed with low levels of education are over-represented 10 among jobseekers registered at NAES Figure 13: The COVID-related wage subsidies had the second largest number 10 of beneficiaries in 2020, after vocational training Figure 14: Share of unemployed receiving unemployment benefits in Albania is 16 much lower than select comparator countries, 2015-2020 Figure 15: Albania’s unemployment benefits have very low replacement rates, 17 especially for average earners Figure 16: Many unemployment benefit recipients are forced out of assistance 18 due to expiration of benefits in 2020 Figure 17: Social security contributions collected for unemployment insurance 19 could finance a significantly more generous benefit Figure 18: Coverage and adequacy of Social Assistance Programs and their 22 impact on poverty Figure 19: Year to year employments losses in Albania, were smaller but more 28 persistent for women v ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Executive Summary Until the early 2020s, Albania’s labor market was Albania’s recovery from the COVID-19 pandemic, trending in a positive direction, evidenced by while also helping to position the labor force to take increased employment and female labor force advantage of changing demand for labor that may participation. Despite these gains in employment, arise from economic growth and structural transfor- however, labor productivity in Albania is low and has mation, issues that are considered more broadly in stagnated in recent years. In fact, Albania’s labor the 2021 Albania Country Economic Memorandum market continues to be characterized by a highly (see box below). This note then considers the role of informal workforce, a large share of which is active in selected social protection instruments in protecting the agricultural sector. At the same time, household workers from periods of unemployment and other incomes remain low, with a higher prevalence of shocks, as these investments can also help people poverty among self-employed and unemployed transition to new jobs, while also protecting their than wage employees. While the contribution wellbeing, thereby preventing an erosion of human of labor earnings to poverty reduction is limited, capital. employment status is closely associated with income-level, suggesting that wage employment This analysis shows that Albania has demon- is still central to securing a household’s wellbeing. strated significant commitment to reforming its Many of these weaknesses in the labor market were labor programs to better support jobseekers to further exposed by the COVID-19 pandemic. gain employment and promote their employability. The Government recently laid the legal and institu- In recognition of these issues, this note considers tional foundation for effective and evidence-based the role of selected social protection programs in labor market programs, new active labor market promoting employment and employability and programs (ALMPs) have been introduced, and their protecting the poor and vulnerable from income- delivery is undergoing significant reform on several and job-loss. It presents a detailed, technical analysis fronts, underpinned by a strong commitment to of selected programs, assessing their design and monitoring and evaluation to drive further improve- implementation based on available evidence and ments. Despite these improvements, spending on international good practice. More specifically, it labor market programs relative to GDP continues considers the current role of employment programs to be low, which is also reflected in the continued in supporting workers to transition into employment low coverage of these programs. While uptake of and to improve their skills, which will contribute to these programs by employers and jobseekers is This background note is one of several analytical contributions to the 2021 Albania Country Economic Memorandum (CEM). The CEM is a World Bank flagship report that aims to help Albania identify next steps in its structural reform agenda. As set out in the CEM, Albania needs to refocus attention on the pre-crisis reform agenda and accelerate its long-term economic growth rate, including by spurring productivity growth, building human capital, and supporting investment. On the labor supply side, this means investing in people and supporting workers in their transitions towards better employment. On the labor demand side, this means supporting firm productivity growth and the creation of better job oppor- tunities. Beyond higher economic growth rates per se, however, the quality of the development model needs to strengthen. Through more green, resilient and inclusive development (GRID), Albania can ensure that growth gains will be more sustainable. Finally, the CEM highlights the need for Albania to rebuild its public finances. The COVID-19 crisis has driven public debt to new heights. Upgrading Albania’s growth model – including implementing many of the reforms proposed in the CEM - will require further spending. In this context, increasing the fiscal space available to Albania needs to be a priority. Back to table of contents vi ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force expected to increase as the new ALMPs are rolled out (once the worst of the COVID-19 pandemic passes), further investments in enhancing coverage would help solidify these reforms and strengthen their contribution to promoting employment and employability of workers. At the same time, there are several considerations for improving the effec- tiveness of ALMPs, which are detailed in the note. Beyond the investments made in workers through ALMPs, the social protection system in Albania seeks to protect people from income shocks and job loss. Among the social protection instruments, unemployment benefits play this role most directly, given its express function in providing income support following the loss of a job. Albania’s unem- ployment insurance system appears to be falling short of this aim, as the flat-rate benefit is not able to guarantee an appropriate level of income during periods of unemployment; and the ability to access the benefit is limited, as illustrated by the low coverage of the unemployed. Additionally, Albania’s unemployment benefit is nominally financed from social security contributions, but contributions are also used to fund extraordinary measures beyond contributory unemployment benefits. There are several considerations for the Government to take into account to improve the coverage of unemploy- ment benefits (while continuing to be fully financed through contributions), which range from reforming the parameters of the system to modernizing the application process. Given that many people will likely remain beyond the social insurance system for some time, given the informal nature of their work, the Government may consider further strengthening its social assistance programs beyond the current function of basic income support for the poorest, to one that provides temporary support to poor and vulnerable people in response to covariate shocks. There is emerging experience globally on how social assistance can being to fill the gap in social insurance coverage by establishing ways of reaching poor people who are affected by shocks – experience that Albania itself gained during the COVID-19 pandemic. The 2018 reform of the Ndihma Ekonomike (NE), and the subsequent investments in its delivery systems, have laid the foundation for such an adaptive social protection system. Introducing a set of rules in advance that would allow the NE to expand its coverage to poor people affected by shocks could fill an important gap in the social protection system in Albania. Back to table of contents vii ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force 1. Introduction Up until early 2020, Albania’s labor market had increase, however, was in low wage sectors and due been trending in a positive direction, evidenced by to a rise in informal employment of 30,000, or 6.7 increased employment and female labor force par- percent, between the second quarter of 2018 and ticipation. In 2019, the employment rate reached a the second quarter of 2019.4 Albania stands out record 61.2 percent (68.2 percent among men and from other countries in the region in that the activity 54.4 percent among women) and female labor force rate among lower-skilled individuals is the highest in participation climbed to 61.6 percent (compared the Western Balkans (53 percent in Albania versus 31 with 77.6 percent for men).1 Employment grew percent in the Western Balkans on average in 2019), by 42,000 persons or 3.4 percent between the and in contrast to other Western Balkan countries, second quarter of 2018 and the second quarter of the unemployment rate among lower-skilled indi- 2019, and more than half of those new jobs went viduals in Albania is lower than among medium- to women and the prime-age group (25-54 years).2 and higher skilled (under 9 percent compared with The share of long-term unemployment decreased over 12 percent) (Figure 1). In fact, the medium- and by more than 3 percentage points, to 64 percent of higher skilled individuals make up about two thirds total unemployment, which was below the regional of all unemployed in Albania (Figure 2), suggesting average but still well above the EU average.3 low private returns to education due to low quality of education.5 Although Albania’s unemployment Despite these gains in employment, labor produc- rate is lower than the regional average, many of tivity in Albania is low and has stagnated in recent those in employment are either underemployed years. The largest portion of the employment and/or work in low-productivity sectors. In relation Figure 1: Unemployment among the lower-skilled Figure 2: Only a third of the unemployed is low is much lower in Albania than in other countries in skilled, compared with over 60 percent of those the region employed informally 45% 100% 5% 8% Unemployment Rate (% of population) 40% 11% 90% 20% 23% 35% 80% 30% 34% 32% 36% 70% 25% 20% 60% 36% 43% 15% 50% 10% 40% 5% 30% 61% 0% 57% 56% 20% 44% ia na o o ia ia s an v gr an on rb vi so 35% ne lk Se go lb ed Ko Ba te A 10% ze ac on rn er M te M H th es 0% d or an W N Informal Inactive Self Employed Unemployed a ni employed employed s Bo Low (levels 0-2) Medium (levels 3-4) High (levels 5-8) Medium (levels 3-4) Low (levels 0-2) High (levels 5-8) Source: SEE Jobs Gateway Note: The educational structure refers to the International Standard Classification of Education (ISCED), 2011: levels 0-2: early childhood education and primary education; levels 3-4: lower secondary education and upper secondary education and post-secondary non-tertiary education; levels 5-8: short-cycle tertiary education, bachelor or equivalent, master or equivalent, doctoral or equivalent. 1 INSTAT, see ERP 2021-2023. 2 World Bank (2020): Western Balkan Labor Market Trends 2020. The overall working age population remained fairly stable (slight drop of 0.4 percent) between the second quarter of 2018 and the second quarter of 2019. 3 World Bank (2020): Western Balkan Labor Market Trends 2020. 4 World Bank (2020): Western Balkan Labor Market Trends 2020. 5 See: World Bank (2018). Towards More, Better and Sustainable Jobs for Albania: A Series of Summary Policy Notes. Input for Albania’s Jobs and Growth Action Plan. Back to table of contents 1 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force to other countries in the Western Balkans, Albania manufacturing and service sectors have been has the highest share of employees in self-em- growing recently, agriculture remains an impor- ployment (34 percent versus the regional average tant part of the economy. Productivity in agricul- of 22.9 percent in 2018) and in part-time employ- ture has increased per employee over the past ten ment (18.3 percent versus the regional average of years, as gross value-added rose10 and the number 10.6 percent in 2018)6. Additionally, employment is employed decreased, largely driven by outmigration predominantly in agriculture (rural areas) or in ele- from rural areas11. Albania’s agricultural sector con- mentary occupations (urban areas) (Figure 3) and tinues to be dominated by fragmented small-scale much of it informal (Figure 4; see paragraph below), farming, with farming plots averaging 1 hectare12. with estimates of the size of the informal economy Large parts of the sector continue to be informal ranging from 25 to 50 percent of GDP7. As a result with women representing 80 percent of all informal of these factors, labor productivity has stopped workers in agriculture13. Data from 2012 indicates growing in recent years (Figure 5) and is consist- that households engaged in the agricultural sector ently lower than any of its regional counterparts, as were largely underemployed, with the number of measured by GDP per person employed (Figure 6). days worked averaging only three-quarters of the Albania’s challenge is thus both to create more jobs full-time equivalent. In only two regions (Tirana but also to create better jobs and to enhance the and Durres) did the average household’s number quality of education and training.8 of working days on and off the farm indicate full employment, whereas in a number of other regions While decreasing, almost half of the workforce members of farming households worked less than or remains in agriculture and there is thus scope to equal to 60 percent of full-time equivalent14. There promote alternative employment opportunities is thus significant scope to promote additional and/ for large parts of the workforce. While the total or alternative employment opportunities for large number of employed in the agricultural sector in parts of the work force15, which will require a new Albania has been decreasing for several years, 40 approach to labor market activation and training percent of workers continue to work in the private to reskill workers as they move from agriculture to agricultural sector9. This reflects the fact that, while manufacturing and services. Figure 3: Occupations are predominantly of Figure 4: In Albania, almost the entire agricultural elementary nature sector is informal and more than half of all employed 100% Elementary occupations and 100% skilled agricultural, forestry and 90% fishery workers 90% 22.8 Pland and machine operators, 80% 80% Share of informality (2019) 41.6 and assemblers 70% 70% Craft and related trades workers 60% 57% 60% 75.5 Service and sales workers 50% 50% 40% 40% Clerical support workers 30% 23% 19% 30% 20% 14% Technicians and associate 20% professionals 10% 0% 10% 18 Professionals 12.4 Albania Bosnia and North Serbia 0% 2.2 Herzegovina Macedonia Rural Urban Total Managers Total Agriculture Non-agriculture Source: ILO Database Source: ILOSTAT, Indicator: EMP_NIFL_SEX_ECO_RT_A 6 SEE Jobs Gateway database 7 EBRD (2019): Albania Diagnostic 8 For a more fulsome discussion of these issues, please see World Bank. 2021. Albania Country Economic Memorandum: Strengthening the Sustainabil- ity of Albania’s Growth Model. 9 INSTAT (2019): Employed by sectors 2000 – 2019. http://databaza.instat.gov.al/ 10 This is in large parts due to an increased focus on exporting fresh vegetables, almost tripling the value of goods exported to the EU from 2015 to 2019. EC DG AGRI (2020): Agri-Food Trade Statistical Factsheet. https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/ agrifood-albania_en.pdf 11 World Bank. 2020. Systematic Country Diagnostic: 2019 Update. 12 World Bank. 2020. Systematic Country Diagnostic: 2019 Update. 13 World Bank. 2020. Systematic Country Diagnostic: 2019 Update. 14 FAO (2019): Smallholders and family farms in Albania. 15 See World Bank. 2021. Albania Country Economic Memorandum: Strengthening the Sustainability of Albania’s Growth Model. Back to table of contents 2 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Figure 5: Labor productivity has stagnated in Figure 6: Labor productivity in Albania has recent years consistently been lower than for regional counterparts 15% 80,000 GDP per person employed, in 2017 USD PPP 10% 70,000 60,000 5% 50,000 0% 40,000 30,000 -5% 20,000 -10% 10,000 -15% 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011 2012 2013 2014 2015 2016 2017 2018 2019 GDP real growth in % Albania Serbia Employment aged 15+, growth in % Bosnia and Herzegovina North Macedonia Labor productivity growth in % Montenegro STEE7 Source: World Bank and wiiw (2020): Western Balkan Labor Market Source: World Development Indicators Trends 2020 Household incomes remain low, with a higher The COVID-19 pandemic exposed how the current prevalence of poverty among self-employed and structure of the labor market leaves people unemployed than wage employees. These trends vulnerable to shocks. As most countries, Albania in the labor market are reflected in the country’s responded to the COVID-19 pandemic by putting average monthly gross wage, which was only 70 in place lockdown measures, leading to decreases percent of the Western Balkan’s average at EUR in labor demand and thus a reduction in working 425 gross per month16. The contribution of labor hours or job losses. To mitigate the effects on the earnings to poverty reduction is limited and is population, the Government introduced a range lower than in the period prior to 2008, when real of measures to prevent the dismissal of workers, wages grew, on average, at close to 10 percent per to promote re-hiring and protect the unemployed year17. The level of in-work poverty was estimated (see Annex 1 for an overview of the impacts of to be 39 percent in 2018, meaning that nearly half COVID-19 and the response of the Government). a million Albanian workers live in households at risk While these measures likely cushioned the blow for of poverty18. Employment status, however, is closely many workers, the modest rise in unemployment associated with income-level, suggesting that wage rates may also point to how low income levels leave employment is still central to securing a house- people with little to fall back upon, forcing them hold’s wellbeing. Wage employment is concen- to immediately search for re-employment or fall trated among people in the upper quintiles of the back into agriculture. Within this response, while population, while those who are self-employed or the coverage of unemployment benefits doubled, unemployed more likely to be in the bottom of the this was from a relatively low base, suggesting that income distribution (Figure 7). However, given that unemployment benefits may not be effectively facil- job creation is largely in the informal sector and self- itating labor market transitions in response to job and part-time employment in Albania remain high, loss or broader economic crises for large segments scope to move into jobs that will lead to more secure of the population. income is currently limited. Large scale emigration continues to be the most evident symptom of a lack Enhancing labor productivity and enabling of good jobs. workers to transition between jobs is thus central 16 SEE Jobs Gateway database. 