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Unemployment and underemployment is a prevalent problem confronting youth across the world today. It is, in fact, part of the larger and perpetual struggle shared globally by governments to provide employment for all citizens. It is however, rather discomforting to know that the relationship between economic growth and employment is imperfect and that growth in GDP is not always accompanied by jobs growth.
More than 200 million people across the world today are unemployed or underemployed. Among the labour market groups, youth are particularly vulnerable as they are more likely to be unemployed than their adult counterparts at the global level.
Youth today are confronted by a host of issues such as illiteracy, inadequate training and a lack of skills which hampers their chances of being able to find suitable employment. Recently, the global youth employment situation has worsened as a result of the global jobs crisis and fluctuating economic trends.
This proposal will examine the causes of the employment challenges faced by youths today and offer a route map of viable solutions which can be implemented to tackle the employment challenges faced by youth around the world today.
As a blueprint for the future, this proposal represents a conviction and an audacious vision towards the improvement of the educational competencies of youth worldwide which ¿½¿½ if fully implemented ¿½¿½ will produce substantial and verifiable results. This will take countries closer to achieving the MDG of ¿½D achieving universal primary education and lay the foundation for a robust global workforce of tomorrow.
UNEMPLOYMENT, YOUTH & PRODUCTIVITY
Despite worldwide efforts by governments to achieve high GDP numbers, massive unemployment prevails even in developed countries. The developed economies and the European Union saw the largest increase in unemployment by 2.3 percentage points and accounted for more than two thirds of the increase in the global number of unemployed in 2009.
1. Strong GDP growth necessary for jobs growth, but not answer to global employment woes:
While strong economic growth is a fundamental prerequisite in spurring the creation of jobs, simply stimulating higher exports or consumption to achieve high GDP numbers is not the answer to the staggering unemployment rate looming in countries all across the world.
The imperfect relationship between economic growth and jobs growth, as observed by Arthur Okun in the original statement of his law, known as Okun¿½¿½s Law, shows that growth in GDP is not always accompanied in growth in employment (Prachowny, 1993). It is estimated that a 3% increase in output will result in a 1% increase in employment rate (Prachowny, 1993).
2. Productivity matters, not just size of labour force:
The entry into the new millennium marked a watershed era as it saw the emergence of new industrial powers such as China, Russia, and India. It also witnessed the transformation of once manufacturing-based economies such as South Korea, Taiwan, Hong Kong and Singapore into knowledge-based economies in order for them to remain relevant to the changing global economic landscape and to avoid competition against economies with cheaper labour markets and raw materials.
As the reliance on human capital grows heavier , competition among developed economies in the new millennium is now based on the premise of productivity rather than the size of a country¿½¿½s workforce.
China, soon to overtake Japan as the second largest economy in the world, is currently the world¿½¿½s largest economy in terms of workforce size with a labour force of 800 million people. However, in terms of real GDP per capita (PPP), China only ranks 89th in the world. (2008 World Bank estimate)
On the contrary, countries with small labour workforces such as Singapore and Switzerland with workforce sizes of 2.96 million and 4.04 million respectively, rank as the 3rd and 6th richest nation in the world in terms of real GDP per capita (PPP).
GDP per capita is derived from the combination of 2 components ¿½C the productivity of labour and utilisation of labour. Productivity gains are crucial and key to long-term and sustainable economic growth. Innovation in turn, is paramount to driving productivity growth.
? Labour Productivity & Utilization
In analyzing the productivity performance of an economy, one has to understand the dynamics behind its productivity. Labour utilisation is determined by 3 factors ¿½C average working time (no. of hours worked), labour force participation rate and unemployment rate.
The utilisation of labour is high in Switzerland as compared with the other OECD nations ¿½C Switzerland is at third place, falling short behind South Korea and Iceland. Singapore, in recent years, is on par with the OECD countries (combined), ranking slightly lower than the EU-15 and EU-25.
