The
number of young people out of work globally is nearly as big as the population
of the United States
The Economist
The Economist
“YOUNG people
ought not to be idle. It is very bad for them,” said Margaret Thatcher in 1984.
She was right: there are few worse things that society can do to its young than
to leave them in limbo. Those who start their careers on the dole are more
likely to have lower wages and more spells of joblessness later in life,
because they lose out on the chance to acquire skills and self-confidence in
their formative years.
Yet more young
people are idle than ever (see article). OECD figures
suggest that 26m 15- to 24-year-olds in developed countries are not in
employment, education or training; the number of young people without a job has
risen by 30% since 2007. The International Labour Organisation reports that 75m
young people globally are looking for a job. World Bank surveys suggest that
262m young people in emerging markets are economically inactive. Depending on
how you measure them, the number of young people without a job is nearly as
large as the population of America (311m).
Two factors play a
big part. First, the long slowdown in the West has reduced demand for labour,
and it is easier to put off hiring young people than it is to fire older
workers. Second, in emerging economies population growth is fastest in countries
with dysfunctional labour markets, such as India and Egypt.
The result is an
“arc of unemployment”, from southern Europe through north Africa and the Middle
East to South Asia, where the rich world’s recession meets the poor world’s
youthquake. The anger of the young jobless has already burst onto the streets
in the Middle East. Violent crime, generally in decline in the rich world, is
rising in Spain, Italy and Portugal—countries with startlingly high youth
unemployment.
Will growth give
them a job?
The most obvious
way to tackle this problem is to reignite growth. That is easier said than done
in a world plagued by debt, and is anyway only a partial answer. The countries
where the problem is worst (such as Spain and Egypt) suffered from high youth
unemployment even when their economies were growing. Throughout the recession
companies have continued to complain that they cannot find young people with
the right skills. This underlines the importance of two other solutions:
reforming labour markets and improving education. These are familiar
prescriptions, but ones that need to be delivered with both a new vigour and a
new twist.
Youth unemployment
is often at its worst in countries with rigid labour markets. Cartelised
industries, high taxes on hiring, strict rules about firing, high minimum
wages: all these help condemn young people to the street corner. South Africa
has some of the highest unemployment south of the Sahara, in part because it
has powerful trade unions and rigid rules about hiring and firing. Many
countries in the arc of youth unemployment have high minimum wages and heavy
taxes on labour. India has around 200 laws on work and pay.
Deregulating
labour markets is thus central to tackling youth unemployment. But it will not
be enough on its own. Britain has a flexible labour market and high youth
unemployment. In countries with better records, governments tend to take a more
active role in finding jobs for those who are struggling. Germany, which has
the second-lowest level of youth unemployment in the rich world, pays a
proportion of the wages of the long-term unemployed for the first two years.
The Nordic countries provide young people with “personalised plans” to get them
into employment or training. But these policies are too expensive to reproduce
in southern Europe, with their millions of unemployed, let alone the emerging
world. A cheaper approach is to reform labour-hungry bits of the economy—for
example, by making it easier for small businesses to get licences, or
construction companies to get approval for projects, or shops to stay open in
the evening.
The graduate glut
Across the OECD,
people who left school at the earliest opportunity are twice as likely to be
unemployed as university graduates. But it is unwise to conclude that governments
should simply continue with the established policy of boosting the number of
people who graduate from university. In both Britain and the United States many
people with expensive liberal-arts degrees are finding it impossible to get
decent jobs. In north Africa university graduates are twice as likely to be
unemployed as non-graduates.
What matters is
not just number of years of education people get, but its content. This means
expanding the study of science and technology and closing the gap between the
world of education and the world of work—for example by upgrading vocational
and technical education and by forging closer relations between companies and
schools. Germany’s long-established system of vocational schooling and
apprenticeships does just that. Other countries are following suit: South Korea
has introduced “meister” schools, Singapore has boosted technical colleges, and
Britain is expanding apprenticeships and trying to improve technical education.
Closing the gap
will also require a change of attitude from business. Some companies, ranging
from IBM and Rolls-Royce to McDonald’s and Premier Inn, are revamping their
training programmes, but the fear that employees will be poached discourages
firms from investing in the young. There are ways of getting around the
problem: groups of employers can co-operate with colleges to design training
courses, for example. Technology is also reducing the cost of training:
programmes designed around computer games can give youngsters some virtual
experience, and online courses can help apprentices combine on-the-job training
with academic instruction.
The problem of
youth unemployment has been getting worse for several years. But there are at
last some reasons for hope. Governments are trying to address the mismatch
between education and the labour market. Companies are beginning to take more
responsibility for investing in the young. And technology is helping
democratise education and training. The world has a real chance of introducing
an education-and-training revolution worthy of the scale of the problem.
No comments:
Post a Comment