Large regional unemployment differences are one of the major problems of the Lithuanian labour market. National registered unemployment rate stood at 9.4 per cent on July 1, 2003. Nevertheless, 6 municipal territories witnessed the unemployment rate exceeding 20 per cent at the beginning of 2003, while there are three territories in similar situation now. Hence, the difference between the highest and lowest unemployment rates in different regions is nearly fivefold. Active measures aimed at stimulating labour market and enhancing employability in such regions, leading to reduction of regional disparities, is high on the agenda.

Promotion of Local Employment Initiative (LEI) projects is one of the measures of Unemployment Reduction Programme. It aims at active community job-creation efforts and seeks to jointly solve unemployment problems. This “neighbour helps neighbour” programme, implemented by Lithuanian Labour Exchange (Public Employment Services) is aimed at employment and business promotion in the regions remote from major towns and having high jobless rate.

Entrepreneurs, having business ideas and ability to deliver entirely new products and services can apply for financing and receive a grant (up to 17,200 litas (5,000 euro) for creation of one job). Contracting employers shall undertake the obligation to use the newly created jobs to employ socially vulnerable persons.

 In 2001, 16 pilot projects were implemented in 9 territories and led to creation of 151 jobs. In 2002, 36 projects creating 377 new jobs were implemented.

LEI projects are popular among the employers. This year, 167 eligible applications were received. Currently 89 projects, which will create 818 new jobs, are backed by 7.4 million litas. 68 per cent of LEI projects for 2003 cover wood processing, food and sewing industries. Other projects have the purpose of creating new or enhancing old services, such as agro-tourism, car repair or beauty salon services

Aims

• Creation of new jobs with the view to increase employment of the population and reduce long-term unemployment.

• Provision of local population with better opportunities to participate in economic activities and helping to independently solve their socio-economic problems.

• Reduction of vulnerability of different territories to structural changes in the economy, provision of better possibilities for further development thereof.

• Helping to form a more active and mature community capable of solving its socio-economic problems independently.

Target groups

Socially vulnerable groups of individuals identified by local labour exchanges together with social partners, such as long-term and young unemployed, persons of pre-retirement age, the disabled, etc.

Main project assessment criteria

• Meeting the key needs of the local labour market (unemployment reduction, development of viable economic activities, solving employment problems of specific groups of the unemployed).

• Helping to reduce the number of social benefit recipients.

• Financial support for the project from at least two partners.

• Organisation of vocational training or retraining of the unemployed.

• Municipal support (financial means, premises, equipment, tax benefits, etc.).

• Added value of the project (possibilities for broader application, chances to increase employment in other socio-economic spheres, etc.).

• Focus on new economic activities and/or social services.

• Training curriculum and methodological material to be used when organising training on project preparation for the employees of local labour exchanges (project preparation management, evaluation, selection, financing, supervision and control) are underway;

• Training curriculum and methodological material for the staff working on project preparation (project preparation and management, financing, reporting) are underway.

Legal basis for implementation

Financing:

• LEI are financed from the state budget and Employment Fund.

• The State grant (subsidy) for the creation of one new job shall not exceed 40 minimum monthly wages.

• The project applicant together with its partners shall provide at least 35 % of the total project value.