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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
2
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
3
Why focus on Youth Unemployment?
4
Total Unemployment Rates
Source: Constructed from International Labour Organization (2011) data
Globally unemployment rate at 6.2 percent; 205 million unemployed
5
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
6
Youth & Adult Unemployment Rates
Source: Constructed from International Labour Organization (2011) data
7
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
8
Promoting Youth Employment- Stimulating Labor Demand
9
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
10
Redundancy Cost Indicator(in weeks of salary, 2010)
Source: Reproduced from World Bank (2011)
11
Compensation of Govt Employees (% of Govt Expense)
Source: Constructed from World Bank World Development Indicators data
12
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
13
Export Revenue by Type of Exports (% of GDP, 2008)
Source: Reproduced from Ianchovichina (2011).
14
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.
16
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
6
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)
18
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
20
Summing Up
21
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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