The 2014 Global Risks Report highlighted the risk that the global financial crisis would create a “lost generation”. We pointed to youth unemployment as a corrosive legacy, with the capacity to hinder young people’s integration into traditional patterns of economic life, such as earning, saving and building careers. Among the specific issues raised were long-term unemployment; low-quality, part-time and temporary employment; weak links between education and work; the impact of demographic change and migration; and increasing pressures on social protection systems.
Globally, youth unemployment has been broadly static since the publication of the report in 2014, and it remains moderately higher than before the global financial crisis. Joblessness remains alarmingly high in some countries and regions. Even where job creation has picked up since the crisis, concerns are rising about the growing prevalence of low-quality employment and the rise of the “gig economy”.24 Youth unemployment is set to remain an important global challenge—particularly as demographic shifts in developing countries gather pace—and will continue to amplify numerous domestic and global risks, including social exclusion, mass migration and generational clashes over fiscal and labour-market policies.
Global average masks big underlying differences…
Regional trends differ markedly, particularly in North America and the European Union, where the crisis hit hardest, leading to rapid increases in average youth unemployment followed by sharp reversals (see Figure 4.2). Two other regional outliers are North Africa and Latin America, which have seen youth unemployment jump for reasons unrelated to the crisis. The trigger in North Africa was the onset of the Arab Spring in 2010, while joblessness in Latin America has been increasing since 2014 against a backdrop of mounting political and economic turmoil.
Figure 4.2: Regional Youth Unemployment
Source: International Labour Organization (ILO) Modelled Estimates. http://www.ilo.org/ilostat
Note: Data valid as of 9 October 2017.
Despite the rapid improvements recorded in Europe since 2013, the region remains particularly exposed to problems of youth unemployment: on average, young people in Europe remain much more likely to be unemployed than their counterparts either in North America or in most emerging regions (see Figure 4.2). In some European countries, which had high levels of youth unemployment before the crisis, the situation remains particularly dire—notably in Greece, Spain and Italy. These countries have seen sharp increases in poverty and other adverse societal impacts.
Youth unemployment remains stubbornly high across the Middle East and North Africa (MENA), at around 30%. The ongoing nature of the region’s long-standing challenges on this issue are emphasized by the latest results of an annual World Economic Forum survey of more than 30,000 young people globally: in 2017, respondents from MENA cited the “lack of economic opportunity and employment” as the most serious issue facing their country.25
…and positive headline trends can mask structural challenges
Youth unemployment rates are, on average, significantly lower in developing than advanced economies. However, the structural factors we highlighted in 2014—notably bulging youth populations and the prevalence of low-quality and informal-sector work—continue to challenge developing regions. Across Africa, for example, youth unemployment decreased slightly over the past decade, but levels of working poverty among the young remain high: 70% of young people live on less than US$3.10 per day.26 Since Africa is the youngest region in the world,27 this is likely to have lasting consequences for the continent and beyond: the extent to which a sufficient number of good jobs can be created for rapidly growing youth populations will be a key driver of future migration flows.28 Accelerating technological advances will complicate this challenge in many countries, requiring major improvements to education systems.29
China faces a different challenge: although youth unemployment in the country has remained stable, a 10-fold increase in the number of university graduates between 1997 and 2017 has created problems of underemployment. Many graduates are in low-skilled work, with 25% earning less than the average migrant worker.30
Youth employment schemes have their limits…
In 2016, the UN launched the Global Initiative for Decent Jobs for Youth to coordinate policies on youth employment and young people’s labour rights.31 A similar umbrella scheme exists at the EU level—the €6 billion Youth Guarantee programme, under which member states pledge to ensure that within four months of becoming unemployed young people are offered new employment, education or a workplace apprenticeship.32 However, in countries where youth unemployment appears most intractable, structural drivers—such as relatively high rates of early school-leaving—mean that such short-term interventions will struggle to have much effect. Deeper structural reforms are needed.33
…unless accompanied by education and workplace reforms
The private sector is playing an increasingly prominent role in tackling youth unemployment by equipping youth with marketable skills, particularly in developing economies. Google and IBM, for example, have launched digital-skills programmes for young people in Africa.34 There is a growing recognition of the importance of apprenticeships and vocational training. In Switzerland, the Global Apprenticeship Network (GAN) is a platform of 14 global businesses—including Adecco, IBM, Microsoft and Nestle—that help companies around the world to set up apprenticeship programmes. The government of Germany, a clear leader in this area, is currently working with 18 other countries on apprenticeship schemes.35
The increased use of “flexicurity” policies is another potential way of helping young people who are currently unemployed or consigned to low-quality work. Flexicurity combines (1) increased flexibility for employers to hire and fire workers with (2) generous state unemployment payments and (3) increased investment in active labour market policies (ALMPs)—measures that currently differ widely between countries (see Figure 4.3).36 By encouraging increased movement between jobs in the labour market, flexicurity policies help to create employment openings for young people.
Figure 4.3: Public Spending on Active Labor Market Policies (ALMPs)
Percent of GDP
Source: Organisation for Economic Co-operation and Development (OECD). https://stats.oecd.org/Index.aspx?DataSetCode=LMPEXP