When Youth is Wasted on the Young: The Global Crisis of Youth Unemployment

Youth unemployment

By Lisa Jorke.

“Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.” (Article 23 of the Human Rights Declaration)

News about distressing unemployment rates among young people have been shaking up European media in recent years. Not only in those countries hit hardest by the Eurozone crisis, also within the UK unemployment rates of around 20 per cent among young people caused political debate. Statements by conservative politicians such as George Osborne’s “culture of worklessness” allegedly pervading among the young however completely miss the point. Quite the contrary, youth unemployment is a major challenge in any part of the world, regardless of culture.

According to estimates from the International Labour Organization, around 74.5 million young people (i.e. persons between 15 and 24 years of age) were unemployed in 2013. With around 13.1 per cent, the unemployment rate among young people is almost three times that of the adult unemployment rate. Worst hit regions are the Middle East and North Africa, parts of South America and the Caribbean, and Southern Europe. Despite the diverse economic structures in different regions of the world, the employment situation of young people has aggravated problems practically everywhere else, too. The problem becomes even bigger when looking at the so-called NEETs (not in education, employment or training), who are estimated to comprise around 300 million people in the world.

What makes the issue of youth unemployment so alarming is the fact that it crosses seemingly established borders between industrialised and developing countries and occurs across all levels of education, affecting both young men and women (although women to a slightly higher degree). How can the elephant in the room be explained, then? Is it a repercussion from the global financial crisis? A consequence of worldwide population growth and demographic change? Or is there simply a lack of jobs? A closer look at national and regional characteristics of youth unemployment shows that the issue defies easy explanation.

The many faces of youth unemployment

The global financial crisis has had widespread disastrous effects on people and livelihoods and has exacerbated poverty and inequality the world over. Especially in developed economies, unemployment rates have risen sharply—in the European Union it is estimated to have increased from 7.2 in 2007 to 11.0 in 2013. The Eurozone crisis in particular entailed rigorous austerity measures imposed by national governments in Greece, Spain, and other troubled EU economies, and enforced by the troika of International Monetary Fund, European Central Bank and EU Commission. These measures, which include cuts in social protection, public sector salaries and education, have caused a noticeable rise in unemployment in these countries. As is well known from empirical observations, recessions tend to hit young people the hardest. Young people have less experience and less dependants than their older colleagues, so they are the first ones to get the boot when employers need to let people go—and the last ones to be hired again. Youth unemployment rates in 2012 have reached staggering heights in Greece (55.4 per cent), Spain (53.2 per cent), and Portugal (37.7 per cent), closely followed by Italy, Slovakia, and Ireland. In comparison, Germany’s youth unemployment rate was at 8.1 per cent in the same year.

So the state of the economy and the position a government takes up in social expenditures do play a decisive role in determining the state of a country’s (or region’s) youth unemployment. But it does not explain youth unemployment figures in the Middle East and North Africa, which with 28.3 per cent (as of 2013) has the highest regional youth unemployment in the world—compared to 18.3 per cent in Europe. While unemployment rates in the region have risen as a result of the global financial crisis, in the last decades the MENA economies have actually been growing. They have an abundance of young people—in fact, a third of the population is between 15 and 29 years old—many of them well-educated. And yet this is what makes the situation so difficult in this part of the world. There are simply too many young people for not enough jobs. The “youth bulge” currently experienced by the MENA countries offers an opportunity to spur economic growth and quickly increase wealth. Yet when their talents remain untapped, young people risk becoming a vast cohort of jobless. The same problem is faced by many countries on the continent. Africa will have the largest workforce on the planet in 2040, exceeding that of China and India. There is economic growth, there is an abundance of young people, but there is also a lack of sufficient structural change to absorb these people into the labour market. The urgency to create jobs is huge for African governments: if the Ugandan government does not create 600.000 annually over the next twelve years, it will be unable to meet specified social and economic goals. If not enough jobs are created, the effects on poverty levels on the continent will be dramatic.

While adverse economic and demographic conditions are important factors contributing to high youth unemployment, they conceal the fact that global youth unemployment is a structural issue. Young people remain jobless despite economic growth because growth fails to create a sufficient amount of jobs. In the global post-crisis economy, this has been termed the “jobless recovery”. So what makes this recovery jobless? It is the political, economic and educational environment in which young people are able (or unable) to enter the labour market. And all across the planet, these environments show serious dysfunctions.

