Prepared by Ana Diakonidze, Digital Economy Skills Consultant, World Bank with guidance from

Siddhartha Raja, Senior Technology & Jobs Specialist, World Bank Group and Natalija Gelvanovska,

Senior ICT Policy Specialist, World Bank. Any errors are the responsibility of the authors alone.

Kosovo Digital Economy:

Skills for Jobs

June 2016

i

Strategic positioning and executive summary

This report recommends specific mechanisms to the Government to develop digital economy skills

among young people in Kosovo. Such a program would help create better and inclusive jobs in the

digital economy in Kosovo, within the broader framework of the Kosovo Digital Economy (KODE)

program being developed by the Ministry of Economic Development (MED) and the World Bank.

It proposes an export- and demand-driven mechanism to accelerate young people into new jobs created

at existing businesses or at startups operating in the digital economy. The main message of this report

is that: Kosovo should consider setting up a digital economy skills development program that

responds to export market demands and creates jobs.

The digital economy can play a significant role in boosting Kosovo exports, but the creation of good jobs

due to the growth in digital exports is not automatic. In the case of Kosovo, the link between digital

economy expansion—in Kosovo and globally—and job creation is weak due to:

Constraints to increasing the quality and quantity of digital exports, limiting growth of the digital

economy, and

A weak startup ecosystem that limits the creation of new firms,

The limited access to high-quality training and sizable skills mismatches that limit the

employability of jobseekers.

There is thus a need for a strategic program for digital economy job creation that builds on international

experience and the specific context in Kosovo. Such a program should have three main pillars:

Establishment of digital economy market surveillance mechanism has to ensure that the local

companies are aware of the demand on international, as well as local market.

Seed capital and business services should be provided to the start-ups to boost entrepreneurship

(covered in another report, expected to be completed in late 2016).

A consortium of training providers, industry representatives, and the government together designs

a training program based on the identified needs and train a critical mass of people to enable digital

economy companies to participate in higher-quality and larger export projects.

This report focuses on the third constraint, with an exclusive focus on fostering job creation, i.e. responding

to demand for labor. This contrasts with existing analyses and efforts that have typically focused on skills

development (i.e. supply-side interventions) without a clear link with either demand from employers or

long-term job creation potential in the economy. This report complements analyses on the first two

constraints, which will be included in a separate report (on startup ecosystem) and in other industry analyses

(e.g. reports by ICT industry association, STIKK). As such, this report builds on and is aligned with the

Government’s strategies for the digital economy, including the National IT Strategy and the National

Development Strategy approved in January 2016.

This report is structured as follows. The first part outlines the challenges facing Kosovo in terms of job

creation, and focuses on the potential of the digital economy to create better and inclusive jobs. The second

part builds on the challenges identified in the first section and introduces the detailed description of

proposed strategic intervention. Particular attention is devoted to a possible Digital Economy Skills for Jobs

training program. The program design elements include the methods of curriculum design, options of

training delivery, methods of financing, and embedded matching services for students.

ii

Table of contents

Part 1. Defining the challenge ....................................................................................................................... 1

Background: Socio-economic parameters of Kosovo ............................................................................... 1

Vision for Skills and Development ........................................................................................................... 2

Outlook of Kosovo’s digital economy ...................................................................................................... 3

Skills Gap in the digital economy ............................................................................................................. 5

Part 2. Defining the intervention ................................................................................................................... 7

Methodology for this research .................................................................................................................. 7

The rationale for intervention ................................................................................................................... 7

Lessons from international best practices ............................................................................................... 10

Program design for Kosovo: Options and considerations ....................................................................... 11

Strategic design elements ........................................................................................................................ 12

Mapping the program design to the IT Strategy, and evaluating economic impact ................................ 20

Summary of the program design ............................................................................................................. 23

Annex 1: List of Respondents ..................................................................................................................... 25

1

Part 1. Defining the challenge

This first part of the report aims at outlining the

existing socio-economic conditions in Kosovo,

its vision for its development, and the critical

role that the digital economy1 has to play in

countries’ economic development. It includes an

analysis of the skills gap in the sector, and the

challenges faced by both the demand-side and

the supply-side serve as a background to the

discussion about possible interventions and

ways forward.

Background: Socio-economic parameters

of Kosovo

Kosovo’s economic growth has been steady and

generally at rates above those in neighboring

countries (Figure 1), which is largely attributed

to public investments in infrastructure, donor

assistance and remittances. In 2015, the growth

was driven primarily by private investment.

Despite registering growth over the past couple

of years, Kosovo struggles with low GDP per

capita (EUR 3195.9 in 2015), high rates of

unemployment and poverty and is ranked as the

poorest country in Europe.2

Figure 1: Real GDP Annual Growth Rates 2008-153

Over the period of 2008-2014, contribution to

the GDP by main economic sectors showed

relative constant values. The service sector

accounts for most of the jobs (around 70

1 Definition of the digital economy: combination of the

vertical ICT sector (digital industry) and the horizontal ICT

applications and usage across society and the economy

(digital society). 2 World Bank Group in Kosovo, Country Snapshot, April

2015

percent), while industry employs only 17

percent, and the remaining portion of the labour

force are employed in agriculture.

Kosovo suffers from a high negative trade

balance and its net export is expected to

continue being negative (Figure 2).4 Remittances

and other diaspora inflows will remain among

the main drivers of domestic demand and

growth.5 As such, economic growth in Kosovo

in expected to change little through 2016 and

2017, assuming sustained consumption growth,

rising exports and private investment.

Exports have not reached the level required to

transform the economy. And foreign direct

investment (FDI) has not reached the level

needed to finance the current account deficit.

Given this backdrop, growing private sector

activities and productivity-increasing

investments have to become increasingly more

critical as engines to growth and, in turn,

improve job and income perspectives.

Figure 2: Trade Balance (% of GDP)6

Kosovo’s unemployment and inactivity rates are

the highest in South Eastern Europe, estimated

at 35.3 and 63 percent respectively in 2014.

High unemployment levels in the country co-

exist with increased difficulties in filling

vacancies. Despite the fact that Kosovo has the

youngest population in Europe, its youth

potential remains largely untapped;

3 Kosovo Agency of Statistics 4 World Bank Group, South East Europe Regular Economic

Report No. 9, 2016 5 European Training Foundation, SKILLS 2020, Kosovo,

2014 6 The World Bank, 2016

4.5

3.63.3

4.4

2.8

3.4

1.2

3.6

2008 2009 2010 2011 2012 2013 2014 2015

-40

-20

0

20

40

20

12

20

13

20

14

20

15

20

16

Goodsexports

Goodsimports

TradeBalance

2

unemployment among youth (15-24 year olds)

reached 61 percent in 2014 and 30.2 percent of

young people were not in education,

employment or training (NEETs) according to

the Labour Force Survey in 2014.

The situation is worse for young women. In

2014, only 12.5 percent of working age (aged

15-64) women were employed, compared to

41.3 percent of working age men. The rate of

female unemployment has increased in 2014 and

stands at alarming 41.6 percent, compared to

33.1 percent of unemployment among men.7

Thus, the labour market remains rigid, and there

are few job opportunities for young entrants

(about 30,000 per year). Of the many

unemployed, about 60 percent are considered

unskilled or having outdated skills. The number

of unemployed persons with a university

education has also increased, signaling a

mismatch between the skills needed in the

labour market and those provided by the

education system.8 Skills mismatch represents

particular barrier for entering the world of work

for young population.

Vision for Skills and Development

Against this background, the government of

Kosovo has identified attracting investments and

improving the skillset of the workforce, through

strengthening Vocational Education and

Training (VET) and higher education and

fostering requalification and lifelong learning, as

immediate priorities (2015 Economic Reform

Program, European Commission). Kosovo with

the support of European Training Foundation

has formulated a SKILLS 2020 framework,

which conveys the vision for skills development

as well as priorities and roadmap for Human

Resource Development.