17 Real wage growth rate was 2.1 percent per year between 2014 and 2018. World Bank. 2020. Systematic Country Diagnostic: 2019 Update. 18 Jorgoni, Elira. 2019. In-work poverty in Albania. European Social Policy Network (ESPN). Back to table of contents 3 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force both to promoting structural transformation and enhancing wellbeing. The scope for further struc- tural transformation in Albania is significant19, which will create opportunities for workers to transition into new jobs in higher productive sectors. While these changes will be driven by economic growth in services and manufacturing, to take advantage of these opportunities, investments in education, health and labor market institutions are required so that workers will have the requisite skills to respond to changes in demand for labor within and across sectors. This note considers the role of employment programs in supporting workers to transition into employment and to improve their skills, as Albania’s economy recovers from the COVID-19 pandemic. This brings with it a particular focus on the poor and vulnerable who risk being left behind. This note then considers the role of selected social protection instruments in protecting workers from periods of unemployment and other shocks, as these invest- ments can also help people transition to new jobs, while also protecting their wellbeing, thereby preventing an erosion of human capital. The final section concludes. Figure 7: Households whose heads are unemployed or self-employed are concentrated amongst the poorest 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 20.88 27.91 40% 23 24.35 40% 30% 21.25 25.18 30% 17.86 20% 19.19 16.51 30.82 26.97 25.43 20% 10% 20.07 10.61 32.66 12.84 9.78 4.39 10% 20.85 18.62 0% 15.55 9.83 0% ed t ee d ed e en rc ye Q1 Q2 Q3 Q4 Q5 tir oy oy ud fo o Re pl pl pl St r Em bo m Em ne la Unemployed Self Employed lf U e Se th Out of labor force Retired of ut Student Employee with contract O Q1 Q2 Q3 Q4 Q5 Employee without contract Source: 2018 SILC 19 See World Bank. 2021. Albania Country Economic Memorandum: Strengthening the Sustainability of Albania’s Growth Model for further reading. Back to table of contents 4 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force 2. Supporting employment: role of active labor market programs Supporting employment and promoting the upskill- The foundations for a more effective ALMP system ing of the workforce will be crucial to underpin were laid with the passing of the new Employment Albania’s recovery from COVID-19 and transition to Promotion Law in early 2019 and the establishment a more productive economy. Despite improvements of the National Agency for Employment and Skills. before the outbreak of the COVID-19 pandemic, Recent legislative efforts have laid the institutional Albania’s labor market continues to underperform. In foundation for effective and evidence-based labor 2019, over 63 percent of unemployed had been out market policies. In March 2019 the new Employment of work for 12 months or more.20 The pervasiveness Promotion Law was adopted that paved the way of long-term unemployment means that many job- to establish the National Agency for Employment seekers have suffered a protracted lack of contact and Skills (NAES), which replaced the old National with the world of work. They thus risk losing (or, in Employment Service (NES) and has become the the case of labor market entrants, never gaining) key agency to manage both employment services relevant skills and work habits. The informal nature and programs and vocational education and of many jobs and the dominance of low-productivity training (VET). Additionally, the definition of what work, particularly in agriculture, effectively prevent can be financed as part of ALMPs was expanded investments in upskilling, perpetuating the cycle of to include self-employment programs and to allow poverty and subsistence work. For this reason, estab- for expenses such as transport or kindergarten lishing an effective system of active labor market fees to be covered; the legal basis for outsourcing programs (ALMPs) to underpin a sustainable labor the delivery of ALMPs to non-public providers has market recovery with a readily employable workforce been established22 and the definition of youth was should be among the priorities of Albania’s govern- expanded from 15-18 years to 15-29 years of age. ment. Box 1 provides an overview of the institutional setup related to employment policy in Albania. Box 1: Capacity constraints at the Ministry of Finance and Economy impact labor market policy reforms The Ministry of Finance and Economy (MoFE), and in particular the General Directorate of Economic Devel- opment and Employment, is responsible for the employment and vocational education and training (VET) portfolio. It oversees the State Inspectorate of Labor and Social Services (SILSS), the National Agency for Employment and Skills (NAES), and the National Agency for Vocational Education and Training and Qual- ifications (NAVETQ). There are several supporting consultative bodies such as the National Labor Council (NLC) and its Sectoral Commissions (SCs), the National Council of Skills and Vocational Education (NCSVE), and the Employment Advisory Council (EAC). Social security contributions are covered by the Institute of Social Security (ISS)21, which is an independent body. With the integration of the employment and VET portfolio into the MoFE, there have been challenges related to lack of human resources, but also structural issues such as procurement and institutional cooper- ation and agreements. There is a lack of staff within the relevant departments of the General Directorate of Economic Development and Employment at MoFE, which, among other issues, limits its ability to oversee and manage NAES and learn from the implementation of the new Employment Promotion Law, which is described in the paragraphs that follow. 20 INSTAT (2019): Yearly indicators of labour market 2010 - 2019. http://databaza.instat.gov.al/ Institute of Social Security. 2018. “Annual Report 2018”, and Law No.7703 of 11.05.1993. “On Social Security in the Republic of Albania”. 21 22 While the legal basis for such outsourcing has been established, to put this into practice, bylaws need to be adopted and setup of NAES modified. These issues are touched upon further in the sections below. Back to table of contents 5 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Comprehensive reforms in all aspects related to the 4-5 years and, integrates the use of information delivery, design, and monitoring and evaluation of from authorities other than NAES. Provided suc- ALMPs are ongoing, which is anticipated to improve cessful implementation, these would allow NAES to their impact and responsiveness to the market. As effectively assess the performance of its programs, part of the ongoing reform, NAES has established budget the programs accordingly and design them a business relation department for engagement according to the labor market’s demand. However, with businesses and better understanding of local the M&E framework was created with the assump- labor markets, modernized business services to tion that the agency will develop an advanced attract employers, and established new methods IT-based database24. Recently, an analysis of the for employer engagement. Specifically, NAES has requirements of a newly designed management developed several guidelines on service delivery that information system were finalized, procurement include detailed guidance for how to approach and was completed, and testing and piloting of the work with businesses.23 There are plans for training system have begun. Until the system is fully oper- of NAES staff and to further strengthen the capacity ational, however, data availability is significantly of counsellors. A new model for engagement with limiting policy maker’s ability to manage enrollment jobseekers has been introduced that allows counsel- into ALMPs effectively and to use the monitoring lors to use their time more efficiently. Upon registra- results for program participants to inform decisions tion, a jobseeker is asked to fill a profiling question- on ALMP policy. naire, which segments jobseekers into three groups according to their distance from the labor market. ALMPs were redesigned based on evidence of This categorization is used to support the decision previous programs and international best practices, on access to services and programs. For example, for with the menu of programs now mirroring those jobseekers in the third group (those that are farthest generally found in Europe. In 2020, three decrees from the labor market), a mandatory preparation of the council of ministers (DCM) introduced a set program on job search and soft skills called “Start of eight new ALMPs, five of which were designed SMART” was introduced, which is a 2-week course based on previous evaluations and interna- at the VET Centers operated by NAES. During the tional best-practice25 and three in response to the interview with a counsellor, there is now the option COVID-19 pandemic. The five new ALMPs intro- to record barriers to work (e.g., no childcare, lack duced towards the end of 2020 included a wage of transport, health problems, etc.). The interview subsidy program for vulnerable groups26 (DCM 17), is completed with the drafting of individual action an on-the-job training program for unskilled job- plans (IAPs) with referral to appropriate ALMPs. This seekers (DCM 17), an internship program for recent is a major improvement over earlier ALMP delivery, graduates (DCM 17), a community employment where programs were implemented through annual program for long-term unemployed (DCM 535), and calls for applications and jobseekers could only a self-employment program (DCM 348). Addition- enroll at discrete points in the year. ally, two programs were continued from before the reform (DCM 873 - vocational internship programs A new monitoring and evaluation (M&E) framework for unemployed who have completed higher was introduced in 2020, whose implementa- education, and DCM 162 - payment of participa- tion depends on the deployment of a newly tion in professional training courses). In response to designed management information system. Mon- the COVID-19 pandemic, a wage subsidy for formal itoring results for program participants through workers and a formalization subsidy for previously the M&E system can provide additional informa- informal workers (DCM 608) were introduced in late tion on the needs of the local labor markets, as 2020.27 Finally, short vocational training courses are well as in the planning process of ALMPs. The new offered by NAES through the Vocational Training M&E framework follows a clear intervention logic, Centers (VTCs). A review of labor market programs mandates follow-up surveys of beneficiaries, plans suggests that there are eight broad types of services for regular cost-benefit analyses and impact evalu- and programs that are commonly deployed by public ations (preferably randomized controlled trials) every employment services in European countries.28 With 23 These were piloted in four regional offices and will be rolled-out nationally shortly. 24 Monitoring and Evaluation Framework for National Agency for Employment and Skills (NAES), National Agency for Vocational Education, Training and Qualifications (NAVETQ) and National Employment and Skills Strategy (NESS) 2019-2022. 25 Previous evaluations had emphasized the lack of participation of people with disabilities and from vulnerable groups, and recommendations including the prioritization of on-the-job training programs and those promoting employment of unemployed in difficulty. See Esmeralda Shehaj. 2020. Performance of Western Balkan economies regard- ing the European Pillar of Social Rights Updated review on Albania. 26 See eligibility criteria in Table 1, Annex 2. 27 See Table 1, Annex 2 for an overview of all ALMPs and beneficiary numbers in 2019 and 2020. 28 These are: 1. Intermediation; 2. Preparation (job search preparation online and face to face, career and vocational guidance, women’s networks); 3. Wage subsidies (including for seasonal workers, work experience programs, internships); 4. Entrepreneurship (training, financial support); 5. Training (basic skills, digital skills, short and long vocational training, employer-led programs, and comprehensive employment programs); 6. Apprenticeship (for youth), at vocational schools; and 7. Public works. The review of programs and the details on some of the programs described here were developed as part of a World Bank technical assistance to support Greece in the reform of the design, delivery, and monitoring and evaluation of ALMPs. Back to table of contents 6 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force the new programming, NAES is offering at least one contact and UNDP), and GIZ have been contributing service/program of each of the eight types. to both financing and reform of ALMPs. In 2020, the budget allocated toward employment promotion In addition to the ongoing reforms, a thorough programs increased by more than 50 percent (from understanding of labor market conditions and ALL 390 million to ALL 590 million). Actual spending trends is the foundation for effective public on these programs, however, is considerably below employment policy. At this point, however, limited the allocated budget.32 This underspending likely data availability is constraining NAES’ ability to arises from a combination of the impacts of the understand customers and their needs and to antic- COVID-19 pandemic on general services delivery ipate new skill demands. As a result, training courses and the reforms of programs, including the timing of are not systematically updated to respond to labor their introduction in late 2020 and the changes to market demands. Currently, there is no labor market the way in which employers and jobseekers benefit observatory to produce systematic information from ALMPs. As these reforms take hold, it is antici- which could guide jobseekers or inform the planning pated that the allocated funding will be fully utilized. process of ALMPs.29 Multiple donors have supported the agency in partly filling this shortage of informa- While the share of unemployed who register with tion, although these remain ad hoc.30 Going forward, NAES is low, less than one in five registered job- businesses could be involved and relied upon more seekers benefit from ALMPs. Even returning to systematically to obtain important labor market full utilization of the budget, the overall low levels information, for example through more formal insti- of budget allocation mean that the share of unem- tutions such as local or sectoral skills councils. These ployed who benefit from labor market programs is councils exist in many countries and their mandate very low. Among registered jobseekers, coverage includes the identification and forecasts of labor of ALMPs, including vocational training, reached demand and skill needs.31 New sources of real-time 18 percent in 2019, up from 13 percent in 2015 labor market information, such as postings on online (Figure 10).33 This increase, however, is due to the job portals, can complement conventional labor fall in unemployed who register with NAES in the market data sources. first place. The absolute number of ALMP benefi- ciaries has dropped since 2015. Even fewer unem- Despite a strong commitment to this reform, ployed, only 2 percent, benefit from unemployment spending on labor market programs relative benefits (covered in detail in the next section below). to GDP remains low. Spending on labor market The share of unemployed registered at NAES programs has declined since 2016 and continues to dropped from 67 percent in 2015 to 43 percent in be low compared to both EU and regional spending. 2019, or 70,930 jobseekers (Figure 10). The onset Expenditures on labor market programs, both active of the COVID-19 pandemic has reversed this trend, and passive, reached a low of 0.08 percent of GDP as the share of unemployed registered at NAES in 2018 (down from 0.12 percent in 2016) (Figure 8). increased to 56 percent in the last quarter of 2020 In 2019, spending on ALMPs (composed of employ- (91,452 jobseekers during last quarter; 82,921 as ment promotion programs and vocational training quarterly average in 2020) (Figure 11). COVID-19 programs) reached 0.02 percent of Albania’s GDP. has reversed the trend for the number of vacancies While an improvement on the year prior, this level registered. In 2020, the number of vacancies reg- of spending remains very low compared to an EU istered with NAES dropped by half, from 50,785 in average of 0.39 percent or for example 0.13 percent 2019 to 25,141 in 2020 and the number of jobseek- in neighboring North Macedonia (Figure 9). Donors ers who found employment through intermediation such as the EU, SDC (implementing through Swiss- dropped to 23,118 or 28 percent. 29 NAES has access to the generic labor market indicators derived from Labor Force Surveys by INSTAT and its own basic statistics collected on registration for employment services, intermediation and participation in ALMPs. These statistics can be aggregated by a number of characteristics such as gender, age or region, however the current database does not allow for a systematic analysis of these indicators. 30 As part of an SDC financed project, UNDP has finalized the procurement process for an advanced IT-based database and testing and piloting of the system are in process. In 2017 UNDP also financed a skill needs analysis, which has not been conducted since but is on the planned list of activities of the government’s Economic Reform Program for 2021. As part of their Risi Albania project, Helvetas has produced a description of the top 100 professions needed in the Albanian labor market, however, there is currently no institutionalized process in place to regularly update this information. Helvetas has also supported private training providers in conducting their own market research on labor demand. GIZ contributed to the production of labor market information by outsourcing small-scale surveys on skill demand by employers and by conducting regular tracing of the labor market outcomes of vocational education and training graduates. Helvetas recently financed a survey of firms to research changes in upskilling and reskilling due to COVID-19, which found that firms are increasing budgets allocated to workforce skills development, with specific focus on communications, customer focus and teamwork. The World Bank, which conducted a nationally representative survey among employers to assess their skill needs in 2017, recently started collecting information from online job postings, to show that these new sources of real-time labor market information can complement conventional labor market data sources and improve the targeting of employment services, counsellors and learning providers. 