There seems to be broad recognition of the importance of formal schooling and the need to improve its quality (e.g. Indonesia, United Republic of Tanzania, Zambia, Zimbabwe). Raising the school leaving age, reducing child labour and raising the quality as well as instituting 'appropriate' curricula of education are important objectives. These findings reaffirm the need to "increase investment in basic education targeted at improving the quality of education and access to further and higher education for disadvantaged categories of young people" as noted in the resolution concerning youth employment adopted by the ILO's General Conference at its 86th Session.
75. There is little evidence that job training schemes work, especially in difficult times, partly because they are biased towards preparation for formal sector jobs which simply do not exist on any adequate scale (Zambia Ministry of Sport, Youth and Child Development - MSYCD - 1996). One exception perhaps is Egypt which has adopted the Mubarak-Kohl initiative which attempts to adapt the successful German dual education and training system to the Egyptian context. Several pilot schemes suggest some success. The rate of return to programmes is likely to be a function of the state of the labour market (national and local). It is easier to place programme participants when unemployment is low and vice versa. The displacement effects for non-participants are potentially serious.
11.0.2 Egypt ;
The pilot project in the 10th of Ramadan City
In Ramadan City, Egypt, the modern private sector is organized in the Investors' Association (IA). Many of its members use relatively sophisticated production methods, and have serious difficulties recruiting adequately qualified workers. Therefore, the IA was willing to invest in the Mubarak-Kohl Initiative. In 1995, a dual vocational education and training centre became operational. The youths, who were to become mechanics, electricians or textile workers, were selected by the factories themselves. Each week for a period of three years, these students receive two days of general and technical education (arranged by the Ministry of Education) and four days of practical work experience. The Regional Unit of the Dual System (RUDS), with specialists from the private sector and the German GTZ, supervised the internships and designed some specialized courses. Together, the Ministry and RUDS designed and evaluated the exams.
Almost all factories that participated in 1995 are still participating four years later. This confirms the viability of the dual training system. But the pilot project also showed that even under ideal circumstances (an enthusiastic and organized private sector, with modern factories and a clear need for qualified workers), a dual training system is not established easily. Some individual factories used their interns as cheapleast close, substitutes for their younger counterparts. In many cases, it is not at all clear that this is true, particularly as regards skilled workers. If, on the other hand, youths and adults are complementary in the workplace, reflecting, for example, different skill requirements, the wages of youths with respect to adults should have no influence. In such a scenario, both youth wages and adult wages with respect to other input costs will have a negative effect. Thus, although wages play a role, higher youth wages will tend to lower the employment rates of both adults and young people.
Wages vs aggregate demand
Much of the debate in Europe over the appropriate policy response was, at least initially, conducted in terms of the relative importance of the youth/adult wage ratio and aggregate demand in determining the level of youth unemployment .although the debate has now moved on towards discussions of the consequences for youth unemployment of a minimum wage. To take the example of Britain, the first half of the 1980s saw a plethora of studies analysing the issue .Without going into details, it might just be observed that whilst all the studies considering the issue found that aggregate demand played an important role in determining the level of youth unemployment, the findings on the effects of the relative wages were more mixed. With some studies finding a role for relative wages and others not. In part this depends on differences in the modelling procedure and problems with the data on wages, however, the fact remains that the earlier studies, taken as a whole, established a clear and strong link between youth unemployment and aggregate demand, but failed to find an unequivocal link between the level of youth relative wages and youth unemployment.
More recently, Blanchflower & Freeman (1996) have noted that the almost universal fall in the relative wages of young workers observable in OECD countries during the 1990s, despite being accompanied by a sharp reduction in the relative size of the youth cohort did not lead to any increase in youth employment rates which also fell over the period. Finally, Blanchflower (1996), in his analysis of International Social Survey Programme (ISSP) data, notes a weak relationship (R2 = .15) between youth/adult relative wages and the corresponding youth/adult unemployment rates for thirteen industrialised countries.
Figure 4 compares movements in the youth/adult wage ratio with movements in youth unemployment rates. Examination of the figure is undoubtedly a rather superficial way of looking at the issue. Having said that, however, the figure does not seem to reflect any close relationship between the relative wages of youth and their unemployment rates. Indeed, the impression is that, more often than not, unemployment and relative wage rates appear to be moving in opposite directions to each other.
8.0 Youth Unemployment: Causes and Effects
A number of possibilities suggest themselves to explain patterns of high and persistent unemployment amongst the young: aggregate demand; youth wages; the size of the youth cohort and a lack of skills. Clearly, in finding solutions to the youth unemployment problem, it is crucial to determine the relative importance of these factors. Many studies have shown the importance of aggregate demand. As argued above, youth unemployment rates are approximately twice as high as adult unemployment rates. It is also the case that young people are not only more likely to quit their jobs voluntarily but are more likely to be fired as well (last in, first out). However, the opportunity cost to firms of firing young workers appears to be lower than firing older workers. Young workers are also less likely to be subject to employment protection legislation. It is often held that the wages of young workers are too high because of the existence of minimum wage legislation, which raises the wage of the young making them uncompetitive, especially compared to married women who, around the world, have entered the labour force in large numbers over the last two decades. There is a good deal of evidence that youth wages relative to adult wages have declined considerably in recent times in many countries. Furthermore, there is growing literature that suggests that the employment reducing effects of the minimum wage have been greatly exaggerated, especially in the United States where its level is very low. The evidence does not seem to suggest that youths are being priced out of jobs in any major way.
A further explanation for high and persistent youth unemployment is the size of the youth cohort. The higher the number of young people, the more jobs that will be required to accommodate them. This explanation does not fit the data well, as was discussed earlier, since the size of the youth cohort has been in decline in most countries.
Finally, it is argued that in this new technological age the young do not possess the skills that firms need. There is less demand than in the past for unskilled jobs, particularly because of new technology, and this substantially affects the young.