The high rankings of both Switzerland and Singapore in this regard indicate that both countries have a very productive workforce ¿½C with both economies achieving a high labour force participation rate and very low unemployment rate, while working time falls within the OECD average.
The productiveness of a workforce ¿½C or how skilled a country¿½¿½s workforce is, is therefore, the key to tackling the issue of unemployment.
? Increasing Productive Capacity:
Focusing on aggregate supply components such as increasing the quantity or quality factors of production such as land, labour, capital and entrepreneurship, or the improvement of technological progress or increase in investments will lead to an increase in productive capacity which in turn enables an economy to produce at its maximal capacity or full employment.
? Outward Shift of the Production Possibilities Curve:
This can be represented by an outward shift of the production possibilities curve (PPC) from PPC1 to PPC2 and a shift in the aggregate supply curve to the right from AS1 to AS2.
Diagram 1: Outward shift of the PPC Diagram 2: Aggregate supply shifts to the right; results in higher national output (GDP)
3. Youth Unemployment & Vulnerability:
(Part 3 ¿½C ¿½¿½Youth Unemployment & Vulnerability¿½¿½ & the section following it ¿½C ¿½¿½Why Youth Employment Matters¿½¿½ is the author¿½¿½s response to: How does youth unemployment affect you, your country, town or local community?)
Youth are especially vulnerable in labour markets across the world. Prior to the global jobs crisis, the youth to adult employment ratio indicate that youths were already 2.8 times more vulnerable and prone to be being unemployed as compared to their adult counterparts. The global youth unemployment rate triggered by the global jobs crisis in 2009 experienced a massive 1.3 percentage point hike from 12.1 percent in 2008 to 13.4 percent in 2009.
? Youth Unemployment Results in the Social Exclusion & Marginalization of Youths:
The skyrocketing levels of youth unemployment has been a pressing issue which governments are trying to address because of the significant impact it has on the lives of youth. Substantial research have been done on the psychosocial consequences of long-term unemployment; studies indicate that unemployed youth may suffer from a loss of self-esteem, low levels of well-being, and even being isolated from peers.
? Youth Unemployment Hampers Social & Economic Development:
Over the years it has also become eminent that the traditional labour market policies of the past are of little remedy to the continuing social exclusion of youth. Apart from being just a social justice issue, the social exclusion of youth may also result in a decrease in the earning capacities of individuals, a loss in productivity, and ultimately, a decrease in government tax revenue.
The long-term unemployment of youth also poses as a significant harm to the society in the long run as it paralyzes the ability of youths to secure the accommodation needed for establishing families and to participate in the life of society.
Should we fail to meet these challenges, we will have to pay dear price in the future. Unemployment brings with it a host of social problems and youths are especially susceptible to its effects: an inadequacy of skills, loss of self-esteem, marginalization, impoverishment and a waste of a tremendous human resource.
Therefore, it is important that there is a global concerted effort to invest more resources to develop the capacity of the non-government organizations (NGOs) and grassroots organizations (GROs) to provide more holistic, community-based responses to the social exclusion of youth.
WHY YOUTH EMPLOYMENT MATTERS
(This section is the continuation of the author¿½¿½s response to: How does youth unemployment affect you, your country, town or local community?)
? Tremendous Source of Human Potential:
Firstly, it is important to clarify that young people should be valued as an asset rather than a problem as they are the future stalwarts of this global economy.
Over the next decade, some 1.2 billion young people will join the global workforce. Being the most highly educated and competent generation of young men and women ever, the talents of this generation of youths if tapped, will yield in enormous potentials for economic and social development.
Youth, are a dynamic and potent force of the present as well as the future. Rather than referring young people as tomorrow¿½¿½s leaders; the emphasis should instead be on how they can better fulfil their roles as today¿½¿½s partners. Instead of viewing youth as a group for which unemployment is an issue that must be curbed, it is important to tap on youths as partners for social and economic development.
