Youth-friendly Labor Markets Can Help Cut Youth Unemployment

Five years into global crisis, youth unemployment a key concern

Countries urged to address skills mismatch, education gaps

Youth-friendly labor markets, world-class business climate also help

IMF Deputy Managing Director Nemat Shafik told the IMF Youth Dialogue seminar that many countries have failed to make their labor markets youth friendly, which has aggravated unemployment.

“Growth will get us two-thirds of the way in the creation of jobs. But there are also structural issues that relate to the kinds of policies that determine how the labor market and the educational system work and prepare workers for the labor force,” Shafik said.

Unemployed generation

Five years since the onset of the crisis, there are currently about 200 million people unemployed; 75 million of those are young people. According to the International Labor Organization, youth unemployment rates in 2012 were highest in the Middle East and North Africa, at 28.3 percent and 23.7 percent, respectively. Between 2008 and 2012, youth unemployment also increased by as much as 24.9 percent in the developed economies and the European Union.

“In the Irish context, our youth unemployment rate is 28.6 percent,” said Mark Duffy, a student from the George Washington University in the United States. who migrated from Ireland. “We need to create new jobs and remove some of the boundaries for the youth to get jobs,” he said.

Workforce barriers

Shafik noted that uncertainty, lack of adaptability in labor markets, and skills mismatch may explain why unemployment remains high.

“The recovery of the world economy is still very tentative. Many investors are just too uncertain and are holding back investment and not creating jobs for anyone, but particularly for young people,” she said.

Shafik also noted that many countries have failed to make their labor markets youth friendly, which has exacerbated unemployment. “In parts of Europe and the Middle East, there is what we call ‘dualism’ in the labor market where, if you are in the formal labor market and have a job, you’re protected and can’t be fired,” she said. “But if you’re a new entrant, it’s very hard to break in, and you’re stuck in either informality or temporary contracts without benefits and very little labor security.”

Also, sectors that used to employ a great number of people, such as manufacturing, are no longer growing, Shafik explained. “Many young people are coming into labor markets in which the things they’ve been...