World Bank to provide USD 24 mln grant for unemployment insurance scheme

The World Bank will provide USD 24 million (about MVR 370.6 million) in free assistance to fund a scheme being initiated to solve workers' problems and unemployment in the Maldives.

The World Bank, a major donor to the Maldives, said in a press release that the newly launched Sustainable and Integrated Labor Services (SAILS) project will help the Maldives government set up an unemployment insurance scheme and an employment services scheme. In this regard, employers and employees will work together to establish a fund maintained by the Maldives Pension Administration Office to provide unemployment benefits.

The SAILS project will be implemented in collaboration with the Ministry of Economic Development and the Maldives Pension Administration Office. A total of USD 24 million has been approved for the project. The funds are provided by the International Development Association (IDA), a branch of the World Bank that provides concessional assistance to developing countries.

According to the World Bank, despite the strong economic growth in the Maldives, the country has a high youth unemployment rate, which was at 5.3 percent in 2019. Statistics show most of these individuals are situated in the atolls. The proportion of women in jobs is also low at 46 percent. Employers such as resort operators face challenges in finding skilled locals for well-paying jobs.

While pensions are the only means of social security currently available to employees to overcome the challenges they face, young people in the country increasingly choose self-employment. As a result, it would be challenging to ensure that they save enough money by the time they reach retirement age and find ways to cope with potential income volatility.

Both informal and self-employed workers will be able to save money to prepare for situations such as economic and climate change-related challenges and disasters, and they will have the opportunity to access it in such situations. The existing Job Center will be expanded to include five regional hubs across the country, which will provide counseling and job search assistance, as well as specialized targeted training and coaching to help job seekers find suitable jobs. Women seeking employment will be encouraged to participate in programs to empower women economically.