The shared skills vision for Kosovo reads: by

7 Kosovo Results of the 2013 Labor Survey. Published in

July 2014.

http://econpapers.repec.org/RePEc:wbk:wboper:21042,

Low supply of jobs, lack of market-oriented skills and

education, family responsibilities, weak childcare and

eldercare infrastructure, influence of remittances and

traditional culture are usually cited as reasons for low labor

force participation and employment among Kosovar

2020 Kosovo is a globally competitive

knowledge society, with skills that adapt to the

needs of the economy, fostering innovation and

entrepreneurship, and attracting investment for

sustainable development and social inclusion. In

order to achieve the skills vision, four key

priorities with related measures were identified.

The first priority relates to competency-based

learning and improving the responsiveness of

the education and training system to labour

market demands. Linked to this the second

priority emphasizes the need to foster

entrepreneurship and innovation and the third

focuses on reforming and modernization of

employment services to meet the needs of the

labour market. The fourth priority concentrates

on enhancing capacities for coordinated sector

policy development and implementation (ETF,

2014).

However, in spite of these efforts and a

recognition of the challenges, public spending in

education is low relative to regional and GDP

per capita comparators, indicating the need to

prioritize education in public spending.

Kosovo spent 4.1 percent of GDP in 2012 on

education, less than the average in Europe and

Central Asia (4.6 percent) or the upper-middle

income country average (5 percent). Total public

spending on education represents about 14

percent of budgetary expenditure, in line with

other middle-income countries with similar age

profiles. However, because of the large number

of pupils, Kosovo spends only 13 percent of per

capita income per student in both primary and

secondary education, which is much less than all

countries in Southeastern Europe.9

Moreover, Kosovo’s quality of education is

weak and does not succeed at providing students

the skills necessary to transition to a rapidly

women. What is also alarming is that 40.9 percent of young

women are not in education, employment or training

(NEETs), which is over 10 percentage points higher than

the share of men found in the same condition. Such a high

share of NEETs among women raises concerns over their

future employability and productivity. 8 SKILLS 2020, European Training Foundation 9 Kosovo Country Snapshot, World Bank, 2015

3

changing labour market needs. Until 2015,

Kosovo did not participate in the international

education tests and respectively, internationally

comparable data is not available.10 However,

low passing rate and achievement levels of

students at the national Matura demonstrate a

need for improvements.11

Many donor-assisted projects aim to close the

skills gap. For instance, the Enhancing Youth

Employment (EYE) project funded by the Swiss

International Cooperation and implemented by

the Kosovo-HELVETAS aims at developing the

skills of young women and men to better match

the needs of businesses in targeted subsectors.

Primary focus of this project is on

interventions that aim at improving the linkages

between the private sector and the formal (i.e.

schools) and non-formal (i.e. ad-hoc courses and

practical learning) training and education

systems, enhancing provision of career guidance

services and enhancing private sector

companies’ investments into opportunities that

generate employment and enable youth

entrepreneurs to have access to support services

that allow them to successfully start and operate

their own businesses12.

The German Society for International

Cooperation (GIZ) also strongly supports

Kosovo government in the field of Economic

Development and Employment. Through one of

its ongoing project GIZ supports development of

the competence centers in the context of

vocational education and training reforms in

Kosovo. The project supports the Ministry of

Education, Science and Technology in

implementing the reforms to the vocational

education and training system. The main

objective of the project is to improve the training

offered at competence centers and other selected

vocational schools in close cooperation with

industry representatives. The latter is to assure

10 Kosovo took part in PISA 2015, however, the results are

expected in December 2016 11 Kosovo Country Snapshot, World Bank, 2015 12 http://eye-kosovo.org/ 13 https://www.giz.de/en/worldwide/21127.html 14 Accounting for the 20 percent attrition rate, standard for

this type of trainings

the establishment of demand-driven vocational

education and training programs13.

The Ministry of Economic Development and the

World Bank have recently launched the Women

in Online Work (WoW) pilot project, that aims

at involving more women in digital economy.

The pilot consists of intensive training activities

to promote online work outside Pristina in the

municipalities of Lipjan and Gjakova. Currently,

126 women are included in the program and are

undergoing trainings in coding and soft skills. It

is expected that by the program end, 100

women, will have finished the coursework to

become effective online workers.14 WoW pilot is

part of bigger Kosovo Digital Economy (KODE)

initiative launched by the World Bank and

Ministry of Economic Development that aims to

support ICT sector development across three

strategic areas of digital infrastructure, digital

skills and digital businesses.15

Outlook of Kosovo’s digital economy

The digital economy has been named as a

critical sector for Kosovo’s economic

development. According to the Kosovo

Economic Reform Document16 ICT holds

significant potential for growth, however, ICT

promotional policies are rather modest compared

to other regional countries.

The National IT strategy approved by the

government in 2015 envisions the “IT to become

the main driver for economic growth,

employment and innovation until the year 2020

by increasing the international competitiveness

of the Kosovo IT industry based on digital

excellence17.”

The digital economy market in Kosovo, albeit

smaller than that of the countries in the region,

has registered continuous growth, which is also

higher than that in the surrounding countries. It

15 https://mf.rks-

gov.net/LinkClick.aspx?fileticket=4pSL2x76mnU%3d&po

rtalid=0&language=en-US 16 https://mf.rks-

gov.net/LinkClick.aspx?fileticket=4pSL2x76mnU%3d&po

rtalid=0&language=en-US 17 National IT Strategy

4

is one of country’s few export-oriented

industries, marked by continued growth: ICT

sector has been contributing 8-11 percent of

Kosovo’s GDP in 2007-2013 respectively (this

includes telecommunications). In spite of this

growth, the domestic IT market is small and

underdeveloped due to the lack of investment

and a low level of digitization of the economy.

The total value of the Kosovo IT market was

expected to amount to €126 million in 2014,

with the compound annual growth rate projected

to reach 4 percent.

According to the business registry of Tax

Administration of Kosovo, in 2015 a total of 571

companies were registered to have ICT or some

form of ICT component as primary business

activity. In this category, a large number are

assumed to be small computer retail and service

shops. Kosovo IT industry is SME-dominated,

which results into lack of scale for the industry.

Overall, there is a low level of specialization and

differentiation among IT companies in terms of

technologies, target industries (vertical

specialization) and specific functional areas

(horizontal specialization).

In comparison to regional and international

competitors, the maturity level of processes and

quality management systems is too low. This is

also reflected in the comparatively low

percentage of Kosovo IT companies having a

quality certification (e.g. ISO, CMMI, ITMark).

Just like for other industries, access to capital

represents a serious obstacle for Kosovo’s IT

industry growth, as it is very difficult for

companies to obtain loans due to high interest

rates and collateral.18

The latest research by STIKK indicates that

application development is the single largest

category of the main product and/or service lines

of the IT companies in Kosovo (25 percent) it is

followed by consultancy (14 percent) and

trading in hardware (14 percent). Despite of

18http://stikk.org/fileadmin/user_upload/Kosovo_IT_Strate

gy_11.11.2015.pdf 19 STIKK, Skills Gap Analysis, 2015 20 Source: STIKK, Skills Gap Analysis, 2015

number of challenges IT companies are rather

optimistic about the future. For instance, 69

percent of the businesses expect an increase over

the next three-year period. These companies see

increasing export as a single largest category for

anticipated growth. As seen from the chart

below, nearly the third of companies see their

exports growing in the area of software and

application development.19

Figure 3: Foreseen Future Growth in digital

economy areas in Kosovo20

Kosovo exports fewer digital economy products

and services than Kosovo imports, and service

exports dominate. Over the years, the value of

service exports in this field has been from two to

over four times higher than the value of service

imports (Figure 4).

