Part III – Interventions
The series of conversations conducted by the World Economic Forum between August 2013 and January 2014 explored stakeholders’ perspectives on interventions that, in their view, should be adopted to sustainably increase the number of young people productively employed by the private sector.
Throughout this exercise, stakeholders continually emphasized the critical importance of enhancing cooperation, coordination and communication between the private sector, government and civil society (see Box 9).
To achieve such collaboration, stakeholders pointed out that all businesses, governments and young nationals must first recognize and assume their respective responsibilities for reducing youth unemployment, which is of common interest since social stability is required to ensure economic prosperity, and vice versa.
The widely acknowledged importance of cooperation between the private sector, the government and civil society demonstrates that stakeholders share a common, broad perspective on the actors who need to be involved to design and implement interventions to tackle youth unemployment.
Box 9: Some Quotes of Business Leaders, Political Leaders and Young Nationals Concerning Cooperation
- “We hire nationals because we have a social responsibility to do it. The whole region’s stability is dependent on employment creation.”
- “We need a business-led approach to education.”
- “Ministers should be closer to the business sector and to business reality.”
- “The private and public sectors need to share the risk of hiring and training nationals.”
- “The private sector in the region is not bringing a lot of foreign currency in, is not paying a lot of taxes and is not employing a large number of national people. The private sector needs to assume its role and take responsibility for at least one of those three requests, which is to become part of the solution when it comes to employment creation. The government assumes its role by investing.”
- “Young people in our society need to be heard, to express their needs, feelings, abilities, dreams. They just need a chance, support and trust.”
In general, suggested interventions tend to be linked to stakeholders’ perceptions of the root causes of youth unemployment.
If each is taken in isolation, stakeholders’ perceptions of the main causes of youth unemployment – as explored in Part I of this report – would come to define the boundaries of solutions proposed as interventions. For example, if the skills mismatch was to be recognized as the sole root cause of youth unemployment, solutions would be limited in scope to the areas of education, training programmes and the alignment of education with private sector demands. Other significant issues, such as the willingness of young people to work in the private sector, might not be addressed.
As the analysis in Part II emphasizes, youth unemployment is a systemic problem that requires comprehensive, forward-looking and daring solutions. Integrating the perceptions of diverse stakeholders and analysing their causalities provide a “big picture” that on the one hand extends the solution space, while on the other surfaces the necessity for restructuring the foundations of the employment system.
To illustrate this further, the integrated framework exposed in Part II can be used to assess the potential impact of select interventions, the issues they leave unaddressed, and the potential unintended consequences – positive and negative – they might foster. Throughout the project, stakeholders suggested a broad range of interventions to address youth unemployment (see Annex 2 for a comprehensive list of suggestions), among which the three following ones were the most recurring:
- Increasing the flexibility of the legislative and regulatory framework, notably by harmonizing labour laws between national and non-national labour forces and by relaxing regulations related to entrepreneurship and SMEs (e.g. bankruptcy regimes)16
- Improving the education system and developing effective vocational and on-the-job training programmes to provide young people with the skills needed by the market
- Creating a virtuous circle of economic diversification by prioritizing industries, expanding their value-added activities, and integrating SMEs in the entire value chain; this includes encouraging entrepreneurship and easing access to finance for entrepreneurs and SMEs
The three most recurring suggested interventions have a huge potential to solve the unemployment problem, but only if they are implemented in concert and supplemented by additional interventions.
As presented in Table 1, each of these interventions is informed by one or two perceptions emphasizing a specific root cause of youth unemployment. Testing the effectiveness of each of these interventions illustrates that they might prove less effective or sustainable than presumed if implemented individually (see Table 1).
