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Youth Unemployment: Key Issues and Policy Challenges

Youth Unemployment: Key Issues and Policy Challenges. December 13, 2011 | 10:00 AM EST Speaker: Derek H. C. Chen Economist, World Bank Institute. Outline of Presentation. Why focus on youth unemployment? How to promote youth employment? - Stimulating labor demand

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Youth Unemployment: Key Issues and Policy Challenges

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  1. Youth Unemployment:Key Issues and Policy Challenges December 13, 2011 | 10:00 AM EST Speaker: Derek H. C. Chen Economist, World Bank Institute

  2. Outline of Presentation • Why focus on youth unemployment? • How to promote youth employment? - Stimulating labor demand - Enhancing the quality of labor supply • Summing up

  3. Why focus on Youth Unemployment?

  4. Total Unemployment Rates Globally unemployment rate at 6.2 percent; 205 million unemployed Source: Constructed fromInternational Labour Organization (2011) data

  5. Youth Share of Total Unemployment (2009) Unemployed Youth (2010): 77.7 million Youth Share of Unemployed (2010): 38 percent Source: Constructed using data fromInternational Labour Organization website data

  6. Youth & Adult Unemployment Rates Source: Constructed fromInternational Labour Organization (2011) data

  7. Other Reasons for Intervention • Higher likelihood of youth being underemployed and among the working poor • Youth face special challenges when accessing the labor market - a higher chance of losing their jobs during economic downturns (“last in, first out”) - specific barriers to entry, often stemming from lack of experience - path dependence: early unemployment increases the likelihood of subsequent unemployment • Higher likelihood of social and political unrest

  8. Promoting Youth Employment- Stimulating Labor Demand

  9. Promoting Youth Employment - Stimulating Labor Demand • Overall Labor Demand • Importance of flexible labor regulations • Channels of Labor Demand • Public sector labor demand • Private sector labor demand • Self employment and entrepreneurship • Public Sector Labor Demand • Regular salaried civil servant positions • - possible distortionary effects • Short-term public works

  10. Redundancy Cost Indicator(in weeks of salary, 2010) Source: Reproduced from World Bank (2011)

  11. Compensation of Govt Employees (% of Govt Expense) Source: Constructed from World Bank World Development Indicators data

  12. Promoting Youth Employment - Stimulating Labor Demand • Private Sector Labor Demand • The private sector should be the main driver for growth and job creation • Private investment and overall private sector growth need good investment climate • Sectoral policies toward youth friendly sectors • Employment friendly development strategies

  13. Export Revenue by Type of Exports (% of GDP, 2008) Source: Reproduced from Ianchovichina (2011).

  14. World Bank Knowledge Economy Framework

  15. Promoting Youth Employment - Stimulating Labor Demand • Self employment and entrepreneurship • Self employment only alternative when jobs are lacking • Youths face more obstacles because of lack of skills, experience, less credit-worthiness • Youth targeted programs and strategies that address the barriers to doing business.

  16. Promoting Youth Employment- Enhancing Labor Supply

  17. Low Labor Skill – Major Constraint to Business CreationShare of reporting firms, various countries & years Source: Reproduced from Fox and Gaal (2008) Source: Reproduced from World Bank (2011)

  18. University Students by Fields Source: Reproduced from World Bank (2009)

  19. Promoting Youth Employment - Enhancing Labor Supply • Critical to have a well-linked educational and training system • Close cooperation between education system and private sector • Current and industrially relevant curriculum • Work-based training and apprenticeship to acquire industrially relevant skills, hands-on experience • Soft skills are also important

  20. Summing Up

  21. References • Fox, Louise and Melissa SekkelGaal (2008). Working Out of Poverty: Job Creation and the Quality of Growth in Africa. The World Bank. Washington D.C. • Ianchovichina, Elena (2011). “MENA’s Non-Oil Export Performance in the Last Decade.” MENA Knowledge and Learning Quick Notes Series. No. 39, World Bank, April. • International Labor Organization (2011). Global Economic Trends 2011: The challenge of a jobs recovery. International Labor Office, Geneva. • World Bank (2009). Shaping the Future: A Long-Term Perspective of People and Job Mobility for the Middle East and North Africa. Washington DC. • World Bank (2011). “The Challenge of Youth Employability in MENA.” Memo.

  22. dchen2@worldbank.orgwww.developmentdebates.org

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