SIV Blog - 1.12.2019

Introducing the SIV project for solving social challenges of long-term unemployment

Even though the EU unemployment rate is at an all-time low, it’s still more than necessary to focus on diminishing long-term unemployment and accelerating the integration of disadvantaged groups into the labor market.

At the end of 2018, the unemployment rate was 6.6%, and, according to the European Commission, almost half of it is long-term unemployment. While the economy is making yet another turn towards recession, it is of the utmost importance to deal with the problem now.

How are we currently tackling the issues of long-term unemployment and disadvantaged groups?

Let’s firstly take a look at the definition of what those terms actually mean. The long-term unemployment refers to people who have been unemployed for more than 12 months. The long-term unemployment rate shows how many of these long-term unemployed individuals are among all unemployed. It has a direct negative impact on public finance and the persons involved, often leading to dire social consequences.

The disadvantaged groups are the ones that experience a higher risk of social exclusion and poverty than the general population due to their disabilities, ethnicity, among them are also elderly people and youth. They are often referred to as “vulnerable groups”.

Today, long-term unemployment is especially being tackled in the Central European countries, with the emphasis on developing stronger support systems. This support system consists of 5 steps:

Registration with an employment service

Promoting benefits of registration and stepping in contact with inactive groups.

An individual, in-depth assessment to identify needs and potential

Public Employment Services are adopting better tools for improving the quality of individual assessments.

A job integration agreement

Some form of the agreement is now offered in all Member State, within the first 6 months of unemployment.

Single point of contact

Employment and social services are now increasingly working together for creating as smooth process for the unemployed as possible.

Engagement of employers

Hiring initiatives are offered to employers, and additional services provided by the Public Employment Services for better placement of long-term unemployed on the job market.

However, those 5 improvements alone are not enough to lower the unemployment rate significantly. Thus, different European projects are targeted towards enabling employment opportunities for vulnerable people, and long term unemployed. One of those projects is also the SIV project.

Introducing the SIV project

There has been an untapped potential for solving the challenges above by activating private capital. That’s why we are introducing a new Interreg project: Social Impact Vouchers – in short, SIV.

It’s started in March 2019 and will last until February 2022. In those 3 years, 11 partners from 8 Central European countries will research and develop an innovative mechanism for integrating disadvantaged, and long-term unemployed groups into the labor market.

The 8 participating countries: Austria, Croatia, Czech Republic, Germany, Hungary, Poland, Slovakia, and Slovenia.

This partnership will test the initiation of Social Impact Funds for transferring private capital for social issues, and it will also introduce the system of vouchers for incentivizing employers to employ long-term unemployed and other disadvantaged/vulnerable people.

So, there are several objectives being pursued in the following years, let’s name the three most important ones:

  • Installation of a fund with private capital
  • Create and finance a voucher-based incentive system for either unemployed individuals or businesses
  • Implementation of a platform to bring together the needs of unemployed people and businesses

The first half-year of the project

The project partners have started with researching the status quo in all of the project partners' countries. They are putting together first conclusions in a Country Report, which will present the gap and opportunities that can be filled within the scope of this project.

The partnership is currently working hard on creating a stable backbone that will enable the smooth progression of the project as they go.

As of late, the consortium took the first concrete steps into the strategy development for both the fund and the voucher system. This occurred during the second partner meeting, which took place at the end of September in Vienna. Here, the partners focused on alleviating existing challenges in the strategy development and on setting the scene for the concrete implementation.

Where to next

While researching the current situation in Country Reports is a step in the right direction, it’s still necessary to hold a dialogue with important stakeholders and hear their perspectives. Thus, each participating country will organize two Stakeholder Dialogues. The first one with the purpose of discussing leveraging private capital for social impact investments, and the second one for discussing the voucher system.

In each partner region, a Social Impact Fund is ought to be realized. Partners will work together to ensure effective and efficient management. A strategy and action plan for both the fund and the voucher system are being elaborated, which will serve as a guideline for the actual implementation. Technical, legal and any other procedures will take place to start with the distribution of reimbursement vouchers to businesses for hiring disadvantaged groups. 

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