'First Job' youth unemployment prevention programme assessed

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In June 2002, the Polish government launched 'First Job', a major programme aimed at combating unemployment among young people. While the Ministry of Labour's forecasts that the ranks of the unemployed would swell by more than half a million post-secondary school leavers in 2002 proved to be exaggerated, the problem of joblessness amongst young people continues to be acute. This article assesses the implementation of the programme over its first six months, which has been relatively successful.

'First Job' ('Pierwsza praca'), officially inaugurated on 3 June 2002 in Cracow, is Poland’s first national-scale programme for the vocational activation of young people, aiming to enable those entering the labour market to acquire their first work experience (PL0208101N). The direct impetus for this concerted effort on the part of the national administration to facilitate labour market entry for the young was provided by the alarmingly high rate of unemployment in the youngest working age category, that of people aged between 15 and 24. After the first six months of 2002, the unemployment rate among this group of young people stood at 43.5% - over twice as high as the rate for the Polish population as a whole (PL0210110F).

The Ministry of Labour and Social Policy (Ministerstwo Pracy i Polityki Społecznej, MPiPS) estimated that there would be approximately 1 million young people completing post-secondary study in 2002. Some 100,000 of these would enter employment, and 280,000 were expected to embark on further study. Of the remaining 620,000, some were expected, as every year, to remain outside the labour market for one reason or another (the typical ones including compulsory military service, maternity or foreign travel). Thus, the Ministry of Labour expected some 360,000 new school-leavers to register as unemployed with the state labour offices, although the real number of job-seekers would be higher, given the 160,000 or so school leavers who, while they did not register this fact with a state labour office, remained without gainful employment. All considered, then, the target group for the new vocational activation programme encompassed more than half a million young people. The 'First Job' programme is presently expected to remain in operation until the end of 2003. Depending on the results achieved, its continuation over 2004-6 may be considered.

The programme

The 'First Job' programme comprises the following five strands:

  • small and medium-sized enterprises (SMEs);
  • self-employment;
  • education;
  • voluntary work; and
  • information, vocational counselling, and labour market intermediation.

More detail on each of the five strands is set out below, based on government documents.

SMEs

The government believed that the use of SMEs to provide young people with work experience appeared quite promising, in the light of the fact that the relevant legislation, the Act regarding employment and counteraction of unemployment, provides for a number of useful instruments in this area. These include:

  • remuneration refunds for school leavers. For a 12-month period, employers are eligible for the reimbursement of the wages paid out to a newly employed school leaver and of the obligatory social insurance contributions made on their behalf;
  • 'internships'. This scheme allows the county employment office to draw up with an employer a contract, on the basis of which a school leaver is taken on for a 12-month internship, receiving from the employment office a grant whose value is equivalent to that of unemployment benefit;
  • social benefit/community service work. A local administration official (starosta) may assign school leavers to stints of up to six months’ duration at social benefit institutions and at culture, education, tourism, healthcare, and social care institutions, to perform work not necessarily corresponding to the young person's training. The employers are eligible for partial reimbursements of wages and of social insurance contributions paid to and for the school leavers;
  • loans for the creation of new jobs for unemployed persons referred by the county employment office. Under this scheme, the maximum loan to the employer per workplace amounts to 20 times the average wage, with an interest rate of 50% of the variable annual interest rate for lien loans or, in areas threatened with particularly high structural unemployment, 30% of that rate; and
  • special programmes. These are measures pursued by the county employment offices in collaboration with other institutions, geared at the employment of people from risk groups and of those who, given the profile of their qualifications and the situation prevailing in the local job market, are threatened by long-term unemployment.

Self-employment

The government concluded that, in order to stimulate interest in self-employment among recent school leavers, measures should be pursued along three lines:

  • reducing 'red tape' in the area of establishing new businesses and the associated costs, through legal solutions put in place by an 'Entrepreneurship First' legislative package;
  • introducing a large-scale programme offering inexpensive loans, credit assurances, interest subsidies and professional advisory services. Individual county employment offices extend loans for the starting up of independent business activity at interest rates identical to those applied for loans to SMEs - see above - with the possibility of partial debt write-off and the reimbursement of up to 80% of training and consultancy expenses over the first year of activity; and
  • temporary suspension of the payment of the retirement and pension component of obligatory social insurance contributions for graduates opening their own businesses. Under the terms of the Act regarding facilitation of employment, school-leavers may, within 12 months of the commencement of business activity, obtain from the Labour Fund (Fundusz Pracy) (PL0212106F) subsidies towards the accident and pension components of their social insurance contributions. From the outset, however, there was a presumption that the possibilities for subsidising business activity in this way are limited.

Education

It was believed that improvements in educational provision would help support the competitive position of young people entering the labour market, providing them with better skills. Measures towards this end were to be pursued in three distinct areas:

  • overhaul of the educational system through modifying teaching methods so as to foster innovation and independence, and adjusting the curriculum so as to combine general instruction with area-specific programmes in order to provide students with theoretical knowledge about entrepreneurship along with practical abilities, developed through vocational training carried on in collaboration with businesses;
  • continuing education, understood as enabling school leavers to continue learning thanks to training programmes organised by labour offices and financial assistance extended to residents of areas threatened by high structural unemployment to enable them to pursue training; and
  • activation activities within schools themselves, pursued through the establishment of careers offices which provide students with advice in planning their careers and promote school leavers in the labour market. Activities of this sort are to benefit from state support in the form of grants awarded by the Ministry of Labour and Social Policy.