Figure 4: Customs value of ICT-digital Economy

service exports vs. imports, in mln EUR, 2008-2013

in Kosovo21

Digital economy service exports have peaked in

2011, when the country exported services worth

over €96 million. Since 2011, the value of ICT-

21 Department of Post, Telecommunications, and

Information and Communication Technology, Ministry of

Economic Development of Kosovo

0

50

100

150

2008 2009 2010 2011 2012 2013

Service exports, mln EUR

Service imports, mln EUR

5

digital economy service exports has been falling

sharply while service imports have started to

show slow but steady growth.22

Existing research indicates number of challenges

hindering the export capacity of the Kosovo IT

industry. The latter include troubled political

image of the country, lack of branding and

information on global IT market and technology

trends, as well as problems with accessing the

capital. However, the critical challenge still

relates to the lack of professionals, both in terms

of numbers and quality.

Skills Gap in the digital economy

A recent report by STIKK on the labor supply

and demand in Kosovo’s ICT sector summarized

that “ICT companies are not satisfied with the

quality of employees graduating from higher

education institutions in Kosovo were the

majority of the most critical skills highly

demanded in industry are missing.”23

University enrollment rates show that young

Kosovars are not eager to study ICT-related

fields (electrical engineering, computer science

etc.). University representatives explain that the

common sense perception that these subjects are

“difficult” puts young people off and they opt

22 Per data received on January 19, 2015, from the

Department of Post, Telecommunications, and Information

and Communication Technology of the Ministry of

Economic Development of Kosovo

for other subjects (e.g. social sciences).

This dramatically diminishes the potential pool

of future ICT graduates. On the other hand,

graduation rates are not very promising either –

on average 50 percent of students drop out

mostly because they cannot follow the program

or they find jobs before completion of their

studies.

Weakly developed career guidance and

counseling system is contributing to the

problem. Future career choices are mostly made

based on the advice provided by friends and

parents. Nevertheless, recent findings of the

representative sample of the high school

students carried out by the American University

in Kosovo indicate a positive shift – nearly half

of the respondents indicated that they are

interested in pursuing education in ICT. While

this draws a positive perspective for future,

current output of the Universities in Kosovo is

not very promising.

Recent survey of employers by STIKK indicates

that ICT companies are not satisfied with the

quality of employees graduating from higher

education institutions in Kosovo as they lack

most critical skills demanded on the market.

University graduates are not readily employable

and companies have to invest in several months

initial training to get the new hires fully

23 STIKK, Mapping of ICT Sector Labour Supply and

Demand, October 2015:

http://stikk.org/fileadmin/user_upload/Skills_Gap_2015__

EN__-_v5__14.12.2015_.pdf

Box 1: The most-demanded IT skills in Kosovo

Java Script, Knowledge of Systems Integration, SQL, Realtime Systems and .NET are leading the

ranking of the most critical and missing skills for current and future employees in Kosovo. In terms of

specific occupations database programmers and software developers are highly demanded on the local

market. It is critical to mention that companies in Kosovo are in dire need of not only technical skills

but also people with experience in sales and marketing (38% of businesses said they were short of

such employees). However, these people are also expected to have professional certificate in any of

the IT fields. In terms of the specific IT skills following have been emphasized: .NET, PHP, C++,

HTML/XML, mSQL/MySQL, ODBC, Application Programming, Delphi, ILE/400, Java, Objective

C, PL/SQL, Python, Shell –C-Shell/K, Shell/Bourne-Shell, ISO 27001, ISO 2000, CMM/CMMI.

Source: STIKK, Skills Gap Analysis, 2015

6

immersed in the business. Despite of the fact

that employers are not satisfied with the quality

of training at universities, 50 percent still require

future employees to hold university diploma.24

The largest pool of graduates in the area of ICT

comes from the University of Pristina faculty of

Electrical Engineering and faculty of Natural

Sciences and Mathematics. There are also

private higher education institutions (e.g.

American University in Kosovo, UBT, AAB

Riinvest University) which claim higher post-

graduate employment rates, however, the state

university of Pristina still attracts the largest

share of students. Apart from the universities,

there are private vocational education and

training centers, as well as specialized and

authorized training service providers for vendor

certified courses such as Oracle, Microsoft, SQL

etc.

On the other hand, discussions with university

students and graduates indicate that the first

employment opportunity is rather critical for

them. Internships at companies in most cases

have shown to lead to further employment or

provision of valuable on-the-job experience,

which boosts young persons chances of

employment. Previous IT Barometer studies

conducted by STIKK also indicate that

international certifications boost the

employment chances, however, the cost of

sitting the certification exam often represents an

obstacle for many.

24 STIKK, Skills Gap Analysis, 2015

7

Part 2. Defining the intervention

Given the limits to traditional sectors growing

based on local demand—due to the small

internal market, and limited natural resources

and manufacturing capacity—the digital

economy holds great potential as a sector to

drive Kosovo’s economic development. The

digital economy does not require extensive

physical inputs or mobility of the workforce. It

hence also represents a promising field for

generating jobs and income for Kosovars.

However, critical constraints—and stark skills

gaps—remain important challenges for boosting

exports and consequent job creation. The skills

gap is both qualitative and quantitative in nature.

The overarching goal of the proposed

intervention is to improve skills to increase

export quality and quantity generated by

Kosovar ICT companies, including by startups

and established firms. This intervention focuses

on up-skilling of young Kosovars in the digital

economy with an exclusive focus on job creation

in that sector. This program should also respond

to market needs today, but be scalable and

sustainable to address future demand. This

aligns with the Government’s thinking on

economic development as manifested by the

objective of the National IT strategy, where a

sub-goal of this document is to promote the

Kosovo IT industry export.25

This second section of the report will discuss the

possible solutions to the challenges identified in

the first section. First, we provide a clear

argument for why public sector intervention—

through the government, possibly with donor

support—is necessary. We discuss the possible

design through a comparison of international

practices of similar interventions, and close with

a proposal of strategic design elements of the

program for Kosovo: a large-scale training

program combined with market monitoring and

25 Kosovo IT Strategy

startup acceleration mechanisms.

Methodology for this research

This report is based on desk research (including

policy papers and research on Kosovo’s ICT

system, as well as best practice research) and

semi-structured interviews with key policy-

makers and stakeholders in Kosovo. The

interviews have been undertaken during the two

missions of the external consultant to Pristina.

During a visit in October 2015, the consultant

met primarily with the business community (8

large companies), representatives of academia

(major universities), as well as government

counterparts. As a result of the first mission a

draft program design has been elaborated, which

was presented to the main group of stakeholders

in Kosovo in February 2016.

A second visit was dedicated to bi-lateral

meetings with key stakeholders to validate ideas.

A focus was on interviewing the representatives

of ICT start-ups and reaching out to employers

that were not covered during the first mission. In

total 10 companies have been consulted during

the research. Final validation of the draft took

place at the Ministry of Economy and

Sustainable Development of Kosovo attended by

the steering committee of the National IT

Strategy. The key ideas of the program design

were positively appraised and the feedback

received informed further refinement of the

program as presented in this report.

The rationale for intervention

The key argument for intervention refers to the

8

fact that digital economy skills represent a merit

good, with significant long-term effects. Current

trends in global labor markets suggest that—due

to increasing trade and technological adoption—

the future of work will see labor market

polarization and the hollowing out of middle-

skill jobs especially as smart machines substitute

9

for human effort in repetitive and codified work.

Table 1: Market failures hindering digital economy skills development in Kosovo

Market failure Existence in Kosovo

Gaps in

information, on

the possible

benefits of digital

economy skills

acquisition

Young people receive limited career guidance and professional counseling

services. Career choices are often directed by the advice from friends and

family, which is in most cases informed by the societal stereotypes, rather than

professional guidance based on the labour market information system. As a

result, it is highly likely that individuals will under-consume

training/education in the digital economy due to imperfect information.

Gaps in

information, on

the mechanisms

of skills

acquisition

People interested in acquiring digital economy skills do not have well-defined

mechanisms to understand (a) the scope for employment in the digital

economy; and (b) how to acquire in-demand skills from certified and reputable

institutions. The risk in information gaps and asymmetries might dissuade

skills acquisition or even worse, lead to deception.

