Global Employment Trends for Youth

Global Employment Trends for Youth

2006 International Labour Organization Report

The world is facing a growing youth employment crisis. Both developing and developed economies are faced with the challenge of creating decent and sustainable jobs for the large cohort of young women and men entering the labour market every year. The issue features prominently on the international development agenda.

Youth employment is a major focus of the Millennium Development Goals (MDGs) and was reaffirmed by the Ministers and Heads of Delegations participating in the High-Level Segment of the Substantive 2006 Session of the Economic and Social Council (ECOSOC) who committed themselves to “develop[ing] and implement[ing] strategies that give youth everywhere a real and equal opportunity to find full and productive employment and decent work”.

Recognizing that a failure to successfully integrate young people into the labour market has broader consequences for the future prosperity and development of countries, in June 2005 ILO constituents adopted a resolution on youth employment which spelled out an “ILO plan of action to promote pathways to decent work”.

One element is to expand knowledge of the nature and dimensions of youth employment, unemployment and underemployment. The ILO Global Employment Trends for Youth aims to do just that.

This report adds to growing evidence of a global situation in which young people face increasing difficulties when entering the labour force.

One of the principal findings is that a global deficit of decent work opportunities has resulted in a situation in which

One out of every three youth in the world is seeking but unable to find work,Or has given up the job search entirely Or is working but still living below the US$2 a day poverty line.

Without the right foothold from which to start out right in the labour market, young people are less able to make choices that will improve their own job prospects and those of their future dependents.

This, in turn, perpetuates the cycle of insufficient education, low-productivity employment and working poverty from one generation to the next.

The report, therefore, adds urgency to the UN call for development of strategies aimed to give young people a chance to make the most of their productive potential through decent employment.

“Youth unemployment and situations in which young people give up on the job search “discouragement”) or work under inadequate conditions (“underemployment”) incur costs to the economy, to society and to the individual and their family. A lack of decent work, if experienced at an early age, often permanently compromises a person’s future employment prospects and frequently leads to unsuitable labour behaviour patterns that last a lifetime. There is a proven link between youth unemployment and social exclusion. An inability to find employment creates a sense of vulnerability, uselessness and idleness among young people. The most obvious gains then, in making the most of the productive potential of youth and ensuring the availability of decent employment opportunities for youth, are the personal gains to the young people themselves.”

In 2025 42% of the population will be under 25 years old, ie 3,360 000 young people.

It is therefore essential that we now actively seek solutions and work for youth employment over the next 15 years.

A growing labour force can be an asset for labour markets and societies if the economy needs labour and has enough jobs to offer. However, if economic growth is not matched by growth of decent employment opportunities, labour force growth can be a threat since the competition to find jobs among the many young people entering the labour market becomes more intense.

In labour markets where an excess supply of job seekers compete for vacancies, it is the young people who lack social networks and the know-how to market themselves as potential employees who will be the ones left behind to join the growing number of unemployed or discouraged youth. Alternatively, they will accept work under inferior conditions or move into the informal economy which offers the only possibility of earning a living.

This vicious circle that results when economic growth cannot accommodate labour force growth has been observed in sub-Saharan Africa, the Middle East and North Africa, and South Asia. Conversely, a decreasing labour force can also be a challenge as can be witnessed in many developed economies, (former) transition economies and, to a certain extent, also in East Asia, where labour shortages may be starting to retard economic development.

Overall the youth labour force is expected to continue to grow:

633 million in 2005

657 million in 2015

Including 300 million working poor (less than 2$/day)

A deficit of decent work opportunities impacts not only young people who are looking but unable to find employment – the unemployed – but also results in a situation where young women and men work under poor conditions (the “underemployed”) or involuntarily fall outside of the labour force due to their belief that there is no work available for them (the “discouraged workers”).

Regardless of their economic activity status (employed, unemployed or inactive), young people who are not able to make the most of their productive potential are susceptible to feelings of despondency, to marginalization and impoverishment, to idleness and potential attraction to illicit activities, to feeling frustrated with their situation and to directing their anger and frustration at the society that created it.

These are the young people who would benefit the most from policy interventions aimed to increase decent work opportunities for youth. (ILO –2006)

Creation of decent work opportunities for young people (work that offers a worker a good income, security, flexibility, protection ..) should be the priority in terms of turning what is currently wasted productive capacity in large parts of the world into a positive force for development.

Misconception : Unemployment is the key labour market challenge for youth. (ILO-2006)

Youth unemployment is only the tip of the iceberg. Although more difficult to quantify, there are two other groups that together outnumber the unemployed youth but suffer from the same frustrations as the unemployed: the discouraged youth and the working poor.

In countries without effective unemployment support mechanisms, concentrating on unemployment also runs the risk of excluding from the analysis the less privileged population who simply cannot afford to be unemployed.

In several developing countries, young people of higher socio-economic backgrounds are over-represented in the unemployment numbers because it is only they who can afford to spend time looking for work, without incoming wages.

The problem is not so much unemployment, therefore, in developing countries but rather the conditions of work of those who are employed. In such cases the indicators which relate more to conditions of work would be a much more informative gauge of the labour market situation of youth.

Summary

•Young unemployed in 2005 : 85 million (74 million in 1995)

•Young poor workers : 300 million (- 2$/jour)

•Discouraged young people : 20 million

In other words, 400 million decent employment positions are needed in order to reach the full productive potential of today’s youth.

One in three young people

suffers from the inability to find or maintain decent work, has given up looking, or works for wages inferior to the poverty threshold of US$2 a day.

Young people are still 3 times more likely to be unemployed than adults.