No matter what the cause of youth unemployment is, it does seem to have serious consequences especially if the unemployment spells are long or if an individual experiences numerous spells of it. The duration of unemployment spells tends to be shorter for the young than for older workers. There is, however, some evidence across countries that although youth unemployment is of shorter duration than that of adults, the difference is not substantial. The longer an unemployment spell, the more difficult it is for that person to find work because of the loss of skills, morale, psychological damage etc. There are three major reasons why unemployment while young, especially for frequent or long periods, can be particularly harmful:
a. Early unemployment in a person's career may permanently impair his or her future productive capacity.
b. Barriers to employment can block young people in the passage from adolescence to adulthood, which involves setting up a household and forming a family. There is some connection between youth joblessness and serious social problems such as drug abuse, petty crime and single parent families.
c. High levels of youth unemployment may, at an aggregate level, lead to alienation from society and from democratic political processes, which may give rise to social unrest. Unemployment makes people unhappy (Blanchflower and Oswald, 1999a, Winkelmann and Winkelmann, 1999; Oswald,1997b).
In the next three sections, evidence that exists on the causes and consequences of youth unemployment is examined for the OECD, Transition Economies and finally the developing countries of Latin America, Asia and Africa. As much more is known about the workings of the youth labour market in the OECD, the first section on the OECD lays out the ground for other regions of the world. In the following sections, an attempt is made to compare and contrast the situation in the developing countries with that found in the OECD. Interestingly, there seem to be important similarities.
9.0 Consequences of youth joblessness
A number of other important changes in society accompanying the high and rising levels of youth unemployment are correlated with a number of other social outcomes:
a. Unemployed youths are increasingly concentrated in workless households. Of considerable concern is the fact that the proportion of teenagers and young adults (20-24) living in households in which nobody else is employed has risen in the EU as a whole and especially in Belgium, France, Germany, Ireland and the UK. The share of unemployed youth living in workless households is, at over 40 per cent, highest in Finland, Ireland, and the UK and lowest in the southern European countries, Austria, Luxembourg and Switzerland.
b. Increasing proportions of young people are living with their parents. In Canada, France, Greece, Italy, Portugal and Spain there has been a strong increase between 1985 and 1996 in the proportion of young people living with their parents. In Canada and the US, low youth wages increased the likelihood that young women would remain living with their parents and that they would attend school; while low employment rates raised the chances that women would remain in their parents' home with only a marginal impact on their rate of school attendance. The proportion of young people living with their parents are especially high in Spain. Interestingly enough, Spain has the highest rate of home ownership in the OECD.
c. The young are increasingly involved in crime. Large numbers of young American men committed sufficiently serious crimes in the 1980s and 1990s to make 'prisoner' just about the fastest growing occupation among the young. This incarceration rate is approximately ten times higher than other western countries. In the UK, which has the highest rate of incarceration in western Europe, just under 50,000 people were in prison in 1995 or 0.13 per cent of the population aged 15-64 (48,983 men and 1,979 women). Many young persons involved in crime are employed before their arrest, suggesting that they have reservation wages for both legal and illegal work. The reaction of youths to the deteriorated job market in terms of enrolments, residence in parental homes, and crime suggests substantial supply responsiveness to economic incentives, which may augur well for the future.
d. Increasing numbers of young people are committing suicide. The gender disaggregated death rates per 100,000 by suicide and self-inflicted injury for young and older persons for 22 countries for 1970, 1980 and 1992 show that the suicide rates are in all cases higher for men than for women. Across the countries, there is a wide variation in both the adult and youth rates and considerable variation in the pattern of change. In English-speaking countries - the US, Canada, UK, Australia, New Zealand and Ireland - rates of suicide rose sharply, which could potentially reflect the rising problems for youths in the job market in those countries, in particular, the increase in inequality that marked the 1980s. However, the rates of suicide also rose among young men in Norway, where earnings inequality is small and the social safety net high. That youths in these countries report themselves as being happier or more satisfied with their lives further complicates any simple interpretation of these patterns and their link with the increasingly elongated transition from school to work.
e.Engagement of youth in immoral activities.Lack of employment amongst the youth has caused a lot of suffering amongst the youth to an extent that in most cases they end up involving themselves in social vices such as prostitution so as to get their daily bread this fact is possible because most of the African families are faced with poverty thus they use their children as a source of income thus leading to abuse of their bodies due to their engagement in prostitution.
10.0 Asia and Africa: Repercussions of Unemployment on Youth,
The lack of good data makes it difficult to evaluate the extent of the youth labour market problem in many Asian and African countries. Tables 1 and 2 suggest considerable variation in the levels of GDP per capita in both Asia and Africa (cf. Gabon and Eritrea; Singapore and Nepal) and similarly for other variables such as infant death rates and primary school attendance. There are no consistent patterns of youth unemployment - they are very high in some countries (e.g. Algeria, Egypt, Mauritius, Sri Lanka) and very low in others (e.g. Burkina Faso, Central African Republic, Ethiopia, Thailand). Female unemployment rates are generally higher than male rates. There has been considerable growth in Asia and Africa, but presumably from a very low base, in the proportion of young people in 'third-level' or higher education, more prominently in general in Africa than in Asia and also more notably so for females rather than males.
The size of the agricultural sector in these countries tends to be large and in Africa the majority of the young live in rural areas. In contrast, for some Asian countries,
The proportion of youth in the urban areas is uniformly higher than in rural areas. As a measure of labour market slack, the unemployment rate is generally not useful in rural areas, especially in countries where no unemployment benefit system exists, since unemployment in the developing world is primarily an urban phenomena. Where unemployment rates for rural areas exist they are almost always much lower than in urban areas. Youth unemployment rates tend to be higher than adult rates in these countries being, on average, twice as high as overall unemployment rate in some African countries.
The relationship between youth unemployment and educational attainment is mixed. In Africa, the unemployment rates for the least and the most educated tend to be lower than for those with intermediate level of education (e.g. South Africa). On the other hand, in Asia, they are generally higher for the more educated than the less educated. This is partly due to the increased participation in education, resulting in a greater number of educated youths. For example, in Indonesia, among the rural male unemployed adolescents (15-19 years old), more than a third have completed primary schooling, more than a third have had a junior high school degree and about a fifthpossess senior high school degree; their female counterparts are slightly better placed in this regard.
