WASHINGTON, May 27, 2022¡ªÄ¾¹ÏÓ°Ôº¡¯s Board of Executive Directors today approved a $24 million grant to improve social protection coverage and employability of Maldivian workers by providing insurance against shocks and employment support.
Despite its strong economic growth, Maldives has a high rate of youth unemployment (5.3 percent in 2019), with most of them living in the atolls. The female labor force participation rate is also low, at 46 percent. Employers such as resort operators also find it challenging to find skilled locals for high-paying jobs. Safety nets for employees are limited to pensions. As Maldivian youth increasingly turn to casual and self-employment, ensuring that they are able to save for retirement and to cope with potential income shocks will also be challenging.
¡°The COVID-19 pandemic is expected to have increased the number of Maldivians out of work, and many will need help to re-enter the workforce,¡± said Faris. H. Hadad-Zervos, the World Bank Country Director for Maldives, Nepal and Sri Lanka. ¡°As the economy recovers, our assistance will increase acce1ss to economic opportunities by promoting employment in critical sectors such as tourism and renewable energy. It will also enhance social service delivery in the islands.¡±
The new project will support the Government in establishing an unemployment insurance scheme and an employment services scheme. Employers and employees will contribute jointly to a fund managed by the Maldives Pension Administration Office that will pay unemployment benefits. Informal and self-employed workers will also have the opportunity to save and access their funds for events like economic and climate-related shocks. The existing Job Centre, which will be expanded with five regional hubs, will provide counseling, job search assistance, targeted training and coaching to assist jobseekers to find suitable jobs. Female jobseekers will be encouraged to join programs promoting women¡¯s economic empowerment.
¡°The COVID-19 pandemic impacted many workers, especially the self-employed, freelancers and contractors. Government assistance softened the blow, but a large number of workers were still put on no-pay leave or dismissed," said Thomas Walker, Senior Economist and Task Team Leader. ¡°Establishing a contributory social insurance program will lessen the fiscal burden of 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. The total financing is $24 million, which is fully covered under a grant from the International Development Association (IDA), the World Bank¡¯s concessional credit window for developing countries.
