Ministry of Labour and Human Resources

Labour Ministry discontinues Nu 751 mn Direct Employment Scheme of former govt

GNHC evaluation found program to be 77 percent effective and recommended its continuation but funding was an issue

Minister says govt will come up with a YELP program but it will not be a direct employment program

The biggest youth employment scheme of the former PDP government, the Direct Employment Scheme (DES), has been discontinued by the Ministry of Labour and Human Resources (MoLHR).

The scheme was already on hold from around March 2019 pending a GNHC review, but it was expected that the scheme would continue once the new financial year starts from July 2019.

At least, that is what many private companies who were waiting for the scheme to restart with the budgetary year, thought.

The Labour Minister Lyonpo Ugyen Dorji said, “The DES has been discontinued from its previous form and a new scheme called Youth Engagement for Livelihood Program or YELP will be coming in the next few months.”

The minister said that YELP will no longer be a direct employment scheme.

A key difference with the YELP scheme is that unlike in the DES scheme where the program met around 60 percent or more of the salary commitment for a year -YELP will mostly meet only around 30 percent of the pay.

DES even met the full salary commitment for up to two years in the case of SOEs and DHI companies.

However, in certain priority areas the government’s contribution in YELP will be more than 30 percent and will go up 50 percent and in certain cases to even 70 percent, said the minister.

The minister gave examples of priority sectors like agriculture and construction and mentioned a specific program like the school feeding agriculture program.

The minister said that the DES scheme had undergone an assessment by the GNHC which came out with its findings.

The DES which was one program under the Guaranteed Employment Program (GEP) had an initial budget allocation of Nu 551 mn and employed around 5,136 youths from 2014-2017 youths. It then got an additional budget of Nu 200 mn later in 2017 to continue the program to 2018.

The former government had said that by 2018 a total of 6,433 youths were employed under the DES program.

The DES scheme focused on areas like construction, agriculture, hydropower, tourism, ICT, Health, Education and Training, financial services, arts and crafts, retail and sales, production and manufacturing, automobile, green business, media and entertainment and other areas.

Under the DES schemes graduates would get Nu 7,500 a month from the ministry, class 12 pass outs, TTI graduates and Diploma holders would get Nu 5,250 a month and class 10 and 11 pass outs would get Nu 3,750 a month. The employer was supposed to meet the rest.

In case of fully funded salaries for SOEs the pay for graduates was Nu 15,000 a month, it was Nu 14,000 for TTI graduates and Nu 12,000 for class 12 pass outs.

The evaluation was done to assess the the relevancy, effectiveness, efficiency and sustainability of the program.

The survey collected information from 470 DES participants from the year 2014-2015, as this group of participants had already completed their contract term with the MOLHR and their employer.

Effectiveness

Since one of the objectives of the program was to improve the employability of the participants, the effectiveness of the program was measured by the proportion of participants still employed after the program.

The data showed that 77.02 percent of the participants were still employed after the program.

The report said that the literature and other evaluation of similar programs in countries such as Sweden, Denmark and Australia point out that the net gain from DES is about 20 to 30 percent, and only if targeted and implemented properly.

The report says the effectiveness of the program can roughly be calculated at 77 percent without considering other factors such as deadweight loss, substitution and displacement effect.

Efficiency

Efficiency was assessed in terms of the ease of the process in applying for the program and the time taken to place a participant.

37.66 percent of the respondents reported that it was easy for them to get a job through the DES program, whereas 41.7 percent of the respondents found it was fairly easy. 12.13 percent reported that it was fairly difficult and 8.51 percent of the respondents said it was difficult.

The direct cost of the program per beneficiary was Nu. 89,363 over three years.

About 95.5 percent of the employers rated the efficiency of DES staff as either satisfactory or efficient.

Most of the respondents have also reported through the open ended question that finding a job is relatively easy and that the processes involved were not difficult.

The rating of employers was also sought on the ease of availing employees through DES. As per the survey 86 percent of the employers responded saying that the process involved was very easy and fairly easy.

Respondents were also asked how long it took them to get a job in terms of months. The assessment took three months or less as acceptable amount of time.

48.08 percent of the respondents reported that it took one month or less for them to get a job while, 20.43 percent of the respondents said that it took them more than a month or less than three months.

However, 13.4 percent said it took them three to six months to get a job, and 11.06 percent of the respondents said that it took them more than six months to one year. 7.02 percent of the respondents said that it took them more than a year to find a job through DES.

It was found that there is lack of human resources in terms of number and capacity to provide services efficiently. The need was especially felt in terms of monitoring the program implementation.

Relevancy

The program was found to be relevant to the national development objectives. It was formulated and implemented to achieve the National Key Result Areas, “Full Employment”, in the 11th FYP (2013-2018).

Youth unemployment was also an emerging issue with youth unemployment rate of 9.6 percent in 2013.

The program led to the employment of more than 5,000 youth from 2014-17.

Sustainability

Sustainability of the program was looked at from two aspects. One is the financial sustainability of the program in terms of the ability of the government to keep providing the wage subsidy in the future.

The second is the ability of the employers to continue employing the participants after the end of the subsidy period.

The report says that the total budget allocated for DES in total was Nu 751 million and the continuity of the program is uncertain.

The current program was funded with support from the Government of India.