31 In Albania, the setup of sector skill committees was foreseen in the National Employment and Skills Strategy (NESS) 2019-2022 and some donors are working towards strengthening the involvement of businesses. For example, as part of their Risi Albania project, Helvetas is supporting the setup of such committees in five priority subsectors. In addition, close involvement of employers in training programs can improve their alignment with the demand for workers and skills. Businesses are represented in the Board of GIZ supported multi-functional vocational training centers, with the objective to support the anticipation of jobs and skills in demand. 32 In 2020 only 12.1%, or ALL 71.5 million, were disbursed, despite a planned budget for ALMPs (excluding vocational training) of ALL 590 million. It appears that the budget was instead used to cross-subsidize higher expenditures for unemployment benefits. 33 Some beneficiaries of vocational training also benefit from DCM 162 - Payment of Participation in Professional Training Courses. In the calculation of ALMP coverage, these individuals are counted once. Back to table of contents 7 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Figure 8: Spending on labor market programs as Figure 9: Albania’s spending on labor market percent of GDP declined between 2015 and 2018 programs compared to benchmarking countries is very low 0.14% 1.40% 0.12% 1.19% 0.12% 0.11% 1.20% Labor market spending (% of GDP) Labor market spending (% of GDP) 0.10% 0.09% 1.00% 0.09% 0.08% 0.08% 0.80% 0.65% 0.06% 0.60% 0.05% 0.42% 0.04% 0.04% 0.03% 0.40% 0.02% 0.02% 0.02% 0.04% 0.20% 0.10% 0.08% 0.03% 0.03% 0.02% 0.02% 0.00% 0.00% 2015 2016 2017 2018 2019 EU-27 7STEE North Kosovo Albania Macedonia Total LMP (incl. administration, placement and related services) Total LMP (incl. administration, placement and related services) Active LMP (including Vocational Training) Active LMP (including Vocational Training) Passive LMP Passive LMP (unemployment benefits) Source: EU-27/7STEE: Eurostat; Macedonia: SPEED; Kosovo: NESS Progress Report 2018; Albania: Administrative Data NAES Note: 7STEEs include Bulgaria, Croatia, Estonia, Latvia, Lithuania, Slovak Republic, and Slovenia. Total LMP is a combined measure of expenditures toward administration, employment services, active labor market programs and passive labor market programs. Active LMPs covers expenditures toward all interventions of temporary nature which aim at activating the unemployed such as vocational training, wage subsidies or on-the-job training. Passive LMP includes financial assistance which compensates individuals for the loss of wages or salary to support unemployed during their job-search (consisting in the case of Albania only of unemploy- ment benefits) and early retirement programs. Figure 10: The coverage of unemployed with active and passive labor market programs remains low 20% 70% 18% 18% Ratio of the number of unemployment 18% benefit recipients to the number of 16% 60% unemployed 16% 15% 14% 50% Ratio of the number of unemployment 13% benefit recipients to the number of 12% registered jobseekers (at NAES) 40% 10% 9% Ratio of the number of ALMP beneficiaries 9% 9% 8% 8% 8% 30% to the number of unemployed 8% 6% 5% 20% 5% Ratio of the number of ALMP beneficiaries 4% 4% 4% 4% to the number of registered jobseekers (at 3% 3% 2% 3% 3% NAES) 2% 10% 2% 1% 1% Share of unemployed registered at NAES 0% 0% (right axis) 2015 2016 2017 2018 2019 2020 Source: INSTAT, ILOSTAT database (Through WDI). Note: INSTAT reports the number of unemployment beneficiaries at the point of data collection (i.e. the end of each quarter). Further, the methodology used to report this data may underestimate the number of beneficiaries. See section 2 below. However, these data are reported here as they are the official statistics. Back to table of contents 8 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Figure 11: Registered jobseekers and new unemployment beneficiaries increased in 2020 while the number of registered vacancies and intermediations dropped 90000 80000 70000 60000 50000 40000 30000 20000 10000 0 Number of jobseekers Number of vacancies Number of unemployed Number of jobseekers who registered registered who found jobs receive unemployment benefits (per INSTAT definition) 2019 2020 Source: Administrative Data NAES, INSTAT Public Employment Services (PES), such as the in one of ten Vocational Training Centers (VTCs) and NAES, in many countries have a poor reputa- a total of 5,338 or 7.5 percent of registered unem- tion among many jobseekers and for this reason ployed, took part in other ALMPs in 2019. In 2020, few employers choose to collaborate with them the COVID-related wage subsidies, which were to source their workers. According to the 2020 introduced in September 2020, covered more bene- Western Balkan Barometer, only 17 percent of ficiaries than the newly introduced wage subsidy, surveyed firms in Albania respond that they make on-the-job training, and internship programs regular use of the public employment agency when (DCM17), which however only became operational in hiring new employees, 49 percent report that they the last quarter of 2020 (Figure 13). Administrative never do.34 This is in comparison to 29 percent of data from NAES shows that three quarter of benefi- firms in Serbia, 27 percent in Kosovo, 23 percent ciaries of the COVID-19 wage subsidy were women in Montenegro, 18 percent in North Macedonia and more than forty percent of beneficiaries of the and 15 percent in Bosnia Herzegovina. For this COVID-related wage subsidy and the formaliza- reason, better off people may have little incentive tion measure were employed in the manufacturing to register with the NAES, which perpetuates this industry (see Annex 3). It is early to pinpoint specific cycle. This is reflected in the fact that the education design and implementation issues at this time and level of unemployed registered at NAES is skewed it will likely take at least two years of implemen- to the low skilled, with close to 60 percent of regis- tation, which is when the first programs are to be tered jobseekers reaching only up to 8 or 9 years of rigorously evaluated. Efforts are underway at NAES education; the share of unemployed with low levels to intensify outreach to businesses to promote the of education is only about half that rate (Figure 12). uptake of these new programs. Vocational training dominates budget allocations There are, however, several lessons that can be and beneficiary numbers, but efforts are underway learned from international experiences and NAES at NAES to intensify outreach to businesses to could consider experimenting with, and rigor- promote the uptake of the new wage subsidies ously evaluating, different design options to and work experience programs. Almost one fifth gauge uptake by employers and employment for of the budget allocated towards ALMPs is currently vulnerable groups.35 With the reform, the pool expended towards providing short vocational of jobseekers eligible for wage subsides has been training courses. In 2019, a total of 8,818 unem- restricted to those unemployed who have been ployed – 12.4 percent of all registered jobseekers – registered with NAES for 3 months and longer and graduated from one of the courses publicly provided belong to a more vulnerable target group, including 34 Regional Cooperation Council. 2020. Balkan Barometer 2020 Business Opinion Analytical report. 35 The duration of the program is 12 months and the subsidy covers: (i) social security contributions (employer’s contribution) for the entire duration of the wage subsidy, calculated on the basis of the minimum wage; (ii) minimum wage for 4 months, and longer durations (6 and 12 months) for particular vulnerable groups, including victims of trafficking, domestic violence or victims of gender-based violence, Roma and Egyptians, and persons with disabilities. Back to table of contents 9 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Figure 12: Unemployed with low levels of Figure 13: The COVID-related wage subsidies education are over-represented among jobseekers had the second largest number of beneficiaries in registered at NAES 2020, after vocational training 100% Vocational Training 7% 90% 22.7% 7% 80% Allowance for VT 36% 13% participation 70% Vocational internship 60% 6% programs 42.7% 50% 3% 52% Wage Subsidies 40% 4% 8% 30% 57% On-the-job training 7% 20% 34.6% 10% Internships 0% Registered jobseekers Unemployed Covid-19 Wage Subsidies High (levels 5-8 or university) Covid-19 Formalization Medium (levels 3-4 or secondary) Subsidy Low (levels 0-2 or up to 8/9 years of school) Source: INSTAT (2018) Registered jobseekers by education level 2000 – Source: Administrative data NAES. Note: There were no beneficiaries 2019; SEE Jobs Gateway Database. of the newly introduced community employment program and the self-employment program in 2020. youth and long-term unemployed. At the same increase employability and jobseekers’ chances of time, conditions on employers’ eligibility to receive employment. They appeal to employers because the subsidy, the subsidy level, and transaction they do not require committing to a contract while costs were left unchanged. The major risk is that offering the opportunity to try someone out before tight targeting can reduce the attractiveness of the hiring them. These programs also address the needs program for employers who may not be interested of several groups of jobseekers: young people in hiring eligible workers, especially when they are who lack experience in the job market no matter in categories characterized by substantial employ- their educational level; long-term unemployed ability barriers. NAES is aware of this risk and plans people who can benefit from experience in a real to identify employer outreach and diversify the workplace as part of a broader package of support, pool of partnering employers. A process evalua- for example including vocational guidance and soft tion is planned for end 2021. There are ways that skills/employability training; women returning to programs can increase the incentives for partic- the labor market after a long spell of being at home; ipation in these situations, such as trial periods and other marginalized groups who can be hard to before the subsidized employment contract is place in full-time vacancies but again with additional signed, options to exit the program at the end of support, could work if they get a chance with an a probationary period, or recruitment incentives to employer. With the uncertainty that COVID-19 has counsellors to promote hires of very disadvantaged brought to economies, work experience programs workers. NAES could consider experimenting with have become an attractive option for employers, different options within a rigorous evaluation of the and could be explored in Albania. With the risk of wage subsidy program.36 Besides the wage subsidy long-term unemployment on the rise, intensi- program, the new on-the-job training program in fied employer outreach to promote this innovative particular is promising, and such work experience program to increase uptake will be essential, as will programs are used in most European countries be addressing other constraints faced by workers, as an inexpensive and effective intervention to such as childcare for women (see Box 2). 36 The subsidy covers: (i) social security contributions (employer’s contribution) for 4 months, calculated on the basis of the minimum wage; (ii) wage at minimum wage, for 4 months, (iii) social security contributions (employer’s contribution) for 8 months, calculated on the basis of the minimum wage, in case the employer enters into a contract employment of at least eight months with the employee after the end of the program; and (iv) payment for a mentor for each beneficiary. Back to table of contents 10 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Box 2: Access to childcare as a lever for labor force participation Albania’s labor market had improved up until the COVID-19 outbreak, especially for women, for whom rising employment rates (by almost ten percentage points between 2010 and 2019) resulted from increasing labor force participation.37 However, the pandemic highlighted the unequal burden of domestic work, including childcare, which limits women’s labor force participation and employment opportunities and increases the wage gap.38 Since 2020, the decline in labor force participation and employment has persisted among women, in part because in households with children, women often had to change their working arrange- ments to cope with the situation.39 It has been widely documented that having children can push mothers to leave the labor market, which, even if temporary, may thwart career opportunities and earnings.40 In Albania, where women are still considered the primary caregiver, their labor force participation was almost 17 percentage points below that of men in 2020, even with parental leave policies that benefits both parents. To avoid widening labor gender gaps for parents, key policies need to provide: i) widespread access to childcare and fiscal incentives to work for second wage-earners ii) work-life balance conditions for both men and women, including incentives for fathers to devote more time to care activities and more balanced parental leave; and iii) workplace flexibility, including part-time and flexible working-time arrangements. These policies can especially benefit disadvantaged groups such as single mothers or minorities.41 In Albania, access to Early Childhood Education and Care (ECEC) is limited. The institutional responsibility for ECEC for children up to 3 years old lies with municipal governments, which provide center-based services (çerdhes) in part regulated by the Ministry of Health and Social Protection.42 Preschool education for children ages 3 to 6 years is more widely available, as it is part of the pre-university education system overseen by the Ministry of Education, Sports and Youth. These services are not articulated and thus show signifi- cant differences in quality and accessibility.43 While over 80 percent of children aged 3-5 years attended pre-school in 2018,44 attendance and quality at çerdhes is hardly monitored, so that no data is available on the coverage of çerdhes for the 0-3 population, however, anecdotal evidence suggests it is extremely low.45 To increase access to ECEC in Albania, there needs to be an appropriate regulatory and financing framework in place at the national level, to ensure that municipal governments can meet the demand for this service with minimum quality. For financing, global experiences show several options that range include direct provision, subsidies, cash transfers, or public-private arrangements. For quality, a national set of standards needs to be in place to guide municipalities and ensure a minimum quality across municipalities. The standards for ECEC need to be well aligned with the pre-university system, so that ECEC contributes to learning readiness for children that enter preschool. 37 INSTAT. 2021. Employment rate by Sex, Age group, Education level, Type and Year. 38 OECD. 2018. OECD Employment Outlook 2018. OECD, Paris. 39 UN Women. 2020. The Impact of COVID-19 on Women’s and Men’s Lives and Livelihoods in Albania: Results of a Rapid Gender Assessment. Women were 29 percentage points more likely to report a change in working arrangements than men. 40 OECD (2018). 41 Posadas, J. and Vidal-Fernandez, M. 2013. Grandparents’ Childcare and Female Labor Force Participation. 42 The oversight of the MHSP is limited to food safety. 43 The Law on Pre-University Education covers only the services provided from age of 3 onwards, and creates a common framework for all municipali- ties, which is not the case for ECEC. 44 EC. 2019. Key Data on Early Childhood Education and Care in Europe. 2019 Edition. Eurydice Report. 45 The exact number of çerdhes and children attending them is unknown. According to the National Agenda on Children’s Rights 2017-2020, in 2016, 41 municipalities reported a total number of 93 çerdhes, and 20 municipalities had none. Back to table of contents 11 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Many countries have responded in innovative ways jobs and will need extensive re-skilling to become to the global pandemic, retraining and redeploying employable again. The OECD predicts that meeting their labor force to meet changing labor market the reskilling challenge presented by COVID-19 will demand. Both the OECD and the EU showcase most likely require boosting investment in adult examples of rapid retraining in essential areas based training and a renewed effort to reach out to at-risk on immediate needs (see Box 3), but both suggest groups. Short vocational courses have proven an that lessons can be learned from this approach effective response to the pandemic, and they seem longer-term, to help workers transition to the post- set to be a strong element of any PES portfolio COVID-19 economy and to address ongoing skills going forward. Importantly, however, the quality shortages. Many workers made redundant during of training needs to be high, and training needs to the crisis may be unable to return to their previous correspond to labor market demand. Box 3: Examples of short retraining courses for displaced workers Several countries quickly developed short training programs to address immediate demand pressures caused by the COVID-19 pandemic. In some cases, training programs were targeted at health and medical professionals who needed to upskill or to be redeployed; in other cases, the training programs were designed to enable displaced workers to fill roles in essential services. Public, private, voluntary sectors and charities were involved in the effort. The retraining of displaced workers as community health workers in the United Kingdom focused on unem- ployed young adults already trained in first aid or assessing medical emergencies, such as flight attendants. Community health workers implement prevention and control measures, like organizing social distancing and hand hygiene stations as well as detecting cases and co-ordinating testing. Up to two weeks of training on COVID-19 and on public health surveillance, combined with ongoing supervision, provides the necessary core skills and knowledge. The competency-based approach to designing courses helped to reduce training durations by leveraging skills that workers already have. In the United States, the Rapid Skilling program aims to transition displaced vocational and technical workers into currently in-demand occupations using a competency-based approach. The program stems from a collaboration between 180skills – a provider of technical and employability training for the manu- facturing and logistics sectors in North America – state governments, academic partners, and employers who are in urgent need of skilled workers. The