A policy agenda for the sustainable growth of platform work in the Western Balkans
On average 20% of young people are not in employment, education or training (NEET) in the countries of the Western Balkans. The school-to-job transition is particularly thorny. Counterintuitively, and in contrast with the European Union, NEET rates rise as people attain higher educational levels in some countries, as presented by Amira Ramhorst, Team Leader, Regional Cooperation Council (RCC), at a recent ETF event on 7 June 2022 based on a study of youth unemployment in the Western Balkans completed last year.
Watch an overview of the event on the ETF's Youtube channel and continue reading for highlights of the event and the ETF's forthcoming report and summary: Flexibilisation of the Labour Markets in the Western Balkan countries.
Employers in the region complain of skills mismatches, blaming what they call flawed education systems that fail to provide workplace-relevant skills, especially for “non-routine” tasks, typically managerial, professional and high-level technological jobs.
Western Balkan policymakers are responding by overhauling vocational education and training (VET) systems, notably through curriculum reform and working more closely with the private sector. As part of this drive, governments of the region agreed last year to introduce a Youth Guarantee Scheme to address the NEET problem. A partnership with the EU, it focuses on digital, green, language, entrepreneurial and career management skills.
Labour market volatility
In parallel, labour markets are shaken by social, economic and technological changes. They are becoming more flexible. This translates into growth in novel employment relationships. These differ from “traditional work” in terms of working conditions, content, and regulatory and legal ramifications.
Reflecting global trends, young adults under 35-40 have flocked to online platforms in the Western Balkans. Platforms act as intermediaries between freelancers and clients or customers. This kind of work can offer new opportunities, flexibility, higher than average incomes, and reduce brain drain. The flexibility helps people juggle professional and family obligations and other pursuits. They are particularly attractive to students and family caregivers.
Yet they also present risks not yet adequately addressed by public policy. Few of these relationships are covered by existing regulations. They can raise questions about working conditions, social benefits, job stability and more. Some new forms of work, especially those associated with digitalisation, are not tracked by official statistics.
To better understand the platform phenomenon and its policy implications, especially in light of the Youth Guarantee effort, the European Commission called for support from the ETF, which compiled its report, 'Flexibilisation of the Labour Markets in the Western Balkan', to address the needs of young people not in employment, education or training (NEET) in the region. It explored these new forms of employment, including platform work, and the implications for youth employment policies and skills development in the six countries of the Western Balkans: Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia.
Platform worker profile
Platform work exists in mostly two forms: remote work, performed online; and on-location work, where goods and services are provided in a particular place (e.g., ride hailing or cleaning services).
Western Balkan freelancers have gained prominence on international online platforms. Five nations (all but Kosovo) ranked among the global top 10 for the number of freelancers per 1,000 people in 2018 with a lion's share of the growth taking place in Serbia. Workers from the region often specialise in creative, multimedia and technical services, including software development. Remote workers tend to be urban men between the ages of 25 and 35. They are generally equipped with digital and soft skills, including languages. They often get started as students without prior experience in the traditional economy. The pandemic, with its lockdowns and social distancing, further accentuated this trend. The number of Western Balkan residents on international platforms has increased by more than 3.5 times since 2017.
Western Balkan firms dominate the on-location market, with international competitors held at bay by regulatory restrictions, concerns over potential political instability, and other barriers to entry. The region's 33 leading on-location platforms fall into four main categories: delivery, ride-hailing, domestic services (e.g., plumbing, cleaning, and personal training), and care services (e.g. babysitting and nursing for the elderly). People tend to find this kind of work through social media and digital marketing campaigns.
Policy issues
The ETF study and related event in June 2022 revealed a series of policy issues and ideas that deserve attention. Here are some of the main ones:
Digital infrastructure - Despite growing broadband coverage, the regional average of households with Internet in 2020 lagged behind that of the EU: 82% vs. 91%. Digital skill levels are uneven, with Serbia and Montenegro in the lead. On average, 20% of individuals in the region possessed above average digital skills compared to 25% in the EU in 2019.
Digital and soft skills – Digital skill levels are uneven. On average, 20% of individuals in the region possessed above average digital skills compared to 25% in the EU in 2019. Policymakers should strive to identify and promote key sectors and occupations, notably in areas related to digital skills. Soft skills also deserve attention.
