Could employment bonds alleviate youth unemployment in Serbia?

Sep 1, 2016

Mika Pyykkö, Head of Focus Area at Finnish Innovation Fund SITRA explained how Social Impact Bonds may be a win-win solution for different stakeholders

An opportunity  for different stakeholders to invest in alleviating  youth unemployment in Serbia and – to get an attractive return on investment – is being analysed by UNDP Serbia and its partners. Together with SITRA, The Finnish Innovation Fund, and the Finnish Embassy in Serbia we learnt about the application of social impact investment in Finland, through Social Impact Bonds on various topics.

The concept of Social Impact Bonds is more and more widely used with  companies and other stakeholders investing their funds to create a positive social impact as well as secure a financial return. The idea is being screened for application in Serbia and participants in the exploratory meeting held today at the Finish residence in Belgrade expressed interest in the Finnish model.

UNDP and SITRA have embarked on designing a pilot for Serbia, based on similar principles, applied to the issue of high youth unemployment. The business rationale is that only a third of the currently unemployed youth is covered by the active labour market measures in place and there is scope for introducing more measures, packaged in an innovative way, through private-public partnership, to expand and accelerate the employment of young people.

Social Impact Bonds, also known as “Pay for Success” financing, are innovative result-based financial instruments, where outcome payers agree to pay and reward investors only if agreed-upon outcomes are achieved. Forbes estimated that the social impact investment market is projected to grow to $3 trillion in the coming years, which opens up innovative ways to engage the private sector to bolster global sustainability further.

Such an initiative could focus on developing an innovative solution for youth employment as the unemployment rate among young people aged 15-24 in Serbia is very high, reaching 47.5% in 2015,  significantly above the general unemployment rate  (18.2% for the population of working age 15-64).

For more information please contact Elina Jarvela at +381 11 4155 300 or via e-mail at elina.jarvela@undp.org.

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