How can cities help to end youth unemployment?

Across Africa we see the exciting and oft-cited trends of rapid population growth, sustained economic growth, and rising levels of youth education. But we also see high levels of youth unemployment and inability to break into the labour force. Of the continent’s 1.1 billion people, approximately half are under age 25, and approximately 20% are between age 15 and 24. This reality of a large youth population is expected to hold as the population grows; projections suggest that by the year 2100 41% of the world’s youth will be African, up from only 15% in 2000.

Despite this large and growing youth population, and despite the sustained economic growth across the continent, job creation has been inadequate to absorb the young people entering the labour force – rates of youth unemployment in most countries in Africa are approximately double that of adult unemployment, and the ILO estimates that only 16 million of the 73 million jobs created between 2000 and 2008 were for young people.

Faced with an impending crisis, governments, private sector, and programme implementers across the continent are experimenting with a range of models to curb youth unemployment. Models are demand side focused – aimed at increasing opportunities for employment or entrepreneurship; supply side focused – aimed at improving the preparation of young people for these opportunities; matching focused – aimed at aligning the supply and demand for labour; or comprehensive – working across two or more of these dimensions. Recent Dalberg research uncovered at least 130 interventions across the continent.

Harambee Youth Employment Accelerator (Harambee) is one such model operating in South Africa. Since 2011, Harambee has placed over 12,000 at-risk young people into sustained employment and is looking to a future in which they place 10,000 young people per year. Reaching this level of scale has its challenges; challenges that are faced by almost all interventions in this space.

As part of the Impact Journey then, my fellow Young Global Leaders and I spent an afternoon at Harambee, working with the team to brainstorm potential solutions to a challenge that is crucial to the growth, scale, and impact of Harambee, but that is also key to the scale and success of youth-focused interventions across the continent:

How can implementers of youth employment interventions better leverage partnerships with city governments for greater impact on youth employment?

We know that there are at least three possible high-potential areas of leverage for such a partnership: product and service supply chains; SME growth and development; and private corporate growth and development.

Across all three pillars we identified similar challenges and potential points of leverage to ease these constraints. Key to consider is the potential catalytic power of city partnerships beyond purely absorbing youth into city administration jobs – i.e. what potential exists beyond the “city government as direct employer”?

City governments as creator of incentives

Financial incentives could be created to target different populations in order to address their differing constraints:

• For large employers, where the challenge may be the high cost of training of young people to “work-readiness” and then retention, a subsidy or tax incentive could be developed that would encourage these investments as well as ease the financial burden on the employer
• For small to medium employers, where the constraint may be the growth of the company itself, access to concessional finance through a city seeded or city administered fund may enable investments in growth that in turn would necessitate hiring; the employment of youth at that stage may be structured in as part of the original access to capital
• For youth, whose cost of transport constrains both their ability to search for jobs as well as their ability to stay in employment, access to subsidised public transport through a targeted scheme could reduce the “matching” challenge as well as improve retention

City governments as reducer of risk

For small and medium employers in particular, though for large employers as well, the perceived risk of hiring untested young people with limited work experience, and no referral network is extremely high and is further compounded by the difficulties of dismissing staff once employed. As a result, the recruitment practices that are designed to minimise this risk end up locking out young first-time work-seekers. City governments with the mandate to supply public-interest goods, could help reduce risks through innovative mechanisms:

• Enabling increased opportunity for shared work in the form of work-experiences/internships as well as short-term/temporary/seasonal employment of a pool of talent that is well-prepared for the labour market. By serving as the coordinator of this pool, the city eases the risk-to-full-time-employment perceived by employers by creating a testing period but also ensures that young people are building experience and referrals
• In addition to enabling a lower-risk labour market, city partnerships could also leverage lessons from other marketplaces and develop ratings schemes that provide a simple, user-friendly assessment of both employers and employees in this new marketplace – examples such as uber or e-bay may be relevant

City governments as enabler of networks

In addition to creating financial incentives and reducing risks for employers, city governments also have non-financial assets that could be valuable in a partnership to reduce youth unemployment:

• The trust and recognition the city government has in the community can be leveraged to mobilise both young people and employers
• A “City Hall of Fame” structure could foster a spirit of healthy competition among employers in which nomination/recognition/awards could be based on youth employed, ratings and perceptions as a youth-friendly employer, participation in work experience schemes, or other dimensions. For businesses whose product/service offerings are aligned with city procurement, the award could be further linked to contract incentives, etc.

Author: James I. Mwangi, Executive Director, Dalberg, South Africa

Image: A general view of the town of Bambari April 22, 2014. Picture taken April 22, 2014. REUTERS/Emmanuel Braun