Youth-friendly labour markets vital to cut youth unemployment

Recovery of economic growth is the most important factor for creating jobs in any country, but it is not the whole story, a seminar heard during the 2013 IMF-World Bank Annual Meeting in Washington, D.C. IMF, Deputy Managing Director Nemat Shafik told the IMF Youth Dialogue seminar that many countries have failed to make their labour markets youth friendly, which has aggravated unemployment.

"Growth will get us two-thirds of the way in the creation of jobs. But there are also structural issues that relate to the kinds of policy that determine how the labour market and the educational system work and prepare workers for the labour force," Shafik said.

Five years since the onset of the crisis, there are about 200 million people unemployed; 75 million of those are young people.

According to the International Labour Organisation, youth unemployment rates in 2012 were the highest in the Middle East and North Africa, at 28.3 percent and 23.7 percent.

Between 2008 and 2012, youth unemployment also increased by 24.9 percent in the developed economies and the European Union.

"In the Irish context, our youth unemployment rate is 28.6 percent," said a student from the George Washington University in the United States, who migrated from Ireland, Mark Duffy. "We need to create new jobs and remove some of the boundaries for the youth to get jobs," he said.

Shafik said that uncertainty, lack of adaptability in labour markets, and skills mismatch may explain why unemployment remains high.

"The recovery of the world economy is still tentative. Many investors are just too uncertain and are holding back investment and not creating jobs for anyone, particularly for young people," she said.

Shafik said that many countries have failed to make their labour markets youth friendly, which has exacerbated unemployment.

"In parts of Europe and the Middle East, there is what we call 'dualism' in the labour market where, if you are in the formal labour market and have a job, you're protected and can't be fired," she said. "But if you're a new entrant, it's hard to break in, and you're stuck in either informality or temporary contracts without benefits and little labour security," Shafik said.

Sectors that used to employ a great number of people, such as manufacturing, are no longer growing, Shafik said.

"Many young people are coming into labour markets in which the things they've been trained to do are not actually what the labour market is demanding," she said.

A number of initiatives in Yemen focus on building entrepreneurship skills, said chairman of youth-run foundation, Resonate! Yemen, Rafat Al-Akhali. "But youth unemployment needs a coordinated approach," he said. "It's not enough for one sector or one entity to work on it. We need all hands on deck."

"Private sector as employers is one piece of the puzzle," said Al-Akhali. "But also as investors in education and training institutes, creating an 'education for employment' sort of sector."

Other key players identified by panelists included the government, the education system, and civil society organisations. "The government needs to encourage policies for educational institutions to design programs and courses that actually meet the country's needs," said Duffy.

"Education in Chile is not doing its work," said a graduate student at the Universidad de Chile, Damián Vergara. Chilean education has been highly privatised, while the quality of public education has deteriorated.

This, he said has led to an increase in inequality, among other things. "We can't ask youth for all the solutions; most of the solutions have to come from higher levels."

The best way for countries to keep up with evolving trends and deal with uncertainty is to foment the right environment for job creation, said Shafik.

"Put in place winning systems of a world-class business environment that lets firms grow, fail, and evolve. Have a financial system where collateral is easy to recognise, where credit bureaus work, where smaller firms have opportunities to grow," she said.

Linking these world-class systems to training institutions and universities - all working in youth-friendly labour markets - will ensure that the skills young people learn are relevant to the market place.

"The future of job creation is in creating world-class systems of this type," said Shafik.

Panelists agreed that there are things youth can do to take charge of their futures. College students in the United States, for example, can get more involved in their communities to gain real-life skills, said a George Washington University student, Allison De Maio.

"It is on the youth themselves to reach out for these opportunities, especially through volunteerism or internships," he said.

"Youth have to do a lot of work for themselves, preparing for the job market, finding what is out there and how they could be better suited for these jobs. And helping other youth with mentoring, as well," said Al-Akhali.

"It's much easier for youth to be mentors for other youth than doing it across generations," he said.

Courtesy: IMF