Youth unemployment continues to rise in most regions of the world. (ILO - 2006)

The number of young unemployed people increased by 14.8% over the last ten years to the current high of 85 million in 2005. A closer look at the different regions shows an increase of 85.5% in South East Asia and the Pacific, 34.2% in sub-Saharan Africa, 23.0% in Latin America and the Caribbean, 18.2% in the Middle East and North Africa, 16.1% in South Asia, slight decreases in Central and Eastern Europe (non-EU) and CIS and East Asia and a considerable decrease of 17.5% in the developed economies and European Union.

Between 2004 and 2005 the only decrease was observed in the Developed Economies and European Union. All other regions saw increases between 0.4 per cent (South East Asia and the Pacific) and 3.1% (Central and Eastern Europe (non-EU) and CIS). The total number of unemployed youth has increased again over the last two years and stood at 85.3 million in 2005.

Labour market indicators: SE Asia and the Pacific / Europe comparison

 

Active population, share of youth in working age population:

In South East Asia and the Pacific : 27.5%In European Union and developed economies : 15.7%

 

Youth Unemployment rate trends 1995 - 2005 :

In South East Asia and the Pacific : a dramatic increase from 9.2% to 15.8%. This marked rise had to do with the phases of economic crises that led to a heavy increase in unemployment in general, but even more so in youth unemployment. (It has been estimated that a 1 per cent increase in adult unemployment will be matched by 2 per cent rise in unemployment among young people. ILO – 2005).In European Union and developed economies : a considerable decrease from 15.2% to 13.1%.

Ratio of youth-to-adult unemployment rates:

In South East Asia and the Pacific : the ratio was more than 5 times higher than adult unemployment. Young people are highly disadvantaged when looking for work compared to adults.In European Union and developed economies, the ratio was only 2.3 times.

 

Most regions saw increases in the number of unemployed youth between 1995 and 2005. The largest increase of 85.5 per cent (from 5.2 to 9.7 million) was in South East Asia and the Pacific.

 

Why are youth unemployment rates higher than adult unemployment rates? (ILO - 2006)

 

There are many likely explanations:

 

1. The last-in, first-out explanation. Youth are more vulnerable than adults in difficult economic times. They likely to have less work experience than adults. Assuming that employers seek employees with past experience (and as discussed in section 5, this is the case), the youth who is entering the labour force for the first time will be at a disadvantage and have a harder time finding employment vis-à-vis an adult with a longer history of work experience. In times of surplus labour competing for a limited amount of jobs, the youth will be the “last in”. Similarly, because a young worker is likely to have less tenure than an adult worker, less company funds invested in them for training purposes and to have a temporary contract, it will be considered cheaper to let the younger worker go in times of economic downturns. Thus, young workers will be the “first out”.

 

2. The lack of job search expertise explanation. A young person often lacks both labour market information and job search experience. In many developing countries, it is only through informal placement methods – typically through family and friends – that a young person finds work. Beyond the word of mouth approach through families and friends, they simply might not know how and where to look for work. Adults, on the other hand, might have the possibility of finding future work through references from previous employers or colleagues and are more likely to know the “right” people.

 

3. The “shopping around” explanation. Another possibility is that youth might take longer to “shop around” for the right job, meaning they might wait longer to find work that suits their requirements. This, however, implies that a support structure, such as the family, exists to economically support them while they search for work.

In low-income countries, this support structure does not exist for the majority of young people and as a result, a young person simply cannot afford to be unemployed and is likely to take whatever work becomes available, regardless of working conditions or whether or not the job fits his/her education or skills-base.

 

4. The lack of mobility explanation. Young people just starting out in the labor force are unlikely to have the financial resources to re-locate, nationally or internationally, in pursuit of work. Because many will continue to depend on household incomes, their job search threshold will be limited to the nearby vicinity of the family home.

 

None of the explanations on its own is likely to explain in full the difference in youth and adult unemployment rates. What is most likely is that the different factors work together.

The variations of indicator results and issues for consideration presented in each regional study are a reminder that it is better to discuss youth labour market trends on the regional level rather than the global level.

 

Matching the supply and demand for young labor.

Specific programs for youth must be designed to ensure that the aid be allocated where necessary.

Although young people have acquired better education, worldwide unemployment has reached record levels. Youth unemployment has hit the highest rate ever recorded.

 

What is the “Decent work agenda”?

 

Decent work is a development strategy which recognizes the key role in people's lives : work that is productive and offers a decent income; workplace security and social coverage for the family; better outlooks for personal development and social integration; a voice at work; possibility of organizing and taking part in decision making; equal opportunities and treatment of all, women and men. Decent work is the very core of global, national and local strategies, in favor of economic and social progress. It is essential in the efforts to eradicate poverty and as a means to achieve the goal of fair, federating and sustainable development.

 

To implement the Agenda for decent work, four strategic goals need to be established:

 

Job creation – an economy which generates investment opportunities, job creation and the resources for obtaining a sustaining livelihood.Guaranteed labor rights– getting the recognition and respect of workers' rights. All workers, in particular disadvantaged workers or the poor need representation, participation and fair laws which are carried out and that really serve their interests. Supply basic social protection - marginalization and poverty mean that the worst off are in no way protected against accidents which can lead to miserable or declining living conditions.Promote dialog, especially in conflict resolution – the poor understand the need to negotiate and know that dialog is the means to peacefully resolve problems. Social dialog, which requires strong and independent worker and employer organizations, is crucial to raise productivity, avoid conflict at work and build socially responsible companies.

 

(International Labour Organization. October 2006)