Coordination

failure among

market

participants

Despite of concerted efforts, coordination between the employers and

training/education providers remains a key challenge for training system in

Kosovo. While the universities and training companies put individual efforts

for understating the market demand, there is no systematic approach towards

decoding the key trends on local and international market. Instead of the

efforts to work closer with training providers, employers prefer to train new

incumbents in-house. This lack of systematic communication results in the

outdating of curriculum, limited placement opportunities of fresh graduates

and in general decreased responsiveness of the training to market needs.

High costs of

skills acquisition

due to limited

market size

Due to its small market, Kosovo is not an attractive venture for international

training providers (e.g. operating in Mexico or India). Hence, only few private

training providers have attempted to cover the gap. However, business

opportunities are limited. As majority of them indicate, individuals paying out

of pocket represent the smallest share of their clientele. Depending on the type

and duration of the training course, it can cost between EUR 100-400 per

individual. Considering the high unemployment rate among youth the cost has

to be borne by their parents. The average salary in Kosovo for 2015 was EUR

4611, which indicates that not many families can afford sending their children

for private training courses, even if they are fully aware of the related benefits.

Underinvestment

in training quality

due to

information

asymmetries and

small market size

Training providers in Kosovo represent a mix of public/private universities,

few vocational education colleges, and private training centers. Large

employers have established the latter as an initiative to train their own cadre

in-house. While all of these providers thrive for international partnerships and

certification of their programs it is achieved to a varying degree and

respectively, the training quality differs significantly among the providers.

Future trainees do not usually predispose trustworthy information on the

quality of training and their choices are primarily determined by the

affordability of education.

Presence of

spillovers from

improved skills

and labor market

outcomes

While individuals participating in the training program would clearly receive

private benefits (average wage in the digital economy is higher compared with

other sectors in Kosovo), it will be outweighed by the social benefit, expressed

in the increased tax revenue, labour productivity and exports, which in itself

will boost the local demand and stimulate the economy.

Source: Author

10

Existing evidence suggests that policymakers

need to support accelerated investments in

technology adoption by employers and workers;

and in improving human capital with a focus on

productively using technology. Absent such

action, likely not derived from present market

conditions, countries—and their firms and

workers—face degrading competitiveness.26

If left to market forces there are threats for

under-consumption of this particular good,

which can be explained by widespread market

failures as presented above in Table 1. Public

policy and investment is necessary given the

existence of these failures that hinder human

capital development in Kosovo. Given these

market failures, the Government may need to

intervene to overcome information gaps and

asymmetries, and ensure provision of a merit

good in spite of an individual’s ability to pay.

Lessons from international best practices

An international review of the training models

focused on closing the skills gap indicates that

the programs that are truly “demand-led” show

higher rates of success. Aligning training with

the industry requirements is achieved in

different ways by different programs.

For instance, “Year Up” – an acclaimed training

organization with operations in 10 U.S. cities,

conducts employer reviews of their program

once a year. While Naiobits (a training trust in

Nairobi) have found that more frequent reviews

are necessary to keep up with rapidly changing

needs in the labour market.

On the other hand, employers who join the

Monyelta work-readiness training consortia in

South Africa take the lead on developing

curriculum that meets their needs. Then they

work with third-party providers (also member of

the consortia) to deliver the training.

However, employers can be even more involved

in the program like in Youth4Jobs in India,

26 See for example, Brynjolfsson & McAfee, The second

machine age: http://secondmachineage.com/ 27 Grimm et.al. Preparing the Poor and Vulnerable for

Digital Jobs, 2013

which allows partner employers to train students

in specialized skills directly after it recruits

screens and trains them in basic skills.27

Particularly interesting from the perspective of

ensuring “demand-driven” approach is Mexico

First initiative of the Mexican government,

which is supported by World Bank financing.

The program is based on a continuous dialogue

with federal states and private industry around

the country to gather the demand they have

about the IT-related professionals and/or

students.

Based on this information, the program reviews

the list of courses and providers with whom they

have agreements. Apart from working with local

providers, Mexico First negotiates with global

technology providers for tailor-made training

courses and discounts on certifications

demanded by the industry. The discounts are

achieved given the large amount of trainees;

discounts of up to 70 percent have been

achieved. Mexico First does not aim to be the

training provider; it rather serves as a broker

between the industry and training providers and

coordinates the schedule and venue for the

program to be delivered. Rather than having its

own facilities, Mexico First relies on the

facilities of its partners like companies and even

more importantly the universities. Some of the

private universities have even introduced the

training program developed through the program

as elective courses in their curricula.28

Another important feature of successful

programs aimed at enhancing youth

employability is that they combine training in

technical skills with training in soft and

cognitive skills. For instance, in Egypt, the

government sponsored EDUEgypt program

focuses on placing students in the International

Business Process Outsourcing Industry on the

local market. On top providing specific training

in Business Skills, IT and Pharmacy, EDUEgypt

also provides counseling on topics like time and

28 http://blogs.worldbank.org/ic4d/mexico-first-closing-the-

training-gap-in-the-it-industry-through-public-private-

partnerships

11

financial management, professional

communication and foreign languages (notably

English). Other projects go further by sensitizing

students with issues like appropriate workplace

attire. The latter is particularly important to

ensure that students from less-privileged

communities benefit from the program the most.

Other key features of the well-tailored training

programs include: small class sizes and

sufficient repetition, strict industry-approved

intake requirements and provision of post-

placement services.29

A study by the Rockefeller Foundation30 shows

that training programs that combine these

features are successful and cost-effective. The

latter can be indicated by the cost of training as a

proportion of the income earned by the trainee

post-graduation. As depicted in the chart below,

for the programs covered in Rockefeller study,

average salaries earned after graduation quickly

surpassed the training costs per individual.

29

https://www.rockefellerfoundation.org/app/uploads/Prepari

Across all eight programs, it took on average 3.6

months of post-graduation earnings to cover the

cost of training.

Program design for Kosovo: Options and

considerations

The following provides the elements of a

possible design of a market- and export-

responsive skills development program in

Kosovo, aimed at job creation. Based on the

review of the international best practice and

considering the existing market failures and

strategic sector objectives in Kosovo, we

propose the following major areas of

intervention:

1. Establishment of a market surveillance

mechanism to define the demand for

quality and quantity of skills, which

includes:

o An export market monitor, to

ng-the-Poor-and-Vulnerable-for-Digital-Jobs.pdf 30 Ibid

Box 2: Closing the training gap in Mexico

In 2008, the World Bank signed the IT Industry Development Project with Mexico. The project was

aimed at creating initiatives that could be self-sustainable in the long run addressing the main

bottlenecks for development. As part of the project Mexico First was specifically created to address a

skills gap in the IT sector. It had three key functions: up-skilling the supply of labour force in the area

of IT, engaging the employers (demand side) and setting up a technology watch to monitor the

demand in the field of IT. The government of Mexico did not participate as a stakeholder in the board,

although it was closely involved in funding. Connection with employers was ensured through the

participation of the chamber of industry.

Essentially, Mecixo First serves as a matching fund. After receiving requests for training from the

companies, it opens the bidding among the training providers. Specially designed committee evaluates

the bids and offers this training to the company. At the initial stage 50% of funding came from the

World Bank loan, while the Government (25%) and the training recipient (25%) covered the

remaining part.

Important feature in funding refers to the fact that the subsidy to training providers is released not

based on training only, but based on certification of the participants. 80% of certification rate is set as

a target.

MexicoFirst has become the main provider of training grants for IT industry and more then 9000

people have been certified and trained through its support. Notably, the Mexico First program itself

only has 8 employees.

Source: Interviews with World Bank staff.