industries served include manufacturing, logistics and distri- bution, retail, and industrial safety- related occupations. Competency-based online courses were curated into ultra-short-term programs with the minimal amount of skills for initial employment. The programs are particularly aimed at low-skilled, low-income adults and are delivered at a low cost. Also, in the United States, the National Retail Federation made free foundational skills training available online to enable workers from “non-essential” retail sectors transfer and work in “essential” retail sectors. The training can be completed in 5-7 hours and results in a recognized credential that completers can post on their resumes. In view of the need to retrain displaced workers over the medium term, the French public employment service (Pôle Emploi) is making available and promoting 150 free online training courses as a way to prepare for employment transition during lockdown. Source: World Bank (2021): Greece improving the design and delivery of ALMPs, technical not synthesizing progress and identifying lessons learned so far on ALMP reform process Back to table of contents 12 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Box 4: Seasonal workers program examples The “Permanent Seasonal Worker” program in Croatia provides financial support for seasonal workers in the period out of season and allows beneficiaries to participate in the educational programs and training offered by the Croatian public employment services in the off-season46. Training is not the main purpose of the Croatia program, it is more of an optional benefit. The Austrian Competence with Systems program focuses on upskilling workers who are prone to periods of unemployment.47 The goal of this program is to provide upskilling for people with only compulsory or lower levels of educational attainment, already with some job experience. It can be completed between unem- ployment spells, making it particularly interesting for seasonal workers. The training is based on compe- tences and aims to ensure long-term and sustainable knowledge building. There are 12 training possibilities (e.g., retailing, financing and accounting). Source: World Bank (2021): Greece improving the design and delivery of ALMPs, technical not synthesizing progress and identifying lessons learned so far on ALMP reform process As the pandemic is accelerating technological and obtain and validate labor market information and structural changes, countries’ strategies will need to offer the experience of a real job and workplace to shift toward proactive policies that enhance environment. Development partners are supporting employment possibilities for unemployed and NAES with didactic training of VTC trainers, and otherwise vulnerable workers. In Albania, agriculture there have been some first attempts by these and tourism are a major contributor to the economy partners to implement training in sectors not and a significant source of employment, and labor covered by NAES VTCs through non-public training market policy can contribute towards improving providers. Providing the quality assurance and productivity of workers. There are countries with incentives are right, using a wide range of service a significant share of seasonal employment that providers can enhance opportunities for more have experiences to offer to inform employment tailored, demand-led training provision. Learning and training programs aimed at seasonal workers. from other countries, many PESs have engaged See Box 4 for examples of such programs. On one in outsourcing services to the private sector, hand, such programs operate to preserve jobs and non-profit-making bodies and NGOs to improve businesses, especially in the tourism sector, i.e., service delivery and respond to the needs of diverse subsidizing off-season periods for businesses and groups in the labor market. While in many OECD individuals in order to maintain the labor supply countries there remains a heavy reliance on direct in countries where tourism is a major contributor provision delivered by the PES, some services are to the economy. On the other hand, short training contracted out. These include skills training, job programs can be attractive to seasonal workers if search assistance, and intensive forms of counseling they enhance their prospects at work, or enable and support targeted at disadvantaged groups. them to find other work – either in the tourism sector or beyond. Modular programs that enable Building on the possibilities opened by the new recognition and credit for skills attained are Employment Promotion Law, Albania should helpful so that individuals can build credit towards consider other stakeholders for training provision qualifications. Strong relationships between the besides the VTCs, for example private training public employment services and employers are providers, chambers of commerce, and even large crucial to determine their upskilling requirements so employers. Capacity for effective outsourcing takes that courses can be tailored appropriately. time to build up, and high-quality contracting requires effective IT-based information systems that Evidence suggests that close involvement of enable government agencies to track participants, employers in training programs can improve their monitor provider performance and verify service alignment with the demand for workers and skills. delivery and outcomes. NAES may consider issuing A review of the international evidence48 suggests a vouchers as a first step to diversifying training number of principles for high-quality employment provision to non-public providers. However, to training. Employer involvement is crucial, both to increase the supply of high-level skills, employers 46 https://www.cedefop.europa.eu/en/printpdf/tools/matching-skills/country-fiches/croatia 47 https://www.ams.at/arbeitsuchende/karenz-und-wiedereinstieg/so-unterstuetzen-wir-ihren-wiedereinstieg/kms-kompetenz-mit-system 48 Kluve et al 2017; European Employment Policy Observatory (EEPO) Review, June 2015: Upskilling unemployed adults (aged 25 to 64). Back to table of contents 13 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force should be encouraged to provide more training. contributions in order to enact them. Reforms such Currently, higher-skilled occupations, which are as the new VET Law in 2017 expect close involvement precisely those that are more likely to use nonroutine, of the private sector in the training program nonmanual skills (i.e. skills of the new economy), are design and delivery, but many of the channels somewhat less likely to receive employer-provided through which their input could be provided are training in Albania than lower and medium-skilled not functioning or still being established54. Hence, occupations49. This is despite an increasing number aspects of VET which do require partnerships with of firms facing a scarcity of skilled workers. According private sector entities, such as work-based learning, to the Enterprise Survey the share of firms which are based on personal relations and hence vary report having difficulty finding workers with specific significantly across the country. As a result, the skills technical skills and knowledge increased from 6 to imparted at many vocational schools are not the 25 percent between 2013 and 2019. To address this ones demanded by employers and graduates of issue, it could be considered to incentivize training VET schools face significant challenges in making by introducing individual learning accounts, through the transition from education to the world of which each eligible person can accumulate rights to work. The GIZ conducted a tracing study in 2017 training. Resources are only accessed when training which found that only 41 percent of graduates is undertaken, and expenses are directly reimbursed, from vocational secondary schools were in a or contributions matched. The accounts are directly work relationship and one quarter were neither in linked to an individual rather than their employer, education, employment, or training. Over half of the allowing for employees to freely choose the nature latter had been unsuccessfully looking for a job for of their training, independent of employment more than 12 months.55 Standardized collection and status.50 dissemination of detailed labor market information on occupations and skills in demand is needed to Vocational education and training (VET) for begin to address this issue, in addition to closer youth can act as bridge between school and a involvement of employer and worker organizations. first job – but, in Albania, VET reaches a relatively small number of students and does not provide students with enough work-based learning or skills demanded by employers. Currently only 18 percent of students enrolled in upper secondary education attend vocational programs, relative to an average of 58 percent in the six Western Balkan countries.51 Significant reforms have been implemented in recent years to improve the quality and image of VET, most of which have been of legislative nature.52 These novel legal frameworks have, however, not been made operational yet53. In the meantime, challenges remain, including a lack of standardization in regard to the amount and type of work-based learning, little involvement of business and labor unions in shaping curricula, as well as difficulties for VET schools to establish partnerships with employers interested in providing training. Much of the lacking implementation is due to little involvement of the private sector when formulating laws in the first place, while simultaneously requiring significant 49 STEP Survey Albania 2017. 50 More details and the underlying rational behind such provision is provided in the CEM chapter on digital skills. 51 Eurostat: EDUC_UOE_ENRS04, For Albania: INSTAT Database. Pupils enrolled on upper secondary by type of school 2012 – 2020. For Kosovo: KAS askdata. Number of pupils in upper secondary education, 2015 – 2020. Note: Numbers refer to 2018. 52 Such as the Employment Promotion Law from 2019, the Albanian Qualifications Framework Law from 2018 or the new Vocational Education and Training Law from 2017. 53 UNDP’s recent review on Albania’s vocational education specifically highlights the necessary operationalization of the revised Albania Quality Frame- work and secondary legislation for VET-provider’s financial autonomy. Source: UNDP (2020). Review of Albania’s Vocational Education Training System 54 Examples include the non-functioning National VET Council or the establishment of so-called development units whose responsibility is to “set up a cooperation mechanism with private companies to ensure availability of sufficient practical skills acquisition possibilities for students in work-place environments.” Source: UNDP (2020). Review of Albania’s Vocational Education Training System, pp. 9, 10, 103. 55 GIZ conducted a tracing study in 2017 which found that 41 percent of graduates from vocational secondary schools were in a work relationship and one quarter were neither in education, employment, or training. Over half of the latter had been unsuccessfully looking for a job for more than 12 months. Source: GIZ. 2019. Tracing Survey for Graduates from Vocational Secondary Schools in Albania in 2017-2018. Back to table of contents 14 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force 3. Mitigating the impacts of job loss: extending unemployment benefits and protection from severe income shocks Beyond investments to improve the productivity form of protection. While efforts to extend access of workers, social protection contributes towards to social insurance are underway by formalizing fostering growth by alleviating poverty and work, similar issues are arising as people shift into protecting people against risk and promoting new types of work in highly innovative sectors, human capital.56 However, the social protection and as the nature of work changes globally (Box system in Albania is falling short of these objectives. 5). For this reason, the second part of this section The social protection system in Albania is comprised considers the role that Albania’s poverty-targeted of social insurance, which is based on contributions social assistance program may play in mitigating made through a formal employment contract; the impacts of income shocks and jobs loss on the and, social assistance, which provides support to poorest people in the country. poor and vulnerable individuals irrespective of their previous employment status, given its funding by government.57 The sections that follow focus on social insurance instruments that support labor market transitions, specifically unemployment insurance and, to a lesser degree, severance pay58. While unemployment insurance and severance pay are well established in Albania, the informal nature of many jobs undermines the access of people to this Box 5: The changing nature of work will challenge Governments to promote risk sharing outside of formal employment contracts The nature of work is changing as a result of a range of global factors, including technological advances and economic integration, which are leading to a rise in self-employment, fixed-term and part-time work, and “gig economy” jobs, among other more flexible types of work that do not easily fall within the traditional employment relationships. These changes raise questions for how to reinforce and extend social insurance systems, which assume that work is carried out through stable, subordinate wage or salaried employment, with contributions by employer and employees financing the system. The World Bank Social Protection and Jobs White Paper59 argues that, against the backdrop of these changes in the labor market, the objective of risk-sharing, which is preventing poverty and protecting against risk and uncertainty, that is promoted through social insurance remains more relevant than ever. Across countries, however, social insurance falls short when the system assumes that most people have formal employment-based contracts, be these informal workers in low- and middle-income countries or “gig workers” in higher income countries. Recon- sidering the design of social insurance system to accommodate a greater range of employment types can help people prepare for and take advantage of change and support job transitions. These considerations are particularly pertinent to Albania, given the prominence of informal work and the strive for economic transformation. 56 Packard, Truman, Ugo Gentilini, Margaret Grosh, Philip O’Keefe, Robert Palacios, David Robalino, and Indhira Santos. 2019. Protecting All: Risk Sharing for a Diverse and Diversifying World of Work. Human Development Perspectives. Washington, DC: World Bank. 57 Social protection expenditures in Albania amounted to almost 9 percent of the GDP in 2018. Most of these expenditures go towards social insurance (mainly pensions) where spending amounts to 7 percent of the GDP. In 2018, the total expenditure on social protection benefits in the EU amounted to 26.7 percent of GDP, ranging from 13-14 percent in Ireland and Romania, to 31-31 percent in Denmark (Eurostat). 58 See the forthcoming Social Protection Situational Analysis for Albania for a review of the broader social protection system. 59 Packard, Truman, Ugo Gentilini, Margaret Grosh, Philip O’Keefe, Robert Palacios, David Robalino, and Indhira Santos. 2019. Protecting All: Risk Sharing for a Diverse and Diversifying World of Work. Human Development Perspectives. Washington, DC: World Bank. Back to table of contents 15 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force 3.1 Unemployment benefits A well-designed unemployment insurance system have at least 12 months of contributions63, may not is an important part of the social protection be receiving any other benefit except for disability, system, providing temporary financial support to must be registered with NAES, and must be willing jobseekers while they find a new job, although the to take up employment or participate in training system in Albania is falling short of this objective. All or any other suitable ALMP. Although the number countries in the Western Balkans and the 7STEE, with of unemployed who received benefits increased the exception of Kosovo, have an unemployment significantly in 2020, the coverage of unemployed insurance system.60 Unemployment insurance can continued to be very low. In 2019, only 1.8 percent support labor market transitions, in that benefits of unemployed received unemployment benefits can sustain jobseekers while they search for work, (based on data from INSTAT) and increasing to 2.6 resulting in better quality job matches that make percent in 2020 (Figure 14). In contrast, comparator use of their skills. Unemployment insurance can countries in the 7STEE cover a much larger share of also help maintain aggregate demand during registered unemployed, ranging from 18 percent periods of economic downturns. If benefits are in the Slovak Republic to 81 percent in Estonia in too generous, however, unemployment programs 2018 (Figure 14). The coverage of unemployment may lengthen unemployment.61 As a result, for benefits among the unemployed and registered job unemployment benefits “the policy challenge is seekers seems to be higher in other Western Balkans to protect workers while minimizing undesirable countries than in Albania (Figure 14). Against the side effects.”62 In Albania, unemployment benefits backdrop of these low rates of coverage, rates of cover formal employees. To qualify for the benefit, poverty among unemployed people in Albania are beneficiaries must be involuntarily unemployed, high as seen in Figure 7 in the introduction. Figure 14: Share of unemployed receiving unemployment benefits in Albania is much lower than select comparator countries, 2015-2020 90.0% Albania 80.0% Bulgaria Croatia 70.0% UB benefits (% of unemployed) Estonia 60.0% Latvia 50.0% Lithuania Slovak Republic 40.0% Slovenia 30.0% Montenegro 20.0% Serbia 10.0% 1.8% 2.61% 0.0% 2015 2016 2017 2018 2019 2020 Source: INSTAT for Albania, Administrative data for Western Balkan countries, Eurostat for 7STEE. Note: The unemployment num- bers are taken from each country’s respective Labor Force Survey. 60 Severance pay is another instrument to protect the income of workers who have lost their jobs and facilitate transitions between jobs. Severance pay is regulated by the Albanian labor law and provides for those who have been employed for at least three years with the same employer and are dismissed for no fault of their own a compensation equal to 15 days of wage based on the last salary for each complete working year. 61 The extent to which unemployment benefits contribute to unemployment remains under debate. 62 Moffitt, Robert A. 2014. Unemployment benefits and unemployment. IZA World of Labor 2014: 13. 