Underemployment is the main problem in rural areas. For example, a much higher proportion of underemployed young men, women and persons are found: (1) in rural Indonesia, 45.2, 60.5, and 50.9 per cent respectively, compared with 23.5, 23.8 and 23.7 per cent for their urban counterparts; and (2) in agriculture and allied activities in the Philippines, 52.0, 70.0, and 55.0 per cent respectively, compared with 9.0, 15.0 and 13.0 per cent among service workers, 13.0, 12.0 and 12.0 per cent among production and related workers. In general, for some Asian countries, the proportion of underemployed youth in the rural areas is more than twice as high as in the urban areas.
In comparison with the OECD as well as the transition economies and the Latin American countries, much less empirical work on wages and/or youth unemployment has been undertaken on other developing countries. The main published exceptions are Hoddinott (1996) on Côte d'Ivoire; Dickens and Lang (1995) on Sri Lanka and Schultz and Mwabu (1998) and Moll (1993) on South Africa; Blanchflower (1999b) on the Philippines as well as a new crop of unpublished papers by Rodgers and Nataraj (1998) on Taiwan and Kingdon and Knight (1998) on South Africa.
A number of generalized facts emerge from a set of country studies commissioned by the ILO on the nature of the youth labour market in Asian and African countries:
a. Youth unemployment in most developing countries is perceived as a major problem. In many countries young people constitute a very high proportion of both the total population and total unemployment, comprising more than half the total number of the unemployed in Africa. In many countries the young unemployed are looking for their first job (e.g. India).
b. Inadequate and incomplete data make it hard to know exactly the scale of the problem. Some of the features of the problems related to the data for the purpose of making cross-country comparisons are: (1) cross-country variations in the definition of youth; (2) cross-country variations in measurement of employment, unemployment and underemployment; and (3) country-specific data gathering and survey systems.
In general, Africa is thought to be caught in a number of self-reinforcing, vicious circles:
a. African economies are unable to generate adequate growth rates in GDP and enough employment and income generating opportunities to absorb the majority of their labour forces;
b. The inability of the private sector to generate sustainable livelihoods has given prominence to rivalry over control of the state as a primary means for attempting to share in whatever fruits of the economy that there may be, further exacerbating the possibility of unrest; and
c. The capacity of the state to govern and deliver with respect to social services, such as education, and the security is compromised.
High inflation and restrictive macroeconomic policies have especially harmed youth. The main feature of the African labour market is the slow growth of employment in the formal sector and the retrenchment of labour in the course of implementing structural adjustment. In response, the non-formal sectors have not only acted as residual sectors but also as labour absorbers of last resort. Such structure of wages and unemployment can have some perverse effects on youth:
a. High unemployment rates may discourage youth from investing in education and training as the investment appears wasted;
possess senior high school degree; their female counterparts are slightly better placed in this regard.
Underemployment is the main problem in rural areas. For example, a much higher proportion of underemployed young men, women and persons are found: (1) in rural Indonesia, 45.2, 60.5, and 50.9 per cent respectively, compared with 23.5, 23.8 and 23.7 per cent for their urban counterparts; and (2) in agriculture and allied activities in the Philippines, 52.0, 70.0, and 55.0 per cent respectively, compared with 9.0, 15.0 and 13.0 per cent among service workers, 13.0, 12.0 and 12.0 per cent among production and related workers. In general, for some Asian countries, the proportion of underemployed youth in the rural areas is more than twice as high as in the urban areas.
In comparison with the OECD as well as the transition economies and the Latin American countries, much less empirical work on wages and/or youth unemployment has been undertaken on other developing countries. The main published exceptions are Hoddinott (1996) on Côte d'Ivoire; Dickens and Lang (1995) on Sri Lanka and Schultz and Mwabu (1998) and Moll (1993) on South Africa; Blanchflower (1999b) on the Philippines as well as a new crop of unpublished papers by Rodgers and Nataraj (1998) on Taiwan and Kingdon and Knight (1998) on South Africa.
A number of generalized facts emerge from a set of country studies commissioned by the ILO on the nature of the youth labour market in Asian and African countries:
a. Youth unemployment in most developing countries is perceived as a major problem. In many countries young people constitute a very high proportion of both the total population and total unemployment, comprising more than half the total number of the unemployed in Africa. In many countries the young unemployed are looking for their first job (e.g. India).
b. Inadequate and incomplete data make it hard to know exactly the scale of the problem. Some of the features of the problems related to the data for the purpose of making cross-country comparisons are: (1) cross-country variations in the definition of youth; (2) cross-country variations in measurement of employment, unemployment and underemployment; and (3) country-specific data gathering and survey systems.
In general, Africa is thought to be caught in a number of self-reinforcing, vicious circles:
a. African economies are unable to generate adequate growth rates in GDP and enough employment and income generating opportunities to absorb the majority of their labour forces;
b. The inability of the private sector to generate sustainable livelihoods has given prominence to rivalry over control of the state as a primary means for attempting to share in whatever fruits of the economy that there may be, further exacerbating the possibility of unrest; and
c. The capacity of the state to govern and deliver with respect to social services, such as education, and the security is compromised.
High inflation and restrictive macroeconomic policies have especially harmed youth. The main feature of the African labour market is the slow growth of employment in the formal sector and the retrenchment of labour in the course of implementing structural adjustment. In response, the non-formal sectors have not only acted as residual sectors but also as labour absorbers of last resort. Such structure of wages and unemployment can have some perverse effects on youth:
a. High unemployment rates may discourage youth from investing in education and training as the investment appears wasted;
b. The association of increasing age with increasing probability of employment may result in a passive approach to job search; and
c. Youth who have relatives in wage employment may develop a dependency that makes them have a high reservation wage for entry into formal employment (ILO/SAMAT, 1999).
In a different context, the south-east Asian experience has demonstrated that youths are more vulnerable to external shocks such as the financial and the resulting socio-economic crisis since they are the first ones to be retrenched and face greater difficulties in finding employment. Overall, there seems to be some recognition that the problem is closely linked with adult unemployment and overall economic performance.
Various strategies have been tried unsuccessfully, and the public sector job generation has not worked. The World Bank and IMF have come to the aid of countries in financial crisis but forced them to reduce public sector employment (e.g. United Republic of Tanzania, Vietnam). There have been some attempts at reforming the existing educational and training system in Africa (e.g. Zambia). The main aim of such reforms is to increase the relevance of education and training system, making it better geared towards the demands of the labour market.
