Youth unemployment at all-time high

The financial crisis has resulted in an unprecedented increase in unemployment around the world. Last year, a record 80 million youths were out of work.

Kanaga Raja

SINCE the onset of the global economic crisis, between 2007 and 2009, unemployment among young people aged 15 to 24 years has increased by 7.8 million, with 80.7 million young people, the highest number ever, struggling to find work in 2009.

These grim statistics have been highlighted by the International Labour Office (ILO) in its latest report Global Employment Trends for Youth, August 2010.

The report's release coincided with the launch of the United Nations International Year of Youth on 12 August.

The International Labour Office is the secretariat of the International Labour Organisation.

According to the ILO, the youth unemployment rate rose sharply during the economic crisis - more sharply than ever before - from 11.9% to 13.0% between 2007 and 2009. Between 2008 and 2009, the rate increased by 1 percentage point, marking the largest annual change over the 20 years of available global estimates and reversing the pre-crisis trend of declining youth unemployment rates since 2002.

These trends, the ILO points out, will have 'significant consequences for young people as upcoming cohorts of new entrants join the ranks of the already unemployed'.

It further warns of the 'risk of a crisis legacy of a "lost generation" comprised of young people who have dropped out of the labour market, having lost all hope of being able to work for a decent living'.

The ILO has forecast a continued increase in global youth unemployment to an all-time high of 81.2 million and a rate of 13.1% in 2010. In the following year, the number of unemployed youth is projected to decline to 78.5 million and the global youth unemployment rate to 12.7%.

According to the ILO, globally, as much as 90% of youth are living in developing economies in 2010, with the three Asian regions (South Asia, East Asia, and South-East Asia and the Pacific) accounting for more than half (55%) of the world youth population.

As regards the trends in youth unemployment, the report finds that before the crisis youth unemployment was declining in most regions of the world. The number of unemployed youth increased by 3.0% between 1998 and 2008 to 74.1 million in the latter year. The average annual growth rate of youth unemployment over the period was 0.3% while the average annual growth rate of the youth labour force was 0.6%, hence the overall declining trend in the youth unemployment rate.

Worldwide, the youth unemployment rate stood at 12.1% in 2008 (compared to 5.8% for the total unemployment rate and 4.3% for the adult unemployment rate). The rate increased from 2007 by 0.2 percentage point, while compared to the rate in 1998 it had decreased by 0.4 percentage point.

The report underscores that youth unemployment rates continued to be much higher than adult rates in all regions. In most regions, youth were nearly three times more likely to be unemployed than adults, resulting in a global average ratio of youth-to-adult unemployment rate of 2.8 in 2008.

The young working poor

On the basis of available data, says the ILO, young workers appear to be disproportionately susceptible to poverty, reinforcing the notion that youth are not just disadvantaged in terms of accessing work, but also in finding productive work that provides sufficient income to escape poverty.

Higher labour force participation rates of the young working poor (living below the $1.25-a-day poverty line) also reflect lost opportunities for many of the youth who might otherwise attend school and acquire skills and education that could raise their future productivity and potential earnings.

Many young working poor lacked even a primary-level education. In Colombia, 59.9% of the young working poor (in 2003) did not have a primary education, versus 19.9% of youth living above the $2 poverty line. In the Philippines, 35.4% of the young working poor lacked a primary-level education, versus 6.2% of the non-poor working youth.

Overall, it is estimated that 152 million young workers were living in poor households (with per capita expenditure of less than $1.25 a day) in 2008, amounting to 28.1% of all young workers in the world. This is down from an estimated 234 million young working poor in 1998, which corresponded to a youth working poverty rate of 46.2%. Young people therefore accounted for 24.0% of the world's working poor, versus 18.1% of total global employment in 2008.

According to the ILO, in many countries, the young working poor are employed in the agricultural sector. The (simple) average share of workers in the agricultural sector across the 21 countries for which sector-level data are available is 70.4% for youth living below the $1.25-a-day poverty line versus only 40.5% for those above the $2-a-day poverty line.

The report, written in the midst of the global economic crisis, also highlights the impact of the crisis on youth in labour markets around the world.

According to the ILO, the crisis affects each region differently depending on the socioeconomic context and policy responses of the countries in the region. Measured in terms of youth unemployment alone, the impact of the crisis on youth was largest in the developed economies.

No other regions came close to the remarkable 4.6- and 3.5-percentage-point increases in the youth unemployment rates seen between 2008 and 2009 in two regions, the Developed Economies and European Union, and Central and South-Eastern Europe (non-EU) and CIS (Commonwealth of Independent States). These are the largest annual increases in youth unemployment rates ever recorded in any region, stresses the ILO.

Youth in the lower-income regions were not impacted to a great extent by increased unemployment, with the exception of Latin America and the Caribbean where the youth unemployment rate rose from 14.3% to 16.1% between 2008 and 2009.

The increase in the youth unemployment rate in the Developed Economies and European Union has been strong enough to propel the regional average above those of two regions - South-East Asia and the Pacific and Latin America and the Caribbean - that had higher rates in the pre-crisis years.

Challenges for young women

In developing regions, the crisis exacerbated the challenges of young women in finding work. In terms of overall job losses (all ages), there was no difference in the magnitude of the increase in the global female and male unemployment rates; female rates increased from 6.0% in 2007 to 6.7% in 2009 compared to an increase from 5.5% to 6.2% for male rates. For youth, however, the unemployment impact was greater for women than men. The youth female rate rose from 12.1% to 13.2% between 2007 and 2009, and the youth male rate from 11.8% to 12.9%.