Statistics and information gathering – Policymakers in the Western Balkans should start by trying “to map the labour markets” to better understand who is working through the platforms and discover “the actors who could support the sustainable growth of the platforms,” suggested Anna Banczyk, Deputy Head of Unit “Future of Work, Youth Employment” in the European Commission’s Directorate-General for Employment, Social Affairs and Inclusion, during the online event. A systematic approach to monitoring can promote better skills matching.
Taxes – There are efforts to find ways to bring freelancers, including platform workers, into the tax system. But proposals for specific levies on freelancers were squashed after protests in both Montenegro and Serbia. In 2021, the Serbian government created a working group to examine the regulation of platform work. In some countries, such as North Macedonia, self-employed people cannot legally operate as platform workers. This forces them into informality. A more sensible approach would help individuals and increase tax compliance.
Misclassification – Misclassification occurs when an individual is essentially an employee but is categorised as an independent contractor. This is sometimes done to avoid and reduce taxes and/or social charges. This has become a major issue in the EU, but policymakers in the Western Balkans have been slower to act.
Social Benefits and Labour Rights – Even with greater flexibility, the rights of individual workers must be ensured. This includes social and health benefits.
Digital Nomads – Albania wants to attract location independent professionals to live temporarily in the country. Montenegro is considering following suit. Digital nomads are freelancers, entrepreneurs and even employees of diverse nationalities who work remotely. They tend be relatively young and highly educated. Their presence would help locals “get training much faster than through the traditional education system,” said Klajdi Priska, Policy Officer & Project Coordinator, National Youth Congress of Albania, during the online event.
Interview with Kamil Valica, Chair of European Commission’s task force for Youth Guarantee in Western Balkans
The Youth Guarantee launch in the Western Balkans follows the milestone endorsement of the ‘Western Balkans Declaration on ensuring sustainable ...
The Youth Guarantee launch in the Western Balkans follows the milestone endorsement of the ‘Western Balkans Declaration on ensuring sustainable labour market integration of young people’ at the Brdo EU-Western Balkans Ministerial meeting on employment and social affairs in July 2021.
The Youth Guarantee ensures that all young people under 25 years of age get a good-quality, concrete offer within four months of leaving formal education or becoming unemployed. The offer should be for a job, apprenticeship, traineeship, or continued education and be adapted to each individual's need and situation.
The Youth Guarantee is Flagship number 10 of the EU’s Economic and Investment Plan for the region. The European Commission set up an EU-ILO Technical Assistance Facility with two main partners, the ETF and the ILO. The ETF provides advice and guidance on major components, such as skills development implications of transition from school to work. The ETF is also engaged in the progress monitoring.
Kamil Valica
ETF: Kamil, tell us how you got involved working on the Youth Guarantee in the Western Balkans?
KV: I have been working in the international unit of DG Employment for over four years and have been leading the enlargement team for two years and a half. When the COVID-19 pandemic hit us, we immediately understood it could have a very negative impact on young people in the EU and in the Western Balkans. I remembered the effects of the 2008/9 financial crisis and the sharp increase in youth unemployment. I myself finished my Masters, was looking for a job in that period and saw the difficulties my peers were experiencing. However, compared to 2008/9, we were in a better position, with an EU-wide experience with the Youth Guarantee scheme that had been implemented in EU member States since 2013/14 to help the sustainable integration of young people in the labour market. In autumn 2020, the Youth Guarantee in the EU was actually reinforced through a new Council Recommendation. And we thought beyond the EU of our Western Balkans partners. That is why the European Commission proposed a Youth Guarantee flagship in the Economic and Investment Plan for the Western Balkans. I was happy to be at the birth of this initiative. We then did a lot of work to raise awareness of our partners in the Western Balkans on what Youth Guarantee is. This culminated in the declaration that was endorsed by Ministers and Representatives of Western Balkans in Brdo, in which they committed to establish, implement and enhance Youth Guarantee schemes. At the European Commission, we understood the need to assist our partners from the Western Balkans. That is why we set up a technical assistance facility together with our colleagues from the ILO and the ETF. And we have accompanied the Western Balkans on the way towards drafting their Youth Guarantee Implementation Plans.