Minimum wages exist in many countries (e.g. Indonesia, United Republic of Tanzania, Mali, Côte d'Ivoire, India, Mauritius, Zimbabwe, South Africa). High levels of the minimum wage apparently exist in Mauritius, Zimbabwe and South Africa which may reduce employment. The absence of a youth sub-minimum is likely to have the largest employment consequences on the young who tend to have the least skills, if the minimum is actually implemented. Lustig and Mcleod (1997) found minimum wages increased unemployment but lowered poverty in four African countries (Ghana, Mauritius, Morocco, Tunisia) and five Asian countries (India, Indonesia, Philippines, Sri Lanka, Thailand).
A number of countries have experimented with some success with policies to increase self-employment in both urban (e.g. PMRY in India) and rural areas (e.g. TRYSEM also in India). These include workshops on how to set up in business (e.g. Mali and Zimbabwe), provision of lines of credit and advisory activities to help the creation and survival of small businesses (e.g. Philippines, Indonesia, Sri Lanka, Zimbabwe, Mali, Côte d'Ivoire and Cameroon). It is increasingly the case that reforms of the existing educational and training institutions are integrated into programmes for entrepreneurship development and enterprise promotion.
11.0 Projects that have been brought to help Promote youth
Employment to the community
11.0.1 India: Training of Rural Youth for Self-Employment (TRYSEM)
TRYSE s a facilitating component of a poverty eradication programme, which aims at providing basic technical and entrepreneurial skills to the rural poor in the age group of 18 to 35 years to enable them to take up self- or wage- employment. At least 40 per cent of the beneficiaries have to be women. Train- ing is imparted both through training institutions and through the non- institutionalised mode, e.g. master craftsmen functioning from their own place of work. Every TRYSEM trainee becomes eligible to avail of assistance for setting up a self-employment enterprise. During the Eighth Plan
USA, young people between the ages of 16 and 25 typically hold 7-8 different jobs . If such voluntary quitting or behaviour or "shopping around" is less cyclically sensitive than job availability, one consequence will be that when job opportuinites become scarce, unemployment will rise more amongst those groups with a higher likelihood of quitting their jobs. Whilst voluntary quits will also tend to fall during a recession, Moser (1986) shows that, in the USA, voluntary quits fall off markedly with age and are less cyclically volatile than "fires" by firms. The implication is that young people are more likely to quit their jobs than adults and will continue to do so during recessions and therefore will be disproportionately affected by recession-induced reductions in new hires.
Although this goes someway towards providing an explanation, there is little doubt that it is demand side considerations which are of more consequence. The opportunity cost to firms of firing young people is lower than for older workers. Being less skilled, they embody lower levels of investment by firms in training and consequently involve a smaller loss to firms making them redundant. Furthermore, young people are less likely to be subject to employment protection legislation. Almost invariably, such legislation requires a qualifying period before it can be invoked and typically compensation for redundancy increases with tenure. Thus, also for this reason, the more recently taken on employees will be cheaper to fire. Obviously, this will disproportionately affect young people.
Also, much research has shown that the first reaction of firms to a recession is to cease hiring before commencing on the more expensive procedure of redundancies. It is evident that young people will comprise a disproportionate segment of job-seekers and thus will be more heavily affected by a freeze in new hires. For example, Pissarides (1986) has demonstrated that, at the aggregate level, increased unemployment in Britain in the late 1970s and 1980s was essentially attributable to a reduction in the outflow from unemployment rather than any variations in the inflow which varied to a much smaller degree . More recently, looking at the uncompleted duration of unemployment, O'Higgins (1995, pp.27-28) has demonstrated that this continues to be true for both older and younger age-groups. Variations in unemployment reflected increasing unemployment duration, and therefore a fall in the outflow rate, rather than a marked increase in new entrants to unemployment . Indeed, for the under-18s, the progressive reduction in unemployment witnessed from 1983 on was accompanied by a sustained increase in the numbers of new entrants to unemployment. In other words, falling unemployment was accompanied by an increase in the inflow rate rather than the reverse.
For all these reasons it is not particularly surprising to find that young people's unemployment rates are higher than for adults and that they are more cyclically sensitive than their older counterparts.
Wages
The arguments related to wages also have, at least superficially, an obvious intuitive appeal. Wages are likely to have a negative impact on youth employment in as much as, the higher are the relative wages of youth with respect to those of adults the more incentives there are to employ adults as opposed to youths. Although intuitively appealing, this argument relies on the assumption that adult workers are perfect, or atAbstract
The large, and perhaps growing, number of unemployed youth is one of the most daunting problems faced by developed and developing countries alike. On average, and almost everywhere, for every one unemployed adult, two young persons find themselves without a job. The social distress caused by this situation is well known. The long-term effects of youth joblessness are equally important. The unemployment spells over a worker's life cycle are related to the ease of transition between school and work. Furthermore, it is disappointing to observe that the unprecedented expansion of investment in youth education in many regions of the world is not being matched by higher employment levels for this population group. This problem has continued to cause many youth around the world untold suffering thus prompting for the concerned authorities to look for a solution.
Building upon the work initiated in 1996-97 under the Action Program on Youth Unemployment, and in response to the resolution on Youth Employment adopted by the International Labour Conference at its 86th Session (June 1998), the ILO Development Policies Department launched a number of studies on the effectiveness of strategies and programs implemented in different countries of the world to cope with youth marginalization and unemployment.
Our challenge has been to identify practical and effective strategies to eradicate youth unemployment. While much has been learnt, we must admit that more has yet to be discovered. As the present employment situation throughout the world shows, only few countries have managed to generate decent employment for their youth, let alone their adult population. We are still searching for practicable solutions to this global problem. One thing is clear: sustainable, job-enhancing economic growth remains an indispensable component of any strategy to eradicate youth unemployment. Experience has shown that employment-friendly growth is essential, and targeted programs can only provide complementary resources and cross-gap actions. Starting from this premise, the present paper examines the effects of policies and programs on employment, and suggests some viable strategies for the inclusion of youth in the process of development.
