Maciej Lis is Senior Economist at the Institute for Structural Research (IBS), Warsaw.
Over the past 25 years, Poland has made tremendous progress on the economic front — closing by half the GDP per capita gap with developed countries. However, it now needs new engines of growth to keep the pace, lower the high youth unemployment rate — at 24 percent — and make better use of the available labor. One way to achieve this would be improving human capital, which is also essential for further structural change — such as reducing the agricultural sector's role, modernizing industry, and enhancing productivity in services.
Laying cobblestones in Krakow. Photo credit: Flickr @Let Ideas Compete
That is why it's encouraging to see better international educational test scores in recent years in Poland for 15-years old (PISA) and the working population (PIAAC), on top of higher enrollment rates in tertiary education over the past 15 years. Yet, some concerns must still be raised about the overall quality of education and skills preparation for a workforce in an increasingly high-tech, dynamic, globalized world. Keep in mind that although educational systems strongly influence the formation of skills, it might take 10 to 20 years for a higher quality education to be felt in the labor market. Thus, an accurate diagnosis of current educational output is crucial for not only assessing the impact of educational changes but also the anticipated future shape of the labor force — and thus the country's future growth potential.
High Marks for Progress in Most Areas
Let's start with the good news. In the latest round of PISA (Programme for International Student Assessment) testing, Polish 15-year-olds were counted among the best in the OECD in terms of achievement in math, reading, and science tests (see Figure 1). These achievements occurred after a period of little progress in scores between 2003 and 2009. That said, Polish teenagers were already in the forefront of the European Union (EU) as early as 2003. Polish high school students outperform not only their peers from Western and Eastern Europe but also their older colleagues. This means that today's 15 -year-olds would outperform the gymnasium (junior high school) graduates from 3, 6, or 9 years ago, if travelling in time were possible. Moreover, the most recent improvements in skills extends to top, medium, and weak students — in other words, a reduction in the percentage of students who cannot cope with even the simplest problems was accompanied by an increase in the percentage of those being able to solve complex problems. In earlier PISA testing rounds, it was mainly the weaker students who improved.
Figure 1: Major educational advances except in problem-solving
(PISA scores in Poland, Finland, U.S., and whole OECD: 2000-2012)
The improvement in skills of Polish students is affirmed by the results of the PIAAC (Programme for the International Assessment of Adult Competencies) study, which investigates the skills of the population aged 16-65 (see Figure 2). The gap between Poland and the OECD average disappears for the youngest cohort (16-19) in all three dimensions studied — problem solving, numeracy, and literacy. Still, Poland has a ways to go to catch up with Finland.
Figure 2: The younger the better
PIAAC 2012 results by age group
Problem Solving Poses a Major Problem
The not-so-good news is that solving creative problems is much more difficult for Polish students, according to an additional PISA module (see Figure 1). They are clearly below the OECD average, with the top gap in the OECD between results from other tests and creative problems solving. In other words, math and reading test results would imply that good as well as weak students would score much better when solving creative problems. Moreover, Poland is behind the United States in this module, although it is ahead in the other modules. Even the PIAAC score in problem-solving puts Poland below the OECD average except for the youngest cohort (see Figure 2). Complicating factors might be Poland's lower level of urbanization and lower level of technological saturation compared with not only top scorers like Korea and Japan but also regional neighbors like Estonia and the Czech Republic.
One other educational measure — Poland's specific gymnasium final exam — raises additional worries (see Figure 3). The raw scores of the exam cannot be easily compared among cohorts, owing to fluctuations in the level of difficulty of tests in subsequent years. However, this problem could be dealt with by using appropriate statistical techniques that would yield comparable results over time. The conclusions are not very optimistic: the results in math and science have worsened since 2008, although those for the humanities have remained stable
Figure 3: A mixed report card at the gymnasium level
(Standardized gymnasium test score in Poland)
Origins and Outlook
What might be driving the improvements in some areas? First, the education system has benefitted from greater demographic changes in recent years, resulting in fewer schools (especially primary schools in rural areas), smaller class sizes, and the typical merging of gymnasiums with secondary schools (rather than with primary schools) in one building. Second, although commuting to schools in larger agglomerations is more cumbersome and costly, it enables children from vulnerable backgrounds to catch up more quickly. Third, the core syllabus for gymnasiums has been sharpened and made more cohesive between successive levels of education. Fourth, there might be a delayed benefit of the rising tertiary education enrollment in the 1990s and the sharp rise in the percentage of university graduates aged 25-29 — up from 8 percent in 1995 to 42 percent in 2012 — given the vital role of family in skills formation.