63 “Only a small portion of the unemployed is eligible for unemployment insurance benefits because that the current system provides benefits only for those who have paid social contributions during their last year of employment”. Available at: https://www.euraxess.al/albania/information-assistance/ social-security [accessed March 23, 2021]. Back to table of contents 16 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Albania’s unemployment benefit stands out the duration of unemployment benefits in Albania from common unemployment insurance design, may be short and/or jobs search support during which tends to be more directly linked to current this phase should be intensified. Based on NAES earnings and longer pay-out periods. In Albania, administrative data, the number of beneficiaries of a flat-rate benefit of 50 percent the national unemployment insurance increased in 2020, as a minimum wage is paid for 3 to 12 months, plus total of 13,884 jobseekers received benefits. At the additional 5 percent for dependent children, which same time, 10,842 people ceased to receive unem- translates to a replacement ratio of 25 percent for ployment benefits or exited the program, but, unlike Albanians earning the average wage.64 In contrast, in previous years, the reason the majority of bene- net replacement rates for a single individual in ficiaries left was due to their benefits expiring and comparator 7STEE countries range from around not because they entered an active labor market 55 percent of average gross wage in Estonia to program67, which was the main reason for exit in 85 percent in Latvia (Figure 15 and Annex 3 for earlier years (Figure 16). In 2018 and 2019, most details).65 Many of these countries start off with more beneficiaries left unemployment benefits by way generous replacement rates, which are reduced of joining an ALMP, other than vocational training. as periods of unemployment continue. Individuals However, the share of beneficiaries who directly who have contributed for at least one year receive returned into employment was also lower in these 3 months of benefits, more than 3 years receive 6 years than in 2020, when almost a quarter of bene- months, more than 5 years 9 months, and everyone ficiaries left the program due to finding employ- who contributed for more than 10 years receives a ment. In 2019 and 2018 this had only been the case maximum of 12 months.66 The minimum pay-out- for 13 and 5 percent of beneficiaries, respectively. period in Albania and the other Western Balkan While 2020 was an outlier given the impacts of the countries is 3 months. It is 6 months in Slovakia, 8 COVID-19 pandemic, these trends suggest that months in Latvia and 9 months in Lithuania. the length of benefit provision may be too short to activate people into jobs and that there is scope Analysis of administrative data from NAES to intensify jobs search requirements and support suggests that few people move from unemploy- from NAES in the initial period of unemployment. ment benefits directly into work, suggesting that Figure 15: Albania’s unemployment benefits have very low replacement rates, especially for average earners. 100% 3.0% 90% 2.5% Total contribution rate 80% Replacement Rate 70% 2.0% 60% 50% 1.5% 40% 30% 1.0% 20% 0.5% 10% 0% 0.0% ia ia a ia ia ia a a tia o a H E ni i ni vi gr on rb ar an ak en TE Bi oa ac th ua to t ne lg Se La ov ed lb ov 7S M r Cr Es th Bu o A te Sl Sl N Li on M Minimum Wage 67% Average Wage 100% Average Wage Employer + Employee Contribution Rate (right axis) Sources: Albania: INSTAT, Serbia: Statistical Office of the Republic of Serbia, BiH: Federal Bureau of Statistics Bosnia and Herzegovi- na, North Macedonia: MAKSTAT and OECD for the remaining countries; For contribution rates: Social Security Programs Throughout the World, Europe, 2018. Note: Replacement rates are given in terms of gross wage for single individuals without additional housing or social assistance benefits. The contributions for Latvia are collected combined together with other social insurances, hence those for unemployment insurance can’t be isolated 64 Until the age of 18, and until the age of 25 for those in tertiary education, as well as for dependents who are incapacitated (also until the age of 25). The total additional payments of 5 percent per child may not exceed 30 percent of the fixed rate. All women over 55 and men over 60 receive 12 months of benefits, as long as they contributed at least one year and meet all other criteria. Benefits can be extended by up to one year in the case of temporary employment while receiving the benefit. 65 Based on average earnings and 2 months unemployment benefit duration for a single individual in 2019 (pre-COVID). Source: https://europa.eu/ economy_finance/db_indicators/tab/# 66 For cases of repeated claims for benefit, the calculation of the contribution period begins with the last benefit of the payment of unemployment benefits. 67 There is no information as to whether these people moved from the ALMPs into a job. Back to table of contents 17 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Figure 16: Many unemployment benefit recipients are forced out of assistance due to expiration of benefits in 2020 7,000 Frequency for reasons for exiting 6,000 5,000 4,000 3,000 2,000 1,000 0 2018 2019 2020 Employed EPP participation Benefit expiration Other reasons Source: INSTAT for Albania, Administrative data for Western Balkan countries, Eurostat for 7STEE. Note: The unemployment numbers are taken from each country’s respective Labor Force Survey. Current expenditures on regular unemployment Providing more meaningful unemployment benefits are significantly lower than social security benefits could help Albanians sustain the search contributions for unemployment benefits collected for jobs that best use their skills, while also allow for from employers. Social security contributions consumption smoothing of unemployed people.72 include a 0.9 percent contribution from the employer Given the low generosity of unemployment benefits, for unemployment insurance. Total contributions people have little choice but to rush to find a new amount to 24.5 percent of the gross wage68, of employment when they are laid-off. The Government which 14 percent are paid by the employer. The 2019 may consider a range of reforms to improve the state budget shows social security revenues in the generosity and functioning of the unemployment amount of 84,342 million ALL; calculations show insurance system in Albania, which would include that the revenue stemming from the 0.9 percent revising the parameters and modernizing the contribution for unemployment benefit amounts application process. Reforming the parameters to roughly 3,092 million ALL. State expenditures would include, at a minimum, linking unemployment on regular unemployment benefits that same year benefits to previous contribution levels. In order to were 504 million ALL,69 whereas almost 2,164 make the benefit more meaningful, the Government million ALL were paid out as special measures to should consider gradually raising the generosity of workers of the oil, mining and metallurgy industries benefits as well as extending duration of payment. or former members of the military70. Simulations However, determining the exact parameters requires show that the 0.9 percent employer-financed social detailed analyses, given the implications of social security contribution could finance a more generous security contribution by employers and employee unemployment benefit, if it would not finance the on employment in Albania. Albania should consider previously mentioned extraordinary measures carrying-out detailed analysis to inform the revision (Figure 17). Replacing the flat benefit with a 70 of unemployment insurance design parameters percent replacement rate would still only make up such as: (i) benefit amount, (ii) duration of benefits, half of the contributions that are collected, holding (iii) minimum period of contributions, and (iv) the number of beneficiaries constant71. Currently, contribution rate, with the aim to make the benefit the contributions collect significantly exceed more meaningful for the unemployed and thereby expenditures. incentivizing some workers to formalize. 68 0.3% for disease insurance, 1.40% for maternity insurance, 21.60% for pension, 0.3% for accident insurance, 0.9% for unemployment insurance 69 Calculated as (0.9/24.5)*100* ALL 84,342 million. Of these, roughly ALL 680 million were paid by the state in social security contributions for unem- ployment benefits for its personnel. 70 According to the Ministry of Finance and Economy ALL 580 million were paid to former employees of the oil refiner ARMO, ALL 1.042 billion as spe- cial treatment for miners, ALL 411 million for oil industry workers, ALL 71 million for Metallurgy workers and ALL 50 million for former military workers. 71 If the benefit was more generous, more unemployed eligible to claim unemployment benefits might make the effort to apply. 72 Evidence from Austria suggests that longer unemployment duration has a positive effect on wages as unemployment benefits subsidize the search of a good job match (see: Nekoei and Weber, 2017. Does Extending Unemployment Benefits Improve Job Quality? IZA Discussion Paper No. 9034). Back to table of contents 18 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Figure 17: Social security contributions collected for unemployment insurance could finance a significantly more generous benefit 3,500 3,000 Expenditures in million ALL 2,500 2,000 1,500 1,000 500 0 50% of minimum wage 50% of average 70% of average gross Currently collected (Current policy) gross wage wage Note: The graph is simulating increased generosity of unemployment benefits assuming all beneficiaries earned the average gross wage. The simulation used 2019 beneficiary numbers and expenditures of NAES on unemployment benefits to estimate the average length of unemployment benefit provision as 4.45 months. In 2019, expenditures equaled ALL 504.1 million and 8711 beneficiaries received ALL 13,000 each month they were eligible. Application for unemployment benefits continue Finally, while Albania harnessed its unemployment to be based on in-person applications at the local insurance system to respond to COVID-19 pandemic, employment office. In order to apply, and within it took more modest steps than other countries. 60 days of the end of the employment relation- Over 90 percent of countries in Europe and Central ship, individuals must provide an application form, Asia used their unemployment insurance systems to a workbook73 detailing the work experience, photo respond to the COVID-19 pandemic. In Albania, the ID and certificates of enrollment in education for all unemployment benefit amount was doubled for the dependent children in person to the employment months of April, May and June 2020. Other countries office.74 Additionally, employment offices must obtain went further. Serbia and Croatia for example facili- the applicant’s certificate of marital status, and a tated procedures to apply for unemployment benefit, certificate from the individuals’ tax branch supporting as discussed in the paragraph above. Countries such that the claimant is not currently registered and has as Bulgaria and Slovakia temporarily extended the paid the contributions for a given number of years. benefit duration (from 4 to 7 months in Bulgaria and Once the application is approved, the beneficiary from 6 to 10 months in Slovakia). The governments is expected to see an employment counsellor once of Latvia and Lithuania expanded unemployment a month. In OECD countries, online applications for benefits for the self-employed and introduced an unemployment benefits are common, reaching up unemployment assistance benefit for those unem- till 58 percent of applications in the United States, ployed who would not otherwise qualify for the regular 88 percent in the United Kingdom, 95 percent in the unemployment benefit. In Slovenia, workers who had Netherlands, and 100 percent in Iceland and Italy lost their job during the pandemic are automatically as per 2015 information.75 The COVID-19 pandemic entitled to unemployment benefits. Countries such has certainly accelerated the introduction of remote as Chile and the United States have provisions in their applications to enable social distancing, such as regulations that when national (Chile) or state-level applications submitted by email or post in Serbia and (US) unemployment rates exceed a pre-set average, Croatia. The application process for unemployment benefit duration is extended. These experiences benefits could be modernized in Albania by using suggest that Albania may consider setting out rules on-line applications, with verification carried-out that would govern the response to shocks through through interoperability with other government data the unemployment insurance system, including a bases, such as the Tax Authority. This would require careful consideration of options to relax some of digitization of workbooks from pre-2012. the stringent eligibility criteria and extend benefit duration in time of crisis. 73 For each employment relationship, the workbook contains the employment starting date, the occupation, the termination date and the reason for termination. The information contained in the workbook is not digitized for those who entered the labor market prior to 2012. 74 The request for an appointment with the labor office is submitted through the E-Albania portal. The labor offices have computers on site, with desig- nated staff to assist, should people not have access to a computer. 75 OECD. 2015. OECD Employment Outlook 2015. Paris: OECD. Back to table of contents 19 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Albania may also consider additional elements other and introduce individual severance accounts, based countries have introduced, which seek to expand on detailed analysis to identify potential effects on access to the system and promote job mobility. the labor market. Given the limited coverage and low generosity of unemployment benefits in Albania, the Govern- Finally, Albania may also consider harnessing invest- ment could consider reforms that seek to expand ments in its social assistance programs to extend access to the formal social insurance system, such protection to poor and vulnerable workers. While as easing the minimum contribution requirements to improving the effectiveness of unemployment less than 12 months in the case of a crisis, as exem- insurance and severance pay may contribute toward plified by the COVID-19 pandemic. Severance pay is incentivizing workers to formalize, it is likely that, at another instrument to protect the income of workers least in the short term, many workers will remain who have lost their jobs and facilitate transitions informal or in temporary or seasonal employment between jobs.76 Most empirical evidence points to that excludes them from such formal protection. negative impacts of strict dismissal protection, which This given, Albania may consider international expe- may be in the form of high severance pay, on firm rience that is increasingly offering innovative means investments, risk taking and innovation.77 Innova- of reaching informal workers with support when they tive examples for reforming severance pay include need it to prevent their slide into (deeper) poverty. individual accounts to which employers contribute, The introduction of individual savings accounts, such but which are portable across jobs and can be used as in the Austrian example above, are being used to complement pensions later in life. Austria is one in some countries to extend the coverage of social of the (few) countries that has introduced such insurance to low-income workers, who tend to be severance accounts. The reform was motivated by informal. This is being done, for example, through liquidity problems due to severance payments, espe- the establishment of dedicated financial products cially for SMEs, limited labor market mobility, and the accompanied, at times by matching grants from the wish to extend entitlement also to voluntary sepa- Government and behavioral nudges, such as through rations, seasonal employment, and workers with automatic reminders.78 These innovations, which are short tenures. With the reform in 2002, employers often dedicated to expanding pension access, may contribute into a fund for each employee, and in case offer ideas for how Albania could extend the coverage of dismissal after three years of job tenure, workers of unemployment insurance to a greater proportion can choose between receiving the severance of the population. In addition, a global review finds payment from the account or saving the entitlement that, in most cases, the best way to quickly support towards a future pension. The balance of the account informal wage workers and the informal self-em- is carried over from one employer to the next. ployed during crises is through social assistance Besides private sector workers including appren- systems, scope and benefit amounts of which can tices and self-employed, the system is open also to be quickly expanded when there are mechanisms in farmers and freelancers. Evidence suggests that the place to identify and register potential beneficiaries, introduction of these severance savings accounts such as social or civil registries, or property registries, (in highly formal labor markets such as Austria) have for example (see section below for a further discus- increased job mobility, with impacts larger for women sion). In expanding these registries, governments than for men. Such innovations to enhance coverage can work closely with organizations that work with and increase labor market mobility, however, need the informal sector, such as informal business asso- to be preceded by detailed analysis to inform the ciations or microcredit organizations. In addition, parameters of the reform and the likely impact, as the governments can take advantage of administrative effects of such measures likely differ in labor markets data for existing government programs - beyond in which high levels of informality and lower levels of social assistance - including not only current but also compliance with (dismissal) regulations, and there is past beneficiaries. Most often, these initiatives were a real risk that introducing such explicit contributions built on well-established social assistance systems may increase labor costs and hurt formal job creation and, for this reason, the section that following further. Albania could consider innovative elements considers the scope for the Ndihma Ekonomike to that other countries have introduced to expand social play this role. protection coverage, such as reform severance pay 76 Severance pay is regulated by the Albanian labor law and provides for those who have been employed for at least three years with the same employ- er and are dismissed for no fault of their own a compensation equal to 15 days of wage based on the last salary for each complete working year. There are no ceilings, which may add to the risks in cases of liquidity or business problems. 