This ETF assessment was prepared in 2019 on behalf of the national authorities in Moldova with the help of a standardised framework questionnaire for national reporting (National Reporting Framework – NRF). The assessment summarises the main challenges for the development and use of human capital in the country and discusses how education, in particular VET, and labour market policies can contribute to their resolution.

This ETF assessment comes at an important time, as the country prepares for the next Eastern Partnership (EaP) multiannual programme. Launched in 2009 as a joint policy initiative, EaP aims to deepen and strengthen relations between the EU, its Member States and its six eastern neighbours: Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. In May 2020 all six EaP countries and the EU will launch the third phase of the initiative and agree on an ambitious new work plan, revising the 20 Deliverables for 2020. It will aim to bring tangible benefits to the lives of citizens across the region. In this context, cooperation between the EU and its six eastern partner countries will focus on working towards stronger economies, stronger governance, stronger connectivity and stronger societies.

The assessment process included an extensive phase of desk research on the basis of responses to the NRF, and the preparation of an issues paper with an overview of themes to be discussed in the current report, which were then finalised in consultation with the country and thematic teams responsible for Moldova at the ETF. An advanced draft of the ETF assessment was circulated to national stakeholders and international partners and was discussed at a consultation meeting in Chisinau on 5 November 2019 to verify the findings and recommendations.

Like other ETF assessments, this paper is not intended to be exhaustive. The national Torino Process report for Moldova covers a broad range of problems around human capital development and use, while the focus here is on challenges that the ETF recommends should be addressed as a matter of priority.

Moldova is a lower-middle income country in Eastern Europe that is bordered by Romania to the west and south-west and Ukraine to the north, south and east. In 2018 its population was estimated at 3.5 million, although other calculations that take into consideration the effect of emigration put that number at 2.7 million[5] Data from the ETF database and the database of the National Bureau of Statistics.
. Emigration rates are comparatively high, with an estimated annual average outflow of 3 300 people and a total of 25% of the population living abroad at the time of this ETF assessment[6] NRF A.1.1.
. In 2017 remittances accounted for about a fifth of national gross domestic product (GDP). The effects of emigration are further reinforced by demographic ageing and low birth rates.

Moldova is a parliamentary republic with a president as head of state and a prime minister as head of government. The country is member of the United Nations, the Council of Europe, Partnership for Peace, the World Trade Organisation, and other international organisations. According to its national report, it aspires to join the EU, and in 2014 the country signed an EU Association Agreement.

Table 1. Selected country context indicators

Source: ETF database.

Moldova's economy is largely service-oriented, though agriculture and manufacturing industries still contribute over a third of its GDP (2018). The main economic activities are manufacturing (food products make up 37%), trade, agriculture, construction, transportation, ICT and services. The capital, Chisinau, generates more than half of national GDP, while the majority of the population (66%) lives in rural areas. Disparities in economic development between urban and rural areas and between regions are common and considerable[7] NRF A.1.1.
. Although the economy has grown by 4.3% and GDP per capita by 17% since 2015[8] Calculated based on data in current USD adjusted for purchasing power parity. Source: ETF database.
, the level of rural poverty is four times higher than in urban areas and the gap between urban and rural income doubled between 2010 and 2015 (UNDP, 2017).

At the time of this assessment, the policy activities in all public sectors in Moldova were guided by the NDS 2020. The NDS was adopted in 2012 and aligned with the EU financial cycle 2014–2020 for the technical purpose of benefiting from EU support, and the strategic goal of 'changing the paradigm of economic development' from a model of growth that relies on remittances and consumption to one that is built on attracting investment and developing export-oriented industries[9] NDS 2020, p.5ff.
.

To that end, the strategy defines eight priorities to address the most pressing problems. The first concerns the development of human capital in terms of aligning the education system to the requirements of the labour market to enhance labour productivity and increase employment. The strategic purpose is to remove all human-capital-related constraints on economic growth, constraints that emerge when the education and training system fails to meet the requirements of the labour market and the potential of the labour force is not fully explored and mobilised (Lupusor et al., 2017).

Following the approval of the NDS, the Ministry of Education followed up at sector level and developed two comprehensive documents that set the policy priorities and actions in support of the NDS in the area of education and training. These are the Strategy for the Development of Technical Vocational Education 2013–2020, and the Education Development Strategy 2014–2020, Education 2020. In 2014 Moldova also adopted a new Education Code to create the regulatory basis for the reforms to come.

In the area of VET, the medium- and long-term objectives include restructuring and optimising the VET system, increasing the relevance of VET provision, establishing a national quality assurance agency, enhancing the efficiency and quality of VET, making VET more attractive and affordable, and providing quality-assured qualifications and tools for the recognition of diplomas and the validation of non-formal and informal learning to support mobility in Europe[10] Strategy for the Development of Technical Vocational Education 2013–2020 (Government Decision No. 97 of 1 February 2013) and NRF A.2.4.
.

Initially, the implementation of the NDS was supplemented by annual action plans which also included education and training, but their significance has diminished since the full ratification of the Association Agreement between the EU and Moldova in 2016, which came with its own National Action Plan for implementation. Currently the two strategic frameworks coexist side by side and the next iteration of the NDS – Moldova 2030 – embeds the agenda for 2030 and the EU Association Agenda in one set of goals for the development of a sustainable and inclusive economy that offers decent working conditions, decent income, and low levels of economic inequality and informal employment[11] NRF A.2.4.
.