The debate about education versus training needs to be revived. In an increasingly mobile world, the need to acquire the ability to learn is, often, more important than the acquisition of a specific skill. There is, however some evidence to indicate that effective apprenticeship systems ease the transition from education to work. Those systems must rely on the growth of enterprises in the formal sector. Investment in better, earlier and longer education might be more effective in promoting the attitudes and competencies required for the world of work. It is questionable that large untargeted youth employment or training programs have positive rates of return. There is little evidence that such programs improve either the employment prospects or earnings for the young and especially so for the disadvantaged among them. Narrowly targeted and carefully evaluated programs can, however, ease the plight of specific youth categories. The effective use of public resources can only be achieved if there are ways to measure the short-, medium- and long-term outcomes of...specific strategies. It is strongly argued that detailed evaluations must be conducted as a pre-requisite for the design of any job-creating strategy for the young.
Over 70 million young people are unemployed throughout the world according to ILO estimates. In countries as diverse as Colombia, Egypt, Italy and Jamaica, more than one in three young persons are classified as "unemployed" - declaring themselves to be without work, to be searching for work and/or to be available for work. The most seriously affected regions are Southern Europe (Greece, Italy and Spain), Eastern Europe (particularly Bulgaria, Latvia, the former Yugoslav Republic of Macedonia and Poland) and the Caribbean (including Jamaica and Trinidad and Tobago). However, youth unemployment is not high in all countries. In Austria, Japan, Mexico, Singapore, South Korea and the United Republic of Tanzania, less than one in 12 young workers are unemployed and the difference between youth and adult rates is relatively low. (Country data relate to 1997 or earlier.)
In most countries, teenagers experience higher unemployment rates than those in their early twenties. However, the difference is small in such countries as India and Indonesia and only moderate in most developed countries. In France and Germany, where the unemployment rate for teenagers is less than for young adults, mass labour market programs and apprenticeships that target teenagers have reduced their rate of unemployment. Unemployment is but one dimension of the employment problem faced by young people. A disproportionately large number of the young in many countries are underemployed, some working fewer hours than they would like to and others working very long hours with little gain. Some young people may be able to obtain only part-time work, for example, in France (particularly young women) and Indonesia; or seasonal work as happens in the agriculturally based economies of south Asia and sub-Saharan Africa. Underemployment is also high among many young people who work in household production units in the rural and urban informal sectors. In poorer countries, where public or family sources provide little income support, jobless young people are often denied the "luxury" of remaining unemployed. They eke out a living by means of low productivity work in the lower, subsistence-oriented, reaches of the informal sector or in such low yield activities as odd jobs, hawking and car washing. Here the problem may not be short hours but excessively long hours with little reward. The widespread stagnation and decline of employment opportunities in the formal sectors of most developing countries has intensified the problem in recent years, with young women bearing a disproportionate burden.
1.0 Executive summary
1. The aim of the ILO's action program on Strategies to Combat Youth Marginalization and Unemployment is to identify effective policies and interventions to combat youth unemployment and exclusion. To do this, it is necessary to assess both the mechanisms that regulate the demand for labour and identify the strategies that can increase the possibilities of employment and the wages of the young. This, however, must be done in different economic structures and within different business cycles.
2. The work carried out under this action program has been largely based on the resolution on Youth Employment adopted by the International Labour Conference at its 86th Session, June 1998. It is also a continuation of the work initiated in the 1996-97 biennium under the Action Program on Youth Unemployment.
3. To assess youth employment policies it is necessary to ensure that increases in jobs for the young do not lead to rises in adult unemployment, that schooling and training are not impaired and, naturally, that the future employability and the quality of youth employment is enhanced. Evaluations that provide information on the effects of policies and programs over long time periods and take into account these factors
are rarely available. In this sense, it is clear that much remains to be done to identify appropriate youth employment strategies.
4. This essay, which summarizes the work carried out under the Action Programme, describes youth joblessness in the world, assesses some experiences to deal with this problem and suggests what can be done to improve it. In a very summarized manner, research indicates that:
a. There are many similarities in youth labour markets. In particular, it has been found that youth unemployment is approximately double the adult unemployment in most countries of the world. This ratio appears to decline as unemployment increases.
b. In examining possible causes of youth joblessness it has been found that, in general, wages, minimum wages, cohort size, shifts in industry composition, trade, technology and increased female participation are not related to youth unemployment. Reaffirming the fundamental message of the resolution concerning youth employment adopted at the 86th Session of the International Labour Conference, the level of aggregate demand in the economy does appear to play an important role. Contrary to widespread belief, unemployment makes young people very unhappy, which suggests it is not a conscious choice.
c. It is noted that there are substantial supply responses to economic incentives in the youth labour market. High unemployment encourages young people to stay on longer at school and acquire more education. The young are more likely to continue living with their parents these days than was true in the past. It is also observed that there is a number of worrying responses which include increased drug taking, more participation in crime and increased suicide.
d. It has been concluded that increased youth wage flexibility does not seem to be an effective tool to deal with youth joblessness: there is little evidence to suggest that the young are being priced out of jobs. There has been a decline in the wages of the young relative to adults over the last decade in many countries and youth unemployment has not improved. Schemes to encourage self-employment may have some value. Active labour market policies have generally not been very successful in improving the situation of the disadvantaged young. A series of recommendations for narrow targeting and careful monitoring are made in this report.
e. Finally, as it appears that solutions to youth unemployment are driven by what happens to overall unemployment, the effectiveness of the suggested macroeconomic policies in decreasing unemployment is examined. Unfortunately, we are a long way from understanding why aggregate unemployment is so high and why it has trended upwards over the last couple of decades. High unemployment does not seem to be primarily the result of job protection, trade union power or wage 'inflexibility'. There is some evidence that overly generous benefits do tend to raise the level and duration of unemployment by making work less attractive. However, quantitatively, the impact of benefits is small. There are two components of the aggregate unemployment problem to be understood. First, cyclical movements in joblessness - why does unemployment in general and youth unemployment in particular fluctuate up and down in large, irregular cycles? Second, why in so many countries has unemployment trended secularly upwards over the last few decades? It appears that the main explanation for the cyclicality rests with changes in commodity prices in general and the oil price in particular, while explanations of the upward trend are related to aggregated demand, unemployment benefits and labour taxes, the internal mobility of the population, home ownership and the existence of a well-functioning private rental sector.
