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Results-based financing links masses of youth with employment in Nepal

HELVETAS Swiss Intercooperation's picture

Building electrician training, NepalBettina Jenny and Sonja Hofstetter of Helvetas Swiss Intercooperation, Switzerland and Gisela Keller of Helvetas USA explain how a skills development program in Nepal has trained over 100,000 youth— with more than 75,000 of them gainfully employed.

In Nepal, about 500,000 young people enter the Nepalese labor market every year. Most of them are unskilled and have not completed formal education. Moreover, the private sector in Nepal is weak, and a ten-year-long civil war (1996-2006) and subsequent ongoing political instability have contributed to the worsening economic and social situation. In short, getting a job is a huge challenge for many young people in Nepal.

Good intentions are not enough. Future employment and earning outcomes are the key indicator to measure the success of skills training. Many development actors provide skills training with the goal of making personal and economic perspectives available to youth in countries with high unemployment. Such programs tend to focus more on training delivery than on employment, and graduates of these kinds of youth skills programs often discover that their newly acquired skills do not meet market demands.

We do things differently. In 2007, the Swiss Agency for Development and Cooperation (SDC) joined with HELVETAS Swiss Intercooperation to establish the Employment Fund to create new and effective ways to scale up approaches addressing the alarming scope of youth unemployment in Nepal. Funded by the Swiss Agency for Development and Cooperation, the Department for International Development (DFID) and the World Bank, the Employment Fund began its operations in 2008. The Employment Fund offers training in about 80 occupations in construction, hospitality, garments and textile, agriculture, and electronics – to name a few -- in locations all over Nepal. The Employment Fund received a prize for good practice in youth employment awarded by the International Labour Organisation (ILO), and was among the ten finalists for the OECD DAC Prize for Taking Development Innovation to Scale.

Unlike many other skills training programs, the Employment Fund applies a results-based financing approach that has proven to effectively lead to gainful employment upon the completion of training. Training providers are paid based on their success in training youth and subsequently connecting them with the labor market. The key result is gainful employment.

Sarita Darai
Sarita Darai was trained to become a
building electrician.
Initially she felt
uncomfortable, and everybody doubted her
capabilities.

 
“People used to tell me that I would not
be able to do it. They also said that after
the training I would be without a job,”
she said.

 
Sarita proved all of them wrong. She is
now happy to work as an electrician. She
is also a trainer and teaches other
women as well as supports them in
becoming independent.
We only pay for results: How does that work? Training providers receive one part of their payment after the graduation of trainees. The biggest share of the payment is provided only if graduates are placed in gainful employment and earn an income above a pre-defined threshold. The Employment Fund puts special emphasis on the inclusion of women and disadvantaged groups, for instance, through incentives and counselling. More than 50 percent of the trainees are women, and eighty percent are from disadvantaged communities.

The results: The Employment Fund has provided skills training to over 100,000 youth. More than 75,000 of them are gainfully employed. Skills training per trainee costs 300 USD on average. This investment pays off: it only takes about six months for trainees to earn this amount after graduation.

Skills for reconstruction and resilience: Following the devastating earthquakes in Nepal in the spring of 2015, the Employment Fund has used its experience in the construction sector to train masons and carpenters in earthquake-resilient building techniques. These trainees will contribute to the reconstruction of collapsed houses and make sure that the new houses contain seismic safety features in the future.

It’s the employment that matters most: Our key lesson learned is that training and employment services need to be closely tied to job prospects. Training services can only be considered successful if graduates finds gainful employment.

Replication: The World Bank-funded Enhanced Vocational Education and Training (EVENT) project, implemented by the Ministry of Education of Nepal, applied the results-based vocational training pioneered by Employment Fund. Additionally, in Ethiopia, HELVETAS started replicating the Employment Fund as a pilot project in early 2015.
 
Result Based Financing in Skills Development

 
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Photographs and video courtesy of Helvetas Employment Fund

Comments

Submitted by Daniel Palmier on

It's very sad to know the employment condition in Nepal and Government should try some measures to overcome it,My full support for Nepal and it's people .

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