By Jacob Patterson-Stein
Making predictions can be risky. Models fail, experts disagree, and externalities abound. There were people who claimed unrest in Tunisia would have minimal impact in the wider region. How many hats have been eaten in the last year? That said, if terrorism was the defining international issue of the first decade of the twenty-first century, youth unemployment is becoming the global crisis of the second decade.
This is not a prediction or speculation. It is happening now—among both the G20 nations and in the developing world. How the international community responds will be critical.
In its most recent short-term outlook for the G20 Labor and Employment Ministers, the International Labour Organization (ILO) and Organization for Economic Cooperation and Development (OECD) noted that despite an overall 1.5 percent increase in the average employment rate, youth unemployment, which is often twice the overall unemployment rate or higher, is leading to a “scarred generation.” Put more bluntly by those outside of rarefied international conferences, young people born after 1980 are “the screwed generation.” For this generation, long-term unemployment or underemployment threatens to become structural. However one chooses to characterize it, this generation is dealing with too few job options and weaker social protection systems to help ease the pain.
Seventy-five million unemployed young people in the G20, an increase in temporary employment, and as the ILO and OECD report puts it, the “duality of workers in decent work and those who are not” are a threat to aggregate growth, security, and future stability. Despite the seemingly insurmountable demographic debacle, steps are being taken to address these problems.
In France, where youth unemployment is around 23 percent, the government is offering to subsidize up to 75 percent of the salaries of newly hired young people. In the United Kingdom, the government is paying wage incentives to employers who hire job seekers who are 25 or younger. With a youth unemployment rate of 17.1 percent in the United States, the Department of Labor launched the Summer Jobs+ Initiative, which created more than 300,000 summer jobs for low-income youth. No single program will turn the tide of youth unemployment in the G20, but leaders in the EU and US are actively engaging the issue. What is less clear is how the developing world will deal with this crisis.
Africa has the largest youth population in the world and it is set to double in the next thirty years. In the last four years, the continent as a whole has seen relatively steady GDP growth of around 3 percent, and in some areas, such as Ethiopia and Burkina Faso, it has been approximately 9 and 5 percent respectively. Yet, as The Guardian recently reported, almost 60 percent of the continent’s unemployed are between the ages of 15 and 24. With an expected 17-point increase in the number of youth in secondary education in Africa by 2030, the need to increase employment opportunities is dire.
The consequences of unemployment in any country can be long lasting and personally detrimental. Deterioration of skills, depression, and economic stagnation are all very real concerns but the stakes are even higher for many governments in Africa. The World Bank found that nearly half of the young people involved in rebel movements were motivated by continual unemployment. In Ghana, where it is estimated that fewer than half of the 20,000 annual college graduates will find work, youth unemployment has been deemed a security threat.
For governments trying to ingratiate themselves with their citizens, unyielding youth unemployment poses a threat to accountability. The chief economist for the African Development Bank, Mthuli Ncube, recently said that youth unemployment “raises profound policy implications for African governments in terms of economic inclusion, social cohesion, and global competitiveness.”
The African Economic Outlook (AEO), a network of NGOs and think tanks, has made some constructive recommendations to address youth unemployment throughout Africa. Their advice included increasing productivity-enhancing foreign direct investment as well as better integrating labor and education to ensure students are learning skills relevant to the market.
Additionally, AEO suggested increasing labor market flexibility by decoupling social services from employment, so that people are willing to risk changing jobs without giving up healthcare, childcare, or educational opportunities. The organization also supports policies that make it easier to fire employees in places where entrenched interests stand in the way of trade liberalization, such as the doctors’ unions in Tanzania, which actually led to reduced treatment, or terminal operators holding cargo to collect fees while delaying shipments in Kenya. Such measures could clear a path to meaningful employment for the educated young people that have grown up with mobile phone banking and music video swapping via Bluetooth.
These recommendations merit consideration, but it is also worth noting that the metrics of “unemployment” are not necessarily applicable when looking at data from the developing world. Even the ILO definition of unemployment, which includes “those seeking work” and “available for work” seems somewhat misguided. Most organizations use multiple metrics to measure workforce participation, but it is important to recognize that employment, underemployment, and, yes, unemployment can look very different in different places.
In 2010, the official unemployment rate of South Korea was 3.7 percent. It also happened to be 3.7 percent in Liberia that year. This was not because the rising tiger had a cub in West Africa; it instead can be attributed to a “relaxed” definition of unemployment by the Liberian labor survey, which included most of the informal –meaning the untaxed and unregulated– economy. Data that accounts for informal labor is important, however this should not obscure the fact that quantity does not imply quality.
However, this situation is not without hope. In Ivory Coast, the World Bank has launched the Emergency Youth Employment and Skills Development Project, a partnership between the government and private businesses to create internships and job training. Additionally, by facilitating the organization of certain professions in the informal agricultural and service sectors, young people will be able to find stability in the jobs they are intermittently working now.
To progress further, government, private, and non-profit organizations should cooperate to set standards and help products find markets in a way that recognizes that “the informal is normal.” For example, Building Markets, a New York-based nonprofit, is working with young, small-scale carpenters in Liberia to help them find buyers for their wares. The World Bank’s Shanta Devarajan has written that the challenge in Africa is “to increase the productivity, and hence earnings, of the majority of young people who will be employed in informal farms and household enterprises.” Apprenticeships, mentoring programs, and skills training would help young people grow or move beyond the informal work of their parents.
Writing in Foreign Policy, Susan Lund and Arend Van Wamelen of McKinsey & Co. proclaim: “Africa needs a job strategy, not just a growth strategy.” By focusing on existing informal markets and the skills associated with them, such as agriculture, sewing, basic finance, small two- or three-person businesses, and construction, governments in Africa can facilitate an increased demand for human capital, especially among youth. Policy that opens trade and supports young people by increasing their skills will begin to address the jobs crisis and lend some stability to the burgeoning youth population in Africa.
In the aftermath of deposed dictators and with the daily reporting of rebels fighting for democracy, it is easy to forget that it was disgruntled youth who initiated the Arab Spring. Whether in Spain or Senegal, youth unemployment is a truly global challenge. A serious effort to combat youth un- and underemployment will require individual governments, bilateral organizations, and international bodies to work with private and informal sectors. The issue of the next ten years could last for decades more without concerted and immediate action.
Jacob Patterson-Stein is a second year Master of International Development Policy student. Prior to attending McCourt, Jacob worked for Thomson Reuters in Washington D.C., the More than Me Foundation in Liberia, and in a rural public school in South Korea. He spent summer 2013 working for the Support for Economic Analysis Development in Indonesia (SEADI) project in Jakarta.