Certainly the overall better report card for Polish teenagers bodes well for their and Poland's future. However, it is far too early to declare the educational system a great success, given the disappointing results on problem-solving skills — an essential tool for succeeding in the labor market — and employer complaints about ill-equipped youth (a reflection also of problems with vocational schools and even universities). But improvement on the skills front will be much tougher than adjusting the educational syllabus to international standards, a situation that many countries have to contend with.
Brij Kothari is Professor of Communication at the Indian Institute of Management, Ahmedabad, and the Founder of PlanetRead.
In India, the formal sector accounts for only 6% of the total labor force of nearly 500 million. This means that the bulk of labor participation is in the informal sector, trapped in a vicious cycle of low skills, low wages, and low productivity. If these individuals are to have a fair chance at not only upping their job skills, perhaps through vocational training, but also leveraging these gains on social and emerging technological fronts to escape their cycle of poverty, they must have basic functional literacy (not just nominal "literacy"). However, the vast majority of these individuals do not. The encouraging news is that there are numerous efforts under way to dramatically turn this situation around — including a successful program of using subtitles for Bollywood movies (see "Better Late than Never" in Education and Skills 2.0: New Targets and Innovative Approaches, 2014).
Photo credit: Still from Jodhaa Akbar with Same Language Subtitling, Copyright Disney UTV.
Note: Subtitle in image reads "In the folds of these moments."
How Literate is Literate?
Although independent India's literacy rate rose from 18% in the first national census (1951) to 74% in the most recent round (2011), an astonishing 50-60% of the so-called "literates" cannot read the day's newspaper headline, or a Grade 2 level text, in their own language. That is not to say that they are fully illiterate either, because most of them can identify at least a few letters and are, therefore, best thought of as, "early-literate" but functionally illiterate. How high is functional illiteracy? Based on my research (with Tathagata Bandyopadhyay; see Can India's 'literates' read?, 2011) and ASER's findings year after year about the poor state of reading achievement in Grade 5, I estimate that around 400 million "literate" Indians are actually functionally illiterate. This is in addition to the 273 million who are officially illiterate.
India's "ability to read a newspaper headline rate," if there were such a measure, would hover in the 30-37% range. No government would like its galloping literacy rate to be punctured with a statement like this. But if a government does not acknowledge the reality of its nation's literacy quality, it is unlikely to do much about it. A big problem is that the literacy rate in many countries, like India, is simply measured by asking individuals to self-report for all household members if they are "literate" or "illiterate." Even a slight variation on the question, like "Can you read a newspaper?" would give an accurate measure of functional literacy. We have found that people's response to this question is highly correlated to tests that measure an ability to read any simple text functionally. People report accurately because the question is specific and, in their perception, easily subject to verification. One could even replace "newspaper" with "bus board" or "letter" as proxies for functional literacy.
While governments do focus on the challenge of getting illiterates off the starting block, they are swift to label this achievement as "literacy" because all the incentives revolve around getting the literacy rate up. From the government's perspective, the functional literacy rate is best left unmeasured lest the problem surface officially. The state, therefore, gets off the hook of having to also plan for the more arduous and longer transition of early-literates to functional literacy.
Improving Literacy, Bollywood-style
How does one transition 400 million early-literates in India to functional literacy? The essence of a solution lies in creating conditions that allow for at least a few minutes of easy reading engagement, every day and throughout life. This is possible if reading itself becomes an integral part of something people do every day, like, watching television. In India, 750 million people watch, on average, two hours of TV every day. Bollywood-style films and film-based content is a dominant genre in a large number of Indian languages. What if we subtitled the lyrics of all existing film songs on TV — in the same language? Word for word, what you hear is what you read. This was a question we first posed in 1996, calling our approach "Same Language Subtitling" (SLS). It causes automatic and inescapable reading engagement among early-readers (and readers alike) whenever they happen to watch film songs with SLS. Anyone with some letter familiarity cannot but try to read along, as confirmed by a body of eye-tracking research. Viewers like to read along to songs for its Karaoke-like experience and to know the song lyrics.
