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Global Risks Report 2018 Home Previous Next
  • Report Home
  • Explore the survey results
    • The Global Risks Landscape 2018
    • The Risks-trends Interconnections Map 2018
    • The Global Risks Interconnections Map 2018
    • Evolving Risk Landscape, 2008-2018
    • Global Risks of Highest Concern for Doing Business 2018
  • Read the Report
  • Preface
  • Executive Summary
    • Arabic
    • Chinese
    • French
    • German
    • Portuguese
    • Spanish
  • Global Risks 2018: Fractures, Fears and Failures
  • Economic Storm Clouds
  • Future Shocks
    • Grim Reaping
    • A Tangled Web
    • The Death of Trade
    • Democracy Buckles
    • Precision Extinction
    • Into the Abyss
    • Inequality Ingested
    • War without Rules
    • Identity Geopolitics
    • Walled Off
  • Geopolitical Power Shifts
  • Hindsight
    • Antimicrobial Resistance
    • Youth Unemployment
    • Digital Wildfires
  • Risk Reassessment
    • Resilience in complex organizations
    • Cognitive bias and risk management
  • Appendices
    • Appendix A: Descriptions of Global Risks and Trends 2018
    • Appendix B: Global Risks Perception Survey and Methodology 2018
  • Acknowledgements
  • [—divider—]
  • Press Release
  • Shareable Infographics
  • Blogs and Opinions
  • [—divider—]
  • Download the Report

Youth Unemployment

REUTERS/Toby Melville

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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

24
24 In the United States, youth unemployment has declined significantly since the crisis, but a 2016 study suggests that 95% of US net job growth between 2005 and 2015 comprised temporary or unstable jobs. See Katz, L. F. and A. B. Kreuger. 2016. “The Rise and Nature of Alternative Work Arrangements in the United States, 1995–2015”. Working Paper #603, Princeton University, Industrial Relations Section. September 2016. http://dataspace.princeton.edu/jspui/bitstream/88435/dsp01zs25xb933/3/603.pdf
25
25 Global Shapers Community. 2017. Shapers Survey, online data presentation. http://www.shaperssurvey2017.org/
26
26 ILO (International Labour Organization). 2016. “Youth Unemployment Challenge Worsening in Africa”. Press Release, Abidjan, 24 August 2016. http://www.ilo.org/addisababa/media-centre/pr/WCMS_514566/lang--en/index.htm
27
27 World Bank Data: Population ages 0–14 (% of total) https://data.worldbank.org/indicator/SP.POP.0014.TO.ZS and WHO Global Health Observatory data repository: Population Data by country (Recent years): Population Median Age http://apps.who.int/gho/data/view.main.POP2040?lang=en
28
28 United Nations Department of Economic and Social Affairs (UN DESA). International Migration. http://www.un.org/en/development/desa/population/theme/international-migration/
29
29 Diop, M. 2017. “Africa Can Enjoy Leapfrog Development”. The World Bank Group. 11 October 2017. http://www.worldbank.org/en/news/opinion/2017/10/11/africa-can-enjoy-leapfrog-development
30
30 Sapleton, K. 2017. “China Now Produces Twice as Many Graduates a Year as the US”. World Economic Forum Agenda. 13 April 2017. https://www.weforum.org/agenda/2017/04/higher-education-in-china-has-boomed-in-the-last-decade
31
31 International Labour Organization (ILO). 2016. “Guy Ryder Announces Global Youth Initiative”. Press Release, New York, 1 February 2016. http://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_447516/lang--en/index.htm
32
32 European Commission. 2015. “EU Youth Guarantee: Questions and Answers”. Fact Sheet, Brussels, 4 February 2015. http://europa.eu/rapid/press-release_MEMO-15-4102_en.htm
33
33 Dolado, J. J., ed. 2015. No Country for Young People? Youth Labour Market Problems in Europe. London: CEPR Press. http://voxeu.org/sites/default/files/file/No_Country_Young_People_VoxEU.pdf, pp. 132–34.
34
34 Google’s programme launched in 2016 with a goal of training 1 million people, but the target was increased to 10 million in 2017. IBM’s programme is larger still, aiming to train 25 million people, initially in Egypt, Kenya, Morocco, Nigeria and South Africa.
35
35 Jacobs, R. 2017. “Germany’s Apprenticeship Scheme Success May Be Hard to Replicate”. Financial Times. 21 April 2017. https://www.ft.com/content/1a82e8e0-04cf-11e7-aa5b-6bb07f5c8e12
36
36 Sandbu, M. 2017. “A Policy for Centrists Who Care about the Left-Behind”. Financial Times. 2 November 2017. https://www.ft.com/content/d9eca590-bf05-11e7-b8a3-38a6e068f464
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