5. On the basis of present knowledge about the policies adopted and experiences evaluated, it is concluded that:
a. Economic strategies that boost aggregate demand must be adopted;
b. Carefully targeted dual apprenticeship - education systems should be implemented;
c. These systems will be successful if the formal sector in the economy grows, and if active tripartite participation in these schemes is achieved; and
d. Self-employment and small enterprises in the formal sector backed up with financial services and training, are promoted within carefully targeted population groups.
2.0 Who are the youth?
According to the standard UN definition, youth comprises the age-group between fifteen and twenty-four inclusive. In practice, the operational definition of youth varies widely from country to country depending on cultural, institutional and political factors. In industrialized countries, the lower age limit usually corresponds to the statutory minimum school-leaving age, whilst the upper limit tends to vary more widely. In Britain, for example, "Youth Employment Policy" generally refers to policies targeted at the 16-18 year old age group whilst in Italy the term is used to describe policies for people aged between 14-29 in Northern Italy and 14-32 in the South. For the purposes of this paper the UN definition is used. Within the category of youth, it is also important to make a further distinction between teenagers and young adults, since the problems faced by these two groups are quite distinct.
3.0 What is unemployment?
Although it may appear obvious, it is important to begin by discussing briefly what we mean by unemployment. According to the ILO definition, which is now the most widely used definition, at least as regards the reporting of unemployment statistics, the unemployed are defined as those people who have not worked more than one hour during the short reference period but who are available for and actively seeking work. Even with this fairly unequivocal definition, some cross-country differences may arise. For example, how are students treated? In most countries, students are treated as being outside the labour force, in others (e.g. Norway), if they are actively seeking work, they are included.
Furthermore, a number of normative questions arise concerning this definition. For example, is the one hour rule appropriate? Some national authorities would prefer to use a longer working period. Thus, the Netherlands have implemented a twelve-hour (per week) rule. That is, using this definition, a person is defined as unemployed if they have worked less than twelve hours in the reference week.
Another issue regards the treatment of those traditionally defined as outside the labour force. One might question the exclusion from the unemployed of discouraged workers; people who wish to work but are not actively seeking a job since they see no possibility of obtaining gainful employment. Their position "outside the labour force" is purely a question of prevailing economic conditions. If and when the chances of finding work improve, at least some of these people will return to employment without ever having been defined as unemployed. I would thus argue that non-employment is possibly a more useful concept than unemployment. That is,…
the ratio of those neither in education or employment to the population (either including or excluding those in education). However, such a statistic is not widely reported and is, at least at present, impracticable.
To provide an example of the importance of these distinctions, table 1 presents information on the non-employed/population ratio and the non-employment rate of male eighteen year-olds and the male unemployment rates of the 15-19 year old age group. Even though the last rate is not strictly comparable to the other two since the age group used is wider, the differences in the rankings of countries for the three different indices are quite striking. The UK varies in position from seventh to fourteenth according to which index is employed. Similarly France varies from sixth position to eleventh using the different indices. None of the countries in the table maintain the same ranking throughout and the rank correlation coefficients between the unemployment rate and the non-employment ratio.
Table 1
Non-employment/population ration and non-employment rate for 18 years old and unemployment rates for 15-19 years old males, 1994
Non-employment Population ratio 18-years old1 Non-employment rate 18 years old2 Unemployment rate 15-19 years old
Country Ratio Ranking Rate Ranking Rate Ranking
Europe Belgium 13.0 9 59.9 14 9.5 2
Denmark 4.4 1 12.4 1 9.9 3
France 10.7 6 53.1 13 21.9 11
Germany 7.8 4 14.2 2 6.2 1
Greece 10.8 7 35.0 8 12.8 5
Ireland 16.8 11 41.3 9 31.8 12
Italy 15.2 10 45.5 11 33.0 13
Netherlands 5.3 2 21.0 4 12.1 4
Portugal 7.2 3 17.9 3 15.53 6
Spain 17.2 12 48.2 12 39.8 14
United 23.5 14 34.4 7 21.1 10
Other Australia 17.4 13 29.9 5 19.2 8
OECD Canada 10.2 5 42.5 10 20.9 9
United States3 12.0 8 33.4 6 18.4 7
Notes: 1) This is defined as: (unemployed not in school+inactive not in school)/total population of the age group. 2) This is defined as: (unemployed not in school+inactive not in school)/total population of the age group not in school. 3) Refer to 1993. Source: OECD Economic Outlook 1996, Table 4.8 and 4.9 and OECD Database.
Non-employment rate respectively are .61 and .54. Hardly a very close relationship between series which are supposedly representing the same phenomenon. Others argue for the use of the unemployment/population ratio (e.g. Gaude, 1997). Using this type of definition often radically changes the impression of the magnitude of the problem particularly when one looks at cross-country definitions. This is particularly true when one looks at teenage unemployment.
Table 2 presents a similar comparison to table 1. However, this time the two reported statistics are the unemployment/population ratio and the unemployment rate (1995) of 15-19 year old males. Once again there are striking differences between the two indices, even more so than in the previous table. The difference between the two indices depends on the labour force participation rate. Countries with relatively low labour force participation rates of teenagers will tend to score better according to the first index vis-a-vis the second. The rank correlation coefficient in this case is .16. Although unemployment/population ratios are more readily available, the statistic is perhaps less meaningful than the non-employment ratio or rate since, other things being equal, the more discouraged workers there are the lower will be this ratio.
Table 2
Unemployment population ratio, unemployment rates with rankings
Country Unemployment/ Population Ranking Unemployment rates Ranking
Europe Belgium 2.7 1 30.6 12
Denmark 5.1 6 7.3 1
France 3.0 3 24.1 10
Germany 2.7 2 7.9 2
Greece 3.7 4 21.8 9
Ireland 7.0 8 28.0 11
Italy 7.4 9 31.5 13
Netherland 6.3 7 14.1 4
Portugal 3.9 5 14.0 3
Spain 10.4 13 46.0 14
United Kingdom 9.5 10 19.5 6
Other OECD Australia 10.9 14 19.7 7
Canada 9.8 11 19.8 8
United States 10.1 12 18.4 5
Source: OECD Database.