12

provide updates on the trends in

and demand from the global

digital economy, and;

o An annual demand survey of

Kosovan firms into the

definition of in-demand skills.31

2. A start-up acceleration mechanism, which

is geared towards providing technical and

financial support to young entrepreneurs in

Kosovo. World Bank team is currently

working with a local consultant to define

the details of this component and link it

with these other two activities.

3. A digital economy skills for jobs program

for young people that delivers global-

standard training in the subject areas,

identified through the abovementioned

market surveillance as being in high

demand;.

As it will be shown in the remainder of the

report listed components envisage strong

partnership between the industry, training

providers and the government. This should

tackle the existing market failures primarily

relating to the information gaps and coordination

31 Kosovo ICT association STIKK is already implementing

the second component of this mechanism. STIKK is also

failures.

These three pillars jointly would provide a

strong boost to Kosovo’s digital economy

development, steer entrepreneurship and equip

companies with top-notch qualified

professionals. This report is focusing on

illuminating the detailed architecture of the

“digital economy skills for jobs” training

program, while the reports on other components

will be provided separately.

Strategic design elements

Box A represents visualization of the key

program design elements and their effect on

market failures identified in the first part of the

report. As it can be seen from the table on the

next page, all defined components address the

challenges or failures either directly or

indirectly.

The first two elements are two of the three major

areas of intervention. They target the

coordination failure, increased quality of

training and increase the positive spillover by

means of boosting ICT startups. The remaining

5 elements belong to the “digital economy skills

interested in developing the first component as well,

pending availability of funding.

Figure 5: An Attractive “Return on Investment”: Income, Training and Salary Metrics

Source: Grimm et. al. 2013

13

for jobs” component. They are explained in

detail in the remainder of the report.

Industry-government partnership: Institutional arrangement

This implies cooperation among the industry—

including training providers and digital economy

businesses—and the government. Such a group

is already established in Kosovo in the form of

the ‘Steering committee of the Kosovo National

IT strategy,’ which represents the critical mass

of like-minded people/organizations concerned

with the fate of the digital economy’s

development in Kosovo.

For the purposes of successful implementation

of proposed program the industry-government

partnership should include representatives of the

key line ministries like Ministry of Education,

Science and Technology, Ministry of Labour

and Social Welfare, Ministry of Economic

Development and Ministry of Finance. On the

other hand, major employers in the ICT field as

well as the industry associations should play a

pivotal role in the partnership.

Finally yet importantly, universities and other

private training institutions represent the third

important part of the steering committee.

Bringing together all key actors the steering

committee aims to tackle the coordination

failure and increase awareness of all parties

involved (including the future trainees) on the

benefits of participation and opportunities in the

digital economy. Respectively, this element has

Box: Key design elements and their role in addressing existing market failures

Design elements

Market failure

Mark

et

surv

eillance

mech

anism

Startu

p jo

bs

acceleration

Ind

ustry

-

go

vern

men

t

partn

ership

Ind

ustry

-

info

rmed

curricu

lum

Glo

bal

standard

trainin

g

Em

bed

ded

match

ing

services

Impro

ved

afford

ability

via v

ou

chers

Gaps in

information on

benefits

Gaps in

information on

mechanisms

Coordination

failure

High costs of skills

acquisition

Underinvestment

in training quality

Presence of

spillovers

Key: Direct effect Indirect effect

Source: Author’s analysis.

14

direct and indirect effect on all market failures.

The presence of the steering committee is a clear

advantage for keeping the topic on state agenda

and making sure all the voices are heard.

However, it is a rather high-level body with

numerous participants. Respectively, there is a

need to define a program management agency

(PMA) with technical level people and smaller

size that would take over the management and

administration of the proposed program. The

PMA should ideally represent a group of 4-5

people acting on behalf of the steering

committee.

It is critical to note that definition of the PMA

does not imply the creation of a new agency or

institution, but rather to identify an existing

agency, ministry, not-for-profit actor, or other

credible and capable participant that can play

this role. Only if such an agency cannot be

identified, might it be necessary to set up a new

agency.

The PMA is also meant to be a coordinator with

national educational institutions including the

Ministry of Education, Science, and

Technology—especially its higher education and

TVET departments—and with organizations that

work on qualifications frameworks, donor

coordination (e.g. with EU-based funding

agencies working on education), and so on.

Industry-informed curriculum

A notable market failure has to do with the weak

coordination among trainers and employers due

to lack of understanding of the in-demand skills

and provision of relevant, market-responsive

training programs. This manifests itself critically

in terms of the curriculum design.

As the latest STIKK survey indicates,32 about 85

percent of ICT companies have not been

consulted in the process of curriculum

development at public/private universities.

Furthermore, the report indicates that the efforts

from training providers are focused on the

inputs: facilities, labs, programs, and alignment

32 http://stikk.org/en/publications/

with some foreign university programs.

Introducing employers at the educational boards

of the universities is a positive development,

however, even in this case adopting/revising a

curriculum is a long process and cannot respond

to the rapidly changing trends on the market.

Private training providers, who offer courses of

shorter duration, are somewhat in a better

position in this regard.

The proposed training program design thus

needs to have a responsive curriculum design

methodology. Hence, we propose this to be

informed primarily by the results of the market

surveillance mechanism. As mentioned in the

introduction to the report this mechanism should

produce timely and up-to-date analysis regarding

the skills need and respectively define the

specific training areas. Considering the dynamic

nature of the industry this exercise should be

carried out shortly before launching the training

sessions. For similar reason, current report does

not go in-depth analysis of the topic.

Figure 6 outlines the steps in the curriculum

design process, which envisages utilizing the

results of the market surveillance mechanism, as

well as inclusion of local employers.

Apart from this, design methodology will need

to take into account the capacity of local training

providers. As described in the first part of the

report, number of training providers is not large

in Kosovo. There are about 10 major providers

including the universities, few VET colleges and

other private providers.

All training providers need to get accreditation

of their programs by the national authorities. It is

important to mention that private providers run

most of their programs using internationally

certified trainers and programs. The public

universities and VET colleges also follow the

suit, however, with varied outcomes.

The typical practice at private companies is to

certify local staff either through on-line courses

offered by the vendors or sending them abroad

for receiving the training. As for universities,

15

efforts are made to align their curriculum with

that of universities in Western Europe or the US.

However, updated curricula itself does not

suffice for high quality education as the quality

of instruction plays a crucial role in this regards.

As a matter of fact we can differentiate among

the training fields and areas in which local

providers feel confident to deliver (e.g. Java),

but on the other hand there are number of areas

where they have openly expressed the

willingness to receive further support and know-

how (e.g. Scrum). In areas where local resources

might be lacking, the intervention may support

partnerships with international training providers

and building local training capacity.

Apart from the technical skills training the

program should make an emphasis on soft skills.

Communication, problem solving, teamwork

and collaboration and foreign languages (esp.

English) are critically important for the job

market. The language issue is particularly

important for supporting female employment

considering that 68% of women only speak

Albanian33.

Last but not least, local employers need to be

involved in the process of training program

design, not only because they might be more

aware of the current needs and trends on the

market, but also to increase their ownership and

33 Kosovo Agency of Statistics, 2014

motivation for participation.

Global Standard Training

Efficient and effective training delivery is key to

successful outcomes and thus the ‘who, when

and where’ of the training are critical issues to

be considered. Theoretically, there are two

options: (a) training provision with single

provider; or (b) using multiple providers

(distributed model).

While the first option makes the process easier

to manage, it represents a strong distortion to the

local market as public support to one provider

would put it in a monopolistic condition and

crowd-out the business of other existing training

providers, especially in smaller market such as

Kosovo. During the timeframe of conducting

this study we did not observe cartelization or

monopolization of training as a market failure,

and hence, do not see the need for an

intervention that would need to bring in a new

strong competitor. Hence, this option may in fact

hinder, rather than support capacity development

of local providers.

