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Dominican Republic expands youth employment program with IDB support

$20 million loan to benefit 24,000 youth at 80 percent job placement rate

The Inter-American Development Bank (IDB) today approved a loan for $20 million to support the National Employment System (NES) of the Ministry of Labor of the Dominican Republic. The key component of the project is its third generation of the Youth and Employment Program, which will benefit 24,000 socially vulnerable youth at an expected employment rate of at least 80 percent after the completion of the program.

The loan will help improve the employability of the most vulnerable population in the labor market, especially at-risk youth, for a quality and better paying job in the formal market. The financing will support the NES expand its labor intermediation and training service coverage and effectiveness as well as strengthen the labor data system for policy-making.

Based on impact evaluation of the previous programs, the new employment program seeks to enhance its effectiveness by redesigning the training modules to double the hours of life skills training and incorporate practical technical-vocational skills to provide skilled labors for the competitive industrial sectors such as trading services and hotels and restaurants in the country. The initiative is aimed at poor at-risk youth aged 16-29 years, who are out of school and lack a regular job.

In addition, the program will rigorously mainstream gender  issues from the early stage to promote labor force participation of young women, who are among the most vulnerable in the Dominican labor market.

Unemployment rate among young people (aged 18-29) in the Dominican Republic is at 34 percent, more than doubling the rate for adults. Job quality is also an important issue among youth because most are mainly employed in the informal sector, where wages are low and opportunities for further development and training practically non-existent.

In the first two programs between 2001 and 2008, 47,000 participated in the Youth and Employment Program, which consists of life and technical skills combined with private sector internships, managed by the NES.

Through the initiative, participants acquired hands-on work experience and technical skills necessary to improve their employability for better quality jobs in the formal sector. Among 47,000, 22 percent were employed by the same companies they received internships and about 60 percent obtained a job within six months after completing the program, according to the Dominican Ministry of Labor.

The IDB has supported the program since its inception, later joined by the World Bank, and provided technical support and a total financing of $26 million as part of its support for the Dominican labor markets and social transfer in 1999 and 2005.

“The importance of the Bank’s involvement in the development of this project is not limited to the role of financing but the Bank has been an integral part of the project management team jointly making decisions and adjustments for improvement on a daily basis," said Laura Ripani, IDB senior economist and the team leader of the project.

The program will help improve the coverage and services of the NES. This will enable job seekers, in particular vulnerable youth, to have one-stop access to effective job training for quality employment and to other labor intermediation services, such as on-line job information, career orientation and counseling based on the needs of both job seekers and employers.

The project will provide entrepreneurship skills training combined with an access to credit for unemployed disadvantaged youth aged 18–19.

A pilot evaluation was conducted by the IDB in 2010 for the previous two programs and the resulting information served to adapt the new program’s design and operations. The enhanced evaluation will help refine the program content.

The IDB loan is granted for a term of 25 years to be disbursed in 5 years with a grace period of 5 years and an interest rate based on LIBOR. Local counterpart funds totals $2 million.