Whatever the merits of the foregoing arguments, this paper continues to employ the conventional unemployment definition, since it is the only statistic which is widely available across a range of countries, and over an extended time period. Some comfort may be drawn from the fact that, at least within countries, movements in the series are likely to be highly correlated over time. It should , however, be born in mind that veryoften, when talking about, in particular teenage unemployment rates, we are in fact referring to a rather small group of people due to the low labour force participation of this group.
4.0 Who are the young unemployed?
Youth unemployment is by no means spread evenly amongst young people. A number of individual characteristics tend to increase or reduce the likelihood that a young person becomes unemployed. Let us look at a few of these in turn.
Women vs. men
There does not appear to be any strict pattern in the relationship between male and female unemployment rates. In the countries for which ILO-comparable data is available, women face higher youth (as well as adult) unemployment rates than men more often than not, although this varies much from one country to another. Figure 6 shows the ratio of female to male unemployment rates for different age-groups over time for a number of European countries. It can be seen from the figure that in several European countries (Finland, France, Poland, Portugal, Romania and Spain) female youth unemployment rates are significantly higher than male youth unemployment rates. Thus, in a number of countries, the situation facing young women is particularly serious. If one looks at developments over time, one notes that, particularly in Southern European countries, this pattern has remained fairly constant or tended to slightly increase over time. This might be attributed to the exogenous tendency for the labour force participation rates of adult women to rise. In as much as adult women tend to be employed in less skilled work than men, there may be greater substitutability between young and adult women than there is for younger and older males
5.0 Characteristics of youth unemployment
Youth unemployment rates are higher than adult unemployment rates
The most obvious general labour market characteristic of youth unemployment is that its rate is higher than that of adults. Figures 1a and 1b illustrate this separately for males and females. The observation is true across a wide range of countries (not just in Europe or indeed in industrialised countries) and across gender. There are of course a few exceptions to the rule. In Germany female unemployment rates appear to increase with age whilst young male adults (20-24) have unemployment rates which are higher than both prime-age adults and teenagers. This "inverted-U" shape profile of unemployment is found in a number of other countries. One observes this pattern in Indonesia and the Philippines and for males in Finland, Portugal and Sweden.
Figure 1a
Male unemployment rates by age, 1994
Figure 1b
Female unemployment rates by age, 1994
Notes:
1) For France, data refer to 1993.
2) For the Netherlands, data refer to 1992.
3) For Indonesia, teenagers are defined as those aged 10-19.
4 )For Norway, Spain, Sweden and the USA, teenagers are defined as those aged 16-19.
5) For Portugal, teenagers are defined as those aged 12-19.
6) For Romania, teenagers are defined as those aged 14-19.
Source: ILO-comparable annual employment and unemployment estimates, ILO, Geneva, 1996
6.0 Youth in Labour Markets
We now turn to a series of statistics (Tables 1 and 2) that describe the extent to which the young are jobless by country and over time. First, changes in the relative size of the youth population aged 15-24 compared with the older age group 25-54 are reported (Table 1). The size of the youth population aged 15-24 years relative to the numbers aged 25-64 has fallen in all developed countries and most developing countries - the main exceptions are Niger, El Salvador, Nicaragua, Paraguay and Pakistan. The youth population is increasing in most of the transition economies.
From Table 1 it can be observed that: (1) the youth participation rates are higher in developed countries than in developing countries; (2) the participation rates for young men have declined in almost all countries; and (3) they have declined for women aged 15-19 in most countries, but increased for the older age group of 20-24 year old for most countries, except for the eastern European countries where the rates have declined.
An examination of overall unemployment rates (with minimum and maximum ages variously defined) and by gender presents a mixed picture (Table 2). Overall rates vary from as high as 38.8 per cent in Macedonia to as low as 0.4 per cent in Uzbekistan. This illustrates the difficulty of interpreting the unemployment rate in developing and transition economies. For example, in transition economies it is unclear whether a low unemployment rate is a signal of positive factors - the economy is working well at full-employment - or of negative factors - little adjustment has been made to a market economy. Similarly, in many less developed countries, only the better educated can afford to be unemployed. Hence, in those countries, unemployment rates for the more educated are above those of the least educated. In the majority of countries reported in Table 2, female unemployment rates are higher than male rates (e.g. Botswana, Jamaica, Chile, Belgium and Spain), while in a few others, the male rates are higher (e.g. El Salvador, Algeria, Puerto Rico, UK, Sweden and Australia).
Data on current unemployment rates across countries for the 15-24 and 25+ age groups reveals that the youth unemployment rates are approximately twice as high as adult unemployment rates across both developed and developing countries. In a number of developing countries the ratio is considerably higher (Egypt, Colombia, Chile, Honduras, Indonesia, Republic of Korea and Sri Lanka). The ratio is also above two in several southern European countries (Greece, Italy and Turkey), as well as in a number of Eastern European countries (e.g. Bulgaria, Estonia, Romania and Slovenia).
An examination of male and female unemployment rates for our two age groups shows that the unemployment rates for young men aged 15-24 are lower than the equivalent rates for young women in virtually all of the developing countries and transition economies (Table 2). The pattern is more mixed in the developed world - male youth rates are higher in the English speaking countries (Australia, Canada, Ireland, New Zealand, the UK and the US) plus Japan, Sweden and Turkey, but lower in countries such as Austria, Belgium, Denmark, France, Germany, Italy, Spain and Portugal.
Youth unemployment rates are significantly higher in the 1990s than they were in the 1980s in a number of countries. Even where they have not increased significantly they have generally remained high (e.g. Spain at 36 per cent and Italy 32 per cent). The rate has increased markedly in Brazil, Colombia, El Salvador, Nicaragua, Canada,Italy, France, Finland, Sweden and New Zealand but declined sharply in Chile, the Netherlands and Portugal.
