New jobs for young people are scarce, unemployment is rising

By Dr Gyan Pathak

Young people (age group 15-24) are almost five times more likely to be unemployed than adults in Asia and the Pacific, and when they do find a job, it is often in the economy informal with low wages and poor working conditions. After the COVID-19 pandemic, they now face additional obstacles in the labor market, with long-term repercussions on their earnings and life chances.

An AfDB Briefing on “Supporting Youth Employment in Asia and the Pacific: What Works” indicates that youth employment is a complex socio-economic challenge that defies analysis or solutions simple. Understanding the complexities can help redirect needed policies, programs and investments.

While youth employment has remained stubbornly low after the global financial crisis of 2008, a key consensus has emerged that the root causes of the problems faced by young people exist on both the supply and labor market demand. It is not only about young people with inadequate or irrelevant skills and competences to be employable, but also about the scarcity of quality jobs for young people.

The study identifies five key issues that underpin the complexity of the youth employment challenge – the structural disadvantage of young people, the twin challenges of supply and demand, the vulnerability of young people to shocks, young people in the life cycle and young people and the future of work.

Compared to adults, young people are consistently disadvantaged in the labor market. Youth unemployment rates tend to be much higher than those for adults (25+ age group). In Asia and the Pacific, 13.8% of young people were unemployed in 2019, compared to 3% of adults.

Many young people in the region cannot afford to be unemployed. Youth labor force participation in the region is higher than in other parts of the world. A majority of young people are locked into informal jobs, working in precarious conditions, in poor conditions and for low wages. Before the COVID-19 pandemic, 84% of young people in the region compared to 69% of adults did not have access to social protection. The data is important since the region is home to around 55% of the world’s youth.

In addition, extreme or moderate working poverty (living on less than $3.20 a day) affected one in four young workers, a rate well above the 18 percent for adults. In addition, rates of young people not earning or learning have remained consistently high. In 2019, there were more than 160 million young people, about a quarter of the region’s youth population, not in employment, education or training (NEET) and this rate has been increasing since 2012. In South Asia, the NEET rate was highest at 30 percent. This is obviously a big concern for India since it is the largest and most populous country in South Asia.

The AfDB and ILO had stated in their 2020 report that for some young people, age combines with other vulnerabilities – including gender, sexual orientation, disability, migrant status and remote or rural – to aggravate disadvantages. For example, young women make up almost three-quarters of NEETs in Asia and the Pacific, with many having responsibilities at home for care and/or subsistence production work.

The difficulties faced by young people in obtaining quality jobs are caused by constraints on both sides of the labor market. The employment challenge is not only about placing young people in quality (supply-side) jobs. It is also about whether there are enough quality jobs (on the demand side).

On the supply side, young people are not well prepared for the world of work. In South Asia, more than half (54%) of the youth population is expected to leave education without the 21st century skills needed to be employable in 2020-2030. Moreover, this sub-region is expected to have the largest youth labor force in the world until 2040. This indicates a disconnect between education systems and the labor market as well as a lack of enabling support structures, such as than affordable child care. Several countries face significant talent shortages. The problems can be particularly acute when there is a gap in perception of employability between actors in the education system and employers

Besides possessing inadequate or irrelevant skills to be employable, young people are further disadvantaged by a lack of work experience and social capital and limited information when looking for a job. There can also be a mismatch between the aspirations of young people on the one hand and the positions offered by employers on the other, which can lead to anxiety, frustration and detachment from the labor market. Even when young people have the right qualifications and skills, there may not be enough jobs available for them. The lack of quality jobs in the region is a major challenge.

While government policies and programs are supply-driven, such as skills, the demand for youth labor has emerged as the main constraint. Demand-side barriers, such as jobless growth, affect all job seekers and workers, but may affect young people disproportionately. Insufficient creation of entry-level jobs, restrictive employment regulations and negative employer perceptions of young people are the main barriers to hiring young workers. In addition, reduced access to credit, markets and networks affects young entrepreneurs.

Young people are more vulnerable than adults to economic crises for four main reasons. Companies are reducing hiring and are more likely to lay off recent hires. Young people are more likely to work in informal and temporary jobs with less access to crisis protection and support. And young entrepreneurs have less access to the finance, resources, information and networks needed to build their resilience during the crisis. A bad start has long-term implications for earnings, job quality, career progression and well-being. Such a start during the crisis leads to lifelong scarring effects. COVID-19 has worsened their precarious situation, with analysis showing the recovery gap between young people and adults is widening.

The experience of young people is further complicated by their entry into the labor market during a complex stage of life transition linked to economic and social inclusion and personal growth. Their complex development needs require urgent support.

The future of work is changing rapidly due to ‘megatrends’ and the labor market prospects of young people are being affected. These trends are highlighted in demographics, industry 4.0 and climate change. These three elements are evolving rapidly and therefore we need complete and integrated solutions. (API Service)

The post New Jobs For Youth Becoming Rare, Unemployment Rising first appeared on IPA Newspack.

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