Voluntary work

The voluntary work component of the programme is intended to provide those school leavers who have not been able to find jobs with unpaid practical experience in some line of work. An obstacle in this regard was posed by the absence of legal provisions regulating voluntary work, and the government thus proceeded to draft a statute concerning 'public benefit' and voluntary work, specifying in the process the institutions which would benefit from unpaid work, namely non-governmental organisations (NGOs) and public administration bodies. NGOs may - although they are under no duty to do so - cover the expenses associated with a volunteer’s work - eg the necessary medical examinations, accident insurance, or travel costs. Public administration bodies, though, are obliged to cover expenses for these items. As far as the public administration is concerned, voluntary work may apply, in particular, to social aid, the labour market, healthcare, the judiciary, culture, sports and tourism, and education.

Information, vocational guidance and employment services

The goal of the information, vocational counselling, and labour market intermediation component is the establishment of an effective information network based on the Information and Career Planning Centres (Centra Informacji i Planowania Kariery Zawodowej) affiliated with the District Employment Offices (Wojewódzkie Urzędy Pracy). These centres should provide school leavers with knowledge about the labour market and with practical training in job-hunting skills. Areas at risk of structural unemployment will also have Commune Information Centres (Gminne Centra Informacji) which monitor local labour markets. By the end of the pilot stage - ie at the end of 2002 - 200 such entities will have been opened.

The programme's implementation

The intentions of the government, as expressed in its formulation of the 'First Job' programme, were ambitious, particularly considering the scale of the problem to be addressed. Needless to say, the biggest question mark was posed by the programme’s funding. Overall, approximately PLN 1 billion was earmarked for the launch of the 'First Job' programme, to be obtained from: the Labour Fund; World Bank and EU (PHARE programme) aid; the reserves established by some of the state’s revenues from the privatisation programme; loans from the Council of Europe Development Bank; and local government bodies at the communal, county, and district levels. The idea was that these funds were to be disbursed on a gradual basis, though actual availability and the attendant time-frames had not been definitively confirmed. Furthermore, some of the solutions provided for under the programme met with criticism on the part of independent experts; these took an especially sceptical view of the programme's strand dealing with SMEs and of the temporary funding of school leavers’ internship remuneration (for the reason that, upon the conclusion of the internship, a less scrupulous employer could let the school leaver go and retain a new intern, again claiming a state subsidy). The Ministry of Labour implemented a systematic monitoring regime for the programme, intending to evaluate its execution on a continuous basis.

During the first five months of the 'First Job' programme's operation, only 227,000 graduates, half the expected figure, presented themselves at the employment offices to register as unemployed. Of that number, 63,000 people (roughly a quarter) took advantage of one of the programme’s proposals - see table 1 below. A notable feature was the great popularity of the subsidised internships programme as well as the manifestly low interest among school leavers in commencing business activity on their own account, suggesting that the self-employment strand should be reconsidered. Furthermore, delays in the introduction of the various programme components have resulted in limited response as of yet, although the authorities expect the situation to improve in 2003.

Table 1. Take-up of First Job schemes by young people, first five months of operation
Instrument No. of participants
Internships for school leavers 36,838
Reimbursements for employers of school leavers 13,409
Loans for commencement of business activity 173
Training 7,253
Training loans 17
Loans for creation of additional jobs 84
Intervention projects 1,756
Public works 566
Social benefit work 775
Social insurance contribution refunds 9
Special programmes 436
Participation in PHARE and World Bank programmes 1,311
Measures under legislative Act regarding facilitation of graduate employment 78
Total 62,705

Source: Ministry of Labour and Social Policy, 2002.

As far as the financing of the programme is concerned, the only element which still has to be set in motion are the funds from privatisation; these could not have been tapped into given the lack of the appropriate legislation. As for the other elements, they have been operating at a satisfactory level - see table 2 below - and the involvement of the Agricultural Proper Agency (Agencja Nieruchomości Rolnych, ANR) in vocational activation projects for residents of small towns and rural areas has been particularly noteworthy.

Table 2. Financing of the First Job programme
Source of funding Envisaged total amount (PLN million) Already disbursed after five months Amount to be disbursed by end of 2002
Labour Fund 560 558 2
Grant from the national budget for infrastructure investments pursued as public works in communities threatened by particularly high structural unemployment 30 30 -
Foreign aid PHARE and PAOW projects 6 6 -
Funds provided by the Agricultural Ownership Agency of the State Treasury 199 199 -
Funds from the property restitution reserve and from privatisation reserves made available by the Ministry of the State Treasury 209 - 209
Total 1,004 793 211

Source: Ministry of Labour and Social Policy, 2002.

An interesting development was the distribution, in June 2002, of a textbook entitled The school leaver’s kit, a guide to the job market for school leavers. August 2002, meanwhile, saw the launching - as of yet, on a pilot basis - of the 'My first company' programme which promotes, in collaboration with a group of information technology businesses, telephone work in four counties afflicted by particularly high unemployment.

Commentary

In light of the achievements of the 'First Job' programme to date, the wave of criticism which it attracted during the first stage of its operation is shown to have been exaggerated. Following some initial difficulties in harmonising the individual elements of the programme, it seems that, near the end of 2002, the programme is functioning in an ever-smoother way. By the same token, the fears concerning its financing have turned out to be largely unfounded, although the funds pledged from the privatisation reserves remain inaccessible due to lack of the appropriate legislative grounds. Overall legislative slackness, it might be added, remains one of the programme’s principal weaknesses; there is still no statute which regulates voluntary work. Apart from that, it appears that some of the solutions adopted within the 'First Job' programme are at variance with social expectations; the poor response among young people whom the programme, as it was hoped, would encourage to establish their own businesses must be regarded as a failure. (Jan Czarzasty, Warsaw School of Economy (Szkoła Główna Handlowa, SGH) and Institute of Public Affairs (Instytut Spraw Publicznych, ISP)).

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