77 With regard to training provision, there is mixed evidence. In theory, strict dismissal protection might result in longer-term employment relationship, creating a greater incentive for firms to invest in firm- or sector-specific job training. There is evidence, however, that the impact depends on the com- position of the workforce, and that firms rely more heavily on temporary contracts (see for example Bratti et al., 2018). 78 See for example Bosh M, et al., 2019. How to promote retirement savings for low-income and independent workers: the cases of Chile, Colombia, Mexico and Peru. IDB Technical Note, 1777. Inter-American Development Bank Back to table of contents 20 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force 3.2 Social assistance Albania’s last-resort income support program, support to poor households based on their poverty the Ndihma Ekonomike, appears to be effectively status provides the legal foundation to expand the reaching poor households. In 2011, the Govern- coverage of the program. Such an expansion can be ment adopted the Social Assistance Framework managed within the existing targeting system; this Law, which established the legal basis for revising requires only a change to the threshold or cut-off the eligibility criteria for the Ndihma Ekonomike, its point, which would allow additional poor households only Last Resort Income Support (LRIS) program. to enter the program. To ensure that the targeting This revision removed binary filters and adopted a system continues to respond effectively to current Unified Scoring Formula that would better identify poverty dynamics, any effort to expand coverage the extreme poor population. The new eligibility should be accompanied by a review of the targeting criteria and targeting procedures were initially system both in terms of its operational procedures piloted and then scaled-up nationwide from January (are people aware of the program and are they able 1, 2018. Initial analysis suggests improvements in to apply) and the Unified Scoring Formula to confirm the targeting accuracy of the program, although its continued accuracy. this will be confirmed with analysis of household survey data collected following the complete While the value of the Ndihma Ekonomike benefit roll-out of the new targeting procedure. Analysis of has increased in recent years, analysis suggests this the 2019 SILC shows that 73.5 percent of benefi- may be low. The average NE benefit amount has ciaries of the NE are from the poorest thirty percent increased significantly, by 17 percent between 2017 of the population, up from 60 percent in 2017. This and August 2019.80 Despite this increase, recent points to improvements in the targeting accuracy analysis shows that the NE benefit trails other of the program, although this should continue social benefits in Albania. Comparing the NE benefit to be assessed as more recent household survey levels as set out in legislation, the benefit level for a data becomes available. Moving forward, it will be household consisting of one adult member is equal important to update the targeting tools, specifi- to only 6.5 percent of the minimum wage, 13 percent cally the Unified Scoring Formula, so that it correctly of the unemployment benefit and 25 percent of reflects changing poverty dynamics in Albania (the the social pension.81 For a beneficiary household current formula is based on 2015 data). consisting of two adults and two children, the benefit is equivalent to 18.5 percent of the poverty Despite these improvements, the coverage of the line of US$3.20 per day and 10.7 percent of the Ndihma Ekonomike remains low in comparison to US$ 5.50 per day. This analysis suggesting the low need. Currently, the NE reaches roughly nine percent relative value of the current NE benefit may arise, in of the population.79 While significant, given that part, from the fact that the nominal value of the NE poverty in Albania, at 38 percent, is the highest in the has not been increased since 2018. This has not only Western Balkans, coverage remains low in compar- eroded the purchasing poverty of the NE benefit, ison with need. This reflects the overall spending on but it is also in direct contrast with the regular social assistance, including on the NE, in Albania. In increases to the minimum wage, and by extension 2018, Albania spent roughly 1.35 percent of GDP on unemployment benefits, and social pension over social assistance (of which 25 percent is allocated this same period. This analysis points to need for a to the NE), which is again low compared with an mechanism to inform a periodic review, and possible average of 3.2 percent on means-tested (pover- increase, of the NE benefit to, at a minimum, protect ty-targeted) programs among EU countries. This its real value. Figure 18 considers the coverage suggest that Albania may consider expanding the and adequacy of social assistance programs and coverage of the NE to additional poor household their impact on the poverty rate in selected ECA by increasing the thresholds within the targeting countries, using the most recent data available. system, which would allow poor households to As seen in this figure, the coverage of the NE lags qualify for support. The aims of the NE to provide that of other countries in ECA, while the adequacy 79 This analysis is based on administrative data on the number of beneficiaries (under families in need category) in 2021. 80 Beyond the cash transfer, NE beneficiaries also receive other subsidies and other compensations, such payment in exchange for attendance of com- pulsory education, vaccination of children and compensation of electricity. This section considers only the cash transfer. 81 WB staff calculations for note on NE benefit adequacy prepared for the Ministry of Health and Social Protection, 2021. Back to table of contents 21 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force appears to be relatively more generous although, The Government’s decision to double the NE given the modest impacts on poverty, this may payment as part of the response to COVID-19 reflect the depth of poverty rather than a generous appears to be justified, although the exact increase transfer. could have been better calibrated. In response to COVID-19, Albania initially doubled the value Like other countries around the globe, Albania of the NE benefit for a period of three months. harnessed its social assistance programs to protect Harnessing the NE in this way was an effective the poor from the COVID-19 pandemic. Within its means of protecting some poor households from broader response to COVID-19 (see Annex 1), the the pandemic, given that the program appears to be Government adopted a set of measures that were well targeted to the bottom quintile of the popula- specifically designed to protect the most vulner- tion, although it did little to reach additional poor or able parts of the population from the economic newly poor households. The decision to increase the impacts of the crisis. First, the Government doubled NE benefit followed a broader trend in the region: the value of the NE benefit for April, May and June other countries in the Western Balkans similarly 2020, for those who had applied for the NE up to increased the value of the benefit to existing bene- March 10, 202082, temporarily eliminated the need ficiaries of the last resort income support program, for in-person recertification every three months and although the rationale for such increases was allowed for applications to be submitted electron- not always clearly articulated or justified. Kosovo ically or through the post office. Because of these doubled the benefit for a period of three months changes, the number of NE beneficiaries increased (extending it again at the beginning of 2021). In by 11 percent (from 62,016 families in March 2020 Montenegro, the functionality of the Social Card to 69,073 in July 2020). Second, the Government was modified for two ad hoc payments, €50 in April approved in the second part of April 2020 a one-off and €200 in August, and families received their benefit (ALL 16,000, equivalent to 156 USD) for all payments within three days. The fact that benefits the families that had applied to the NE between were increased across countries suggests that the July 2019 and April 2020 and had data in the MIS, ability to increase the value is an important part with 4,524 families receiving this payment.83 Finally, of responding to crisis. However, in Albania, as in an inter-ministerial committee chaired by Ministry other countries, the rationale for the doubling of the of Defense was established to organize and deliver benefit for an initial period of three months was not food and other support items for about 600,000 set out in relation to a specific objective or analysis. individuals identified by local governments as This suggests that the basis upon which the value vulnerable. Most recently, the NE benefit was again would increase in response to shocks should be set doubled for the period of January to June 2021. out in advance and based on analysis of adequacy to achieve the stated objectives. Figure 18: Coverage and adequacy of Social Assistance Programs and their impact on poverty 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 0 0 TJK BIH TJK BIH -0.01 KGZ MNE -0.01 KGZ MNE Impact in FGT0 pov. (5.50usd/d) Impact in FGT0 pov. (5.50usd/d) MKD UKR UKR MKD ARM TUR TUR ALB POL ARMPOL ALB -0.02 KSV -0.02 KSV SRB ROU ROU SRB -0.03 -0.03 MDA MDA -0.04 -0.04 KAZ KAZ -0.05 BGR -0.05 BGR GEO GEO -0.06 -0.06 Coverage of the Poor (5.50usd/d) Adequacy (poor 5.50usd/d) *Adequacy is calculated as the average value of the transfers over the total welfare of the beneficiaries. The poverty line of 5.50 USD/day was used to allow for international comparison. Source: SPEED (Social Protection Expenditure and Evaluation Database). 2020. Database, Washington, DC: World Bank 82 The measure was approved through the DCM no. 254 approved on 27.03.2020. 83 Based on the Decision no. 341, dated 23.4.2020 of the Council of Ministers “On some additions and changes to the decision no.305, dated 16.4.2020, of the Council of Ministers,“ On the determination of procedures, documentation and the amount of financial assistance for current employees and employees dismissed as a result of COVID - 19””. Back to table of contents 22 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force However, while some effort was made to provide erable investments in strengthening the targeting support to additional poor households, the full range of the NE, setting up a management information of options through the NE were not harnessed. The system (MIS), and strengthening the capacity of CSW low coverage of the NE left many poor households staff to administer the scheme. These investments exposed to the negative economic impacts of the provide a solid foundation to advance towards a COVID-19 pandemic. In recognition of these gaps, shock-responsive social protection system, particu- the Government introduced two measures that larly because the eligibility criteria and targeting aimed to specifically reach additional poor people, system are designed to identify people based on as described84. The first of these actions mirrored, to their poverty status. Using the NE as the basis, some extent, those taken by other countries, which further criteria are required to (i) determine how to used information in the management information identify people quickly for support when a shock systems of their social assistance programs or their occurs; and (ii) establish the value and duration of the social registries to provide support to additional transfer to be provided for existing and new bene- households, thereby expanding coverage of social ficiaries. In terms of rapidly identifying people who assistance support. Notable, however, the Govern- need support when a shock occurs, countries have ment opted not to expand the coverage of the NE tended to opt for two different approaches: firstly, to additional poor households using the full range countries have invested in social registries of poor of program procedures by, for example, increasing households, which then contain data that can be the eligibility threshold and paying the regular NE used by the state to quickly identify beneficiaries to payment (or double payment) to the people who receive payments; secondly, countries have estab- received the temporary response. lished eligibility criteria that are then used when people actively apply for support during a crisis. A more rapid scale-up in response to shocks would North Macedonia adopted this second approach, be possible by introducing a crisis modifier into the while the Philippines, Brazil and other countries have NE, drawing on experience from other countries established social registries that are used to support across the globe and in the Western Balkans. crises response. The decision in Albania to provide a A global review of the response to COVID-19 one-off transfer to former NE beneficiaries points to documents the widespread use of social protection how a social registry might work, in that the infor- to respond to the economic effects of the pandemic, mation on these beneficiaries was easily available with social assistance being the most prominent in the MIS. In both models, criteria would need to policy response: as of December 2020, a total of be established to allow an identification of affected 215 countries or territories have planned or imple- households such due to their geographic location (in mented social protection measures as part of their the case of an earthquake) or characteristics associ- response, with a majority of these having been social ated with being affected by the shock. The Unified assistance programs focusing on cash benefits85. Scoring Formula provides a basis for such a system, Throughout the crisis, coverage of cash transfers although it would need to be carefully reviewed to has increased from 16 to 38 percent of the global consider vulnerabilities to shock. In terms of delivery population. This review also points to the strong systems, this requires modifying the MIS, clarifying correlation between the expansions in coverage and the roles and responsibilities of social workers in presence of established social protection systems.86 terms of outreach and enrolment, and ensuring that A similar trend was seen in the Western Balkans. the payment systems can quickly make payments In North Macedonia, for example, the Guaran- during crisis. teed Minimum Income (GMI) program was quickly expanded to people negatively affected by the crisis For such a program to respond quickly to a range by amending the eligibility criteria, which included of shocks, it needs to be supported by established assessing the income of applicants in the previous triggers and backed by contingency financing. In month instead of the normal three-month period. addition to establishing the rules and procedures within the NE to identify who would receive support Through its investments in the NE, the Government in response to a shock, for how long and at what level, has established a platform that could be used to a set of rules are required to determine when such provide rapid response to poor people affected a response would be triggered. In some countries, by shocks, including those working in the informal a response through the social assistance system is sector. In Albania, the Government has made consid- triggered by data from the early warning system 84 Specifically, (i) provide a one-off payment to people who applied for NE and (ii) deliver food and other support items for about 600,000 individuals identified by local governments as vulnerable. 85 Gentilini U, Almenfi M, Dale P. Social Protection and Jobs Responses to COVID-19: A Real-Time Review of Country Measures, version December 11, 2021. 86 Gentilini U, Almenfi M, Dale P. Social Protection and Jobs Responses to COVID-19: A Real-Time Review of Country Measures, version December 11, 2021. Back to table of contents 23 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force reaching a pre-determined level. This approach can be used for localized or larger (national) shocks and does not require a declaration of emergency by the national government. Other countries use the procedures that have been established within their Disaster Risk Management system to identify and respond to crises. In both cases, when such a response is triggered, it is financed through contin- gency financing (or a budget reallocation) and follow the rules and procedures that are set out in advance, such that support quickly reaches house- holds affected by the shock. The Ministry of Finance has commissioned an assessment of disaster risk financing options, which lays the foundation further analysis of the cost of expanding the NE in response to anticipated shocks. Back to table of contents 24 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force 4. Reform recommendations This note has considered the role of selected social support program. These two programs were chosen protection instruments in promoting employment in recognizing of the fact that while social insurance and protecting people from income or job loss in specifically aims to protect people from job loss Albania. The sections above presented a detailed through unemployment benefits, access is severely technical analysis of the new suite of employment constrained by the continued levels of informality programs that aim to promote employability, in Albania. In such circumstances, there is emerging reviewing their design and implementation according experience globally on how social assistance to the aims of the recent reform and international can being to fill this gap by establishing ways of best practice. In terms of protecting people from reaching poor people who are affected by shocks periods of income-loss, the note focused on two – experience that Albania itself gained during the selected programs: unemployment benefits and COVID-19 pandemic. Based on this analysis, the the Ndhima Ekonomike, Albania’s last resort income recommendations of this note are as follows: Recommendation 1: Consolidate the employment reform and invest in demand-driven active labor market programs informed by real-time labor market information. Albania has demonstrated significant commitment to reforming its labor programs to better support jobseekers to gain employment and promote their employability. The Government recently laid the legal and institutional foundation for effective and evidence-based labor market programs, new active labor market programs (ALMPs) have been introduced, and their delivery is undergoing significant reform on several fronts, underpinned by a strong commitment to monitoring and evaluation to drive further improve- ments. Despite this progress, spending on labor market programs relative to GDP continues to be low, which is reflected in the