On the other hand, the distributed approach

brings better opportunities to increase existing

training providers’ capacities and offer high

quality training. In this option, the PMA,

cooperates with local partners (private or public)

Figure 6. Curriculum design process

Source: Authors

Program Management Agency processes results of the Market Survaillance Mechanism and local employer surveys and sends out request for training in the most demanded fields

Training providers together with employers involved in the program devise a training curriculum based on the request & send it back to the Program Management Agency

Program Management Agency assesses the quality of the training program (its adhere to national and international standards)

Final training programs/curricula are established and approved

16

who are tasked to design (together with

employers) and deliver the training. The

program management agency retains oversight

and reviews the quality of training.

This intervention, although less distortionary, is

much more difficult to administer considering

the varying levels of current quality of training

provision. Assessing the quality of proposed

training program is a crucial aspect of the

program design. As described earlier, the level

of international certification varies among the

training providers in Kosovo. The quality

assessment process should thus consider

following aspects: international certification of

the training provider, quality of individual

trainers, training equipment and duration.

Ensuring the quality of proposed training should

also consider another important challenge. As

described in the earlier sections, there are certain

areas where local providers have no expertise

and might not be ready to provide training

without external assistance. It can be safely

assumed, that training in exactly these areas will

be heavily sought-after by the local, as well as

international employers.

Consequently, the training delivery component

should take this into account. This will require

funding for training of trainers and assessments

to ensure that training providers attain, operate,

and maintain standards. Those assessments can

be both through evaluation of infrastructure,

curricula, and facilities, and through the

evaluation of training by trainees. Funding for

this aspect of the program will need to be set

aside, especially for training centers that are

newer or outside of the main urban areas (and

are hence less likely to have the key

infrastructures in place).

Figure 7 presents two streams of training: one

that is aimed at training providers (ToT) and

another aimed at individuals/future employees.

Given such a design the proposed intervention

does not only aim at becoming a training broker,

but also aims at building the capacity of local

training providers. ToT will be provided by an

internationally renowned training institution and

include IT freelancers, as well as representatives

from industry and academia. The trainers

undergoing ToT will acquire new skills in ICT

using complex problem solving and problem-

based learning approaches.

This part of the program needs to be separate

from the selection process of the training

providers. The PMA should be given the task to

identify training areas for which local capacity

already exists and where ToT is needed first.

Figure 7: Training Process

Despite more challenging design of the

distributed model, it represents much more

sustainable approach in a future perspective

compared to the first option (solo provision of

training). Respectively, the text proceeds

assuming this type of design.

The distributed training model will also open the

possibility of training being delivered outside of

the main urban areas, and in some of the smaller

towns. This will require assessment and likely

capacity building of the training providers in

those locations, but will increase the likelihood

that more people will be able to participate in the

program especially if they are employed or have

family/social responsibilities that might prevent

them from travelling elsewhere for training.

Embedded Matching Services

As the review of international practice shows

training delivery is not effective unless it is

matched with proper guidance and counseling

services. As described in the first part of the

ToT in the

"New" Training

Fields for

providers

Training delivery

for individuals

17

report, this system is in a nascent phase of

development and there are no national standards

or guidelines to be adhered to. Universities run

their own career guidance services. The National

IT Strategy puts a spotlight on this issue by

proposing the introduction of Student Placement

Service. The proposed intervention directly

refers to this idea.

Namely, the matching service should offer

enrolled students the following services:

- General guidance on the chosen field of

study: estimated earnings, demand on

the local and international labour

market, specific requirements put

forward by the employers;

- Specific matching service by the end of

the training: support in the preparation

of applications, getting into contact with

employers, preparing them for the first

interview, counseling them throughout

the negotiation process with the

employer; as mentioned earlier first

contact with the employer has been

noted critical for stepping into the

labour market. In this regard the

program could provide internship

opportunities to the high achievers to

boost their employment chances. This

would be conditional on the internship

places provided by the employer.

- Full or partial financial support can be

provided to the graduates to undertake

international certification. STIKK

barometer surveys indicate that

international certification increases the

bargaining power on the labour market.

By adding this component to the

program, participants will have

increased motivation to complete the

training;

- Post-placement service: monitoring the

first few months after recruitment and

offering on-the-job counseling when

necessary.

Cooperation with the public employment office

(PEO) in this regard is highly recommended.

34

http://documents.worldbank.org/curated/en/2015/06/24880

Many of the PEOs in Kosovo are hampered due

to the low staff capacity, insufficient technology,

week ties to the professional training providers

and most importantly with the private sector.

The Ministry of Labour and Social Welfare is

fully aware of the challenge and attempts to

improve the situation with international support.

Most notably, one of the focuses of the World

Bank “Competitiveness and Jobs” project34 is to

improve the capacity of PEOs and Active

Labour Market Policies. It is noteworthy, that

young people are least interested in cooperating

with PEOs, despite of their high unemployment

rates. Given the fact that proposed training

program is an active labour market measure in

itself, targeted at young Kosovars, synergies

should be sought between the two WB projects.

Job matching and mediation service, as outlined

in this section, is a key function of PEOs. It is

possible that the PMA could provide necessary

inputs to the PEOs to undertake digital economy

skills and jobs-related matching.

Cooperation with employers becomes

particularly critical in this part of the program. It

helps ensure that the program is demand driven

and students have opportunities to be linked with

industry once inducted to the program.

Employers can cooperate with the program to

the different extent. The models in Table below

show increasing level of participation in the

program.

The categories in the table are not mutually

exclusive and employers participating in the

consortium can be offered to choose any

combination of the roles as per their

convenience. It is important to consider that

historically the interest from private firms has

been limited to engage in similar processes in

Kosovo. Thus, they need a strong incentive to

participate in the program. Production of the

high caliber cadre should become the main

motivator for companies to show increased

participation level, offering more internship and

employment opportunities to the program

257/project-information-document-concept-stage-kosovo-

competitiveness-jobs-p152881

18

participants.

Table: Different levels of Employer Inclusion

Level of

participation

Functions

Co-design of the

training

program35

Employers provide

regular insight

regarding specific skills

need of the future

employees, which are

reflected in the curricula

Co-design and co-

execution of the

training program

Employers provide

regular insight into the

specific skills needed

and use the devised

training programs for

their in-house training

Offering

internships to the

training

participants

An employer makes

certain number of

internship places

available for program

graduates

Recruiting

training

participants

An employer recruits

certain number of

graduates (could be

direct recruitment as

well as after the

internship).

Improved Affordability via Vouchers

Training programs of this type are typically

funded through various sources like

government/donor funding, employer

contribution as well as tuition fees paid by the

participants. In most cases however, funding is

realized as a combination of several sources,

which is not surprising considering that they are

addressing the needs felt by different groups:

governments concerned about the work-

readiness of their region’s young people, private

sector entities desperate for talent and young

people looking for new skills and opportunities.

However, certain options are pre-determined for

Kosovo. As indicated earlier out-of-pocket

payments would represent a big strain for the

population and high cost of training has been

identified as one of the market failures for the

35 It is crucial to note that as part of developing the National

Qualification Framework Kosovo has elaborated guidelines

proposed analysis. On the other hand, it is

difficult to motivate employers to contribute

financially to the scheme when they do not trust

the quality of training and have no guarantees

that other companies will not poach trained

workers. These issues point towards the need for

public intervention.

We propose a voucher model for funding the

training program. For the given situation they

can be organized in two ways: vouchers

provided to future students and/or to the training

providers. It is worthwhile to note that in the

case of option 1 (single training provider)

voucher mechanism is not relevant and in this

case funding will be solely based on the

negotiation between the training provider and

the consortium. As for the option 2 (distributed

model with several participants), the table below

outlines the possible scenarios.

Table 2: Funding model options in the distributed

model of training delivery

Preparatory

Stage

Funding

Option 1.

Vouchers

to Training

Providers

Funding

Option 2.