? Increases Global Output:
Figures published in 2003 by the ILO indicate that the world¿½¿½s youth unemployment rate if halved could potentially generate an additional US$2.2 to 3.5 trillion to the global GDP. Factoring in the time value of money and the annual average global inflation rate of 2.78% (2000 ¿½C 2007), this represents a 3.9 to 6.2 percent of the global GDP in 2009.
Regions which will stand to benefit the most from an increase in youth employment are places such as sub-Saharan Africa, boosting an additional 12 to 19 percent to the region¿½¿½s GDP.
? Reduces Illegal Activities:
The largest beneficiary of the increase in the productive capacities of youth and the availability of employment opportunities to youth, are young people themselves. Conclusive research has shown that there is an inextricable relationship between unemployment and social exclusion and that an increase in the former will ultimately result in an increase in the latter. Young people, who are a more susceptible group to the effects of unemployment, may feel vulnerable and useless, and this sense of idleness could potentially increase the chances of youths being involved in illegal activities.
In addition, it has also been verified that groups which consistently find it difficult to find employment tend to be youths who graduate only with elementary or high school education qualifications ¿½C a group with a high likelihood of being subjected to higher unemployment during the period of their prime-age work career.
? Eradicates Poverty:
Lastly, it is important to note that young people who are incapable of earning decent wages to support themselves are likely to continue staying within the family household much longer than the family can afford.
Looking from a social perspective, youth unemployment extends the financial weightload on the household and impedes the chances of the family to get out of poverty and potentially hampers the chances of younger members of the family to gain access to education (family unable to afford to pay for it, their future earning potentials will therefore be limited) which in turns dampens the future prospects of the younger members of the family as well.
Apart from just the family which gets entrapped in poverty, the next generation risks falling into the same fate as well. For the most impoverished parts of the world, enabling young people to find decent employment is the key to assisting them and their families out of poverty.
Close to 600 million people make up the working poor in the world today ¿½C defined by the ILO as ¿½¿½people who work but do not earn enough to get themselves and their families above the US $1 a day poverty line¿½¿½. Within this group, no lesser than a quarter of them ¿½C 130 million ¿½C are youth.
TACKLING YOUTH UNEMPLOYMENT
(This section is the author¿½¿½s response to: ¿½¿½What can you do, working together with your peers, to find a sustainable solution for job seekers through youth entrepreneurship? Think specifically about the barriers youths face in the labour market and how to tackle difficulties in accessing capital for business start-ups.¿½¿½)
One decade ago, at the millennium summit, world leaders and head of states agreed unanimously, within the framework of the Millennium Declaration, to ¿½¿½develop and implement strategies that give young people everywhere a real chance to find decent and productive work.¿½¿½
In this section, I will offer a series of viable and implementable solutions which will add some merit to the good work that international bodies and governments have already been doing, in curbing the rising youth unemployment rate and tapping onto the potential of youths whom which, are a tremendous potential for social and economic development.
1. The Global Youth Development Initiative:
For us to effect a substantial change on the global youth employment situation, it is vital that there is an international commitment and a global concerted effort by governments and international bodies to resolve the problem.
Therefore, I propose the setting up of a global youth development initiative ¿½C an initiative which will be run and managed by youth which oversees the international effort of:
1) Assisting unemployed youth find suitable employment.
2) Ensure that currently employed youth continue to stay in the workforce and are able to earn decent wages to support themselves and their families.
3) Maximizing and tapping into the productive capacities and potentials of youth.
4) Leading and driving workforce development throughout the world which is paramount to lifting millions of people out of the poverty trap.
This initiative will be established as a joint collaboration between local governments and international bodies such as the United Nations, the World Bank and the International Labour Organization and will begin its operations in 20 countries across the globe with a proposed endowment fund size of US$5 million.
The funding will be a one-off funding to provide the foundation and its local community branches with a good head start; the foundation will have to seek for alternative forms of future funding through avenues such as social entrepreneurship, public donations or seeking sponsors and partnering with government agencies or tapping on the support of local grassroots organizations (GROs) in order to sustain its outreach efforts.