Since 2006, SLS has been implemented on 10 weekly half-hour song-based TV programs, in as many languages, currently delivering reading practice to 200 million weak-reading TV viewers in India. As we have slowly scaled up, we have done rigorous testing to ensure that SLS is working, and we now have strong evidence that it is a proven solution on the scale that is required. The Indian Institute of Management, Ahmedabad (IIM-A) and the Nielsen-ORG Center for Social Research studied the effects of SLS in 3,179 households during 2002-2007, demonstrating that exposure to 30 minutes of SLS per week increased the functional literacy rate from 25% to 56% among students with at least five years of schooling (see PlanetRead for the latest studies). Plus, the cost is minuscule. For example, with a viewership of 20 million, one U.S. dollar can give 30 minutes of daily reading practice for about 1,000 people per year.
IIM-A and PlanetRead are now on course to deliver regular reading practice to all the 750 million TV viewers in India at present, and growing rapidly. More than half the viewers are also weak-readers. The goal is to implement SLS on all songs on TV in India, in all languages, through national policy. The strategy is to scale up in India first and let that speak as a model for expansion to other countries, especially in South Asia and Sub-Saharan Africa, on popularly watched song-based programming, in the local language. The latest update in this narrative is that the Broadcasting Corporation of India (Prasar Bharati), the national TV network (Doordarshan), and the Planning Commission have supported, in principle, the scaling up of SLS nationally.
In India and many other countries, the problem of low quality of literacy is real, if under-researched, and seldom acknowledged officially. Yet we feel strongly that the SLS solution is proven and cost-effective. So what is holding back broadcast policy in India and other low literacy nations from considering SLS seriously? What is holding back private networks with a genuine interest in doing "well" (ratings do go up) by doing "good?" These questions are not easily answered. But at its core, policy-making generally lacks the risk-taking ability required to advance social innovation in a time-bound manner. On the other hand, private networks may need to do much more to bring — what might sometimes be a peripheral interest in doing good — to a place where doing well and doing good are inseparable.
Jennifer Silberman is the Vice President of Corporate Responsibility for Hilton Worldwide
Tourists and room touters at Port Athinios of Santorini. Photo credit: Klearchos Kapoutsis
Against a global backdrop of extremely high youth unemployment and with hundreds of millions of youth in unpaid or poorly paid and unproductive work, there is a growing call for a “jobs revolution.” In Part 1 of this series, the JKP’s David Robalino and Mattias Lundberg described a new global collaborative effort – which includes the private sector – to find effective, sustainable solutions for young people.
In Part 2 of this series, we talk with Jennifer Silberman, Vice President of Corporate Responsibility for Hilton Worldwide, who was a panelist at the recent WB seminar on Boosting Share Prosperity by Getting to Youth Employment Solutions. She suggests that the tourism and hospitality sector has a lot to offer not only by hiring young people to work in hotels and resorts but also by linking them to the value chains. She notes that Hilton Worldwide sponsors over 2,000 classes through its internal Hilton University, along with working closely with local vocational schools and community organizations to develop a talented workforce, as has been done in Saudi Arabia and South Africa.
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Read part 1 of "Facilitating A Youth Jobs Revolution"
David A. Robalino is a Lead Economist and Labor and Youth Team Leader at the World Bank and Mattias Lundberg is Senior Economist and Youth Focal Point of the Labor and
Youth Team at the World Bank
The statistics are distressingly familiar. Recent World Bank estimates suggest that about 6 percent of young people are unemployed, and another 20 percent are idle — that is, they are not working and are not in school or training. This is nearly 300 million young people altogether. In addition, there are hundreds of millions of young people around the world who are in unpaid or poorly paid and unproductive work. So we must bring millions of young people into work who are currently out of the workforce, and we must also help boost the productivity of those that are currently in poor jobs.