Vouchers to

Training

Participants

- Ask for the

bids for

training

delivery;

- Evaluate the

bids;

- Select the

“best”

providers

- Provide

vouchers to

the selected

training

providers

- Pre-test the

potential

training

participants

- Provide the

vouchers to

the selected

participants

Providing vouchers to the training participants

has clear advantages. It gives the freedom of

choice to the participants and fosters

competitiveness among the training providers.

On top of this it ensures that training is not

purely driven by the narrow interest of the

employers, but serves the need of young people

who might be interested in starting up their

for employer participation in training design, delivery etc.

19

business.

Nevertheless, there are certain issues to be taken

into account in this case:

- The value of the voucher: should it

cover the entire training fee or should

the students co-finance the training?

Previous experience suggests imposing

at least symbolic contribution to ensure

that students have incentives to

complete the program.

- Considering that the program aims at

inclusivity, students outside Pristina

should be given a chance to participate.

Respectively, vouchers might include

small stipends or could be designed to

be accepted in a wider range of training

locations. This will also help in

expanding training opportunities to

minorities.

On the other hand, when vouchers are provided

to the training providers it purely serves the

function of satisfying the “order” placed by the

employers to the consortium. This would ensure

highly demand-driven nature of the program,

however, it might limit the scope of training, as

the demand might be small. Limiting the

freedom of choice for individuals is also

counterproductive for fostering entrepreneurial

spirit and hence increased job creation.

When vouchers are provided to the training

providers certain measures should be taken to

ensure they have right incentives. Just like in

case of depicting various levels of employer

inclusion, voucher disbursement to training

providers may happen based on number of

people trained, certified and/or placed. These

steps show increased level of responsibility put

on the training provider, with each step

increasing the pressure for successful

performance.

Determining how to encourage training

providers to support trainees after the classroom

phase is over can be challenging. Nevertheless,

number of programs carried out by World

36http://www.worldbank.org/content/dam/Worldbank/docu

ment/Gender/1411485_AGI_LearningFromPracticeSeriesv

Bank36 indicates that results-based payments

conditional on placement can work. For

instance, in Liberia a “Withheld Incentive

Payment” (WIP) has been applied. WIP means

that 10 percent of total contract value is withheld

until 6 months after the classroom training ends.

Of this amount the training provider receives an

amount proportional to the number of graduates

employed. While in Nepal the training cost is

directly broken up in direct training cost and

incentive for placement, which is disbursed

gradually after the training ends, depending on

the “outcomes” achieved. Obviously, a thorough

monitoring mechanism shall be introduced to

avoid potential risks like “creaming” of training

participants, discouraging “poor performers” to

continue training or over-reporting of the results.

Ensuring inclusion of women and minorities

The team has sought to consider the steps it

could take in ensuring the inclusion of women

and vulnerable groups in this program. We

discuss the preliminary thinking regarding

inclusion here, focusing on three groups: women

(especially rural women), ethnic minorities, and

people with disabilities.

Given the small size of Kosovo’s population, it

must activate the largest number possible of

inhabitants to contribute to the economy.

Kosovo lags in and should consider including

more women, especially from outside of the

urban areas in the digital economy. The team

that prepared this report has also been involved

in the WOW pilot, which has had some success

in mobilizing young, educated women to learn

skills and market them through online work

platforms. At this time, the experience suggests

that women might need a travel stipend to allow

them to travel comfortably and safely to-and-

from work or their location of training. In terms

of technical skills and competency, we found

that candidates were competitive and are

trainable to global standards. Further discussion

on the need for, and possible directions to

5.pdf

20

include women in the program is in Box A.

Kosovo’s population has about 10 percent of

ethnic minority groups, including Serbs,

Roma, Ashkali, Egyptians, Gorani, Bosniacs,

Turkish, and Croatians. As noted by a number of

studies on access to education for minorities in

Kosovo, those groups tend to face additional

barriers due to lack of instruction or content in

their language. There might also be barriers to

their participation in this training program other

than economic (i.e. affordability).

Hence, the program as defined (including the

possible option of vouchers to enhance

affordability) should take into consideration

those actions that can build links with the

minority communities in Kosovo. This might

include the need for specific language outreach

and instruction, to ensure that participants from

the Serbian minority, or from the Roma

community.

As has been noted in multiple studies, the digital

economy creates possibilities for people with

disabilities (PWD) to increase their economic

and social participation by allowing them

increased access to lifelong education, skills

development, and employment.37 It might be

possible for a participant with a disability to

access the program if they have accessible

technology solutions provided to them, and are

able to use accessible work places. Finally, the

team is also testing out whether the WOW

program will be useful for people with

disabilities (in this case women) to find and do

work online. That pilot-in-a-pilot, of four

women with disabilities, is yet to begin, but the

team will document results and integrate them

into any downstream work that addresses these

issues.

In each case, additional support during the

placement period might also be required to

ensure that successful participants from these

minority groups find jobs.

It is also critical to note that these initial

37 See, for example:

http://pubdocs.worldbank.org/pubdocs/publicdoc/2016/4/12

‘markers’ on inclusion are meant to form a first

step in the discussion. Specific actions will need

to be defined based on a social inclusion

assessment that may be carried out—for

example, in conjunction with civil society or

other donors—to identify particular actions to

identify, mobilize, and ensure high-quality

participation of specific minority groups.

Such an assessment could be carried out in

partnership with the industry association STIKK

and with the Government, when the specific

program may be developed for implementation.

Mapping the program design to the IT

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Divide-through-Digital-Technology-RAJA.pdf

21

Strategy, and evaluating economic impact

In closing, we present the mapping of the

program design with the IT strategy. In effect,

the intention is to underscore that the proposed

program is responsive to the strategic objectives

and the existing ideas of the Kosovo government

and the ICT sector, rather than being some

external concept that is disassociated with local

realities or programs.

Moreover, we map the items with the market

failures that we have diagnosed, to ensure a tight

fit both to the strategy and to the rationale for

public sector interventions.

As shown in table 3 proposed program design

overlaps in number of areas with the national IT

strategy. This points to the need for increased

cooperation between the national IT steering

committee and the PMA.

Hence, this program would support and align

with a number of elements of national strategies.

Costing of the program, possible economic impact, and sustainability

The scope of this report did not include a

detailed financial assessment of the program.

However, we provide a simple ‘back-of-the-

envelope’ estimate here to offer a sense of the

possible costs and the economic impact.

The costs of a training program such as the one

proposed here vary significantly based on the

Box A: A focus on inclusion of women in the digital economy

There are three main reasons for efforts to increase the likelihood of women’s participation in the

proposed training program and subsequent success. First, surveys of Kosovo’s ICT employers find

that they employ four times more men than women. Second, women own one in seven ICT

businesses, as of 2014. This is in spite of the fact that more women have completed their tertiary

educations in ICT-related field. It is also despite the fact that Internet usage among Kosovar women is

similar to men, at about 79 percent (compared with 81 percent) as of 2013. This is the third reason—a

need to identify and address gaps to convert latent talent, which is a weight on a small economy such

as Kosovo, into productive human capital.

Specific efforts to mobilize women to participate in training and working in the ICT sector are needed

as surveys in Kosovo show that often times there information and perception gaps at play. For

example, 24 percent of women surveyed said they chose not to work in the ICT field as it was a ‘male

profession.’ A staggering 44 percent said that they did not have adequate support networks. Other

reasons for their non-participation include the more general issues related to social norms (such as

female members of the household having to take care of the elderly or young family members). The

lack of information among women about career opportunities in the field is also high; most get their

information from non-professional or personal social networks.

Even among formal employees, many women report a lack of support from employers (78 percent) or

gender prejudices (71 percent) as hindrances at work. Results from the WOW pilot suggest that at

least some women do see telework as an opportunity to earn an income using their skills, while

gaining from the flexibility of working from home. However, language barriers and skills gaps may

hold them back from being competitive.