The initiative will oversee and ensure the setting up of smaller and local branches in countries throughout the world. Every local branch will be given a minimum and intial funding of US$40,000 ¿½C US$100,000 (amount will vary depending on country) and this sum of money will be subsequently divided and allocated to the different state or community branches.
Each community branch is to make the best use out of the funds allocated to them and is to find their own means of raising more money for their future operations and outreach efforts. Doing so will provide aspiring youth entrepreneurs and intrapreneurs with a development platform which they can use to advance themselves with and subsequently, spur a spirit of entrepreneurism among youth.
Considering the importance of the tasks and that failure cannot be an outcome, the global initiative is to be led by a team of competent young men and women with strong integrity of character. The executive committee will be made up of elected members whom will be voted in by members at an annual youth summit. The executive committee members will then nominate and elect its members to the various executive positions. It is also crucial that good Business Continuity Management (BCM) exists within the organization, so that it is prepared to deal with any crisis or unforeseen circumstances.
2. Helping Youths Find Employment:
With the rise new industrial powers such as Russia, China and India ¿½C economies which capable of providing the world with cheaper labour and raw materials, developed nations are rushing to scale up workforce productivity in order to continue achieving strong and sustainable economic growth.
It is therefore, imperative that youths have the necessary skills in order to be employable. By improving the productive capacities and skill competencies of youth, more and more youth can find suitable employment and earn a decent wage which is able to provide for their basic needs.
For young people to stay competitive and employable in the fast and ever changing workplace, it is crucial that they are equipped with the skills which are the most relevant, current and sought after by employers.
In response to these needs, the global initiative will help to lead and drive workforce development throughout the world. This will allow young people to be more employable and competitive in the workforce, from skill workers to professionals.
? Funding, Job-Matching & Training Programmes:
The role of the global initiative is to open more doors of opportunities for youth through subsidizing and sending youth for training and skills upgrading courses. Using the funds available to them and through additional sources of funding, a funding scheme will be developed to ramp up training programmes to help firms and youth cope with the economic recession and to build strong manpower capabilities for the recovery.
By tapping on the available funding, youth will be able to upgrade their skills (up-skill) to advance in their current jobs or acquire new skills (re-skill) to take on employment in a new industry or sector. The main objective is to assist youth to stay in their jobs or find decent employment, strengthen their capabilities and to prepare them for the global economic recovery.
? When Employers Benefit, Youth Benefit:
Employers will also enjoy a competitive edge through the subsidized training programmes for their employees. This will enable firms to build stronger capabilities and stay competitive, laying the foundation for strong and sustainable economic growth for economies around the world. Each local branch will also partner MNCs, SMEs, industry partners, the trade unions, government agencies and training institutes to build the infrastructure needed to help our youths upgrade and acquire new skills.
As the global economy heads for recovery, small businesses and firms will begin re-hiring once again and it is important that we equip our youth with the skills needed to fill those job positions when they become available.
3. Global Youth Campaign for Education:
Education is the key which opens the door of opportunity to all individuals. It is the fundamental basis in achieving all of the Millennium Development Goals as it is central to providing people with the ability to make more attain better health, achieve a better quality of life and live in safer and more sustainable environments.
The third and final agenda of the global initiative will be to spearhead a campaign for education throughout the world. This campaign will focus on areas such as basic education for all, equal opportunities for boys and girls alike, and quality learning.
The objective of this focus is to prepare our young, boys and girls alike for their eventual entry into the global workforce and to ensure that they are equipped the skills and competencies required to become globally competitive and employable.
? Campaign for Equal Opportunities:
As of today, there is still gender discrimination against girls and women in education. Of all of the children whom are not in school today, 55% are girls and an overwhelming two-thirds of the adult population in the world whom are illiterate are women.
