Young people are being excluded from economic life by a combination of joblessness and barriers to the creation of start-ups. Unleashing the energy, entrepreneurial spirit and technological genius of the young is not just a moral imperative, but an economic necessity.
We are at a crisis point in relation to the world’s young people. According to the International Labour Organisation, global youth unemployment stands at 12.9%. And in the world’s largest economies, OECD figures show that it’s an average of just above 16%, with youth employment falling 7 points from where it was before the crisis. Arguably, this is one of our biggest failures since the downturn began–we are unable, or politically unwilling, to ensure that young people participate meaningfully in the economy. This failure threatens not only the global economic system, but also the cohesion of our societies.
Young people today are entering the most difficult labour market in decades, with potentially tragic consequences for their lives and futures. We are not just talking about a delay in finding meaningful employment–some of this generation will never make it onto the career ladder. Those who do manage to find work after being unemployed will earn around 8% less and suffer weaker career progression across their whole working lives than peers who enter the workforce directly. Again, a policy failure within our societies: once a gap emerges, it tends to be persistent and difficult to close, thus fuelling a persistent cycle of poverty and inequality.
In addition to this, we ignore the fact that young people don’t just need jobs, but quality jobs that meet their needs. Creating labour conditions where overqualified employees work for little pay in low-skilled jobs is not a sensible answer. This is important because, among young people who do find work, a shocking number of them are classed among the working poor–some estimate that there may be more young working poor than young unemployed. Earning too little to maintain oneself or others, less than a living wage, is reminiscent of a bygone era. Unsurprisingly, it’s a source of immense frustration and resentment.
In the short term, the exclusion of young people from the labour market affects both individuals and societies tremendously. Perhaps most importantly, it delays the onset of key steps into adulthood, such as living independently, marrying or moving in with a partner, and starting a family. These are not just soft, social milestones–they are fundamental to health and well-being, and in themselves go quite some way to preventing mental health problems and exclusion. At a societal level, disenfranchised, excluded and hopeless young people contribute to unrest, crime, instability and a loss of faith in the ability of the “establishment” to recognise and provide for all our needs.
Over the long term, this early-career exclusion becomes endemic and structural. Lower income and employment status increase the likelihood of poor lifestyle behaviours and consequent illness, including diabetes and heart disease. Broader social-economic factors also kick in, reducing not only the health prospects and productivity of this generation of young people, but also, eventually, those of its children.
It’s a disaster in the making, not just for the individuals affected, but for society in general.
This is the hard vision of the future facing young people today. And it is made even harder when set against the opportunity enjoyed by previous generations. The baby boomers were born into an unprecedented period of peace with free and widespread education. They entered a labour market filled with job opportunities, where a single income could support an entire family. They made small fortunes on their houses. And, having enjoyed mostly free access to rapidly improving healthcare, they are now preparing for an extended retirement on a healthy pension.
To younger generations, it seems extraordinary that this generation, which seems to have gained so much, is leaving behind so little. This same generation has overseen the greatest exploitation of natural resources in modern history, but has never taken the political and economic decisions to ensure that the planet can sustain future generations. Its period of stewardship has ensured that those who are leaving the marketplace now will do so mostly in comfort and with extended years of life, while the generations behind must deal with the environmental “omnishambles”–unprecedented and unsustainable debt, an ageing population, and few economic prospects. It’s quite a way to leave the party.
In this context, not addressing youth unemployment effectively, immediately and with full attention seems to be not only economic folly, but moral bankruptcy. When we talk about intergenerational solidarity, we must ensure that today’s young people can look to their futures with hope and expectation. Indeed, many countries have already started to recognise the need to address this problem and the importance attached to it by voters.
The recommendations from the OECD and other international organisations are not rocket science: the textbook response is to build sufficient demand at the level of the economy, coupled with policies that specifically target the under-25s. Businesses complain that unfriendly business ecosystems of regulation and taxation stifle their ability to invest in younger employees. Some companies are announcing apprentice schemes, and Germany–which has enjoyed great success in keeping young people in employment–is being hailed by some as a model.
But, more importantly, I would argue that business start-up regulations and young people’s poor access to loans are crucial barriers to what could be a font of innovation and entrepreneurship. The economic and societal potential in this well-educated generation of young people is enormous.
They are ideally placed to capitalise on the explosion of new technologies and greater global interconnectivity, and are already using these technologies to reshape our societies and democracies.
We need to ensure that resources, funding and regulation are appropriate to allow this generation to help itself. Unfortunately, and despite good intentions, much of what could help to create more successful young entrepreneurs– such as loans, research funding, start-up schemes, and sometimes procurement and other systemic fiscal or regulatory barriers–seems to favour large, established corporations and institutions, not newcomers. We are stifling the lifeblood of our economies, and this urgently needs review and reform.
At the heart of this economic problem is a looming human tragedy. We cannot allow ourselves to let down a generation that was born at the wrong time. Simplifying access to start-up opportunities and fostering entrepreneurship is essential and cost-effective. It’s high time that the generation at the top turned political rhetoric and policy aspiration into the energy and decisive action needed to create the conditions for change, leading us from a “lost” to a “found” generation.
References and recommended sources
OECD work on employment
OECD Forum 2013 Issues
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