The average annual changes in the proportion of 20-24 year olds in higher education between 1990 and 1995 show a rise. It is likely that this is in part a labour supply response on the part of the young to the lack of unskilled job opportunities, as well as to the worldwide increase in the demand for the skills. A lack of jobs causes young people to defer their entry into the world of work. The transition from school to work appears to be sensitive to aggregate economic conditions, with the employment and unemployment of youths highly dependent on the rate of unemployment, particularly for younger youths and for those out of school (see Blanchflower and Freeman, 1996b and OECD, 1996).
7.0 Main determinants of fluctuations in youth unemployment and why do they
vary more than adults rates?
Explanations of youth unemployment basically reduce to the discussion of the relative importance of three factors.
„h Aggregate Demand
„h Youth Wages
„h Size of the Youth Labour Force
The intuitive arguments underlying the roles of these three factors are fairly self-evident. In determining responses to the problem, however, it is clearly of fundamental importance to determine the relative importance of these factors in as far as is possible.
Aggregate demand
Aggregate demand affects youth unemployment in a similar way in which it affects the overall level of unemployment. A fall in aggregate demand will lead to a fall in the demand for labour in general and consequently for young labour as well as adult workers. This is a fairly uncontroversial and self-evident (albeit important) statement. Perhaps of more interest and relevance to the discussion here is the fact noted above that youth unemployment rates are typically substantially higher than adult rates, and that they are more cyclically variable as was demonstrated by figures 2a and 2b.
In this regard, rather than ask: does aggregate demand influence youth unemployment? To which the reply is an unequivocal yes, a more interesting and relevant question is: why do fluctuations in aggregate demand affect youths disproportionately?
There are a number of reasons why one might expect youth unemployment to be more sensitive than adult unemployment to changes in aggregate demand. On the supply side, it is often argued that young people are more likely to voluntarily quit their jobs than older workers. Their initial experiences in the labour market are likely to involve a certain amount of "shopping around" in so far as circumstances permit, so as to find an appropriate occupation. The opportunity cost of doing so is lower for young people. They will tend to have fewer skills and lower wages, and are less likely to "need" a job to support a family. Blanchflower & Freeman (1996) report that, in thelabour (and were consequently excluded from the project), and participating factories are concerned about their trainees moving to competitors after graduation (a fear that is not confirmed by dual training system experiences in Germany). To some extent, recruiting students ‘the Egyptian way’ solved these issues: through people who already work for the company and who supported the candidacy of friends or relatives. While this type of favouritism is generally considered harmful, impeding fair and effective recruitment processes, the principle proved useful in the case of the dual training system. Youngsters whose parents or relatives work in the same factory are unlikely to be exploited, as their relative will keep a keen eye on their duties and learning process. After graduation, the family's loyalty towards the factory keeps students committed to their employers.
Investors' Association (IA). Many of its members use relatively sophisticated production methods, and have serious difficulties recruiting adequately qualified workers. Therefore, the IA was willing to invest in the Mubarak-Kohl Initiative. In 1995, a dual vocational education and training centre became operational. The youths, who were to become mechanics, electricians or textile workers, were selected by the factories themselves. Each week for a period of three years, these students receive two days of general and technical education (arranged by the Ministry of Education) and four days of practical work experience. The Regional Unit of the Dual System (RUDS), with specialists from the private sector and the German GTZ, supervised the internships and designed some specialized courses. Together, the Ministry and RUDS designed and evaluated the exams.
Almost all factories that participated in 1995 are still participating four years later. This confirms the viability of the dual training system. But the pilot project also showed that even under ideal circumstances (an enthusiastic and organized private sector, with modern factories and a clear need for qualified workers), a dual training system is not established easily. Some individual factories used their interns as cheap labour (and were consequently excluded from the project), and participating factories are concerned about their trainees moving to competitors after graduation (a fear that is not confirmed by dual training system experiences in Germany). To some extent, these issues were solved by recruiting students 'the Egyptian way': through people who already work for the company and who supported the candidacy of friends or relatives. While this type of favouritism is generally considered harmful, impeding fair and effective recruitment processes, the principle proved useful in the case of the dual training system. Youngsters whose parents or relatives work in the same factory are unlikely to be exploited, as their relative will keep a keen eye on their duties and learning process. After graduation, the family's loyalty towards the factory keeps students committed to their employers.
Investors' Association (IA). Many of its members use relatively sophisticated production methods, and have serious difficulties recruiting adequately qualified workers. Therefore, the IA was willing to invest in the Mubarak-Kohl Initiative. In 1995, a dual vocational education and training centre became operational. The youths, who were to become mechanics, electricians or textile workers, were selected by the factories themselves. Each week for a period of three years, these students receive two days of general and technical education (arranged by the Ministry of Education) and four days of practical work experience. The Regional Unit of the Dual System (RUDS), with specialists from the private sector and the German GTZ, supervised the internships and designed some specialized courses. Together, the Ministry and RUDS designed and evaluated the exams.
Almost all factories that participated in 1995 are still participating four years later. This confirms the viability of the dual training system. But the pilot project also showed that even under ideal circumstances (an enthusiastic and organized private sector, with modern factories and a clear need for qualified workers), a dual training system is not established easily. Some individual factories used their interns as cheap labour (and were consequently excluded from the project), and participating factories are concerned about their trainees moving to competitors after graduation (a fear that is not confirmed by dual training system experiences in Germany). To some extent, these issues were solved by recruiting students 'the Egyptian way': through people who already work for the company and who supported the candidacy of friends or relatives. While this type of favouritism is generally considered harmful, impeding fair and effective recruitment processes, the principle proved useful in the case of the dual training system. Youngsters whose parents or relatives work in the same factory are unlikely to be exploited, as their relative will keep a keen eye on their duties and learning process. After graduation, the family's loyalty towards the factory keeps students committed to their employers.
11.0.3 Germany
Germany is often taken to be an example of good practice in youth employment policy although it is not without its difficulties which will be returned to below. Similar types of system may be observed in several other countries such as Austria, Switzerland, and to some extent Denmark. As noted above, Germany is characterised by relatively low levels of youth and, in particular, teenage unemployment. Although the situation of young (particularly male) adults seems to have rapidly deteriorated following reunification, the relative position of youths is still comparatively favourable with respect to oth
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