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Youth: Labor pains in region

China Daily, 24 October 2014 - When leaders of the G20, representing the world’s biggest economies, gather in the Australian city of Brisbane next month, one of the major issues on the agenda will be unemployment ­— or more specifically youth unemployment.

It says almost half of young workers are self-employed and, of the remaining half who do get paid work, only one-quarter have a standard job relationship that includes a written contract of their employment status.

“The lack of prospects for secure employment, along with increased education, access to modern technology and exposure to the perceived advantages of developed economies, create the risk of frustration among youth,” says John Buchanan, director of the University of Sydney’s Business School.

“Youth unemployment should not be seen in isolation. It is a global problem and unless taken seriously by governments it will become a barrier to growth,” he tells China Daily Asia Weekly.

For a number of years the ILO, World Bank and the ADB have been sounding alarm bells about youth unemployment.

Rajiv Biswas, Asia-Pacific chief economist with IHS, an international information company, says youth unemployment “remains one of the major economic challenges facing developing Asia”.

“Youth unemployment rates are often significantly higher than (those) for older workers, reflecting lack of training and experience,” he says.

The ILO estimates put youth unemployment rates for males aged 15-24 at 20 percent in Indonesia, 9.4 percent in India, 10.1 percent in Myanmar and 13.6 percent in the Philippines.

“These figures also do not fully capture the significant numbers of underemployed youth workers in many low-income developing countries,” Biswas says.

“A key factor that underpins the future competitiveness of an economy is increasingly the education and training levels of its youth workforce, which is essential to attracting higher-value added manufacturing and services industries to a country,” he says.

The large numbers of youth entering the workforce in some emerging Asian countries also create considerable pressures on governments.

“Around 10 million young people enter the Indian workforce and

1 million youth enter the Indonesian workforce each year,” Biswas says.

“For both India and Indonesia, accelerating the pace of growth of the manufacturing sector will be an important means of creating jobs for these new cohorts of youth entering the workforce each year.”

In contrast, countries with aging demographics, notably Japan and to some degree, China and South Korea, do not have the same dilemma as developing Asian economies with huge populations of young people.

These East Asian countries may eventually be faced with insufficient numbers of youth entering the workforce, says Biswas.

“Japan is the closest to this demographic problem, since its population and total workforce size are already contracting,” he says.

The ILO has warned of a “scarred” generation of young workers facing a dangerous mix of high unemployment, increased inactivity and precarious work in developed countries, as well as persistently high working poverty in the developing world.

The World Economic Forum says 357.7 million young people globally are not in education, training or employment. It adds that 62 percent of them are in South Asia (101 million), and East Asia and the Pacific (119.4 million).

“There are no easy answers for youth unemployment because it can be high for many reasons — some good, others bad,” says Sudhir Shetty, World Bank chief economist for East Asia and the Pacific.

“Each country is different,” he tells China Daily Asia Weekly.

Consider the Philippines, for instance, he says. It has one of the highest economic growth rates in the region, at around 6 percent, yet there are simply not enough jobs, including for the young.

On the other hand, high youth unemployment in Indonesia is associated with a high level of informal activity,” he adds.

Shetty says Asian governments realize there is a growing problem with unemployment especially among the young and worry that this could weaken social cohesion.

“Moreover, prolonged spells of unemployment among the young can ‘scar’ them by making it more likely that they will be unemployed in the future or have lower earnings prospects,” he adds.

A recent report by the World Bank showed that the Philippines needs to create 1.15 million new jobs every year just for those entering the labor market. With 10 million out of work in a country with a population just over 100 million, that is a lot of jobs, and the Philippines does not have the capacity to do that.

While joblessness remains a major concern, low-quality work is by far a bigger problem, says Matthieu Cognac, the ILO’s regional coordinator for youth employment.

“Many young people in Asia face the same problem — survival. With little or no social security protection in many countries, they do anything just to survive.

“This perpetuates a cycle of informality and working poverty. The vast majority workers in Asia are in the informal sector,” Cognac says.

The informal sector is broadly defined to include enterprises that fall below the purview of government regulations. Operationally, the informal sector includes agriculture and informal services.

“Governments should match education with those skills the economy needs,” Cognac says, adding that the skills “mismatch” must be turned around. For example, very few countries try to develop programs to keep young people in agriculture. “In most countries agricultural work is the domain of the poor. But this can be turned around to be positive not only for the economy but for young people as well.”

Cognac further explains that while a vast number of people are working in agriculture in Asia, there are very few training centers looking at ways to keep youth on the land.

Shetty echoes the need to focus on agriculture. He says the Philippines, for example, could create worthwhile jobs in the sector to keep young people on the land rather than seeing them drift into urban areas and underemployment or no employment at all.

He cites South Korea as an example of a country that has developed programs to attract young people to rural areas.

“They offer such things as tax-free loans and tax breaks so young people can explore ways to make agriculture more efficient and profitable.”

The good news is that these programs are gaining ground — and provide an example of “what can be done in other countries where you have large rural-based populations”.


This selection of news and comment is provided as a service to Network users, and is not intended to be comprehensive. The articles featured are compiled by external agencies and in no way reflect the views of the ILO, its constituents or partners. Their inclusion does not imply the endorsement or approval by the ILO of the information contained therein.


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