Youth Unemployment Crisis

How well poor youths make the transition from school to work, from childhood to adult life, can determine both their and their family’s—and collectively, their community’s—chances of escaping poverty. When they themselves become parents, having a history of good and steady employment is likely to lead to a significant and sustained reduction in poverty. Young people are among the world’s greatest assets; youth unemployment is a tremendous waste of opportunity. And yet the global deficit of employment opportunities has resulted in a situation in which one out of every three young people is seeking but unable to find work, has given up the job search entirely, or is working but still living below the $2/day poverty line. Youths are more than three times as likely as adults to be unemployed. “The world is facing a growing youth employment crisis____In recent years slowing global employment growth, and increasing unemployment, underemployment and disillusionment have hit young people the hardest.”45 The world’s demographics are such that 89 percent of the world’s youth live in developing economies, where the employment deficit is worse.

There is growing evidence that being unemployed at an early age has a direct and negative impact on future income streams. Research has shown that unemployed youths suffer a permanent decrease in their lifetime earning profile; one study suggests an income penalty from early unemployment in the magnitude of13 to 21 percent at age 42.46 Youth unemployment results in reduced investment in human capital, depriving the young of work experience during that portion of the lifecycle when such experience yields the highest return, and frequently leading to unsuitable labor behavior patterns that last a lifetime.

Without the proper foothold from which to start out right in the labor market, young people are less likely to make choices that improve their own job prospects as well as those of their future dependents, thus perpetuating the cycle of insufficient education, low productivity, and poverty from one generation to the next. Youth unemployment is costly, not only in terms of economic development, but also in terms of social development. There is a proven link between youth unemployment and social exclusion.47 An inability to find employment creates a sense of vulnerability, uselessness, and idleness among young people. Youth unemployment is associated with high levels of crime, violence, substance abuse, and the rise of political extremism. In some countries, virtually the only paid occupation open to many young men is with the various armed groups involved in civil conflict. For young women, the danger of entrapment in the sex industry is widespread.48

Christoph Ernst of the International Labor Organization calls for special youth employment programs, arguing that a job- creation strategy needs to cover both labor demand and supply, combined with well-targeted and structured interventions.49 Many governments all over the world have developed initiatives targeted at youth employment. Even in a rich country like Canada, the government created the Youth Employment Strategy to help young people, particularly those facing barriers to employment, get the information and gain the skills they need to make a successful transition from school to the workplace.50 Recognizing the risk of falling behind on the target of achieving decent employment, and youth employment in particular, the government of Tanzania has introduced an employment-creation program.51 NGOs, too, have entered this arena; the Youth Entrepreneurship and Sustainability (YES) campaign was launched in 2002 to promote youth employability and employment creation.52 The YES networks in 83 countries bring together diverse stakeholders including governments, companies, banks, and NGOs.

The EGMM is a good example of what Ernst advocates: a well- targeted intervention focused on youth employment.

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