ETF: What for you are the key features of the Youth Guarantee?
The Youth Guarantee is a holistic approach to help young people sustainably integrate into the labour market. It encompasses education and early school leaving prevention and gives chances to those facing difficulties through labour market experience or going back to education.
ETF: In your experience, what are the main challenges for the Youth Guarantee?
KV: I think one big challenge is the trust of young people in public institutions and in their ability to help. For example in the Western Balkans, there are a large number of people who are in the situation of not being in employment, education or training (NEET), but they are not registered at the public employment service. It can even be as low as 10% of young people in this category who are registered. There can be many reasons such as family responsibilities, discouragement, health issues, etc., but public institutions still need to demonstrate that they are able to cater for different needs. And for this, their capacity needs to be reinforced.
Some Western Balkans partners, for example, don't have or have only limited second chance education possibilities for young people. For example, in Albania you can study in vocational school only until the age of 21. So, what are young people able to do after this? How can they obtain a qualification if they are older? As part of the work on establishing Youth Guarantee schemes, our Western Balkans partners are mapping such issues and exploring solutions for these gaps and limitations in the system which I believe will soon lead to some regulatory changes and improvements.
ETF: We know that in the Western Balkans, the share of NEETs (those not in education, employment or training) rises with the level of education that they have, is this something the Youth Guarantee will address?
KV: This is a striking figure and the answer is ‘yes’. The pattern of university graduates being most in danger of becoming NEETs cannot be generalized across the region. We know for example that in Albania, secondary education graduates are most likely to become NEETS, and for Kosovo, it is university graduates. We advocate that countries improve their mapping of the skills needs in the labour market, and use this information not only to plan their active labour market policies and their training offer, but also to feed it back into the education system so that it becomes more aligned with labour market needs. We are also advocating for more participation of employers in the provision of vocational education and training. The mismatch that we see can be also linked to the fact that the number of university graduates has really increased very fast over the last years and companies are not able to absorb all the workforce. However, this relates to the demand side of the labour market and with the Youth Guarantee we are working more on the supply side, the human capital part of the equation.
ETF: What are the steps being taken to get young people involved in the Youth Guarantee and, as you mentioned, to register with public employment services and get started on their first traineeship or job?
KV: To attract young people to register, it is important that public employment services in Western Balkans develop capacities to cater for the needs of all young people. If we talk about university graduates, they can be easy targets. They definitely have a level of preparation in technical fields or in humanities or social sciences that can be a basis for finding a job and probably also have very good soft skills, which are now being particularly praised by employers. And maybe these young people don't need intense support but only some assistance to learn to look for a job, how to prepare their CV and how to effectively undergo an interview. Job matching can be a very effective tool for them which is a point that was raised at the recent Youth Guarantee coordinators meeting in June 2022 in Tirana. In the European Union, about 45% of the offers in the Youth Guarantee actually come through job matching. Focusing on university graduates can bring better figures and results but this is not the overriding focus of the Youth Guarantee. The aim is to cater to the needs of all young people right across the economic and social spectrum and to give increased support to those who are most in need and ensure they have tailored offers.
ETF: Are there any key takeaways from the meeting of the Youth Guarantee Coordinators in Tirana that you would like to share?
KV:I think the first highlight was that we need physical meetings. Our Western Balkan colleagues appreciated the physical presence and the meeting was an icebreaker. We saw a lot of informal meetings and contacts exchanged, pertinent questions being asked and valuable contributions being shared. What really stays in my mind, is the progress that has been made in the Western Balkans since last autumn and the resolve with which they are now developing the Youth Guarantee implementation plans. We have already received a draft plan for review.
ETF: How valuable do you find Youth Councils? We see young people are present at meetings but how much are we actually involving them?
KV: We have witnessed a lot of energy coming from young people. They have been involved in all the multi-stakeholder groups that are working on elaborating the implementation plans. During a recent meeting in Brussels, youth organisations from the Western Balkans shared with us that currently they contributed to the development of the plans in addition to their regular work and financed this engagement from their own resources. For the future, they said that would they need capacity building and financial support to contribute to the implementation of Youth Guarantee through outreach within communities, training or other specialised offers.
