How to tackle youth unemployment

More than 150 years after Ivan Turgenev penned those words, millions of youths cannot go their way, and certainly not as if they owned treasure: some 200m young people, mostly in developing countries, earn less than US$2 per day.

The young are three times more likely than adults to be unemployed; joblessness stands at 13.1% for youths aged 15-24, an all-time peak difference. In 2010, 536m working youths in developing countries were underemployed. Taken together with the 75m without jobs last year, that’s about half the world’s 1.2bn 15-24-year-olds. A growing subset of these young people is the NEET group: Not in Education, Employment or Training. Stalled and hard to reach, these 357 million (97 percent of whom were in developing countries as of 2012) remain at particular risk of both social and labour market exclusion.

Tackling global youth unemployment requires countries to implement a multitude of initiatives and public-private partnerships. According to a study conducted by McKinsey, only 45% of global employers believe new graduates have adequate skills for entry-level jobs. As a result, even though jobs may be available, they remain unfilled. This “Talent Paradox”, as Deloitte refers to it, underscores the need for skills training that is relevant to industry and reduces time to productivity for any new hire.

Encouraging innovation and entrepreneurship is another way to productively employ youth. Microfinancing groups such as Kiva and Accion, for example, provide small loans so youths can start businesses or pay for vocational training. Last year, the Tony Elumelu Foundation launched a $100m project with the goal of initiating 10,000 start-ups, creating 1m new jobs and achieving $10bn in annual revenues. The American University in Cairo also leased its GrEEK campus to Sawari Ventures to create Egypt’s first tech park.

Motivated youth from emerging markets are also flocking to massive open online course (MOOC) platforms that offer free university courses. According to Anant Agarwal, the President of edX, a MOOC founded by Massachusetts Institute of Technology (MIT) and Harvard University, a large number of registered students are from emerging markets . Since its inception in 2012, more than 4 million students from 196 countries have registered for edX courses, with 48% from developing countries, according to edX. While the majority of registered students in MOOCs don’t complete the course, the large numbers of registrations from the emerging markets is remarkable.

The International Labour Organization (ILO) and other international organizations like the OECD suggest that world governments take seriously the youth unemployment crisis. In the short term, countries with an underemployed youth bulge are more prone to political and civic unrest . Examples include Egypt, where 60% of the population is under 30 , Nigeria, with 71% under 30 , and India, where half the population is under 25. For governments with aging populations like Germany and China, however, this youth also represents a formidable labor market competitor in the future. But whether emerging markets can develop their human capital potential depends on how quickly and effectively they close the skills gap.

This article is published in collaboration with GE LookAhead. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Holly Hickman writes for GE Look Ahead.

 Image: Job offers are seen in this illustration in Milan April 3, 2012. REUTERS/Alessandro Garofalo