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

einstitute.worldbank.org

Youth Unemployment:Key Issues and Policy Challenges

December 13, 2011 | 10:00 AM EST

Speaker:

Derek H. C. Chen

Economist, World Bank Institute

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Outline of Presentationo Why focus on youth unemployment?

o How to promote youth employment?

- Stimulating labor demand

- Enhancing the quality of labor supply

o Summing up

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Why focus on Youth Unemployment?

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Total Unemployment Rates

Source: Constructed from International Labour Organization (2011) data

Globally unemployment rate at 6.2 percent; 205 million unemployed

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Youth Share of Total Unemployment (2009)

Source: Constructed using data from International Labour Organization website data

Unemployed Youth (2010): 77.7 millionYouth Share of Unemployed (2010): 38 percent

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Youth & Adult Unemployment Rates

Source: Constructed from International Labour Organization (2011) data

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o Higher likelihood of youth being underemployed and among the working poor

o 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

o Higher likelihood of social and political unrest

Other Reasons for Intervention

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Promoting Youth Employment- Stimulating Labor Demand

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Promoting Youth Employment - Stimulating Labor Demand

Overall Labor Demando Importance of flexible labor regulations

Channels of Labor Demando Public sector labor demando Private sector labor demando Self employment and entrepreneurship

Public Sector Labor Demando Regular salaried civil servant positions

- possible distortionary effectso Short-term public works

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Redundancy Cost Indicator(in weeks of salary, 2010)

Source: Reproduced from World Bank (2011)

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Compensation of Govt Employees (% of Govt Expense)

Source: Constructed from World Bank World Development Indicators data

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Promoting Youth Employment - Stimulating Labor Demand

Private Sector Labor Demando The private sector should be the main driver for growth and

job creationo Private investment and overall private sector growth need

good investment climateo Sectoral policies toward youth friendly sectorso Employment friendly development strategies

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Export Revenue by Type of Exports (% of GDP, 2008)

Source: Reproduced from Ianchovichina (2011).

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World Bank Knowledge Economy Framework

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Promoting Youth Employment - Stimulating Labor Demand

Self employment and entrepreneurshipo Self employment only alternative when jobs are lackingo Youths face more obstacles because of lack of skills,

experience, less credit-worthinesso Youth targeted programs and strategies that address the

barriers to doing business.

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Promoting Youth Employment- Enhancing Labor Supply

Source: Reproduced from Fox and Gaal (2008)

Low Labor Skill – Major Constraint to Business Creation

Share of reporting firms, various countries & years

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13

14

24

25.5

27

35.7

25

31

33

36

37

38

50

0 10 20 30 40 50 60

East Asia and Pacific

South Asia

Europe and Central Asia

Latin America and the Caribean

Africa

Middle East and North Africa

AMCs*

West Bank Gaza 2006

Morocco 2007

Jordan 2006

Syria 2003

Algeria 2007

Lebanon 2006

Egypt 2008

Source: Reproduced from World Bank (2011)

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University Students by Fields

Source: Reproduced from World Bank (2009)

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Promoting Youth Employment - Enhancing Labor Supply

Critical to have a well-linked educational and training systemo Close cooperation between education system and private

sectoro Current and industrially relevant curriculumo Work-based training and apprenticeship to acquire

industrially relevant skills, hands-on experienceo Soft skills are also important

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Summing Up

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Referenceso Fox, Louise and Melissa Sekkel Gaal (2008). Working Out of Poverty:

Job Creation and the Quality of Growth in Africa. The World Bank. Washington D.C.

o 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.

o International Labor Organization (2011). Global Economic Trends 2011: The challenge of a jobs recovery. International Labor Office, Geneva.

o World Bank (2009). Shaping the Future: A Long-Term Perspective of People and Job Mobility for the Middle East and North Africa. Washington DC.

o World Bank (2011). “The Challenge of Youth Employability in MENA.” Memo.

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