Consequently, efforts are needed to improve awareness of the opportunities of the digital economy as

a career choice—among young women and their families—and to boost the likelihood of them

gaining relevant skills, and most critically, progressing in their careers. This will need the formation

of social networks, including mentor and peer groups to help with information sharing and support.

Various pilots within Kosovo—including WOW, but also supported by other donors—can provide

useful pointers to what might be learnt and which interventions could be scaled up.

22

number of students, possible contributions of

businesses, and types of skills to be delivered.

Based on other ICT skills development

programs financed by the World Bank, the cost

per trainee could be in the range of US$1500-

3000. Costs can be further reduced by using

existing infrastructure (e.g. tying up with a local

training partner or using existing university

computer lab facilities).

Hence, if the target is to have about 1000

students trained (over a four-year program), and

presuming higher costs per student given the

advanced level skills and the smaller size of the

program, costs for the program could be in the

range of $2-4M.

The value of salaries of workers employed after

this program (with conservative assumptions;

$500 in monthly salaries, and only half of 1000

trainees employed) is in the range of US$2.8

million (over five years). This suggests that the

program will have a positive significant impact

in terms of economic value generated. The

internal rate of return of such a program over

five years will be about 27 percent, and the net

38 It is worthwhile to note that even as improving the

education system will be critical for overall improvements,

the particular skills development program envisaged here is

focused on employers’ dynamically changing needs (as

opposed to the more stable capacities developed in the

present value in year zero of personal taxes

generated is over $200,000.

A related issue is sustainability, in terms of

financial issues, but also institutional issues and

the risk of ‘brain drain’. At this time, the

analysis suggests a few initial ideas that may be

considered.

First, implementation of this program could have

an indirect positive effect on increasing the

quality of the education system. As outlined

previously, the program envisions building

capacity of local providers in digital economy

training–where local providers do not feel

comfortable enough and declare that they need

know-how. The providers are largely defined as

private training centers, as well as VET colleges

and Universities. Thus, by training individuals

(lecturers, instructors) from these providers there

would be a positive spillover effect on the

national education system, as these individuals

will integrate the expertise into their regular

teaching.38

Second, the program (and specifically the PMA)

education system). In that context, an effort will need to

consider the rigidity of public educational system (e.g., the

courses/syllabi cannot be changed overnight, accreditation

and approval of changes to the courses sometimes can take

years). As such, the effort outlined here will be a

Table 3: Mapping the program design to the IT strategy

Components of the Program Design Reference in the national IT Strategy

Market Surveillance Mechanism 2.10. Compile monthly newsletter on latest

technology trends

3.1. Export information service

Digital Economy Skills for Jobs Program 2.1. Establish STIKK Training Academy

2.3. Establish national IT quality forum

2.5. Establish Quality management & certification

program

5.1. Implement continuous improvement system for

IT education in Kosovo

5.3. Introduce Student Placement Services

5.5. Competency assessment standards for IT students

Start-up acceleration mechanism 7.1. Start-up coaching and consulting

2.7. IT enterprise development Fund

7.2. Support angel investors to Kosovo

9.3. FDI incentive scheme

Source: Authors.

23

should look to increasing the probability that

employers will be willing to co-finance or even

take over the program in the long-run. For this,

the program should provide a value to the

private sector and help to overcome the

coordination failures that might exist currently.

Aiming for such an outcome would mean

emphasizing the demand-orientation of the

program.

While it will not be possible to stem ‘brain

drain’ entirely, it is likely that linking training

with improved local labor market outcomes will

at least help to stem the tide. For this, high

quality training combined with awareness

building about the clear links to the demand for

labor among employers and strong placement

and matching services will help. As indicated

earlier, improving support for graduates from

this program to become digital entrepreneurs in

Kosovo will also help reduce the risk of brain

drain.

Relatedly, it would be useful to include—as

noted earlier—a ‘training of trainers’ stream

within the larger program. This would help to

increase the capacity of the training ecosystem

within Kosovo, while also helping (to some

extent at least) reducing the risk or impact of

‘brain drain’. The Government may consider

providing small grants to set up training centers.

A mix of interventions would need to be piloted

and interventions evaluated; the successful

programs should then be scaled up.

Summary of the program design

This section summarizes key aspects of the

program design. As it can be discerned from the

sections above key stakeholders have a role to

play in almost all components of the program.

Below we summarize major tasks per

responsible bodies.

The Program Management Agency takes the

lead in defining the areas of training to be

offered by the program, identifies the training

areas where local providers need ToT and

capacity building, and checks the quality of

supplement to the formal education system and focused

entirely on bridging Kosovars from education to

training delivery. At the same time, it is in

charge of overall coordination of the program,

and where necessary, steers the public awareness

campaign.

The training providers design the training

curriculum aligned to the international

standards. When necessary they participate in

ToT to increase their capacity and deliver high-

quality trainings. The employers are involved in

the curriculum design process and voice their

opinion regarding the areas of training to be

delivered by the program. Depending on the

level of involvement, they co-execute the

training and recruit the participants as interns

and/or employees.

In the end, we would like to draw readers’

attention to the fact that that there are certain

fixed and variable components in the program

design. The basic elements as presented in Box

A can be considered fixed as they are deemed

essential for the closing the gap in digital

economy skills delivery in Kosovo. However,

local actors have certain degree of freedom to

choose how exactly these components can be

implemented. The latter refers to the “variable”

sub-components as described in the table 4

below.

Finally, it should be noted that depending on the

combination of the “variable” sub-components

multiple program designs are possible.

Irrespective of the final design it is crucial that

right incentives are provided to all parties

involved.

This primarily refers to the strategy towards the

“employers” and “training providers.” For both

groups the report outlines different modes of

involvement with increasing level of

commitment. Obviously, the highest level of

involvement is desirable (e.g., employers

recruiting students from the program and

training providers committing to place the

participants into jobs). However, it might take

some time to build the trust among the

stakeholders. Thus, it may be advisable to start

employment, in the digital economy.

24

from the minimum and gradually increase the level of commitment.

Table 4: Fixed and Variable Components of the Program Design

Program Components

Fixed Variable

Industry-government partnership

Industry informed curriculum - Based on international market surveillance

- Based on local employer surveys

- Both

Global standard training - Single provider vs. Distributed model

- Co-executed with employers

Embedded matching services - Counseling

- Matching services

- Post placement services

- Others

Increased affordability through vouchers - To training providers

- To participants

- Both

25

Annex 1: List of Respondents

1. Agim Kukaj – Head of the Department of Post, Telecommunications and Information,

Ministry of Economic Development of Kosovo

2. Alejtin Berisha – Executive Director, College Universum

3. Bardh Kadiu – Deputy Executive Director, STIKK

4. Donjeta Sahatcju – Partner & Executive Director, Rrota

5. Driton Hapciu – Managing Partner, Cacttus

6. Edmund Hajrizi – President, University for Business and Technology

7. Enver Hamiti – Dean, Electrical and Computer Engineering Faculty, University of Pristina

8. Flamur Shala – Co-Fouder, Baruti

9. Gentrit Gojani – Cofounder/Android Developr, Zag-apps

10. Gezim Pula – Managing Partner, 3CIS

11. Ibrahim Gashi – Rector, University of Pristina

12. Leart Zogjani – Founder, Art Director,

13. Leart Zogjani – Founder, art Director, KOKRRA

14. Levent Koro – Economic Expert, Consultant

15. Lindita Tahiri – Vice Rector for International Relations, University of Pristina

16. Mentor Sahiti – Executive Director, Adaptivit

17. Peonare Caka – Teach ECDL Project Manager, American University of Kosovo

18. Rron Cena – Riector, Formon

19. Shkumbin Hoxha – Director, Tekkoc LLC.

20. Uranik Begu – Executive Director, Innovation Centre Kosovo

21. Vildane Kelmendi – Training Department Manager, Cacttus

22. Visar Jasiqi - American University of Kosovo

23. Vjollca Cavolli – Executive Director, STIKK

24. Yll Daci – Director of Operation, 3CIS