The crisis has thus led to some changes in the gap between female and male youth unemployment rates. With the exceptions of the Developed Economies and European Union and East Asia, the unemployment rates of young females consistently exceed those of young males.

Young women in most regions have become even more likely to be unemployed than young men. There were three regions where in 2007 a young woman was already much more likely to suffer unemployment than a young man; by 2009, the gap had increased even further to 7.3 percentage points in Latin America and the Caribbean, 10.5 points in the Middle East and 11.4 points in North Africa.

'Clearly, what is happening in these regions is that where job markets were already highly competitive for youth, as the market becomes even more difficult during the economic crisis, young women are pushed even further to the back of the queue,' says the ILO.

The report also finds that the unemployment rate of youth has proven to be more sensitive to the economic crisis than that of adults. The overall percentage point increase in the global youth unemployment rate between 2007 and 2009 exceeded that of the adult rate (1.1 percentage points compared to 0.7 percentage point), but still the ratio between the two rates actually decreased slightly from 2.8 to 2.7.

It is suspected that youth will face a longer recovery than adults, mainly because they face a situation whereby upcoming cohorts of new entrants (first-time job-seekers) join the ranks of the already unemployed (job losers).

The crisis resulted in an unprecedented increase in unemployment around the world, with nearly 29 million more unemployed in 2009 versus 2007, 7.8 million of whom were young people.

According to the ILO, despite the robust economic growth forecast for 2010, global unemployment is projected to continue to rise, with a baseline forecast of 209 million unemployed in 2010, an increase of 2.3 million versus 2009. This projection implies that the global unemployment rate will remain elevated at 6.4%, versus 5.7% in 2007.

'It is clear that the labour market recovery is occurring with a significant lag, and in a much less pronounced fashion, to the overall economic recovery.'

The current ILO forecast is for a continued increase in youth unemployment around the world in 2010, followed by a moderate decline in 2011, with the number of unemployed projected to decline by 2.7 million to 78.5 million, and the global youth unemployment rate declining to 12.7%.

Only in the Middle East and North Africa are youth unemployment rates expected to continue the upward path in 2011. For all other regions, slight improvements over the peak years (2010 in most cases) are forecast.

The largest decrease (1 percentage point) in youth unemployment rates is expected for Central and South-Eastern Europe (non-EU) and CIS. The 2011 rate in the Developed Economies and European Union would represent a 0.9-percentage-point decrease from the previous year. However, the expected rate of 18.2% would still be higher than was ever seen in the region over the pre-crisis period (1991-2007).

The ILO says that the adult unemployment rates, which rose less than those of youth during the crisis period, are also forecast to decrease slightly less than youth in all regions but South-East Asia and the Pacific.

The global youth unemployment rate is projected to drop significantly to 12.7% in 2011 from 13.1% in 2010. In comparison, the adult unemployment rates are expected to decline from 4.8% in 2010 to 4.7% in 2011.

In general, though, says the ILO, the higher elasticity of youth unemployment rates in the current economic crisis means that the unemployment impact in 2011 is harder to predict. As economic instability continues and recovery forecasts from the International Monetary Fund (IMF) face revisions in each coming quarter, the projections of youth unemployment prospects remain tentative.

The report notes that the unemployment rate of adults is expected to show recovery one year earlier (in some cases, two years) than that of youth. The projections thus support the argument that young people, perhaps due to their lack of experience, remain at the back of the unemployment queue as markets begin to recover.

Call for action

On a positive note, the ILO finds that many governments around the world have taken up the call for action to support youth at risk that was made in the Global Jobs Pact adopted by the International Labour Organisation in 2009.

They have introduced measures to sustain youth employment through a combination of incentives for new employment, employment services, skills development, income support, public works and community services, and youth entrepreneurship.

'In developing countries, crisis pervades the daily life of the poor,' said ILO Director-General Juan Somavia. 'The effects of the economic and financial crisis threaten to exacerbate the pre-existing decent work deficits among youth. The result is that the number of young people stuck in working poverty grows and the cycle of working poverty persists through at least another generation.'

'Young people are the drivers of economic development,' he further said. 'Foregoing this potential is an economic waste and can undermine social stability. The crisis is an opportunity to re-assess strategies for addressing the serious disadvantages that young people face as they enter the labour market. It is important to focus on comprehensive and integrated strategies that combine education and training policies with targeted employment policies for youth,' he stressed.

'Social time-bomb'

Meanwhile, the International Trade Union Confederation (ITUC) on 12 August described the high and rising levels of youth unemployment globally as a 'social time-bomb', which it said risks damaging the social, economic and political fabric of countries around the world.

A press release quoted ITUC General Secretary Sharan Burrow as saying: 'More than 80 million young people are now out of work and many millions more are trapped in short-term, low-paid jobs or in the informal economy. An entire generation of young people is being left behind, and the consequences of this for society will be severe. Governments have to act urgently to get job-creation moving, by maintaining economic stimulus where it is needed rather than by cutting public expenditure.'

'Trade unions across the world are pressing governments to adopt macroeconomic policies which put employment at the centre, as well as specific measures to improve the access of young people to decent jobs and quality education and training. We as trade unions also need to do more to reach out to young people, to keep their concerns at the top of our own agenda both in terms of government policy as well as protection in the labour market and the workplace,' she added.                                        

Kanaga Raja is Editor of the South-North Development Monitor (SUNS). This article is reproduced from SUNS (No. 6987, 13 August 2010), which is published by the Third World Network.

*Third World Resurgence No. 238/239, June-July 2010, pp 10-12