Girl working on a loom at a carpet and silk weaving center in the Herat Citadel in Afghanistan that is funded under the auspices of the Afghanistan Rural Enterprise Development Project (AREDP).
Photo credit: Graham Crouch / World Bank
Yet we have too few successful solutions to match the scale of the youth employment challenge. The reality is that to make further progress, we need new insights, fresh ideas, and new partnerships, including directly involving employers and young people in finding answers — what is now being referred to as a "jobs revolution." Effective solutions will come from a collective global leadership that facilitates policy coordination, promotes rigorous learning and evidence, and engages the private sector effectively.
Many Programs, Few Reliable Lessons
Why do we know so little after so many youth jobs programs have been undertaken since the 2008 financial crisis by governments, NGOs, academia, multilaterals and other organizations? After all, the Word Bank, in partnership with the Inter-American Development Bank and the International Labour Organization, maintains an inventory of more than 800 programs that have been implemented during the past five years. These programs include various types of training (including life skills), job search assistance, wage subsidies, and support to open a business and engage in self-employment.
Yet the sad reality is that we still haven't discovered interventions that are broadly applicable and that can be scaled up sustainably and reliably. Part of the problem is that we haven't been able to learn systematically what needs to be done to improve the design of current and future programs. Indeed, most of the programs out there haven't been rigorously evaluated, which leaves us unsure whether the changes we see among program beneficiaries are really due to the program or to some other unrelated events. And those programs that have been evaluated rarely yield solid recommendations about what programs work in different contexts, or how to design and implement them. The other problem is that while employment and growth are generated by entrepreneurs and investors, employment programs are often managed by public institutions with weak links to the private sector.
New Initiatives to Find Solutions
In an effort to help turn this situation around, the World Bank Group (WBG) recently hosted a discussion on Boosting Shared Prosperity by Getting to Youth Employment Solutions, as part of the World Bank/IMF Annual Meetings. The panelists included representatives of government, international donors, civil society groups, and the private sector. The overall message was that we must redouble our efforts and act differently. As His Excellency Lamine Doghri, the Minister for International Cooperation of Tunisia, put it: "The first revolution has brought freedom. We hope that the next one creates more jobs." The panelists underscored the need for more effective solutions, and they urged firms and governments to invest in the development of markets, promote self-employment, and provide the skills needed for young people to find productive jobs.
One way this could happen, said Jennifer Silberman, Vice President for Corporate Responsibility for Hilton Hotels Worldwide, would be through the tourism and hospitality sector — not only by hiring young people to work in hotels and resorts but also by linking them to the value chains. "There is a huge ecosystem that supports the hotels, so the value chain, or supply chain, for one of our hotels is enormous, because it's everything from food and beverages, which are almost always sourced locally, to products and services, to transportation, to tourism groups." Hilton also works closely with local vocational schools and community organizations to develop a talented workforce. For more on this topic, see the JKP's interview with Silberman, up next, in Part 2 of this series.
This discussion is the beginning of a collaborative effort being led by the WBG to find effective, sustainable solutions for young people, which involves a number of organizations that are similarly dedicated to finding solutions for youth employment — Plan International, Accenture, the International Youth Foundation, and Youth Business International. The collective response is based on a global coalition oriented around three sets of activities:
First, pinpointing the constraints facing young people and what has worked to facilitate their entry to work, digesting the evidence, and preparing tools to facilitate effective policies and investment.
Second, coordinating and influencing the design, implementation, and evaluation of innovative and scalable interventions to create jobs for youth.
Third, engaging directly with the private sector, as providers of training and skills, as employers, and in the supply chain, as buyers of goods and services produced by young people.
Over the next few months we'll be able to put in place the mechanisms necessary to bring together the different actors involved in the youth employment agenda and start the work. As Chairman Nigel Chapman, Chief Executive Officer of Plan International, reminded us, the challenges we face can't be tackled by one particular facet of society alone. We must work together — not least by engaging with young people themselves.