The first—and arguably most obvious one—is a lack of sufficient education, which is particularly problematic in Sub-Saharan Africa. 36 per cent of those aged between 15 and 24 have never attended school, 28 per cent have only finished primary school, and a mere 8 per cent finished secondary school. In North Africa, too, most unemployed young people do not even have secondary education. Young people without sufficient education are severely limited in their choice of employment. They have to accept jobs in the agricultural sector or work informally, either as unpaid family labour or as small entrepreneurs (over 70 per cent in some countries). Informal employment puts young people into highly vulnerable employment conditions and makes them part of the huge global cohort of the working poor. Among the world’s 942 million working people living under $ 2 a day (as of 2010), 23.5 per cent were between 15 and 24 years old. Young people in developing countries are thus among the poorest and most vulnerable workers on the planet.

However, this does not mean that education always protects from unemployment. Evidence from Vietnam to the Philippines, from Tunisia to Sub-Saharan Africa, shows that a large proportion of young people most vulnerable to unemployment are those who are highly educated. In economies where structural change from primary to tertiary sectors has not taken place to a sufficient degree, these people are often overqualified for the jobs available. This is certainly the case in the Maghreb (Tunisia, Algeria and Morocco), where a large number of people attend university to prepare for public sector jobs which are no longer available in such great numbers. Similarly, the current generation of jobseekers in Southern Europe is very highly educated, but struggles to find quality jobs. While some choose to become self-employed, this can also be a challenge, as bureaucratic hurdles to open up formal businesses are extremely high in places such as Spain, Algeria, and Sub-Saharan Africa. And while entrepreneurship is certainly desirable from a policy makers’ point of view—after all, it turns job seekers into job creators—starting one’s own business requires a certain degree of know-how and means taking financial risks.

The challenge for many young people is thus not the availability of jobs per se, but the availability of jobs that suit their education and skills. As described earlier, developing economies with a lack of structural change cannot accommodate enough well-educated people in their labour market. In search of the right job, these people often leave their home country. According to the United Nations Population Fund, “economic migrants are the world’s fastest growing group of migrants”. To illustrate the scale of the problem, in the Philippines over a million university-educated citizens left their country in 2000. However, the jobs waiting at the other end of the world may not always be more suitable. Thus many well-educated overseas Filipino workers are overqualified in their positions as domestic workers, especially in the Gulf countries. Yet the lack of perspectives at home is such that they still put up with ill-suited work abroad under often harsh working conditions.

Repercussions of youth unemployment

So what happens to the young people who are unable to find a place to work? Like malnutrition, unemployment at a young age can have adverse effects later in life. Those affected are more likely to not find employment at all; and even if they do, they tend to be paid less than people who have not been unemployed. The young jobless are affected by skills stagnation and wasted capacities. Both physically and mentally, they tend to be less healthy.

And also for national governments, the effects of youth unemployment can be serious. Not only will they face lower tax revenues and higher social spending, but a large portion of economically inactive young people will also stifle economic growth and drive social inequality and unrest. Some commentators assert that the high unemployment rates in the Middle East and North Africa contributed to the upheavals around the Arab Spring.

The “time-bomb” character of global youth unemployment acts as a reality-check on governments the world over. Political decision makers need to ask themselves how they plan to sustain their nation, how they intend to involve young people in their economic, political and social future and let them contribute to economic development. But challenges also emerge on a transnational scale. How to handle global flows of migration and remittances, what to do about destitution and social unrest that ignites whole regions?

The case for a concerted effort to tackle youth unemployment is evident, but achieving the right balance will be tricky. On the one hand governments need to create a climate conducive to business and job creation, as an overregulated formal sector can lead to an inflated informal sector where jobs are more insecure. At the same time political regulators need to make sure workers receive a fair wage in the formal economy. Crucially for young people, the transition from education to work needs to be smoothened. This requires better coordination between all involved actors. As a McKinsey report stated, 74 per cent of education providers in Europe were positive that they had prepared their graduates well for the job market—a statement which was supported by only 38 per cent of young people and 35 per cent of employers. Regarding training at the workplace, only 21 per cent of employees in American companies received training in the past five years (as of 2011) compared to two and a half weeks per annum in 1979. Clearly there is a need for improved communication between all stakeholders, and the search for joint solutions pays off. Examples from Cambodia, India and Chile show that public-private and multi-stakeholder projects produce better results than government-only initiatives. Programmes to fight youth unemployment on a regional scale in Europe and the Arab world have so far been little more than public promises, however.

Should this come as a surprise? Maybe not. After all, youth unemployment seems to be much less problematic for those who are neither young nor unemployed. At the heart of the youth unemployment issue lays a generation gap. For members of the older generation who have made a living in the old world, it is easy to dismiss the needs of the younger generation struggling to make a living in the new one. It will take a bridge across the gap to create a perspective for the young generation and to belie George Bernard Shaw’s claim that “youth is wasted on the young”.

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