Table 1: Using the integrated framework to test the effectiveness of interventions: Selected examples (click here to open full page version)
|Suggested intervention to sustainably increase the number of young people productively employed by the private sector||Corresponding perception(s) of the main causes of youth unemployment||Example(s) of impact||Example(s) of remaining barriers for young people to be productively employed in the private sector||Example(s) of potential – positive and negative – unintended consequences|
|1. Increasing the flexibility of the legislative and regulatory framework, notably by harmonizing labour laws between national and non-national labour forces and by relaxing regulations related to entrepreneurship and SMEs||Perception 5: Labour regulations are too rigid for national employees|
Perception 6: The business environment is non-conducive for entrepreneurship and SMEs
Where it links in the integrated framework: “Limited rights of non-nationals” and “Protective government”
|• Increases the relative competitiveness of the national workforce|
• Creates a “wake-up call” for young people to take responsibility
• Encourages entrepreneurship by changing the rules that shape attitudes towards failure (for example easing bankruptcy laws)
|• Work ethics and skills of young nationals are not addressed, hindering successful competition|
• The attractiveness of the private sector for young nationals remains limited if the regulatory framework doesn’t tackle the public employment scheme as well; even if it does, attractiveness of the private sector remains confined by the degree of (mis)trust between it and young people
|• Work incentives need to be addressed in parallel, otherwise labour force participation of young nationals might decrease if their labour rights are reduced (for example reduced job protection), given their expectations towards the social contract|
• If the regulatory framework eases rigidity only in the private sector, public employment would become even more attractive (for example if job protection there persists)
• If labour laws and related regulations are harmonized by giving more rights to non-nationals, it could strengthen non-nationals’ long-term engagement with their host country
|2. Improving the education system and developing effective vocational and on-the-job training programmes to provide young people with the skills needed by the market||Perception 1: There is a skills mismatch inhibiting nationals from being employed in the private sector|
Where it links in the integrated framework: “Education dynamics”
|• Improves young people’s employability by teaching them market-relevant skills (for example technical, managerial, social skills)|
• Raises young people’s awareness of opportunities offered by private companies by increasing their exposure to private sector activities and role models during training programmes
|• If changes in the education system do not target family and primary education, basic incentives for young people to take responsibility and productively participate in the labour market might not be tackled |
• If improvements in the education system do not address creativity, young people’s problem-solving skills might remain insufficient for the private sector
• The non-national labour force remains more competitive in terms of cost (lower salary expectations) and flexibility (lower job protection and overall less labour rights)
|• If labour laws are not harmonized simultaneously, this could lead to increased frustration on the part of well-educated young people who still cannot find their space in the private sector due to the competitive advantages (cost and flexibility) of non-nationals|
• If improved education is translated into higher labour force participation of young people in general, and women in particular, this might ease public budgets; the productive contribution of women to economic development might also support economic diversification efforts
|3. Creating a virtuous circle of economic diversification by prioritizing industries, expanding their value-added activities and integrating SMEs in the entire value chain; this includes encouraging entrepreneurship and easing access to finance for entrepreneurs and SMEs||Perception 6: The business environment is non-conducive for entrepreneurship and SMEs|
Perception 7: The economy is not sufficiently diversified
Where it links in the integrated framework: “Protective government” and “Education dynamics”
|• Fosters self-employment and job creation beyond the oil and gas sector|
• Increases the attractiveness of the private sector for young nationals by creating jobs in sectors that are more attractive to nationals (e.g. knowledge-based industries)
|• The employability of young people is not addressed|
• The relative attractiveness of entrepreneurship and private sector employment for young nationals remains limited if the lack of social recognition of the private sector and/or young people’s awareness of their opportunities and rights in the private sector are not addressed
• If cultural perceptions of certain job functions do not change, young people’s willingness to go into vocational training or accept jobs that match their skills might not be addressed
|• If there is a lack of skilled and motivated national labour to sustain a more diversified economy, reliance on non-national labour would be encouraged|
• As economic diversification encourages using the entire workforce, it could in turn spur the implementation of the other interventions
Moreover, these examples suggest that to sustainably increase the number of young people productively employed by the private sector, additional measures are needed, particularly measures that increase trust-building between the private sector and young people, as well as measures that create a suitable framework for young people to become more independent, creative, motivated and responsible.
To this end, devising mechanisms for systematically increasing the private sector’s engagement with decision-making in the public sphere, and increasing integration of the non-national workforce into society, could foster greater trust between the private sector and young people. Additionally, concerning young people’s mindsets, reshaping the educational system is necessary but not sufficient. The analysis found in the previous section exposes that the prerequisite for effective reforms is the willingness of authorities to give up their protection of young nationals to some degree, giving the latter the motivation to take greater responsibility for their lives. A performance management system in the public sector that increases the accountability of employees conjoined with lower job security would achieve such an impact, for example. In this scenario, government would serve as a role model for family and primary education, ultimately culminating in profound change to the mental frameworks of young nationals. Only through such interventions will young women and men be able to succeed in a competitive private sector and contribute to economic prosperity.
Enabling an environment in which young women and men are able to contribute to economic prosperity requires rethinking the starting point of social stability dynamics.
The benefits of implementing reforms to the employment system in a comprehensive and structural manner are evident, particularly bearing in mind the vulnerabilities exposed in the previous section. A system that relies on the productivity of its own workforce is clearly more resilient than one that relies on volatile oil and gas prices. The way in which the social contract is implemented today could not be sustained in the long term should oil and gas prices decline. Hence, tackling the challenge on a structural level might incur short-term costs, as it implies redesigning the whole employment system, including its educational institutions, but opens the way to seize long-term opportunities and make the system more sustainable over the long run.
Given the structural nature of the employment system’s vulnerabilities, any sustainable intervention needs to take underlying behaviour patterns and created dependencies of the system into account. The good news is that these patterns are primarily constructs of the current system and can thus be redirected and modified through the creation of a different, more resilient system.