By Claudia Sepulveda, Lead Economist, Office of the Chief Economist, the World BankPosted on July 24, 2013 Young people continue to face record unemployment levels in many OECD countries—with rates exceeding 60 percent in Greece, 55 percent in Spain, and about 40 percent in Italy and Portugal—according to the latest OECD Employment Outlook. The report says the uneven, weak recovery has failed to generate enough jobs to make a serious dent in joblessness in many OECD countries. Moreover, high unemployment is set to remain high in OECD countries through 2014, with youth and low-skilled labor hardest hit. The report calls for youth to be a top priority for policy action to avoid long-term "scarring" effects as a result of prolonged unemployment and low-income spells early on in their careers.
University students in France checking bulletin board for new schedule 2011 ©Photo_Alto
But what policies can be pursued? And what evidence do we have of their impact on employment in the short and long run? Developed countries are increasingly relying on job search assistance programs to prepare young job seekers for the recruitment process and to connect them with potentials employers. Europe in particular has shown a strong interest in active labor market policies (such as public employment services, labor market training, and subsidized employment). But so far, the verdict on these programs has been mixed. And a new study out on France's experience with this approach offers a cautionary tale. France's Job Placement Assistance for Young Graduates In France, where more than 25 percent of recent graduates cannot find stable work, the Ministry of Labor decided in 2007 to subcontract additional job counseling services to private agencies believed to be more efficient than the French public employment agency, Pôle Emploi. Under the program, private agencies were contracted to provide intensive placement services to young graduates (at least two-year college degree) who have been unemployed for at least six months. The private agencies’ intervention consisted of (i) helping young graduate job seekers to find a durable job—either on a CDI (indefinite-term contract) or CDD (fixed-term contract) with a length of six months or more; and (ii) continuing to advise job seekers during the first six months of the job to help them keep the job or find another one if they resign. The program design included an incentive scheme for the private agencies. In particular, payment was in stages—25 percent when a job seeker enrolled in the program, 40 percent once a job seeker received a contract for a job (within six months of entry into the program), and the remainder if the job seeker was still employed after six months. Evaluating France's Job Placement Program How has this large-scale program worked? That's a question that several economic researchers—Bruno Crépon, Esther Duflo, Marc Gurgand, Roland Rathelot, and Philippe Zamora—recently tried to answer. They conducted a randomized controlled evaluation from 2007 to 2010 covering 250 communities in 10 regions in France, with about 30,000 young educated job seekers randomly selected to participate. The evaluation aimed at:
The evaluation used a two-step randomization: (1) assigning randomly the proportion of job seekers that would receive intensive counseling in a given community; and (2) assigning randomly job seekers in each treated community into the treatment or comparison group. Individuals assigned to the treatment group were put in contact with a private agency for intensive job counseling lasting a year, while those in the comparison group continued to have the option of standard job counseling from Pôle Emploi. Thus, both treatment and comparison individuals were eligible to receive counseling through Pôle Emploi—with the evaluation measuring the impact of supplementing public employment counseling with more-intensive counseling from a private provider. A Disappointing Outcome So what do the results show? In a recent paper titled "Do Labor Market Policies have Displacement Effects? Evidence from a Clustered Randomized Experiment," the researchers report that overall the program had little effect on long-term employment.
||Assessing whether job seekers assigned to the treatment group were more likely to have found a stable job than those who were not. |
||Assessing whether offering job counseling displaced job seekers who did not benefit from the program—and if so, quantifying how large this effect might be. |
This evaluation suggests that the enthusiasm among OECD governments for active labor programs should be re-examined. The main problem appears to be that once externalities are taken into consideration, labor policies that seem to reduce unemployment aren't really accomplishing their goals.
||After eight months, job seekers in the treatment group were 2.5 percentage points more likely to have found employment, mostly driven by its effect on men. |
||However, this effect came partly at the expense of other workers, mainly in weak labor markets (small pool of jobs). |
||Increases in employment were driven mostly by fixed-term contracts, and there was no increase in permanent employment contracts. |
||All employment gains disappeared after 12 months, and there was no stepping stone effect where a fixed-term job led to a permanent job. |
José Luis Polanco is the Director of the Project Coordinating Unit at the Ministry of Labor, Dominican Republic
Photo Credit: Youth and Employment Program, Ministry of Labor
In the Dominican Republic, the unemployment rate among young people (18-29) is around 26.6 percent, more than double the rate for adults. Job quality is also an issue, with youth mostly employed in the informal sector, where wages are low and benefits rare. An important and innovative program aimed at improving this situation is the Youth and Employment Program—known as Juventud y Empleo (JE)—begun in 2001. It is aimed at poor at-risk youth aged 16-29, who are out of school and lack a regular job. It combines classroom training with a subsequent internship period. And it also has a novel review element: built-in experimental evaluations so managers can keep tweaking the program design.
