Youth Employment Programs - Independent Evaluation Group

slightly from 21.6 percent in 2005 to 23 percent in 2009; but the overall youthunemployment rate remained persistently high.In 2008, Turkey, with Bank support, reduced the social security contributionfor employers in order to provide an incentive to hire youth and women.Turkey also lifted hiring quotas to allow flexibility, and financed socialsecurity contributions for employees with disabilities from the governmentbudget. Yet, Turkey’s labor regulations remain among the most rigid amongthe OECD countries, and the new changes do not appear to have had an effecton youth employment. The growth slow-down in 2007, the global economiccrisis in 2008, and an increasing youth labor force participation rate from31 percent in 2006 to 38 percent in 2008, contributed to an increase in theyouth unemployment rate from 19 percent in 2006 to 25 percent in 2009 (formale youth, the rate went from 18.3 to 25.4 percent and for female youth, therate went from 20.6 to 25 percent).The 15 DPOs included in this review did not touch upon minimum wageissues. However, the Bank has offered technical advice on difficult policyreforms such as minimum wages (box F.3).Bank-supported regulatory reforms have contributed to transparency andfinancial sustainability. In Romania, the Bank supported legislation to defineunemployment benefits for adults at 75 percent of the minimum wage, andat 50 percent of the minimum wage for youth. The law brought transparencyBox F.1Union Power and Youth Employment Issues in South AfricaThe International Labor Organization (ILO) estimates the average minimum wage is considerablyhigher in South Africa ($390 in purchasing power parity) than in Mexico ($170) and Brazil($286). The level of unionization is also much higher than average, and the bargaining power ofthe unions is evidenced by higher wage premiums for unionized labor. The unions have successfullybid up the wages of their members to levels that make recruiting of low-skilled manualworkers unattractive in many industries exposed to international competition. Recently,Taiwanese garment investors in South Africa gave the unions an ultimatum of either acceptingpay levels of 30 percent below the minimum wage or facing substantial job losses. The unionsagreed to the pay cut for three years and negotiated an agreement that 5,000 additional jobswill be created. However, the unions successfully blocked a proposal for a youth sub-minimumwage, which could have promoted youth employment as evidenced in OECD countries. Despitevarious efforts by the Bank to provide technical advice on youth employment financed throughtrust funds, a/ the dialogue with the South African government focused on an electricity supplyloan.Source: IEG 2012c.a. The Bank sponsored a conference on labor markets in May 2010. It used Spanish trust funds to elicitemployers’ opinions on youth wage subsidies, Australian trust funds to promote skills development, andstarted to use Dutch trust funds to write a series of technical briefs on skills shortages.Appendix F: Lessons from Impact Evaluations and World Bank Group Operations 139