Employment strategies for Urban Youth Richard Curtain.

Employment strategies for Urban Youth

Richard Curtain

Outline of paper

– Why Invest in Young People– PRSPs and Young People

– Programs for youth

– Role of labour market intermediaries

– Youth entrepreneurships – opportunities and limits

Biographical note

● Completed PhD at The Australian National University in 1980 with a thesis on rural urban migration and urban unemployment in Papua New Guinea.

● Visited Kenya for three weeks in 1979.

● As a consultant since 1993 specialising in public policy

● reports on young people at risk in the labour market

● In 1998, he was part of a five member team that evaluated emergency job creation schemes in Indonesia.

● Since 2000, completed several reports for the UN on youth employment.

Public policy approach

● a realistic discussion of opportunities must address not just the question of what should be done but also who should do it and why it is not already being done.

2. Why invest in young people?

● Seven reasons or arguments offered– Giving young people their fair share of resources– MDGs– Young people as vulnerable– Economic benefits of investing in young people– Long term benefits available– Young people as a liability

Young people and the Millennium Development Goals

Five MDGs cover activities in which mostly young people are engaged. – education attainment, – gender balance in education, – improved maternal health, – combating HIV/AIDS and other diseases such as

malaria and tuberculosis and – decent employment opportunities for young people.

MDG 8

Youth employment is seen as a by-product of Goal 8 of developing a Global Partnership for Development to ‘develop and implement strategies for decent and productive work for youth

– Just who is responsible for achieving this target is not clear.

Other arguments

● Economic benefits of investing in young people● Young people as vulnerable● Long term benefits available

– Demographic bonus or dividend.

Young people as a liability

– A greater chance of civil conflict for a poor country has also been linked to its young people’s lack of education and access to jobs.

– Countries whose young people have low levels of participation in education are more likely, other things being equal, to be engaged in civil strife.

PRSPs and youth employment

● Cambodia’s PRSP (December 2002) ● Republic of Djibouti (May 2004) ● Cameroon’s PRSP (August 2003) ● Zambia’s PRSP (March 2002, p 64) ● The PRSP of the Islamic Republic of Mauritania

(March 2002) ● Republic of Senegal’s PRSP (May 2002)

4. Programs for urban youth

● Neglect of young people in the past

● World Bank projects for urban youth

● Projects highlighted by the Economic Commission for Africa

Information on cost effective initiatives is scarce

In developing countries, there is very little evaluation of the effectiveness of existing youth programs. Where reliable estimates of effectiveness exist, the measurement is often over too short a period of time to be useful. In other cases, there is reliable information only on one or two effects of an investment ... Information on other effects, including many of those needed to obtain estimates of social benefits, is often lacking. This is clearly a major gap in the information base on investments in youth.

Knowles James C and Behrman, Jere R; 2003, p23.

Programs for young people that have a broader impact

– formal schooling where it is to improve the quality of schooling in general or through targeted scholarship programs aimed at individuals

– adult basic education and literacy targeted to adolescents,

– selected investments in school-based health services such as micronutrient supplements, and

– investments designed to reduce the use of tobacco products.

5. A range of policy optionsA youth friendly labour market

– providing ample opportunities for young people to be trained within enterprises under wage arrangements and employment contracts that encourage their recruitment and training;

– providing ample opportunities for young people to gain experience of paid work while they are students; and

– limiting the restrictions that are attached to hiring them.

Some key considerations related to a youth employment strategy

– Promote youth entrepreneurship as a viable option

– Link efforts to promote youth employment to information and communication technologies

– Work through private/public partnerships where possible

– Target the poor

– Put young people in charge.

ICT as a job creator

● The potential of information and communication technologies

● Challenges facing the use of ICT for young entrepreneurs

6. Use of labour market intermediaries or brokers

Table 1: Proportion of employment gained through employment services agencies, EU 1999, USA, 2000 and Australia 1999

Group training companies

– Primary employer of apprentices and trainees, and then arrange placements or rotations with ‘host’ employers.

– Host employers pay an all-up fee to the group training company for the ‘hire’ of the apprentice or trainee

– Their other role is to organise complementary off-the-job, classroom-based training with registered training providers

Employment and training outcomes

● Apprenticeship completion rates are high relative to other forms of education and training.

● Over 90 percent of group training apprentices and trainees who successfully completed their training achieved a successful employment outcome.

● This outcome consisted of either retention as an ongoing employee by their host employer or alternatively, finding work with a new employer in an unsubsidised job within three months after completing their apprenticeship or traineeship. .

