The youth unemployment rate today in Latin America and the Caribbean stands at a remarkable 15 percent. These 8 million unemployed are part of what may be called a global “lost generation” of young people at risk of social exclusion—all of whom lack opportunities, resources and access to formal labor markets.
In 2011, 75 million out of the 200 million unemployed people in the world were between the ages of 15 and 24. According to International Labour Organization (ILO) estimates for 2011, youth represent 23.5 percent of the world’s total working poor population.1
This generation has a powerful impact on the larger society. Joblessness, social deprivation and lack of involvement in the community contribute to rising violent crime and fraying social cohesion. In Latin America and the Caribbean, the presence of a growing population of socially excluded youth threatens to undermine the achievements of the past decade in reducing poverty and inequality and improving education outcomes, particularly in countries like Peru, Colombia and Brazil.
In recent years, young people have come to constitute a new societal fault line in the region, many left behind in the decade of economic growth and opportunity. They are the latest victims of the region’s long history of discrimination and exclusion.
Consider the following.
The estimated youth population (15 to 24 years) in Latin America and the Caribbean is 106 million. This is 18 percent of the region’s total population and the number is growing fast. The region will have the largest number of young people in its history by 2020.2
About 53 percent of the total youth population work and around 15 percent are unemployed.
Only one-third of the total youth population are full-time students; another third work full time. And nearly one in five young adults in the region is neither working nor studying—nearly 20 million young people, the now famous ni/nis (ni estudian, ni trabajan).
Opportunities for stable incomes and for joining the middle class are scarce even for the 50 million young adults who do work, since 60 percent of young workers have informal jobs with low productivity, low income and precarious working conditions.3
Youth violence and crime are strongly correlated to joblessness and nonattendance at school. Almost 80 percent of common street crimes in Latin America are committed by individuals between 12 and 25 years old. Young people are also the biggest victims of violence.
A variety of factors exacerbate the vulnerability of youth in labor markets. Barriers to employment for young people include structural issues such as low overall economic growth, low private-sector investment, insufficient entrepreneurship, and inadequate trade dynamism. Demand for young workers is also affected by regulations and employment protection rules that reduce hiring incentives.
There are also barriers to labor market entry specific to young people, such as the lack of previous job experience, which limits access to first jobs and thus work experience. The dilemma increases during economic downturns because youth are often the last hired and the first fired. Firms dismiss young workers first because they have fewer skills, less training and less talent than adult workers who have been with the company more years and in whom the company has already made an important investment in training.
What’s more, a 2007 ILO study looking at informality among young workers in the region found that, among young salaried workers, only 24 percent had a permanent contract, 13 percent had a temporary contract and 63 percent worked without any written contract.4 Temporary contracts make it easier for firms to hire and fire youth, but temporary contracts can also become a permanent trap rather than a stepping stone into more permanent and better paid jobs.
Below are some of the most important barriers and gaps. Fortunately, many can be overcome through coordinated public policy and private-sector actions.
Skills Training
Young people with poor education need help learning how to get and keep a job. According to the Youth Employment Inventory—a database of information on youth employment programs supported by the German government, the Youth Employment Network and multilateral donors—mismatches in non-technical skills, such as numeracy, literacy, soft and life skills, play an important role and were cited by employers from numerous countries as a major constraint to hiring young workers.5 In fact, a recent study by the Inter-American Development Bank (IDB) in Argentina, Brazil and Chile found that many employers value soft skills as much as, or more than, technical skills.6
Skills mismatches are directly linked to deficiencies in education systems. While access to education and average achievement have improved over the past two decades, the region has not seen a significant decrease in youth joblessness or increase in earnings.7 Latin American and Caribbean students are behind their OECD country counterparts in academic achievement by two years.8
Aggravating the problem are the inequalities in access to quality education for the poor. In Colombia, for instance, low school completion rates affect students at all income levels, but they are more predominant among the poor. In this context, efforts to ensure
equity, access and school completion will benefit the labor market prospects of disadvantaged youth.
