1. einstitute.worldbank.org Youth Unemployment: Key Issues and Policy Challenges December 13, 2011 | 10:00 AM EST Speaker: Derek H. C. Chen Economist, World Bank Institute

2. Outline of Presentation o Why focus on youth unemployment? o How to promote youth employment? - Stimulating labor demand - Enhancing the quality of labor supply o Summing up 2

3. Why focus on Youth Unemployment? 3

4. Total Unemployment Rates 4 Source: Constructed from International Labour Organization (2011) data Globally unemployment rate at 6.2 percent; 205 million unemployed

5. Youth Share of Total Unemployment (2009) 5 Source: Constructed using data from International Labour Organization website data Unemployed Youth (2010): 77.7 million Youth Share of Unemployed (2010): 38 percent

6. Youth & Adult Unemployment Rates 6 Source: Constructed from International Labour Organization (2011) data

7. o Higher likelihood of youth being underemployed and among the working poor o Youth face special challenges when accessing the labor market - a higher chance of losing their jobs during economic downturns (“last in, first out”) - specific barriers to entry, often stemming from lack of experience - path dependence: early unemployment increases the likelihood of subsequent unemployment o Higher likelihood of social and political unrest 7 Other Reasons for Intervention

8. Promoting Youth Employment- Stimulating Labor Demand 8

9. 9 Overall Labor Demand o Importance of flexible labor regulations Channels of Labor Demand o Public sector labor demand o Private sector labor demand o Self employment and entrepreneurship Public Sector Labor Demand o Regular salaried civil servant positions - possible distortionary effects o Short-term public works

10. Redundancy Cost Indicator (in weeks of salary, 2010) 10 Source: Reproduced from World Bank (2011)

11. Compensation of Govt Employees (% of Govt Expense) 11 Source: Constructed from World Bank World Development Indicators data

12. Promoting Youth Employment - Stimulating Labor Demand 12 Private Sector Labor Demand o The private sector should be the main driver for growth and job creation o Private investment and overall private sector growth need good investment climate o Sectoral policies toward youth friendly sectors o Employment friendly development strategies

13. Export Revenue by Type of Exports (% of GDP, 2008) 13 Source: Reproduced from Ianchovichina (2011).

14. World Bank Knowledge Economy Framework 14

15. Promoting Youth Employment - Stimulating Labor Demand 15 Self employment and entrepreneurship o Self employment only alternative when jobs are lacking o Youths face more obstacles because of lack of skills, experience, less credit-worthiness o Youth targeted programs and strategies that address the barriers to doing business.

16. Promoting Youth Employment- Enhancing Labor Supply 16

17. Source: Reproduced from Fox and Gaal (2008) Low Labor Skill – Major Constraint to Business Creation Share of reporting firms, various countries & years Source: Reproduced from World Bank (2011)

18. University Students by Fields 18 Source: Reproduced from World Bank (2009)

19. Promoting Youth Employment - Enhancing Labor Supply 19 Critical to have a well-linked educational and training system o Close cooperation between education system and private sector o Current and industrially relevant curriculum o Work-based training and apprenticeship to acquire industrially relevant skills, hands-on experience o Soft skills are also important

20. Summing Up 20

21. References o Fox, Louise and Melissa Sekkel Gaal (2008). Working Out of Poverty: Job Creation and the Quality of Growth in Africa. The World Bank. Washington D.C. o Ianchovichina, Elena (2011). “MENA’s Non-Oil Export Performance in the Last Decade.” MENA Knowledge and Learning Quick Notes Series. No. 39, World Bank, April. o International Labor Organization (2011). Global Economic Trends 2011: The challenge of a jobs recovery. International Labor Office, Geneva. o World Bank (2009). Shaping the Future: A Long-Term Perspective of People and Job Mobility for the Middle East and North Africa. Washington DC. o World Bank (2011). “The Challenge of Youth Employability in MENA.” Memo. 21

22. dchen2@worldbank.org dchen2@worldbank.org www.developmentdebates.org 22