ETF: Why is the case of North Macedonia frequently referred to when talking about the Youth Guarantee in the Western Balkans?
KV: North Macedonia is a pioneer in the region. They piloted in 2018 and in 2019, they started implementing the Youth Guarantee countrywide. They have been good at involving many stakeholders and they have openly shared all their experience and insights with other countries at the meeting in Tirana. They are inspirational. They have also done well in adopting the monitoring processes that are being done at the EU level. Of course, there are also some things that need to be improved such as evaluation, which needs to be planned for from the outset, and they are now working on this as part of the second National Youth Guarantee implementation plan.
ETF: How else is good practice sharing supported?
KV: I think it is important to explain that all our work with the Western Balkans is based on lessons learnt and good practice that EU Member States have made since 2013. We bring this experience from the EU to the regional meetings with our Western Balkan partners. We also encourage them to ask for support from the EU TAIEX instrument to organise study visits and exchanges to learn from the experience of EU countries.
ETF: For you, what are the next steps professionally?
KV: After many satisfying years working in this field, I will move to a new position representing the European Union at the United Nations in Geneva liaising in particular with the International Labour Organisation and the International Organisation for Migration. My work on the Youth Guarantee in the Western Balkans will always remain very dear to my heart. I believe that together with my team we made a valuable contribution to the initiative and that with the resolve of the Western Balkan partners it will progress further and soon materialize.
Impact investment for skills and societies in the Western Balkans
In March 2022, a new report: Exploration of Impact Investment for Skills Creation: Existing actions, emerging trends, implementation modali...
In March 2022, a new report: Exploration of Impact Investment for Skills Creation: Existing actions, emerging trends, implementation modalities, best practice. A case study with relevance to the Western Balkans regionwas published in the framework of the cooperation between the Joint Research Centre of the European Commission and the ETF, with complementary contributions from both institutions in addition to input from external experts.
Focused on the Western Balkans region, the report examines how impact investment can be used to fill the gap in skills development, by redirecting funding to SMEs and their skills ecosystems. After reviewing how impact investment has already been used for skills development in key European innovation systems, it suggests how it could be applied in the Western Balkans.
The EU's Social Business Initiative of 2011 introduced impact investment to the EU and the trend has been reinforced by the EU's response to the COVID-19 pandemic and the European Green Deal, and by the growing appetite for Environmental, Social and Governance (ESG) investing.
Impact investment is not philanthropy; the fact of generating financial gains is its prerequisite. But it incorporates non-financial objectives too, like sharing value among targeted stakeholders. A new alignment of public and private interests, impact investment's initiatives lie on a spectrum, with exclusively financial returns at one extreme and an exclusive focus on social impact at the other.
The report identifies the lack of relevant skills as a major obstacle to innovation in the Western Balkans, and the absence of initiatives to invest in human capital is exacerbating that situation. SMEs are the backbone of growing economies, so supporting SMEs is the key to ensuring growth, innovation and job creation. But middle-income countries like those in the region need a certain level of human capital to be able to supply the technical, managerial and marketing capacities required to boost production processes in the sector.
So what instruments can be used to help build sustainable skills in the Western Balkans? The report recommends enhancing current financial instruments, such as the Western Balkans Enterprise Development and Innovation Facility. Supported by international donors, the Facility aims to enhance access to finance for SMEs via bank loans at improved conditions, as well as access to targeted equity investment. Expanding the platform's services will help promote inclusive skills creation initiatives in the region, and nurture nascent regional innovation ecosystems.
New instruments also have a role to play in developing an impact investment market to support skills development in the Western Balkans. Among them, the report highlights the InvestEU Fund – with a budgetary envelope of €430 million – and the Economic and Investment Plan for the Western Balkans.
There are three main recommendations:
1. These new instruments can combine existing tools and create new ones, but their effective design and implementation will require political commitment and the broader engagement of the private sector in skills development.
2. Strategic planning and monitoring is required. Measuring the social effects of impact investment will require adapting the approaches currently used by financial institutions. The report recommends using smart specialisation to move SME skills forward, tailoring training to local needs, and designating a dedicated institution for SME skills-building in the region.
