The World Bank has decided to provide a grant of USD24 million to the Maldives.
The Board of Executive Directors of the World Bank approved the USD24 million grant to improve social protection coverage and employability of Maldivian workers by providing insurance against shocks and employment support. The aid was contributed under Sustainable and Integrated Labour Services (SAILS), a new initiative started by the World Bank.
Despite the strong economic growth, the Maldives has a high rate of youth unemployment at 5.3% in 2019, with most of them living in the atolls. The female labour force participation rate is also low, at 46%. Some 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.
Country Director for the Maldives, Nepal and Sri Lanka Faris. H. Hadad-Zervos said as the economy recovers, the assistance from the World Bank will increase access to economic opportunities by promoting employment in critical sectors such as tourism and renewable energy which will as a result enhance social service delivery in the islands.
The SAILS project will support the government in establishing an unemployment insurance scheme and an employment services scheme. As such, employers and employees will contribute jointly to a fund managed by the MPAO 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. In addition, female job seekers will be encouraged to join programs promoting women’s economic empowerment.
Senior Economist and Task Team Leader Thomas Walker revealed establishing a contributory social insurance programme will lessen the financial 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 (MPAO). The total financing is USD24 million, which is fully covered under a grant from the International Development Association (IDA), the World Bank’s concessional credit window for developing countries.