continued low coverage of these programs. While uptake by employers and jobseekers is expected to increase as the new ALMPs are rolled out (once the worst of the COVID-19 pandemic passes), further investments in enhancing coverage would help solidify these reforms and strengthen their contri- bution to promoting labor market transitions. Proposed policy actions: • Strengthen the capacity of relevant actors to manage and implement the reform. Build capacity of the Ministry of Finance and Economy to manage and learn from the reform, and expand the capacity building and training of employment counsellors at the National Agency for Employment and Skills (NAES) for employer outreach, proactive case management, and specialized support for vulnerable groups. Inter- mediation of vulnerable groups could be outsourced to non-public providers using performance-based contracting. This would require enacting bylaws that allow for outsourcing of ALMP implementation to non-public training providers and start piloting. • Invest in the systematic analysis of labor market information and use evidence to inform program design. Standardized collection and dissemination of detailed labor market information on occupations and skills in demand is needed to inform programming decisions. Businesses could be involved and relied upon more systematically to obtain important labor market information, for example through more formal institutions such as local or sectoral skills councils. New sources of real-time labor market information, such as postings on online job portals, can complement conventional labor market data sources. • Operationalize information management system and evaluate the effectiveness of ALMPs. Finalize the testing of the new information management system and make use of the system in order to generate monitoring information that can be used to evaluate the effectiveness of ALMPs, informing ALMP programming, internal decision-making and budget distributions. Start conducting pilots of alternative Back to table of contents 25 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force program design options, such as for the wage subsidy program, and evaluating them using rigorous impact evaluation methodologies. • Invest in upskilling and reskilling programs and increase resources. With the uncertainty that COVID-19 has brought to economies, work experience programs have become an attractive option for employers and could be explored in Albania. With the risk of long-term unemployment on the rise, intensified employer outreach to increase ALMP uptake will be essential, as will be addressing other constraints faced by workers, such as childcare for women. Short vocational courses have proven to be an effective response to the pandemic, and they seem set to be a strong element of any employment services portfolio going forward. Importantly, however, the quality of training needs to be high, and training needs to correspond to labor market demand. NAES may consider issuing vouchers as a first step to diversi- fying training provision to non-public providers. Finally, there are countries with a significant share of seasonal employment that have experiences to offer to inform employment and training programs aimed at seasonal workers. Once NAES fully operationalizes the existing programs and has strengthened its implementation capacity, ALMP budgets should be raised conditional on fully absorbing existing budget funds and fully implementing the monitoring and evaluation of the programs. • Incentivize training of workers, both formal and informal. To increase the supply of high-level skills, employers should be encouraged to provide more training. For example, incentivize training by intro- ducing individual learning accounts, through which each eligible person can accumulate rights to training. The accounts can be directly linked to an individual rather than their employer, allowing for employees to freely choose the nature of their training, independent of employment status. Recommendation 2: Strengthen coverage and adequacy of unemployment benefits Beyond the investments made in workers through ALMPs, the social protection system in Albania contrib- utes towards facilitating labor market transitions by protecting people from income shocks and job loss. Among social protection instruments, an unemployment benefit plays this role most directly, given its express function in providing income support following the loss of a job. Albania’s unemployment insurance system appears to be falling short of this aim, as the flat-rate benefit is not able to guarantee an appro- priate level of income during periods of unemployment; and the ability to access the benefit is limited, as illustrated by the low coverage of the unemployed. Additionally, Albania’s unemployment benefit is nominally financed from social security contributions, but contributions are also used to fund extraordinary measures beyond contributory unemployment benefits. There are several considerations for the Govern- ment to take into account to improve the coverage of unemployment benefits, which range from reforming the parameters of the system to modernizing the application process. Proposed policy actions: • Reform unemployment benefits by paying higher benefits based on a replacement rate with some degree of redistribution. As a first step, a detailed analysis should inform the potential revision of unem- ployment insurance design parameters, such as: (i) benefit amount, (ii) duration of benefits, (iii) minimum period of contributions, and (iv) contribution rate, with the aim to make the benefit more meaningful for the unemployed and thereby incentivizing some workers to formalize, while also ensuring that unemploy- ment benefits remain fully financed through contributions during non-crisis periods. • The application process for unemployment benefits could be modernized. This could be done by using on-line applications, with verification carried-out through interoperability with other government data bases, such as the Tax Authority. • Consider setting out rules that would govern the response to shocks through the unemployment insurance system, including a careful consideration of options to relax some of the stringent eligibility criteria and extend benefit duration in time of crisis. • Consider innovative elements that other countries have introduced to expand social protection coverage, such as reform severance pay and introduce individual severance accounts, based on detailed analysis to identify potential effects on the labor market. Back to table of contents 26 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Recommendation 3: Improve the shock responsiveness and coverage of social assistance programs Given that many people will likely remain beyond the social insurance system in the short term, the Government may consider further strengthening its social assistance programs, specifically the Ndhima Ekonomike, beyond its current function as a last-resort income support to program to one that provides temporary support to poor and vulnerable people in response to covariate shocks. Following its reform in 2018, Albania’s last-resort income support program, the Ndihma Ekonomike (NE), appears to be effec- tively reaching poor households, thereby helping ensure that these households are able to meet their basic needs. Despite these improvements, the coverage of the NE remains low in comparison to need and there has been an erosion in the value of the benefit over time. Like other countries around the globe, Albania harnessed its social assistance programs to protect the poor from the COVID-19 pandemic. While this response provided additional protection to existing beneficiaries of the NE, it did not effectively reach additional poor households or workers in the informal sector. Drawing on global experience, Albania may consider harnessing the investments in the NE to set out a system that provides rapid support to poor households when a crisis hits them. Furthermore, Proposed policy actions: • Introduce crisis modifier into social assistance programs and strengthen delivery systems. Prepare for crisis by (i) determining how to identify people quickly for support; and (ii) establishing the value and duration of the crisis transfer for existing and new beneficiaries. Relatedly, strengthen delivery systems, by modifying the MIS, including potentially building out a social registry, clarifying the roles and responsi- bilities of social workers in terms of outreach and enrolment, and ensuring that the payment systems can quickly make payments during crisis. • Make social assistance accessible to more poor people and increase generosity. Consider extending coverage by increasing the budgetary allocation to social assistance programs, specifically the Ndhima Ekonomike (NE), by increasing the threshold or cut-off point within the Unified Scoring Formula, and reviewing the continued accuracy of the Formula. Review the NE benefit value regularly by establishing a methodology and legislating a means of increasing the value on the basis of such a review. Back to table of contents 27 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Annex 1. The impacts of COVID-19 in Albania and the response of Government The COVID-19 pandemic has led to significant In Albania, women lost jobs at a smaller but more contractions in the global economy with important persistent rate than men. Employment rates for consequences on jobs and workers, and especially women further decreased due to COVID-19, by for women, youth and vulnerable populations. 1.4 percentage points from 54.6 to 53.2 in Albania Currently, more than 90 percent of workers are in between 2019Q2 and 2020Q2, by 3.9 percentage countries implementing some form of closures, points from 61.2 to 57.3 in the OECD countries, by while estimates suggest a decrease in working 1.4 percentage points from 62.9 to 61.5 in the EU, hours equivalent to 255 million full-time jobs in and between 0.6 and 3.4 percentage points in most 2020, and that a further 36 to 130 million full-time comparator countries in the region. Unlike in other equivalent jobs may be lost in 2021.87 As most countries, in Albania, a larger share of men lost their countries, Albania responded to the COVID-19 employment during the crisis than women, however pandemic by putting in place lockdown measures, with a significantly quicker recovery. While 2.2 leading to decreases in labor demand and thus a percentage points less men were employed in the reduction in working hours or job losses. The ILO88 2nd quarter of 2020 relative to the previous years, estimated that by June 2020, about 73 percent employment rates were already 0.2 percentage of all domestic workers in the world had been points higher in the 3rd quarter, than they had been impacted from COVID-19 either through a reduction in all of 2019. For female workers, however, the in working hours, or loss of employment. These decline persisted into the second half of 2020, as effects are evident in the reduction of employment women were still 0.5 percentage points less likely to rates almost in all countries, with employment rates be employed relative to the same time in 2019. decreasing by about 4 percentage points from 68.6 to 64.6 in OECD countries in the second quarter of Social protection is a central feature of most 2020, 1.5 percentage points from 68.3 to 66.8 in countries’ responses to Covid-19 and governments the EU, 1.81 percentage points from 61.4 to 59.6 in have rapidly innovated to adapt existing systems Albania, and between 0.3 to 3.3 percentage points to their needs. As of December 2020, a total of in most countries in the ECA region. 215 countries or territories have planned or imple- Figure 19: Year to year employments losses in Albania were smaller but more persistent for women. 80 Employment-to-population ratio 70 -1.63% -1.49% -1.81% -0.71% 60 -5.7% -1.35% -0.61% -3.3% 50 40 30 20 10 0 Total Female Total Female Total Female Total Female Albania Montenegro Serbia STEE7 2019Q2 2020Q2 Source: ILO, OECD (2020), Albanian Institute of Statistics, WB staff calculations 87 ILO (International Labour Organization). 2021. ILO Monitor: COVID-19 and the world of work. Seventh edition. Updated estimates and analysis. Gene- va: ILO. 88 ILO (International Labour Organization). 2020a. Impact of the COVID-19 crisis on loss of jobs and hours among domestic workers. Geneva: ILO. Back to table of contents 28 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force mented social protection measures as part of their 3 month-period, with interest rates fully covered by response, with a majority of these having been social the government. assistance programs focusing on cash benefits89. As successful early assistance made use of existing Support was provided to those dismissed due to delivery infrastructures such as social registries, COVID and additional ALMPs implemented to digital payment mechanisms or poverty identifica- support re-hiring efforts. In the second financial tion systems, many countries quickly gathered the package in mid-April, ALL 40,000 (equivalent to political commitment to expand or build their own. 387 USD) was provided to all employees dismissed This has led to social assistance payments having during the period from restrictions started to apply reached a wider population in the second half of until May 17th. 173,019 individuals were sent one-off 2020, with governments innovating by for example payments of ALL 40,000 under the second package, using digital payments to reach informal workers, totaling ALL 6.9 billion which were disbursed (equiv- anonymized mobile phone data for targeting or new alent to ~USD 67 million)94. Those who were eligible application and validation procedures to prevent to receive unemployment assistance received fraud90. Throughout the crisis, coverage of cash double the amount between April and June 2020, a transfers has increased from 16% to 38% of the measure from which 2823 jobseekers benefited. In population. Social insurance has also played a signif- addition, three active labor market programs were icant role in the form of unemployment benefits or established with a focus on labor market reintegra- paid sick support, although clearly positively corre- tion for unemployed who had lost their jobs due to lated with income. Additionally, some reforms were Covid-1995. Two of these programs provided wage used in social insurance sector to provide short- subsidies of half the minimum wage to previously term relief such as by temporarily reducing contri- formal workers and payed the employers share of bution rates or loosening regulations on pension social contributions for the duration of 4 months for withdrawals. one program and 8 months for the other. Combined, a total of 1,161 individuals benefitted from wage To prevent firing of workers, payments were made subsidies, with almost all beneficiaries enrolled in to workers affected by lockdowns and loan guar- the 8-month subsidy (only 30 of the total benefi- antees issued to firms. As part of the first package ciaries received the 4-month contract and subsidy). introduced in March 2020, the government made The third program aimed at formalizing employees three monthly payments equal to the minimum by covering the full cost of social contributions for wage (ALL 26,000 equivalent to 252 USD) to 12 months if a self-identified informal employee employees of businesses which had temporarily received a formal employment contract. Through closed down as a result of COVID-19 restrictions this initiative, social contributions of 560 individuals and had a turnover of up to ALL 14 million (equiv- were covered in 2020. alent to ~USD 136,000)91. A total of 65,674 individ- uals received payments in three instalments, with a In parallel, Albania’s social assistance program total of ALL 5.1 billion having been disbursed (equiv- Ndhima Ekonomika (NE) was expanded vertically alent to ~ USD 49 million)92. In the second package, and horizontally. First, the Government doubled during the last half of April 2020, additional one-off the value of the Ndihma Ekonomike (NE) benefit payments of ALL 40,000 (equivalent to 387 USD) for April, May and June 2020, for those who had were made to employees of large enterprises which applied for the NE up to March 10, 202096. Second, had temporarily closed due to restrictions and to to comply with public health containment measures, employees of smaller firms which were allowed the Ministry of Health and Social Policy (MoHSP) to continue to operate93. The Albanian govern- temporarily removed the requirement for NE bene- ment also issued a loan guarantee in the amount ficiaries to present every three months to the social of ALL 11.0 billion (equivalent to approx. USD 100 administrator a declaration on their socio-economic million) which was to cover employee salaries for a situation97. This measure came into effect at the 89 Gentillini et al. 2021. Social Protection and Jobs Responses to COVID-19 : A Real-Time Review of Country Measures version 14 90 Gentillini et al. 2020. Social Protection and Jobs Responses to COVID-19 : A Real-Time Review of Country Measures version 13 91 Council of Ministers Decision No. 254 dated 27.3.2020 (amended), ‘On the procedures for the financial support to the employees of businesses with turnover up to 14 million ALL, economic support and unemployment benefits due to the Covid-19’ 92 Ministry of Finance and Economy (2021). ‘Economic Reform Programme 2021 – 2023.’ 93 Council of Ministers Decision No. 305, dated 16.4.2020, ‘On the procedures for the financial support to the actual employees and the unemployed due to Covid-19’. 94 Ministry of Finance and Economy (2021). ‘Economic Reform Programme 2021 – 2023.’ 95 Council of Ministers Decision No. 603 dated 29.7.2020, ‘On the procedures, criteria and rules for the implementation of the employment promotion program through the employment of unemployed persons as a result of Covid-19’ 96 The measure was approved through the DCM no. 254 approved on 27.03.2020. 97 The SSS enters and checks the information in the MIS to verify if the status of the HH changed or not. Back to table of contents 29 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force beginning of April 202098 and ended in September 202099. Third, beginning on April 1, the NE applicants could apply for the benefits either by filling the form electronically or by sending it by post office in hard copy. Because of these changes, the number of NE beneficiaries increased by 11 percent (from 62,016 families in March 2020 to 69,073 in July 2020). In addition, the Government approved in the second part of April 2020 a one-off benefit (ALL 16,000, equivalent to 156 USD) for all the families that had applied to the NE between July 2019 and April 2020, but who had since exited, with 4,524 families receiving this payment.100 Finally, an inter-ministe- rial committee chaired by Ministry of Defense was established to organize and deliver food and other support items for about 600,000 individuals iden- tified by local governments as vulnerable. Most recently, the NE benefit was again doubled for the period of January to June 2021. The introduction of such measures alongside the support to firms to protects formal jobs was vital given the high rates of informality in the Albanian labor force, which means that a large number of people could not be reached through those mechanisms that are based on formal employment contracts and social insurance mechanisms. 