The JKP recently asked José Luis Polanco—the Director of the Project Coordinating Unit in the Ministry of Labor—about the latest program evaluation, which for the first time looked at both labor market outcomes (employment, wages, benefits) and outcomes related to youth behavior, expectations, and non-cognitive skills. He tells us that the results were mixed. There was some evidence of higher incomes and benefits (health insurance), especially for males, along with promising results on the "soft skills" side. But there were no significant signs of overall higher employment. Thus, the program is now being modified to further increase time spent on the basic skills module. Efforts are also under way to get more input from entrepreneurs on their needs and more strongly link the National Employment Service with the key business associations.
By Ingrid Woolard, Associate Professor, University of Cape Town's School of Economics, and Research Associate, Southern Africa Labour and Development Research (SALDRU)
IT training for kids who live in the surrounding farm areas of
Stutterheim outside East London in the Eastern Cape. South Africa.
Photo: Trevor Samson / World Bank
Globally youth are, on average, nearly three times more likely to be unemployed than older adults. In South Africa this problem has been exacerbated by the global downturn. When the economy slowed down, youth unemployment began to rise sooner than adult unemployment, suggesting that younger people are more vulnerable to changing economic conditions.The question arises whether one should specifically target youth among the unemployed. It could be reasonably argued that policies that aim to increase employment will automatically assist the youth without creating unnecessary distortions through targeting. However, I would argue that youth face sufficiently more barriers to entering the labor market to merit specific interventions.A tougher job picture for youth In South Africa, overall unemployment is high, with the narrow rate (which counts only those that are actively seeking work) at 22.1 percent in late 2012. But the rate is even higher for youth, with variations by age, gender, region, and race.
A big problem for youth is the numerous barriers to employment, such as their high cost of labor, low skill, difficulty with job search, and persistently low employment outcomes. Too expensive. Youth labor poses relatively high costs and low productivity for potential employers. There is some evidence that youth hold unrealistically high reservation wages, a complicating factor in a market where inflexibility to adjustments causes unskilled wages in some sectors to already exceed the marginal product of labor. As a result, youth tend to be "last-in" and "first-out" of employment (ILO, 2006). Inadequate education. Without the benefit of on-the-job training and past work experience, low-skilled youth don't look particularly attractive to employers — resulting in a frequent mismatch between what the labor market requires and what the youth can offer. Harder job search. A young person is likely to have accumulated less social capital than someone older, and since their friends are also likely to be unemployed, it's tougher to leverage their networks. One South African study (Burns et al, 2010b) estimates that social networks alone might enhance the probability of finding employment by as much as 3 to 12 percentage points.Lasting setbacks. Two well-observed consequences of unemployment during youth are a persistently lower wage ("wage scarring") and lower probability of being employed in later life. While no estimates of these effects exist in South Africa, a U.S. study estimates that being unemployed while young results in 7.5 percent and 13.4 percent lower earnings for males and females respectively, in the third year following employment (Kletzer and Fairlie, 2003).Interventions to overcome labor market barriers for youth What can be done to improve the job picture for youth? I'd like to suggest four possible remedies. First, encourage the growth of industries and firms that tend to have a high degree of youth labor absorption. One way is adopting an industrial policy that explicitly targets job creation for youth. The Department of Trade and Industry's Industrial Policy Action Plan (2011) outlines the government's intention to support labor-intensive industries, which should boost employment across the board. Calibrating aspects of this policy for optimum job-creation among younger generations can be done by creating entrepreneurial and apprenticeship programs. Another way is using direct public-sector employment schemes to target young people and impart valuable skills. South Africa's Expanded Public Works Programme (EPWP) has created 1.6 million jobs but has been criticized for lacking the potential for effectively skilling its participants (McCord, 2005, 2008). Young people would benefit if training were made an integral