3. Specific measures are necessary for SME training. New initiatives for SME funding should leverage equity finance as opposed to debt finance. Intellectual property should be a key consideration for innovative SMEs in their business decisions. And innovation ecosystems –especially when designed as clusters – offer an effective way of meeting the challenges faced by the SME sector.
If these challenges can be tackled successfully, the report concludes that impact investment has a key role to play in reducing the brain drain in the Western Balkans, and supporting the creation of high-value jobs.
To find out more about all these issues be sure to watch the ETF's live interview: Impact investment for skills and societies: a focus on the Western Balkans held on 29 June 2022.
The interview is available on Facebook and all our social media channels.
Guests included:
Nikica Mojsoska-Blazevski, CEO, Macedonia2025.
Aleksandra Kostova, Programme Manager, European Commission, Directorate General for Neighbourhood and Enlargement negotiations.
Elena Andonova, Policy Officer, Innovation and Policy, Joint Research Centre, European Commission.
Siria Taurelli, Senior Human Capital Development Expert, European Training Foundation.
4 facts for digitalisation in the Western Balkans
Western Balkans - Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia
The ETF study, Flexibilization of...
Western Balkans - Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia
The ETF study, Flexibilization of the Labour Markets in the Western Balkan Countries, and related event on 7 June 2022 outlined in this edition of Learning Connects identified the following key issues in the Western Balkans concerning digitalization.
1. Despite growing broadband coverage, the regional average of households with Internet in 2020 lagged behind that of the EU: 82% vs. 91%.
2. On average, 20% of individuals in the region have above average digital skills compared to 25% in the EU in 2019. Digital skill levels are uneven, with Serbia and Montenegro in the lead.
3. Five nations (all but Kosovo) ranked among the global top 10 for the number of freelancers on international online platforms per 1,000 people in 2018.
4. Remote workers tend to be urban men between the ages of 25-35. Workers from the region often specialize in creative, multimedia and technical services, including software development.
PODCAST - Not in education, nor in employment: What's the problem?
The share of young people not in education, training nor in employment, or so called NEETs, is around 10% in the EU, with the highest rates in I...
The share of young people not in education, training nor in employment, or so called NEETs, is around 10% in the EU, with the highest rates in Italy, Greece and Spain, and the lowest rates in the Nordic countries. In the EU Neighbourhood, the share of NEETs varies between 20% and 35%.
Listen to our in-depth discussion with Ummuhan Bardak, ETF expert, in the 18th episode of Skills Factory
What does having too many NEETs actually mean for the economy and society?
What are the reasons behind the decision to stay away from education and employment? How often is it a voluntary decision?
Is there a formula that public authorities could use to increase participation of youth into the education and labour markets?
What's new?
DARYA - A new era for education and training in Central Asia
The EU’s first ever regional project supporting young people in Central Asia, DARYA, through opportunities that foster inclusion and labour market skills was signed on 13 June. The project will be implemented by the European Training Foundation over the next five years (2022– 27).
The aim of the project is to help with the post-COVID recovery in Central Asia by developing the quality and inclusiveness of education, training and employment systems in the region. The project also promotes participatory and inclusive dialogue and cooperation mechanisms in each of the five countries as well as at regional level. The ETF will be working closely with key stakeholders in Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, building a system approach for better skills provision and employability for young people in the short and medium-term at local, regional and cross-country level. More
Marrakech Framework for Action on Adult Learning and Education
The Seventh International Conference on Adult Education (CONFINTEA VII) in Marrakech, 15-17 June 2022, concluded with the signature of the Marrakech Framework for Action on adult learning and education by 142 Member States of UNESCO.
The ETF contributed to the European Commission led workshop on innovation in skills development and its facilitation through the use of innovative tools.Lifelong learning approaches, including adult learning, are critical at a time of rapidly evolving digital technologies and building inclusion at a time when a lack of skills can leave people of all ages marginalised. More
ETF Green Skills 2022 Award Winners
A Croatian-led international project involving primary and secondary schools in Croatia, Armenia and Turkey – the Green Changemakers – was named the winner of the ETF Green Skills Awards on Thursday June 9, 2022.
A Nigerian entrepreneurial recycling and training scheme Operation Skill Them Up and the solar energy initiative of African training network Don Bosco were the runners-up. Find out more