98 The measure was approved on 31 March through the Order of Minister of Health and Social protection no. 213 “On taking measures to prevent infec- tion from COVID-2019 of applicants for economic assistance”. 99 The measure stopped to be in place through the Order No. 213/1 (dated 01.09.2020), of the Minister of Health and Social Protection "On receiving special measures from local self-government units to prevent the spread of infection caused by Covid-19 to applicants and beneficiaries of economic assistance". 100 Based on the Decision no. 341, dated 23.4.2020 of the Council of Ministers “On some additions and changes to the decision no.305, dated 16.4.2020, of the Council of Ministers,“ On the determination of procedures, documentation and the amount of financial assistance for current employ- ees and employees dismissed as a result of COVID - 19””. Back to table of contents 30 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Annex 2. Overview of ALMPs and beneficiaries in 2019 and 2020 Table 1: ALMP beneficiaries in 2019 and 2020, total and as percent of registered jobseekers Old ALMPs New ALMPs Beneficiaries Beneficiaries Beneficiaries Date intro- in 2019 (% in 2020 (% Date intro- in 2020 (% Name and Type Name and Type Target Group duced of registered of registered duced of registered unemployed) unemployed) unemployed) DCM 48 The pro- Jan-08 1282 (1.81%) 0 (0%) DCM 17: Wage Jan-20 Eligible 340 (0.38%) gram of encourag- Subsidies categories, ing the employ- 1 after being ment of jobseekers registered for in difficulty 3 months* DCM 27 The pro- Nov-12 26 (0.04%) 0 (0%) DCM 17: On-the- Jan-20 All jobseekers 270 (0.31%) gram of promotion job training unskilled in of employment of 2 the area of women and girls interest by special groups DCM 248 The Apr-14 58 (0.08%) 0 (0%) DCM 17: Intern- Jan-20 Recently 491 (0.56%) Program of ships graduated Encouragement jobseekers of Employment 3 (Past 24 of Persons with months) Disabilities DCM 64 The Youth Jan-16 0 (0%) 0 (0%) DCM 535: Com- Jul-20 Long-term 0 (0%) Incorporation munity Employ- unemployed Program for the 4 ment/Public (More than Orphans' Youth works one year) Initiative Program DCM 873 Voca- Dec-06 1379 (1.94%) 717 (1.01%) DCM 348: Self Apr-20 All jobseekers 0 (0%) tional internship Employment programs for Program unemployed who have completed 5 higher educa- tion, internally or abroad DCM 162 Payment Mar-18 1430 (2.02%) 602 (0.85%) DCM 608: Labor Sep-20 Unemployed 30 (0.03%) of Participation in market reintegra- as a result of Professional Train- 6 tion (4 months) Covid ing Courses DCM 199 Program Nov-12 20 (0.03%) 0 (0%) DCM 608: Labor Sep-20 Unemployed 1131 (1.28%) for promoting em- market reintegra- as a result of ployment of youth 7 tion (8 months) Covid jobseekers DCM 47 Program Jan-08 1143 (1.61%) 0 (0%) DCM 608: Formal- Sep-20 Unemployed 560 (0.63%) for encourage- ization measures as a result of ment of employ- 8 (12 months) Covid ment through on- the-job training *Eligible jobseekers are: (i) Young people under 29 years; (ii) Long-term unemployed jobseekers; (iii) Jobseekers over the age of 45 years; (iv) Un- skilled unemployed jobseekers; (v) Unemployed jobseekers, returned after no more than 2 years of emigration; (vi) Jobseekers receiving ndihma ekonomike, treating with priority those beneficiaries projected to come out of the economic assistance scheme in the respective year; (vii) Jobseekers receiving unemployment benefits for more than 3 months; (vii) Persons with disabilities; (ix) Victims of trafficking, gender-based violence and victims of domestic violence; (x) Jobseekers from the Roma community and Egyptian; (xi) Completed the course of vocational training or training program through work and are still unemployed 6 months after completion. Back to table of contents 31 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Annex 3. Unemployment insurance across peer countries Component \ Country Bosnia and Herzegovina North Macedonia Montenegro BiH: Employees who paid Employees (all persons who Employees, self-employed contribution for unemploy- have concluded an employ- persons ment ment contact) Coverage Rep. Srpska& Brčko District: employees and voluntary insurance payers BiH: At least 8 months unin- At least 9 months At least 9 months unin- terrupted or intermittent uninterrupted or 12 months terrupted or 18 months contributions over the last intermittent contributions intermittent contributions 18 months over the last 18 months over the last 18 months Minimum contribution requirement Rep. Srpska& Brčko District: 8 continuous or 12 months intermittent in the last 18 months Be involuntarily unemployed Be involuntarily unem- Be unemployed between and be registered in unem- ployed and be in full time the ages of 15-67. Not be ployment service. education. Not receive any a student or a pensioner. Other requirements for eligibility pensions. Not have rejected Part-time covered if full time a job offer. equivalent complies with rule. No maximum Maximum: 26.836 Min. and max. benefit amount Denars/433€ (80% of national average net wage) 3 to 24 months based on 3 to 12 months based on 3 to 12 months based on insurance contribution insurance contribution insurance contribution Pay-out period period period (1 to 12) period. Until re-employment for 35 years of insurance service. BiH: 40% of average 50% of the average monthly 40% of the minimum wage. monthly salary in Federa- net wage of the employee tion of BiH in the last three for the last 24 months. months After the first 12 months, qualifying recipients receive Rep. Srpska: 40 to 45 40% of average monthly net Replacement rate percent of salary based on wage. If working part-time, length contribution beneficiary can receive 50 % of UB. Brčko District: 35 to 40 percent of salary based on length of contribution A total of Eur 5.5M is allo- Unemployed and informal The government provided a cated for unemployment sector workers received an one-time assistance in the benefits for 2020, but this average of 7,000 denars amount of 50 euros to all could increase to another (US$124) per household. The unemployed persons in the Eur 10M to support job estimated coverage is about records of the Employment Adjustments under COVID-19 retention and/or increase 15,500 new GMI HHs and Bureau who do not receive unemployment benefits. At up to 40,300 people with cash benefits or material this point, no adjustment to unemployment insurance. security Apr 2020. qualification for unemploy- This is funded through ment benefits is done. the COVID-19 emergency project. Back to table of contents 32 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Component \ Country Albania Serbia Bulgaria Employees Employees, self-employed Employee , managers, inde- persons, and temporarily pendent traders etc. employed Coverage At least 12 months of contri- At least 12 months At least 12 months unin- butions. uninterrupted or terrupted or intermittent Minimum contribution requirement intermittent contributions in contributions over the last the last 18 months. 18 months. Be willing to be employed; Be between ages 15 to 65 Be living in the country and be willing to participate in years, register with national have terminated the labor employment promotion employment bureau within contract of their own accord Other requirements for eligibility programs; be willing to 30 days, and actively or have been summarily receive training seeking work dismissed, be registered with the Employment agency flat rate 130,000 ALL/ Minimum: 80% of minimum Minimum: BGN 9 (€ 4.6) per monthly wage day. Min. and max. benefit amount Maximum: 160% of Maximum: BGN 74.29 (€ 38) minimum wage. per day. 3 to 12 months based on 3 to 12 months based on 4 to 12 months based on insurance contribution insurance contribution insurance contribution period period. Exceptionally, period. Pay-out period duration is 24 months in cases of unemployed persons with up to two years left for retirement. 50% of national minimum 50% of the average salary 60% of the average daily wage. Continued payment in the last 6 months. Also, contributory income for the into the pension scheme. the person can benefit from last 24 months, but not less Additional 5% for each healthcare. than the fixed minimum dependent child until the amount. age of 18 (provided that they are enrolled in school), Replacement rate and until the age of 25 for those in tertiary education, and those who are incapac- itated. The total additional payments of 5% per child may not exceed 30% of the fixed rate. Government doubled the Government facilitated In 2020, the budget of amount of UB for April to procedures to apply for the Unemployment Fund June 2020. unemployment benefit: was increased by BGN 1 The government issued a billion (EUR 510.2 mil.), and decision for the new method the minimal daily rate of of submitting application unemployment compensa- for unemployment benefit tion was increased by 25% and for registering with NES. (from BGN 9 to BGN 12-EUR The applicants can submit 6.1) as of October 1, 2020. Adjustments under COVID-19 their requests via email or by According to preliminary post. The decision making data, in October 2020 for the received requests is over 17,200 UB recipients extended as well. received the new amount. As of October 1, the UB duration was increased from 4 to 7 months for the unemployed who have last claimed UB less than 3 years ago. Back to table of contents 33 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Component \ Country Croatia Latvia Lithuania Employees (civil servants Employees Employees, self-employed, included), the self-employed one of the parents of a disabled child, unemployed Coverage Citizen should be living in who have taken childcare Croatia. leave from the 1st to the 3rd birthday of the child At least 9 months unin- At least 12 months unin- At least 12 months unin- terrupted or intermittent terrupted or intermittent terrupted or intermittent Minimum contribution requirement contributions over the last contributions over the last contributions over the last 24 months. 16 months. 30 months. Be involuntarily unemployed Not be eligible for the State Be of working age (from (ie not by agreement with old age pension (including 16 to the age retirement- the employer), be registered early pension); 63 for women and 64 for Other requirements for eligibility with the Croatian Employ- not accepted for enrolment men) and not have pension ment Service and claim in a full-time elementary entitlement, be registered submission within the legal or secondary education by the Employment Agency deadline (30 days). program; age 15 and older and reside in Lithuania. Minimum: HRK 1,625.00 (€ There is no minimum or Minimum monthly wage: 215), ie 50% of min wage maximum amount of €141.25 benefit. Maximum: cannot exceed Maximum: First 90 days, 58.18% of the average Min. and max. benefit amount 70%, HRK 4519.9 (€ 597), national wage the rest of the payment, 35%, HRK 2259.9 (€ 299), of the national avg. net wage. 90 to 450 days based on 8 months. No variation of 9 months and can be insurance contribution the duration. prolonged for an additional Pay-out period period 2 months for elderly persons within 5 years of pension- able age. For the first 90 days of 50 to 65 % of average 38.79% average insured receiving the unemployment contribution wage based income (variable) + €141.25 benefits, they amount to on insurance length. For the (fixed) for the first 3 months 60%, and for the rest of first 2 months of unem- of unemployment. The Replacement rate the payment period they ployment, ind. receives full benefit (variable part) goes amount to 30% of the base benefit amount. The benefit down every three months. salary. goes down every 2 months to 45% on month 7. The government facilitated The government expanded The government provided submitting unemployment those eligible for UB to UB for the self-employed benefit requests by allowing self-employed who are who paid contributions: at for application via mail, micro-enterprise owners. EUR 257/ month for up to e-mail or telephone. Also, the government 3 months when they are introduced “unemployment unable to carry out their assistance benefit”. If the activities due to quarantine. Adjustments under COVID-19 period of unemployment The government also ends for a person after introduced a 6 month March 12, 2020, they are unemployment Benefit for eligible for an UAB of 180 the unemployed who does Euros/m for 4 months. The not otherwise qualify for UB. measure is extended until The benefit is for 6 months end of 2021. and 33% of the minimum wage, Eur 212 in 2021. Back to table of contents 34 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Component \ Country Estonia Slovakia Slovenia Employees Employees (except Employees, self-employed, pensioners). recipients of Sickness Coverage Citizens living abroad are Benefit, Paternity Benefit also covered. and Childcare Benefit after termination of employment. At least 12 months unin- At least 2 years uninter- At least 9 months unin- terrupted or intermittent rupted or intermittent terrupted or intermittent contributions over the last contributions over the last contributions over the last Minimum contribution requirement 36 months. 4 years. 24 months. For individuals under 30, 6 months of insurance is enough. Be involuntarily unem- Be unemployed, and regis- Be registered with the ployed; and be registered tered to the Office of Labor, Employment Service; as unemployed with the Social Affairs and Family actively searching for Estonian Unemployment within 3 days of unemploy- work. Individual cannot be Other requirements for eligibility Insurance Fund (Eesti ment. Be eligible to work a pensioner, or a student Töötukassa) ; aged between and not eligible for old age under 26 years old. 16 and pensionable age, and pension. reside in Estonia. Minimum: half of the No minimum. Minimum: €530,19 per national minimum wage Maximum: €71.8027 daily month from the previous year. basis of assessment Maximum: €892.50 per Min. and max. benefit amount month Maximum: Earnings over three times the national average daily income for the previous calendar year. 180 to 360 calendar days 6 months. After 3 months, 3 to 25 months based on based on the beneficiary’s the beneficiary can cancel insurance period and age insurance period. registration as a job seeker group. Payment lasts 2 Pay-out period and obtain bonus (50% of months for under 30 if the total amount of benefit.) insurance period is only 6 months. 50% of reference earnings, 50% of the average gross For the first 3 months, 80% income from last year, up to earnings from the last two of the reference earnings, 100 calendar days of unem- years. The amount does not based on gross income in Replacement rate ployment, vary with the duration of the last 8 months. 4-12 unemployment. months, 60%, after 12th 40% of reference earnings month, 50% of reference thereafter. earnings. The government created an For the recipients of The employment status of online platform called e-Un- unemployment benefit, the workers who are unable to employment Insurance Fund 6-month period has been work due to FM, caring for to facilitate online job search expanded by an additional 4 children, inability to come for the unemployed. months temporarily in 2020. to work and other epidem- The expansion has now ic-related reasons will be Adjustments under COVID-19 expired. equal to that of temporarily laid-off workers. Workers who have lost their job during the epidemic will automatically be entitled to unemployment benefits. Back to table of contents 35 ALBANIA COUNTRY ECONOMIC MEMORANDUM Background note on supporting an adaptive and resilient labor force Main Sources Latvia Employment, Social Affairs & Inclusion. 2021. Your Eurofound. 2020. Extension of unemployment rights country by country: Unemployment benefits to self-employed, case LV-2020- benefit. European Commission. ec.europa.eu/ 16/1337 (measures in Latvia), COVID-19 EU social/main.jsp?catId=858&langId=en PolicyWatch, Dublin. http://eurofound.link/ covid19eupolicywatch Gentilini, U., Almenfi, M., Dale, P. 2020. "Social Protection and Jobs Responses to COVID-19: A Real-Time Review of Country Measures". Living paper, version 14 (December 11, 2020). Lithuania http://documents.worldbank.org/curated/ en/590531592231143435/pdf/Social-Pro- Eurofound. 2020. Temporary job-search benefit tection-and-Jobs-Responses-to-COVID-19- for unemployed who would otherwise not be A-Real-Time-Review-of-Country-Measures- eligible to receive benefits, case LT-2020- June-12-2020.pdf SPEED (Social Protection 24/906 (measures in Lithuania), COVID-19 Expenditure and Evaluation Database). 2010. EU PolicyWatch, Dublin. http://eurofound.link/ Database, Washington, DC: World Bank covid19eupolicywatch MISSCEO (The Mutual Information System on Social Protection of the Council of Europe). 2021. Database, Council of Europe. http:// Montenegro (Translated) www.missceo.coe.int/ Government of Montenegro. 2020. Prime Minister MISSOC (Mutual Information System on Social Dusko Markovic presents the government's Protection). 2021. Database. https://www. new economic recovery package from the missoc.org/missoc-database/compara- corona virus pandemic: The road to recovery tive-tables/?test= will not be easy, but we will come out stronger as well. https://www.gov.me/vijesti/223682/ Premijer-Dusko-Markovic-predstavio-no- vi-Vladin-paket-mjera-ekonomskog-oporav- ka-od-pandemije-korona-virusa-Put-opo- Additional Sources per Country ravka-nece-biti.html Croatia (Translated) Serbia Croatian Employment Service. 2020. Exercise of the right to monetary compensation and receipt Institute of Social Insurance. 2021. Rights stemming of claims. Ostvarivanje prava na novčanu from unemployment insurance: Cash benefit. naknadu i zaprimanje zahtjeva | Hrvatski zavod www.zso.gov.rs/english/novcana-naknada. za zapošljavanje (hzz.hr) html Estonia (Translated) Slovakia (Translated) Eesti Töötukassa. 2021. What is the e-Unemploy- Ministry of Labour, Social Affairs and Family of the ment Insurance Fund? https://www.tootukassa. Slovak Republic. 2021. Unemployed: Extension ee/eng/tkauth/login?return=Y29udGVudC9l- of the unemployment period in times of crisis c3Rvbmlhbi11bmVtcGxveW1lbnQtaW5zdXJh- (extension of the duration of entitlement to bmNlLWZ1bmQtc3RvcC1zZXJ2aW5nLWN- unemployment benefit). www.employment. 1c3RvbWVycy1hbGwtb2ZmaWNl gov.sk/sk/koronavirus-pracovna-social- na-oblast/nezamestnani/ Back to table of contents 36 © 2021 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org