World Bank approves $24 million grant to improve social protection for Maldivian workers
The World Bank’s Board of Directors today approved a $24 million grant to improve social protection coverage and employability of Maldivian workers by providing shock insurance and employment support.
Despite its strong economic growth, the Maldives has a high rate of youth unemployment (5.3% in 2019), with most of them living in the atolls. The participation rate of women in the labor market is also low, at 46%. Employers such as resort operators are also struggling to find qualified locals for well-paying jobs. Safety nets for employees are limited to pensions. As young Maldivians increasingly turn to casual and self-employment, it will also be difficult to ensure they are able to save for their retirement and weather any income shocks.
“The COVID-19 pandemic is expected to have increased the number of Maldivians out of work, and many will need help re-entering the labor market,” Faris said. H. Hadad-Zervos, World Bank Country Director for the Maldives, Nepal and Sri Lanka. “As the economy recovers, our assistance will increase access to economic opportunities by supporting employment in critical sectors such as tourism and renewable energy. It will also improve the delivery of social services on the islands.”
The new Sustainable and Integrated Labor Services (SAILS) project will help the government establish an unemployment insurance scheme and an employment services scheme. Employers and employees will jointly contribute to a fund managed by the Maldives Pension Administration Bureau which will pay unemployment benefits. Informal and self-employed workers will also have the ability to save and access their funds for events such as economic and climate-related shocks. The existing Job Centre, which will be expanded with five regional centres, will provide counselling, job search assistance, targeted training and support to help job seekers find suitable jobs. Women seeking employment will be encouraged to join programs that promote women’s economic empowerment.
“The COVID-19 pandemic has affected many workers, especially the self-employed, freelancers and contractors. Government assistance cushioned the blow, but large numbers of workers were still placed on unpaid leave or laid off. “, said Thomas Walker, senior economist. , and work team leader. “Establishing a contributory social insurance program will reduce the fiscal burden from future macroeconomic and climate-related shocks, and improve the country’s resilience to future shocks.”
The SAILS project will be jointly implemented by the Ministry of Economic Development and the Maldives Pension Administration Office. Total funding is $24 million, fully covered by a grant from the International Development Association (IDA), the World Bank’s concessional lending window for developing countries.