part of the program — functioning like an apprenticeship program, with practical work supplementing classroom learning. Second, bring youth labor costs and productivity in line with one another. This can be done by decreasing youth labor costs and increasing youth labor productivity. Realistic measures would be easing legislation for temporary youth employment and permitting fixed-term contracts and infrequent work for specific functions or tasks (ILO, 2012b). But care must be taken not to impede workers’ long-term financial stability by preventing them from accessing social benefits like unemployment insurance. Third, address the shortage in supply of high-skilled youth and shortage in demand for low- to medium-skilled youth. Better quality schooling and high-school completion rates should increase the supply of high-skilled youth. And the provision of intermediate skills training at vocational colleges should make low- to medium-skilled youth more attractive to employers. Fourth, assist youth in an efficient job search process. Employment services should match job-seekers with employers by providing market information and job search skills. This includes counseling, guidance, and advertisement of active labor market programs (ALMPs). It has been shown that passive labor market policies (such as unemployment benefits) can discourage job search, but they can also play an important role in loosening credit constraints to facilitate search. Passive labor market policies should be integrated within an ALMP framework and be conditional on participating in certain competency-building activities or actively searching for a job. I believe that within South Africa — and the African continent as a whole — lies potential for economic development that can be reached by providing employment for our large and growing youth population. This was achieved by the East Asia Tigers where 40 percent of their growth is thought to be thanks to their youth bulge, in conjunction with human capital development (Brenthurst Foundation, 2011). Creating employment for youth by implementing and testing the policies recommended in this blog can have a virtuous and sustained effect on South African aggregate employment, development, and growth.
- • The highest unemployment rate is among teenagers (42 percent), but the picture is not much better for youth in their early 20's (40 percent).
- • Female youth unemployment rate is 6.6 percentage points higher than the male rate, whereas the differential between male and female adults (25-64) is only 2.4 points.
- • In traditional authority areas (essentially the former homelands), the youth unemployment rate is 33 percent — well below the rates in urban formal (44 percent) and urban informal (45 percent) areas, where youth are more likely to reside.
- • Unemployment among white youth (17.8 percent) is way below a staggering 41.9 percent among African youth (the government uses 4 racial classifications: African, coloured, Indian, and white).
Nuria Rodriguez-Planas Visiting Research Fellow, IZA
Big Brothers Big Sisters of Northeast Florida’s
“Beyond School Walls” at JAXPORT (The Jacksonville Port Authority)
Photo credit: JAXPORT, Meredith Fordham Hughes
Young people are among the big losers of the recent financial crisis, with their rates of unemployment and joblessness double those of the adult population in many countries. Can formal mentoring programs help youth who are disadvantaged and most-at-risk? It's a question that Nuria Rodriguez-Planas, a Visiting Research Fellow at Germany's Institute for the Study of Labor (IZA) has explored. She tells the JKP that rigorous evaluations of U.S. programs find positive yet modest effects — especially in the "soft" skills (self esteem, relationship with peers and parents), rather than higher academic performance. But these benefits tend to fade away within a year of the program ending — and in some cases, unintended detrimental effects occur (higher criminal activity, poorer health outcomes).
What is needed, she says, is more careful evaluations of programs, especially over a longer time frame, to pinpoint what works and what doesn't — including whether these programs are helping young people (even on the soft skill front) meet the desired skills of future employers.
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By David A. Robalino, Lead Economist — Labor and Youth Team Leader, the World Bank On May 20, the JKP organized "Jobs and Shared Prosperity Day," which brought together development practitioners and researchers from numerous sectors and disciplines to exchange insights. We had sessions on a variety of issues related to jobs, such as youth, rights, skills, gender, enterprise dynamics, and the recent global financial crisis. We also took the opportunity to deliver the prizes for the Experiences from the Field, a contest that showcases projects aimed at creating jobs and improving employment possibilities.
