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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.
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Bonnie
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