Employer satisfaction

● Table 2: Host employer levels of satisfaction with group training companies, Australia, 2001

Group training – key lessons

● Like apprenticeship systems in general, group training companies are not necessarily easy to transplant to other countries.

● A range of supporting institutions and funding from governments needed

● The idea is a valuable one, even if the implementation is more complex than the simple application of a template would suggest.

7. Entrepreneurship and urban employment generation

● Global Entrepreneurship Monitor (GEM) research 2002 and 2003

● 40 countries surveyed ● Representative national surveys

Gap between potential and actual prevalence of entrepreneurship

● In South Africa, for example, just a quarter of the population (26 per cent) they had the ‘knowledge, skill and experience required to start a new business.’

● Adults who believed they had the requisite skills were eight times more likely to become involved in starting a business

● Among the young Black population in South Africa with upper secondary schooling completed, a quarter of those aged under 23 years believe they have the requisite enterprise start-up skills.

South African results

● The more formally educated the population, the more likely they are to see themselves as having the requisite skills to engage in entrepreneurial activity.

● Only 7 per cent of the population surveyed could be classified as entrepreneurs compared with just over a quarter of the population who said they had the ‘knowledge, skill and experience required to start a new business’.

Two types of entrepreneurship

● Entrepreneurial activity in South Africa and Uganda

● Informal sector entrepreneurs in South Africa

Conclusion from South Africa survey of informal sector

● To address the objective of maximising job creation, more resources should be targeted at formal entrepreneurs rather than informal entrepreneurs in the townships.

● The informal sector remains enormously important in generating self-employment income for a large number of low-income households but is not generally important in the creation of employment for others.

Important Distinction

● A distinction needs to be made between self-employment or entrepreneurship by necessity and opportunity oriented entrepreneurship.

● The former activity, in common with most activities in the informal sector, is more likely to be focused on an individual and on his or her efforts to generate enough income to survive.

● This type of activity has only limited prospects of growing sufficiently in turnover to employ others.

Important distinction

● Fostering entrepreneurship in the sense of starting a new business with the potential to grow compared with self employment requires a different starting points and set of supportive services.

● Running a business is much more complex an undertaking than being self employed.

● It involves not only making a product or providing a service.

● It also requires marketing to customers, dealing with suppliers, complying with regulations and supervising and paying employees.

Conditions needed to foster entrepreneurship

● Self employed● Self financing● Demonstrated capacity

to save● Loan to match savings● Loans matter only when

skills and savings are present

● Business start up● Access to low cost loan for

asset capital purchase only● 3 to 5 year repayment

schedule, negotiable with debt manager

● 18 month milestone for major repayment and release of next tranche of loan

Pathway in two steps

● Need to view self employment as a stepping stone to the other two streams.

● Specific incentives could be devised to encourage young people to move from self employment to economic or social entrepreneurship.

● For example, a young person who has achieved certain savings benchmarks could be offered a loan related to an entrepreneurial activity on more favourable terms than other borrowers.

Different profile & Training needs

● Need to devise a ‘risk profile’ to identifies what characteristics of young people are more likely to be associated with running a business.

● A ‘risk profile’ based on threshold education level (eg secondary school completed) and work experience, for example, could be developed.

● Training needs of self employed are different to the training needs of business start ups

Micro credit

●Training should be available in terms of content and timing on a ‘as needed basis’ as determined by the self employed person or new business.

●The management of loans and delivery of training need to done separately. Programs that mix loans and training are likely to find that good instructors are not always good lenders and vice versa. Borrowers are also likely to get mixed messages if the training is free but the loan has to be repaid with interest

8. Barriers to success

● Who among young people to target?● Targeting young people who are poor is one

option.

Changes needed at 3 levels

● Micro = grassroots eg training for self employed

● Middle level institutions and processes eg type of training provided and who provides it

● Macro – operating framework

Need for supporting infrastructure

● Lack of access to credit is one likely barrier to self employment.

● Other major problems identified are lack of own transport, competition, theft, unavailability of electricity and lack of business skills.

● Lack of a means of communicating with suppliers or customers as well as transport may be important barriers to operating a business.

● Lack of knowledge about basic business practices may also be a major barrier to success.

Need to change education● Education systems at secondary and tertiary

levels are too narrowly focussed on academic knowledge and skills

● Need to promote, within education, opportunities to develop entrepreneurial skills

● Practice firms at secondary and tertiary levels are one option – students develop an enterprise

● Business plan competitions are another way to promote an entrepreneurial culture

Conclusion

● Importance of shift from a focus on supply side to demand side

● role of intermediaries as risk deflectors● Distinction between self employment and

business start up● Different needs in terms of training and support

services