Economics

With too few jobs for young workers, a global hunt for solutions

Aly Rafea is one of the founders of Bey2ollak, a Cairo-based company that generated a cross-platform mobile phone application where users exchange information about traffic and road congestion. Since its launch in 2010, the Egyptian company has reached more than 1 million registered users.

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Laura El-Tantawy

In the midst of continuing globalization and the lingering aftermath of the 2008 financial crisis, youth unemployment has emerged as a dire and worsening problem that spans continents. Following Greece’s International Monetary Fund payment default, it faces the prospect of leaving the eurozone while youth unemployment there hovers near 50 percent. New government numbers from South Africa confirm a rising youth unemployment rate, now officially 36.1 percent (with some estimates, including the World Bank's, above 50 percent).

Dr. Peter Vogel is a scholar of entrepreneurship who specializes in youth unemployment and employment policy. His book, “Generation Jobless?: Turning the Youth Unemployment Crisis into Opportunity,” presents statistics on global youth unemployment and examines solutions through case studies.

The GroundTruth Project, which last year produced the reporting fellowship “Generation T.B.D.,” which featured 21 emerging journalists reporting on youth unemployment in 11 countries, interviewed Vogel in June to learn more about the book and his work. This interview has been edited and condensed for clarity.

Nathaniel Lathrop: I was impressed by your optimism, frankly. In your approach to the book, you diagnose what you think would be most useful for each stakeholder to do — entrepreneurs, educational institutions, policymakers, young people themselves — in order to solve the problem. Do you think there is a general awareness of youth unemployment as a problem? Or is convincing people there is a problem the first step?

Peter Vogel: I think by now, the vast majority of individuals know that there is a problem.

NL: Or know it’s their problem, perhaps?

PV: They know that there is a problem, but many of them don't know or don't want to know that it is their problem. They know that there is something going on, but think about media. If there is a bombardment somewhere in Africa, the media might maybe mention it briefly somewhere. But if there is something similar happening close by, then all of a sudden it’s our problem. It’s our problem from a national perspective, from a regional perspective, so everybody’s all over it.

Where if you take a global perspective, if you zoom out, and go beyond this nationalist or regionalist approach, you would probably say, “Hey, you know, that really doesn’t make that much of a difference.” But that’s the whole logic, so individuals that are not currently unemployed, whose children are currently not unemployed, who don’t know anyone who is unemployed, why should they care about unemployment in the first place?

So think about policymakers, say. It is most evident for them, because it’s part of their policymaking to make sure the labor market functions… For employers it’s also critical, of course, because they need to get talents into their companies. So I’m trying to take this business perspective for the employers, and luckily, some of the big companies like Nestle have these global or international programs that tackle the issue so they do understand. They’re saying, “If we don’t get involved, we’ll be in trouble, maybe not now but in ten, twenty years time, because we’re burning our future economic potential by not doing anything now.”

But as long as it doesn’t happen to you, it’s something abstract. I think with the book I’m trying to take this broad approach and just show, you know, the most obvious solution is just, “Hey, policymakers, fix it.”

NL: Well, yes...

PV: They have the means, the networks and resources to facilitate change. But they will not drive the change. Policymakers won’t drive anything [laughs]. But they can create a regulatory framework and provide funding for entrepreneurs that then drives change. They provide tax incentives for companies like Nestle that say, “Hey, we’re creating twenty thousand additional jobs for young people.” Then the government says, “Hey, great, we’ll take off two percent of your taxes or something for the next two years in return.” You know, something like that.

NL: Is there a necessity to having some sort of large, intercultural discussion of social and political values [if the problem has to be solved globally]? And if so, isn’t that an even larger discussion than the problem of youth unemployment?

PV: Of course. There are some really, really fundamental issues that drive youth unemployment but they also drive other things than youth unemployment. And the cultural perspective that you mentioned, and particularly this dual education system [which combine apprenticeships at companies with and/or vocational training with classroom education].

There are tons of initiatives where countries around the world including the US are trying to adopt this dual education approach. There was a delegation from Switzerland in the White House not too long ago, invited in order to learn from the Swiss dual education system.

But again, as long as parents don’t feel comfortable sending their children into vocational training, to become a blacksmith or something, as long as that is not culturally accepted, that it is a decent profession, you can do as much as you want from a policy perspective, as long as parents don’t send their children into that track and say, “No, you go to college, you go to university, you get your degree, eh?” But, that is in essence the most fundamental part. I come back to the point several times in the book that youth unemployment in one country has very little to do with youth unemployment in another country.

That the drivers are different, and you know also when we look at the statistics, looking at different indicators, the youth unemployment rate is only one of quite a few different indicators we need to consider when talking about solutions.

Basically that there are some structural differences between the countries, which are much more profound, and they’re ingrained in the education system, in the labor market, in the way recruiting takes place. So, you cannot impose a solution that works in one country. These cultural things, it’s tremendously complex, it’s way beyond youth unemployment.

NL: My next question would be, if there’s one thing you want readers to take away from the book, what would that be?

PV: Depends on the reader. [laughs]

NL: Ok, fair enough, fair enough. Let’s say the reader is a policymaker.

