The tragedy of global youth unemployment

The stark numbers

In December 2014, 21.4% of the European people under 25 that were able to work, and were actively looking for work, remained unemployed[1]. The gravity of the youth’s problem becomes particularly clear when we compare this number with the 9.9% overall unemployment rate. Young people often lack the required experience and are short of a good professional network. Employers, on the other hand, generally prefer to employ more experienced personnel, experience a gap between education and the labour market, and tend to keep only their most experienced workers in times of crisis.

Now that the economy is slowly recovering, unemployment rates are gradually decreasing. Eurostat estimates that the youth unemployment rate is almost 2% lower than a year ago. The UK is doing slightly better and youth the youth unemployment rate has gone down with 3.8% over the last year. Nevertheless, even in the UK, the youth unemployment rate remains at 16.2%[2].

The global unemployment rates, however, look even worse. In 2014, over 201 million people were unemployed around the world. This is over one million more than a year ago, and this amount is expected to increase 11 million in the following five years[3]. Youths comprise the majority of this staggering number – the global youth unemployment rate is generally three times the overall unemployment rate[4]. Especially Central and South-Eastern Europe, Asia, the Pacific, Latin America, the Caribbean, and North Africa see a slowdown in economic activity.

The slowdown has a large impact and is one of the reasons why global unemployment rates are on the rise. Other reasons include the expanding labour force, the widening income inequalities, a change in required skills, discouraged workers, and fewer poverty-reducing initiatives. Furthermore, there is a global drop in investment, making it harder for employers to expand their business, or for people to create their own jobs[5].

The real problem

The real problem of youth unemployment is, of course, much more than a staggering number. The real problem of youth unemployment is what these young people are experiencing which includes: no income; no savings for pension; insecurity and not knowing if they can pay their rent next month. Young people are dependent on their parents for a longer period as well as experiencing decreased self-esteem and life-quality. They have limited opportunities for personal development.

Recent research from the Financial Times[6] shows that living standards of people in the UK aged 20-24 are generally decreasing, whilst living standards of people in the UK aged 65-69 are going up. Older generations generally have a more stable contract, had the chance to buy a house that’s now worth double the price, and enjoy generous pension plans.

Unemployment, and especially youth unemployment, is also a big drain for our economies: there is less income from taxes, and more people are dependent on benefits (if there happens to be some). It also implies an erosion of human capital, especially when we are talking about long-term unemployment. Youth unemployment is thus a missed chance for employers as well. Young people have something to offer that no one else can: a pair of fresh eyes, asking the necessary ‘foolish’ questions or coming up with impossible, creative, and up-to-date ideas.

Emergent solutions

Luckily there are many good initiatives around the world that help young people to find work, become more employable, and help bridge the gap between education and work. However, 280 million (!) jobs will need to be created over the coming five years to close the global jobs gap and to absorb the increase in the labour force according to the ILO[7].

Enterprise creation thus has a big focus where it comes to curing the youth unemployment crisis. I am lucky to be involved in an Erasmus Plus-funded project entitled ‘Best practices in teaching entrepreneurship and creating entrepreneurial ecosystems in Europe’. In this project we are identifying Europe’s best practices that support young people to become more entrepreneurial. The results are inspiring.

We see many incubators emerging across Europe (such as the Cambridge Social Ventures in Cambridge[8]) that offer office space, business advice, and sometimes a start-up loan. In Poland enterprise education is an obligatory part of the curriculum for all secondary schools. We see collaborations between governments, businesses and formal or non-formal service providers, such as the Global Entrepreneurship Week foundation in Poland[1], who organised a competition for secondary school pupils in cooperation with the government, businesses and schools. We see a rise in skills trainings, mentorship programmes, and government initiatives such as the Startup Loans Scheme[9] in the UK.

In most of Europe, and especially in the UK, these initiatives are paying off. A recent report of Lord Young[10] shows that the business population in the UK has increased by 17 per cent since 2010. He also sees an increase in the aspirations of young people to start an enterprise. This is good news. Let’s keep up the good work and share best practices in order to ignite more entrepreneurial sparks here and elsewhere in the world.

And in the light of sharing the best practice – feel free to contact me in case you know an inspiring initiative that is worth mentioning in the publication of the European project that I’m involved in via [email protected].

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References

[1] Eurostat Unemployment Statistics, December 2014.

[2] Mirza Davis, James (18 February 2015). Youth Unemployment Statistics. House of Commons Standard Note.

[3] International Labour Organisation (20 January 2015). World employment and social outlook: trends 2015. International Labour Office : Geneva.

[4] International Labour Organisation (20 January 2015). World employment and social outlook: trends 2015. International Labour Office : Geneva.

[5] International Labour Organisation (20 January 2015). World employment and social outlook: trends 2015. International Labour Office : Geneva.

[6] Giles, C. & O’Connor S. (24 February 2015). No country for young men – the UK’s widening generation gap. In: Financial times series Disunited Kingdom.

[7] International Labour Organisation (20 January 2015). World employment and social outlook: trends 2015. International Labour Office : Geneva.

[8] Website Cambridge Social Ventures

[9] Website Startup Loans Scheme

[10] Lord Young (February 2015) The report on small firms 2010-2015.