Davos 2012: Youth unemployment 'disaster'
- 28 January 2012
- From the section Business
Davos is used to bluster from political leaders. But when usually quietly spoken company bosses from all corners of the earth warn of "not a crisis, but a disaster," when they call something a "cancer in society," you know we have a problem.
The world, they say, is "sitting on a social and economic time bomb". The world is plagued by youth unemployment.
The numbers are stark: In some countries of the Arab world, up to 90% of 16-24 year olds are unemployed. In the United States the youth unemployment rate is 23%. In Spain nearly 50%. In the UK 22%.
Worldwide, some 200 million people are unemployed. 75 million are between 16 and 24 and every year about 40 million young people are entering the workforce.
The business leaders at the World Economic Forum (WEF) know why it matters: Young people who were unemployed for a long time will earn less throughout their whole lives.
They will be less employable. They won't have the skills that business needs. They are more likely to have long-term health problems. And it can cause social unrest.
There's a term for it: Lost generation. Or as one business school professor puts it: "Unemployment sucks. Youth unemployment sucks even more."
"The youth has lost a line of sight to the future."
Running out of talent
And bosses really do care about these things, even the most cold-hearted ones, because all of the above costs money - indirectly because of lower demand for their products and services; directly in training and healthcare costs, and higher taxes.
Then there is demography. In Jordan, about 70% of the population is under the age of 30. If the youth is not fit for the workplace, the country will run out of talent soon, said a participant.
And, believe it or not, many chief executives here really care passionately about the issue.
Again and again during the Davos meeting, executives raised the issue of youth unemployment.
For politicians, the Arab Spring is still fresh in people's minds.
The uprisings started in Tunisia, when Mohamed Bouazizi set himself on fire: "He killed himself not because he wanted to make a political protest, he killed himself because he didn't have a job," said an investment fund manager from Pakistan.
Making a difference
The WEF's organisers love to demonstrate that their huge network - a unique combination of big business, government, social entrepreneurs and non-governmental organisations - can make a difference.
A workshop was set up to pin down what causes youth unemployment, and whether there might be some quick-win solutions to tackle the problem.
In line with Davos rules I can't quote people by name, but whoever spoke, it was obvious to participants that the problem defies straightforward solutions.
Of course, all unemployment has one thing in common: a lack of demand for workers.
But every country, every region has different problems.
Automation replaces many routine jobs, not just in developed countries. There are structural problems, for example when it's just too bureaucratic to hire somebody.
The education system can be to blame, failing to give youngsters the skills that are needed for jobs in advanced economies.
In South Korea, it's the other way round. So many people are university graduates, the country is running out of people to fill blue-collar jobs.
Then there are life skills, or rather the lack of it. Some youngsters don't know the basics, from getting on with co-workers to having basic entrepreneurial skills.
Sometimes, better schooling could have provided a fix: In China, most delivery drivers can read only Chinese, which makes them unemployable for global logistics companies who deliver parcels and mail arriving from around the world.
Then there are cultural issues. Some countries educate large numbers of women to university level, only for them to be denied work opportunities, wasting their talents.
Search for solutions
So what to do?
"The private sector could be a game changer in this," said a participant. But you're in Davos, that's what capitalists say, you may counter. Except that the speaker is fairly left-wing and works for an education campaign group.
And it's a theme that comes up again and again: Businesses, universities and schools, governments and non-governmental organisations fail to talk to each other about what they need and what they can deliver.
"Universities are just too slow," said one industrialist. "If I tell them that I need graduates with different skills, it takes them two years or more to change their courses. By then technology will be changing yet again."
However, another boss warned that "a good education does not guarantee you a good life anymore."
Whether they were from the Arab world, the North, from Latin America or Asia, many executives bemoaned the lack of entrepreneurial drive and basic business skills.
Ultimately, though, the problem comes down to demand.
The man in charge of a firm with several hundred thousand staff around the world complained that, "we live in a world where wealth creation is uncoupled from job creation. This once close connection is ruptured."
Big steps, small steps
While some suggested the creation of huge programmes, with $50bn (£32bn) spent over 10 years to train young people around the world, others proposed smaller steps with more guarantee of success.
Too many young people were lacking role models in their own families. Sending successful university graduates back to school to teach for a couple of years would provide the inspiration that many teenagers were lacking. Some countries, especially the United States, had shocking high school drop-out rates. Mentorship programmes for entrepreneurs were proposed, as was help with job mobility.
Too many companies also had neither the resources nor the knowledge to grow their business at speed.
And maybe the incentives were not right. How about a tax system that rewards the creation of long-term jobs, asked one participant.
As the afternoon wore on, again and again Davos man and woman remarked: "There's no simple solution."
Ten for ten
In a small way, the forum has indeed got the ball rolling. A working group of forum members recently launched the Ten programme - "train, employ, nurture".
Forum members are encouraged to employ 10 young people aged between 18 and 24, and train them, give them life skills, start-up skills, and - most importantly - give them a mentor to help them shape their future.
The programme is in its early stages, with two pilot projects in Indonesia and Cambodia.
And for now the companies are probably cherry-picking candidates. So far only 1,000 young people are in the programme. But on the upside some 80% go on to stay with the company.
But why just 10 youngsters per company, the organisers were challenged.
Simple psychology, they replied. Go beyond 10 people, and companies will find it too much of a commitment to join the scheme.
Once the first unemployed are in their placement, many companies start asking for more.
It's just another small step. But tackling youth unemployment, said one executive, "is critical to all our futures".