The Urgency and Opportunity of Global Youth Workforce Development
January 23, 2014
This commentary is a follow-up to the CSIS Chevron Forum on Global Youth Workforce Development on January 15th, which the authors participated in. The video of the event can be watched here: http://csis.org/event/global-youth-workforce-development.
To say that global youth unemployment is one of the most critical and complex economic and social issues of our time would not be an overstatement. On Tuesday, the International Labor Organization (ILO) released its 2014 Global Youth Unemployment Trends report which warned that inadequate progress has been made in young people entering into quality jobs despite the global recovery. Still, 40% of the world’s unemployed are youth, with young people out of work at up to four times the rate of adults. In Egypt, 80% of the unemployed are under the age of 30. In South Africa roughly 40% of youth 15-24 are jobless. The costs to both young people and society at large are mounting.
Jobless young people experience vulnerability to future or long-term unemployment, wage scarring and foregone earnings, wasted capacity, skills stagnation, and short and long-term detriment to physical or emotional health. In lower income countries, and those with less developed safety nets, young people are often underemployed or end up in the informal or shadow economy where work may be irregular and insecure, low wage, hazardous, in poor conditions, or illicit.
Governments face monetary losses from foregone tax revenue and payouts of benefits. Economic growth is undermined by lost productivity of its working age population. A Young Invincibles report released in January 2014 estimated that youth unemployment in the United States is costing federal and state governments roughly $9 billion per year. The European Commission has estimated that youth joblessness costs the EU €153bn in unemployment benefit, lost productivity and lost tax revenue. There are also the social costs - where unemployment, exclusion and aspiration gaps fuel crime, unrest, and radicalism or terrorism.
Clearly, the challenge is great. But we believe the opportunity may be greater.
Another way to measure the cost is to consider the benefits or payoff from a larger and more fully and productively employed young workforce and subsequent consumer base – the “demographic dividend”. Some claim that as much as a third of the growth during in the East Asian “Miracle” is attributable to the increased productivity from its healthy, well-educated and trained young labor force. Even over ten years ago, World Bank studies in the Caribbean argued that lowering youth idleness could raise GDP as much as 3% in recaptured earnings. Countries in sub-Saharan Africa and south Asia with young populations are particularly poised to take advantage of the demographic window currently before them. Just this week, the World Economic Forum noted that research shows that every 1 percent gain in global youth employment yields approximately $72 billion in additional worldwide economic consumption annually.
The problem is complex, with no single cause and no single solution. The global economic downturn and recession, inadequate job creation, informality, structural change, and inefficient youth labor markets marked by an ill-prepared workforce all contribute to the complex nature of the youth employment dilemma. Much has been said about challenges in the school- to- work transition, and in particular about the global education and skills gaps and mismatch. Young people are not being adequately prepared for the jobs of today or the future. Added to this problem are the large numbers of young people that are out of school, not completing secondary or progressing on to higher education, putting them farther at reach from education, training, and employment services and opportunities. Based on OECD and World Bank data, the Economist estimated nearly 300 million youth are not in education, employment or training (NEET) in 2013.
In a survey by the African Economic Outlook, 54% of labor market experts identified the skills mismatch as a key obstacle among youth trying to enter the workforce. Similarly, McKinsey recently released a report on “education to employment” in Europe, finding that 74% of education providers believed their graduates were prepared for work, but only 38% of youth and 35% of employers agreed.
Any approach to promoting youth employment or workforce development should be a long-term, contextually-appropriate, integrative, and sustainable one. We believe that as you look around the world, the demographics will give you different challenges and different opportunities. How governments look at this, how those of us in the non-profit world or the for profit world, think about our workforce development will be very different, and the challenge for us as a world is to ensure balanced solutions. All of us in the donor community, the national governments, the private sector, are trying to figure out how we can provide pathways for these young people to engage in a productive life. This is the time when partnerships are crucial. Just as they have been successful in advancing health solutions, or supporting innovations in technology, public-private partnerships (PPPs) can be a critical element of a successful workforce development strategy - strengthening enabling environments, leveraging resources, and bringing opportunities to scale. Further, perhaps no one is more aware of the gravity of the situation than young people themselves and meaningful youth engagement and collaboration will also be critical to policy and programmatic effectiveness and progress.
So where do we go from here? As global leaders gather in Davos at the World Economic Forum, thinking about the United Nations post-2015 development agenda, we ask them to consider seriously the youth challenge and opportunity before them. To think, and more importantly to act, strategically and creatively with and for the talented, ambitious young people around the world. For our part, we look forward to continuing to examine and pursue a policy dialogue, and RTI is pleased to be collaborating with CSIS to advance this research and conversation. We want to want to bring attention to both the supply and demand constraints and consider how technology is impacting the landscape of education, training and opportunity. RTI, for example, is integrating training and entrepreneurship education with supply chain work. Similarly, the need for increased rigorous monitoring and evaluation in workforce development is great. We have barely scratched the surface of what we need to know to solve the global youth unemployment crisis.
We need to find and share solutions to the challenges we face in terms of trying to ensure the world’s young people are prepared and equipped to succeed in the 21st century workplace.
We need to look for transferable best and promising practice that address the many aspects of the skills mismatch and workforce development challenge including: increasing secondary school completion with improved learning outcomes, reaching out of school youth, strengthening systems for scale, and ensuring secondary and higher education and training is relevant to local and global employer needs including that young people have the ‘life skills’ in addition to knowledge and technical skills to succeed in the workplace. For example, apprenticeships in Germany, alternative learning systems in the Philippines, or implementing a national skills policy in India.
We need to learn from industry best practices like Hilton Worldwide’s leadership in hospitality with the International Youth Foundation to scale soft skills training and create “Passports to Success” quality and lifelong opportunity. At the same time, we need to find and share other innovative workforce development programs that maybe replicable and scalable. For example, we should understand how ConnectEd and Linked Learning are putting thousands of high schoolers in California on a clearer pathway to college and careers with project-led, innovative, demand-driven curricula and pedagogy. And what can we take from the successes of Programa Supérate in El Salvador, for example, an educational program in collaboration with public schools providing youth from gang and crime-ridden communities with a new outlook and quality skillsets that will enable them to make a successful transition to higher education and professional opportunities: English, Computing and Core-values.
As big and complex a challenge workforce development is, we have a growing appreciation for the connectedness between entrepreneurship, education, and all areas of economic opportunity.
We firmly believe in the untapped potential of the world’s youth. And while we know we are not alone, the gravity of the situation merits the call for more collective action and serious investment globally. The time is now. Our shared security and prosperity depend on it.
Henrietta Fore is Chairman and CEO, Holsman International; Former Administrator, U.S. Agency for International Development; and CSIS Trustee. Dr. Nicole Goldin is director of Youth Prosperity and Security Initiative at CSIS – in partnership with the International Youth Foundation. Aaron Williams is Executive Vice President, International Development Group, RTI International; Former Director, U.S. Peace Corps.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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