It is therefore, crucial that special efforts be made to redress the balance. The campaign will pressure governments, schools and the education sector to recruit more female teachers to support low income families and to help make schools more female-friendly. Other groups such as the indigenous tribes, immigrants, children with disabilities, orphans and other ethnic minorities has been from time to time discriminated against as a result of the inaction of most governments to attend to their needs.
It is therefore, imperative that the education sector come up with new approaches which are tailor-made to the specific needs of these vulnerable groups as it is difficult to reach out to such groups simply by increasing opportunities for standard schooling.
? Campaign for Holistic & Quality learning
Finally, the campaign will also step up efforts to ensure that schools and teachers get the resources they need so that students are able to learn in a holistic environment. The quality of education provided is determined by the teaching and learning process as well as the relevance of the learning curriculum in relation to what the industry demands, the availability of learning materials and resources and the conduciveness of the learning environment.
Thus, the campaign will put great importance in ensuring that schools and educational institutions, get the resources which they need and provide an education which relevant to the needs of the learner and the global economy.
NOTES & REFERENCES
This is a compilation of the sources which the author has directly or indirectly referred to in the process of writing this essay. For the links to the references cited, please refer to the footnotes on each of the individual pages.
Books, Journals & Research Papers:
1. Martin Prachowny:
- ¿½¿½Okun's Law: Theoretical Foundations and Revised Estimates,¿½¿½ The Review of Economics and Statistics, 75(2), pp. 331-336.
2. Andrew Abel & Ben Bernanke:
- ¿½¿½Abel, Andrew B. & Bernanke, Ben S. (2005). Macroeconomics (5th Ed.)¿½¿½ Pearson Addison Wesley. ISBN 0-321-16212-9.
3. Richard M. Ryan:
- ¿½¿½Why Identities Fluctuate,¿½¿½ ¿½C The Self-Determination Theory
4. Robert J. Gordon:
- ¿½¿½Productivity, Growth, Inflation and Unemployment,¿½¿½ Cambridge University Press, 2004
1. International Labour Organization (ILO):
- ¿½¿½Global Employment Trends 2010¿½¿½
- ¿½¿½World of Work Report 2009¿½¿½ (Geneva, ILO, December 2009).
- ¿½¿½Youth Speak!¿½¿½
2. United Nations World Youth Agenda (UNWYA):
- ¿½¿½Youth and the Millennium Development Goals¿½¿½
- ¿½¿½United Nations Millennium Declaration¿½¿½
- ¿½¿½World Programme of Action for Youth¿½¿½
- ¿½¿½Youth Unemployment¿½¿½
3. United Nations (UN)
- ¿½¿½UN Population Fund Data¿½¿½
4. World Bank:
- ¿½¿½Purchasing Power Parity (PPP) GDP 2008¿½¿½
- ¿½¿½Population 2008¿½¿½
5. Organisation for Economic Co-operation and Development (OECD):
- ¿½¿½Growth and innovation in Switzerland ¿½C An International Perspective¿½¿½
6. Oxford University Press:
- ¿½¿½The Production Possibility Frontier (Curve): the PPF or PPC¿½¿½
7. Cambridge University Press:
- ¿½¿½Productivity, Growth, Inflation and Unemployment¿½¿½
8. National University of Singapore ¿½C School of Public Policy:
- ¿½¿½Singapore's Competitiveness 2009: Key Findings and Recommendations¿½¿½
9. Singapore Economic Strategies Committee:
- ¿½¿½Committee Recommendations - High-Skilled People, Innovative Economy, Distinctive Global City¿½¿½
10. Singapore Statistics Board:
- ¿½¿½Employment Indicators for 2009¿½¿½
1. Channel News Asia:
- ¿½¿½Singapore's labour movement backs efforts to boost productivity levels¿½¿½
2. The Straits Times:
- ¿½¿½Education for Productivity¿½¿½
3. ZDnet Asia:
- ¿½¿½Singapore¿½¿½s biotech sector churns up¿½¿½