It says no strategies are in place on how to financially sustain the program in the event no funds are forthcoming from the government or development partners. It says that to date there are no commitments on support to the program in the future.

To measure the employers’ ability to continue employing the participants after the end of the subsidy around 58 percent of the employers reported that they would have hired inexperienced youths even if DES did not exist.

Regional officials reported that the current wage levels inclusive of subsidies cannot be sustained in the future as this may disrupt the existing wage levels in the companies once the subsidies are removed.

Issues

40 percent of those who benefited from the program were outside the initial target group of those between 18-24.

It says that a cause of concern that arose from the assessment was, out of the 23 percent or 108 participants currently not working, 72 percent are female and only 28 percent are male. Further, most of those who are currently not working are with education level of either class X or Class XII pass. These are the most vulnerable who are not working.

The survey found 32 percent of the participants were already employed while availing DES. The survey also found out that about 23 percent of the employers witnessed misuse of the program by other employers and youths.

It was reported during the in-depth interviews that in some cases the employers would convert or employ their existing staff through DES for the financial benefits. In some cases, the employers recruited their relatives or someone they knew.

The MoLHR does not have a systematic process to properly verify the background of the participants if they are already employed or not.

The problem was exacerbated by the lack of job takers especially in the south and eastern region where the regional offices are required to recruit predetermined number of participants as a part of their contribution to the Annual Performance Targets.

Other achievements

The program was gender balanced as there was there was an almost equal number of males and females.

The beneficiaries by qualification were 20 masters, 900 general graduates, 622 technical graduates (TTI), 2,216 class 12 pass outs and 1,378 class 10 pass outs.

This report says this shows that the program has benefitted youths who have lower qualification levels and may face more vulnerabilities in the future.

58.51 percent of the respondents live on their own, while the rest of the respondents are dependent on parents, relatives and friends.

According to the report, this could be taken as indication of a majority of participants becoming independent after graduating from the program.

The survey revealed that on an average 90 percent of all the participants earn more than the minimum allowance set for their qualification levels.

The assessment showed that 70 percent of the participants reported that their job responsibility either matches very well or partly matches with what they were recruited for, while 30 percent of the participants said that it did not match at all.

About 84 percent of the employers reported that participants have contributed to the company’s output, and about 89 percent reported that the program has met their human resource requirement.

About 95 percent of the participants reported acquiring certain skills in areas such as communication, managing business, and technical skills etc. About 99 percent of the participants gained moderate or adequate work experience

Out of 469 participants who responded to the question, 390 participants (83%) reported that they are proud of their work while 79 participants (17 percent) said they were not proud of their work.

Only 4 percent (18 participants) said that employers were disrespectful towards them, and 96 percent said they were treated respectfully.

Some more learnings

Around 46 percent of the respondents reported their reason for availing DES was mainly for gaining work experience, followed by 34 percent reporting the reason to be the need to support family and then 19 percent enrolled in DES to earn an income.

Questions were also asked to ascertain what employee traits mattered most for extending contracts. 53.33 percent of the employer hard work mattered. While ‘willingness to work’ and ‘good attitude’ also mattered highly for some other employers. ‘Right education background’ notably scored the lowest with only 3.7 percent.

From the 77.2 percent who are currently employed, half are employed in their jobs that they were placed in initially under the program, and the other half are employed in different jobs. The report says it must also be noted some participants left their initial jobs for better prospects elsewhere.

As per the assessment 94.04 percent of the respondents reported receiving allowance on time from the MoLHR, while 74.25 percent of the respondents reported receiving allowances on time from the employers’ share.

Recommendations

The GNHC has recommended that the DES program be continued as there are insufficient programs to address youth unemployment.

It says that while the cost of the program is substantial, the various benefits which cannot be monetized, such as productively engaging the youth, their contribution to the economy while undergoing the program, and the prevention of social issues provides a good case to continue the program.

It says a wage subsidy is also a better alternative to welfare transfers.

GNHC recommends the creation of a trust fund for youth employment.

It says the share of government subsidy provided by MoLHR needs to be revised (reduced) based on the sector or region as there are less job takers in the eastern and central region.

It says there are potential for efficiency gains by exploring synergies between the DES programs and other youth employment programs like land Use Certification, Priority Sector Lending etc.

The review says the effectiveness of the program in the future could be enhanced by having a clear results and monitoring and evaluation framework, recruiting adequate staff and allocating adequate budget for program management and preventing those already employed from registering in the program.

It says MoLHR could explore the use of tax information to identify those who are already employed.

The review recommends participating enterprises to have structured training programs for the new employees.

It says the program could also be designed to supply labour to sectors that have a critical shortage of labour by providing higher wages for sectors or regions that are a priority in terms of labor shortage.

It is also recommended that the program be expanded to youth who do not meet the minimum qualification levels as they may be more vulnerable.

The review recommends a tracer system to be developed to keep track of all beneficiaries of the program for future evaluation purposes.

The review says that since the program seems to benefit start-ups more, the program could be limited to start ups or enterprises that have only been a few years in operation or are not doing well financially or are small or micro enterprises. It says, different wage subsidies could be provided depending on the financial performance of the companies.

The evaluation was carried out by a joint evaluation team constituting officials from MoLHR and GNHC.

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