Accreditation
Even when they do have the skills, youth can often miss out on the optimal job because they lack information on potential employers and job requirements. Such information gaps stem from youth’s limited access to job networks and social capital. Likewise, there is not an easy means to objectively convey to employers the set of skills a young person has. Here what is often lacking is an accepted, objective way of demonstrating youth skill levels and potential in the labor market, though certification.9
Entrepreneurship
Youth entrepreneurship can be an important avenue of opportunity. The Global Entrepreneurship Monitor, which conducts surveys on entrepreneurship in 59 countries, reports that, in general, regardless of the national development level, the highest number of entrepreneurs can be found in the 25–34 age group. It adds that, globally, the largest share of owners of early-stage start-ups is also found in this age bracket.10
But household data collected by the IDB for 14 Latin American countries showed that only 12.8 percent of workers between the ages of 16 and 24 were entrepreneurs.11 The report also concluded that about 62 percent of young entrepreneurs had only a primary education or incomplete secondary education and that their businesses were fragile and driven mostly by necessity.
Young entrepreneurs in Latin America face major obstacles. They have less capital in the form of skills, knowledge, experience, savings, and access to credit. In addition, they have limited business networks and less access to information about job vacancies. Banks and financial institutions regard them as high risk. To help overcome these challenges, the IDB report recommended including entrepreneurship training in schools.
WHAT IS TO BE DONE?
Governments, the private sector and workers organizations can resolve many of the policy, educational and informational issues mentioned above. Several countries, such as Colombia (1997), Dominican Republic (2000), Nicaragua (2001), Costa Rica (2002), and Honduras (2005), have adopted general youth legislation, which includes references to the rights of young people to education, training, work, and/or fair salaries. Others—such as Peru and Paraguay—have put in place specific plans to promote youth employment.12
Here are some youth employment policy approaches that Latin American policymakers are considering—or should consider. Several have already demonstrated success in promoting employment and social inclusion of young people…
ENDNOTES:
1. The working poor are defined as employed persons living in households with daily per-capita expenditure below US$ 1.25 at purchasing power parity.
2. According to UN figures for 2010. Source: http://esa.un.org/wpp/Excel-Data/population.htm
3. ILO, 2011.
4. Informe Trabajo Decente y Juventud 2007, using data from 17 Latin American countries (Argentina, Brasil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Dominican Republic, Uruguay, Venezuela).
5. The Youth Employment Inventory (YEI) is the largest online repository of information on youth employment programs aiming to provide policymakers and practitioners with experiences on program design and evaluation evidence. The inventory is a joint initiative of the Government of Germany, the World Bank, the Youth Employment Network, the International Labour Organization, the Inter-American Development Bank, and the Multilateral Investment Fund. For further information on the YEI see Gordon Betcherman, et al, “Global Inventory of Interventions to Support Young Workers: Synthesis Report,” Preliminary draft, (Washington DC: World Bank, 2007).
6. Bassi, M., et al, Desconectados. Habilidades, educacion y empleo en America Latina, (Washington DC: Inter-American Development Bank, 2012).
7. In Brazil, drop-out rates among 15-19 year olds, fell from 45.9 percent in the early 1990s to 19 percent in the late 2009. In Costa Rica, such rates fell from 53.2 to 24.6 percent, in Colombia from 42.5 to 34.7, and in Chile from 26.8 to 10 percent.
8. Aedo, C. and Walker, I., “Education and Skills for the 21st Century in LCR,” Mimeo, LCR Regional Study, Office of the Chief Economist for LCR (Washington DC: World Bank, 2011).
9. Skills certification is a quality assurance mechanism that recognizes and certifies individuals’ skills and competencies. One major mechanism for skills certification is the national qualification framework (NQF). An NQF is a single, coherent, and comprehensive instrument for the classification of qualifications according to a set of criteria for specified levels of learning achieved. See Sanchez and Puerto, 2008.
10. Kelley, D.J.; Bosma, N.; Amoros, J.E., 2010 Global Report, Global Entrepreneurship Monitor, 2011.
11. Llisterri, J.J., Kantis, H., Angelelli, P.; Tejerina, L., Is Youth Entrepreneurship a Necessity or an Opportunity? A First Exploration of Household and New Enterprise Surveys in Latin America, Technical Papers Series, (Washington DC: Inter-American Development Bank, 2006).
12. Decent Work and Youth in Latin America 2010 (Lima: International Labour Organization, 2010).