World Bank economist Ritva Reinikka leads the panel discussion "Youth Employment"
Fostering self-employment and small scale entrepreneurs
A topic common to several of the sessions, including the one on youth employment, was the role of self-employment and small scale entrepreneurship as a source of jobs. It's an important question given that about 67 percent of those working around the world are farmers or self-employed, often in small family businesses. These workers are usually involved in activities with very low productivity and close to 70 percent of these workers are poor (see paper by T.H. Gindling and David Newhouse). Among youth, the prevalence of self-employment is even higher — in Africa, 80 percent of working youth are self-employed or farmers (see paper by Cho et al.).
For a long time, many governments have been trying to find ways to support these small scale entrepreneurs or to help the unemployed become such entrepreneurs. The interventions usually combine training (technical, life skills, and basic business management), access to finance, advisory services, and assistance to access markets or value-chains.
Yet, what we know from the few evaluations that have been done on these types of interventions is that the programs often aren't very successful in increasing activity rates, employment rates, or earnings. When success does occur, according to a recent review by Yoonyoung Cho and Maddalena Honorati, the programs combine training and access to finance, rather than offering either training or finance alone. But even then, these successes are rare. A close look at their data shows that only in 25 percent of the cases there is a significant difference in activity and/or earnings indicators between those who participate in the programs and those who do not.
This finding shouldn't come as a surprise. It's tough to find true entrepreneurs — individuals that have not only the technical skills but also the personality, behaviors, and attitudes of an entrepreneur (creativity, perseverance, communication skills, and risk taking). The reality is that most of the self-employed or small scale entrepreneurs are really subsistence entrepreneurs who run some type of business not by vocation and choice, but because there are no other options to make a living.
Rethinking interventions for the subsistence entrepreneurs
So what does this reality mean for policy makers? Some researchers and practitioners have been arguing that programs to support self-employment and entrepreneurship — including among youth — should focus on those individuals who really are or can become entrepreneurs and create/manage businesses with some growth potential (see Antoinette Schoar's paper on the divide between subsistence and transformation entrepreneurship). And there are some initiatives to develop surveys that can be used to identify the true entrepreneurs — although picking "winners" is never easy.
But then, what do we do with the rest, the large majority? At the Jobs and Shared Prosperity Day opening panel, there were dissenting views. Ravi Kanbur (Cornell University) thought it was difficult to pick the gazelles and helping the others meant eventually getting them into wage employment. Jaime Saavedra (World Bank) had a more optimistic view about initiatives that try to increase the productivity and earnings of the subsistence entrepreneurs.
My own view is that in the near future, in regions like Africa and South Asia, there won't be sufficient wage employment to absorb all the new entrants to the labor market. For many youth, self-employment will be the way to make a living, particularly in rural areas, and there can be a role for interventions that help them make this transition. But the types of interventions will need to be different. It won't be about running business competitions and offering training, grants, or access to credit. A more hands-on approach will be required where NGOs or social entrepreneurs do the following:
The expectation is that eventually a few of the "partners" will be able to take over management and the social entrepreneurs can move on to the next venture.
- • Work with groups of youth.
- • Help them identify a joint business in farm or non-farm activities that can be connected to markets of decent size or value chains.
- • Provide the training for and access to the necessary production technologies.
- • Support them during the start-up and initial operations.
Sub-Director of Employment Programs,
Ministry of Vocational Training and Employment, Tunisia
Seller of Tunisian carpets. 06-29-11 © Svetlanka777
In Tunisia, around 40 percent of youth are unemployed, many of them with only a secondary education or less. To help them find jobs, the government is undertaking a comprehensive reform of its active labor market programs (such as training, employment services, wage subsidies, and support for self-employment and entrepreneurship). With the reform, programs are being integrated and private service providers are being allowed to participate—with pay based on results (training provided, internships delivered, and job contracts signed).
The JKP recently spoke with Mohsen Bentouati—Sub-Director of Employment Programs, Ministry of Vocational Training and Employment—about the planned introduction of a biometric identification card. It will be used to monitor the operation of the programs, the use of services, and to make payments, along with ensuring that the people targeted are those most likely to benefit. He said the government will begin with a pilot program that covers the main regions, initially targeting 10,000 youth who are job seekers and unemployed—which will be rigorously evaluated to measure the impact on job opportunities.
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