What works in youth employment?

Youth employment has been high on the agenda of the Montenegrin Government. For 10 years, the Government has invested up to 8 Mio EUR per year for a large internship programme for university graduates. 9 out of 10 youth graduating each year from the universities of the small Adriatic country participated in the programme. At the request of the Government the ILO helped to assess the impact of the programme and found out that there have been no direct gains from participating in the programme in terms of employment or wages.

The Professional Training for Graduates (PTG) programme has been operating for almost 10 years. The objective of PTG is to provide university graduates with some first working experience hoping that it would facilitate a smooth school to work transition reducing the high unemployment and inactivity among young graduates. The programme offers a paid internship in the public or private sector for a duration of 9 months. The interns are entitled to monthly financial compensation equal to 50 per cent of the average net wage of the country, financed by the state budget. No taxes or social security contributions are payable, but the intern is covered by the health insurance.



3,000 young people enrol in the PTG every year comprising 90 per cent of all new graduates. The high enrolment numbers make the program the most expensive active labour market policy of Montenegro. The yearly cost of the programme is amost 8 Mio EUR which is 0.2 to 0.3 per cent of the country’s GDP.



The impact assessment looked at the employment history of PTG participants during the first three years after completing the internship programme as well as wages earned in the same period. In order to establish the counterfactual (what would have happened to beneficiaries in the absence of the intervention), the study used different quasi experimental approaches simulating a control group of young graduates that did not participate in the program. The key result of the study is that there are no direct gains from the PTG programme in terms of main labour market outcomes.



Despite these sobering results, PTG participants show high levels of satisfaction with the programme in a complementary perception survey and consider it useful for their professional advancement. The possible explanation is that the internship provides a relatively high income support, as well as a a sense of security and societal attention important for young people at the sensitive start of their working careers in a challenging labour market.



The key recommendation of the impact assessment is to terminate the PTG programme in its current form as the high cost can not be justified by the limited benefits. A more targeted intervention for young graduates is needed based on a tailor made package of mentoring, counselling, and training instead of extending the same programme to every young university graduate. Including the graduates in the Youth Guarantee  Schemes currently being prepared by the European Commission and the ILO in all Western Balkan economies might be a more effective solution.



Read the report here . The impact assessment was supported by the UK Government, through the Good Governance Fund.