Request for Applications by Democracy International: Support to the RA Ministry of Labour and Social Affairs for the comprehensive and effective implementation of the pilot program on the resultbased public financing of active labour market policies

Date of RFA Issue 2023

Deadline for Applications 12th of July 2023 @ 18:00pm (Yerevan Local Time)

Subcontract Purpose To support the Ministry of Labor and Social Affairs (MLSA) and the Government of Armenia in researching and preparing a design for MLSA to set up a pilot program on the result-based public financing of Active Labor Market Policy, to support MLSA in the program’s successful implementation, and to assess the effectiveness of the proposed mechanism, its risks and opportunities, strengths, and weaknesses.

Anticipated Subcontract Type Firm Fixed Price (FFP)

Attachments 1. Subcontract Application Form 2. Budget Template (Summary, Details, and Notes)

 

 

1. Background

 

The multi-year Protection, Inclusion, and Empowerment Activity in Armenia is implemented by Democracy International (DI) and funded by the United States Agency for International Development (USAID). The goal of the Activity is to improve the lives of disadvantaged and marginalized populations through needed legal-regulatory framework changes, improved services, and intensified cooperation between the government and non-governmental actors to address the needs of vulnerable and marginalized groups. Human capital development is a critical component of economic growth and development in Armenia. With a decreasing and ageing population, productivity is becoming not only a critical component of the Armenian economy, but also a major driver of growth. A vibrant labor market, with an improving level of productivity, will increase the competitiveness of Armenian economy on a global scale, boosting exports and foreign investments, improve living standards increasing consumer spending, enable innovation and technological progress creating new opportunities, and as a result ensure the efficient use of resources. Human capital development is key to increasing productivity as it involves active investing in development of professional knowledge and skills that may enable adoption of new technologies and adaptation to market trends, but also encourage innovative solutions to existing challenges. In that regard, human capital development is the touchstone of the government’s draft Employment Strategy and existing Active Labor Market Policies that aim to address structural unemployment, labor market gaps, and employment and labor resource issues. Armenia still faces significant challenges in creating employment opportunities and ensuring the skills and knowledge of its workforce are up-to-date and relevant to the needs of the economy. That is why investing in human capital can help unlock the full potential of the workforce, leading to increased competitiveness, economic growth, and improved standards of living. ALMPs play a key role in creating an effective link between supply and demand in the labor market. ALMPs involve government interventions aimed at improving the functioning of the labor market by increasing employment opportunities and/or the employability of workers. The primary objective of ALMPs is to reduce unemployment and improve the skills of workers by implementing effective result-oriented mechanisms of professional non-formal short-term education, providing wage subsidies, organizing job search assistance, promoting entrepreneurship and creating public work opportunities. During the last years, the Armenian government has implemented a range of Active Labor Market Policies to address the challenges of unemployment and promote inclusive economic growth. However, according to the World Bank, ALMPs in Armenia still face serious challenges, among which are:

• Low public spending and limited coverage,

• Misalignment between funding and type of programs and jobseeker groups,

• Majority funding going to rural self-employment compared to majority of those who would benefit from MPs, that is, the urban unemployed

• Inadequate monitoring of ALMPs for results measurement.

The issue of results monitoring is fundamental and is especially addressed in the developing Employment Strategy for the Ministry of Labor and Social Affairs of the Republic of Armenia. The strategy is a comprehensive document responding to the most significant labor market challenges, above all, the reduction of structural unemployment. The strategy is based on a deep policy effectiveness study, labor force profiling, analysis of labor market trends, policy mapping and the study of international best practices in employment strategies/policies. In that framework, the strategy pays special attention to the formation of results-based public financing mechanisms to ensure the effective implementation and delivery of ALMPs. Such a performance-based funding model links the funding of public programs to the achievement of predetermined specific results and outcomes. For ALMPs, getting a job by the beneficiaries as a result of participation in the program may be considered as the major outcome, though there may be a number of lesser ones, including moving target beneficiaries from “formal labor force deficient” to “formal labor force ready”. Adoption of these mechanisms seeks to promote accountability, transparency, and efficiency in the implementation of ALMPs. In developing an effective approach to ALMP implementation, it is important to conduct a pilot project that will allow working out in practice the proposed results-based financing mechanisms with the active involvement of various stakeholders, vendors, and end beneficiaries. The practical implementation of the mechanisms under the pilot program will significantly increase the effectiveness of the implementation of the new approach by assessing the real risks and gaps, as well as making appropriate additions and changes. 

 

 

2. Subcontract Results and Activities

 

The specific objective of the assignment is to support the Ministry of Labor and Social Affairs and the Government of Armenia in researching and preparing a design for MLSA to test ALMP, and the Ministry in the implementation of a pilot program on the result-based public financing of Active Labor Market Policies. The technical assistance will also monitor at regular intervals and evaluate upon pilot completion the effectiveness of the proposed mechanism, its risks and opportunities, strengths, and weaknesses. The overall objective of the pilot project will be to ensure efficient and coordinated implementation of Active Labor Market Policies with result-based public financing mechanisms, which will enable the development of practices and mechanisms taking into account field-tested realities, as well as to introduce them in further policy making, including within the framework of 2023-2030 Employment Strategy of Armenia. The result of the project implementation will be a comprehensive assessment of the approach and mechanisms of ALMPs result-based public financing for its more effective further implementation in the framework of the Government’s Employment Strategy. The pilot program will cover the following target groups, which appear to be the most vulnerable in terms of employment issues, and which are targeted by the government’s draft Employment Strategy, that is:

- Beneficiaries of family and social benefits who have no limitations to work;

- Not in Education, Employment or Training (hereinafter: NEET) (aged 18-29);

- Unemployed middle-aged women (aged 30-40).

These target groups are fully consistent with the target groups included in the current draft Employment Strategy and the strategic priorities of the new state policy in the field of employment. It should be noted that based on the MLSA analysis, these target groups represent the most vulnerable in terms of employment, covering a significant share of the underutilization of the country's labor force, and require significant attention of state policy. The distribution of this target groups proportions is following: - Beneficiaries of family and social benefits who have no limitations to work (42.4 th. beneficiaries); - NEET (aged 18-29) (88.6 th. beneficiaries); - Unemployed middle-aged women (aged 30-40) (59.6 th. beneficiaries).

 

The complete announcement and further information on submission process is available here