Rebels with a cause. Unemployed youths take to the streets of Madrid during a general strike in March.
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The crisis facing the world's young people has been brewing for some time, but the Great Recession has elevated youth unemployment from an unfortunate social ill to a major threat to future economic and political stability in many parts of the world. Violent riots in England last year were, in part, the result of disenchantment among young men over miserable economic prospects. In the Middle East, where youth unemployment rates, often about 25%, are among the highest in the world, joblessness is a key source of the rage that sparked the Arab Spring. If the new leaders in the region can't create more jobs for young people, some countries could descend into a debilitating cycle of violence. "If you don't restore hope," says Ahmed Heikal, chairman of Cairo-based private-equity firm Citadel Capital, "we will be in a bigger problem. Another Tahrir Square."
Growing Pains
The factors that cause youth unemployment often differ among regions and labor systems. In much of Western Europe, for example, excessive labor protection makes it more difficult for youths to land good jobs. Since firing full-time workers is so complicated and expensive, employers are wary of taking on new staff. In developing countries with high birthrates, like the Philippines, growth isn't strong enough to absorb the wave of young people entering the workforce each year. Yet youth unemployment also has common roots throughout the world: young entrants to the workforce are often the most vulnerable in economic downturns; new employees are frequently the first to get sacked, while college grads find few employers willing to hire.
In many cases, those who fall behind in the job market at an early age never fully recover. Deprived of skills and experience in their first years in the workforce, they have trouble competing for good jobs for the rest of their working lives. A study conducted by the Economic Council of the Labour Movement, a Copenhagen-based think tank, tracked young Danish workers who were jobless for at least 10 months in 1994 and discovered that 15 years later they were almost twice as likely to be unemployed and earned 14% less--or about $10,000 less--per year than those who were employed as young adults. "The most important factor in how you succeed in the workforce is how you start," says Mie Dalskov Pihl, an Economic Council economist.
Free to Succeed
Solving the problem of youth unemployment will require attacking its core causes. In many countries, schools simply are not preparing students for the labor market. Too often, students choose courses of study that are mismatched with the needs of the economy, because of either personal choice (as in the U.S.) or the structure of an educational system that funnels top talent into certain sectors (as in Egypt).
The result: a skills gap between what graduates are trained to do and what companies actually desire. One possible solution may be apprenticeship programs like those found in Germany, where youth unemployment is lower than in much of the rest of Europe. High-school-age students spend part of their time in classes and part on the job, absorbing the skills companies require.