PV: Like I said before, policymakers are tremendously crucial in solving the youth unemployment crisis, but they alone will not be able to solve it. They cannot solve it on their own, it’s only through the orchestrated approach with other players. So from a policy perspective the best thing that can happen is that policymakers realize their role, their responsibility, but also their limitations. You know, for policymakers I think it’s so important to first of all really understand the core of the problem in one’s own country and region.

And, I’m saying region because, especially in a country like the US, you cannot say, “youth unemployment in the US.” You have to say, “youth unemployment on the East Coast and the West Coast." And you have youth unemployment in the Great Lakes area and elsewhere, so you have to take a much more differentiated perspective. Solving youth unemployment in the Boston area will require different initiatives than solving it in Wyoming.

Or in the Detroit area. So I think that’s the most important thing. That’s why it’s in the front end of the book, I’m trying to really take this differentiated perspective to illustrate that the problem is more complex than we believe, and it’s more complex than media suggests. We need to understand the status quo and what has caused the situation besides the lack of jobs that are there. What are the specific drivers for the region?

Then come up with this multi-stakeholder approach, say, “Hey, we need to work together with the core stakeholder groups of our region, we need to work with the main employers, who are the biggest employers, how can we incentivize them to create opportunities for young people?”

In Europe there have been different approaches. Some have miserably failed. In Greece there was one where basically, governments would pour in money if companies would hire young people and subsidize those companies for up to nine months. Of course, the young person was working there for nine months but once the subsidy was gone the job was canceled, and the person was fired.

NL: Right.

PV: So it was a very short-term thing. Yes the employability of the person went up a little bit, it’s another line in the C.V., but if there are no jobs, what should they apply for? That leads to brain drain and talent leaving the country, going to Germany, going to Switzerland, or going to wherever. It’s a very fundamental issue. So from the policymaker’s perspective, understanding and then orchestrating. You know, entities such as chambers of commerce can help. Or, there are so many government-driven entities that have a networking function, they must take the lead in orchestrating these multi-stakeholder solutions.

They need to bring together the different stakeholder groups, and interconnect the education system, the labor market, entrepreneurship promotion, policy programs, and all that. From that, you can then move down the ladder and say, “OK, now companies need to act, it doesn’t help if you create a regulatory environment that facilitates it if no company picks it up.”

Or if you say, “Hey, we’re now bringing in the dual education system,” but not a single parent wants their kid to go into vocational training, well that doesn’t help either. So then you have all the jobs available, all the apprenticeships, but if not a single young person applies for the job it doesn’t help.

Manufacturing largely happens outside (the US), so how should you know how to build a house, how to manufacture a car, how to build a mobile phone, if all the manufacturing happens outside the country? So, bringing in manufacturing…and that’s again something policymakers can do, if they help companies that are in the manufacturing business, if they give them incentives to create jobs in the manufacturing business. “Hey, bring your textile factories here. Hey Nike, bring your plant into the US, forget about Asia. Hey Ford, assemble your cars here more than elsewhere, and build your parts here.” And all of that is something policy can incentivize, they can provide incentives to companies. And of course it should happen to large and small companies and not just those with the best lobbying entities.

So it should happen across the board, from startup to large entity. Policymakers should incentize them to do something, and you know if you start manufacturing within the US, and same in other countries, the UK for example has exactly the same issue, that you have very few people in this vocational career track, and all of a sudden the jobs are there, then you have to go into the educational system and you have to educate the people that there are these two tracks now, and then the cultural part comes in. Individuals learn that if you do not get a bachelor’s or master’s degree you are not stigmatized as being second class.

NL: One thing I do want to come back to is national interest. For instance, American companies trying to bring jobs back into America. If we’re all competing for a certain number of jobs in the world, a certain amount of market share, that will be a race to the bottom rather than a race to the top, no?

PV: Well the thing is, over the next 15 years or so, we will need a lot of jobs. Additional jobs just to keep up with population growth. It’s estimated we’ll need another half a billion jobs. Not even talking about reducing unemployment, but just keeping up. So, you know, in order to get the additional 200 million registered unemployed into employment and getting all the informal workers, so not even registered, below the radar, into decent employment or into formality, is a lot to be done. So of course you need to be careful, you need to take a global perspective like you said, but of course policymakers take a nationalistic approach. So they are predominantly interested in “What can I do for my country?”

And, how can I reduce unemployment in my country, and not in China? Of course it’s a bit of a narrow perspective, but ultimately that’s how policymakers think... I’m not a politician, but if I were I’d be skeptical that people would vote for me if I tell them, “Hey, I just launched a program, I used taxpayers’ money in order to reduce youth unemployment in three other continents, but, uh, except in our country.”

NL: Well yes, that’s a formula for losing.

PV: It’s a challenging situation for policymakers to be in as well. Because they always always have to follow this popular approach, and do stuff that’s in the interest of their voters, and that’s typically national. And then you have all these international entities, organizations, the International Labor Organizations of this world, that can mediate, coordinate, orchestrate, but at the same time they cannot really say, “Let’s take this global approach.” Unless we merge all the different countries into one big global nation, there will be no truly global approach.

So there’s always winners and losers.

NL: Tough fact.

PV: [Laughs] Yeah.

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