Monday, February 7, 2011

BW: The Youth Unemployment Bomb

Below are some snippets from a highly recommended cover story in BusinessWeek entitled 'The Youth Unemployment BombFrom Cairo to London to Brooklyn, too many young people are jobless and disaffected. Inside the global effort to put the next generation to work

If you are in a plane, train, or automobile here is a 8 minute audio clip discussing the same topic.

In the Middle East alone (since this is the world's current focus, there are upwards of 100M youth who are soon going to be need to find work).  But this is a global phenomena - Spain has a 40% youth unemployment rate, and we've covered the herbivore men in Japan [Jul 29, 2009: Japan's "Herbivore" Men - Young American Men's Future?] and the 'ant tribe' in China. [Nov 18, 2010: [Video] ABC News on China Part 2]  The larger question is, with hundreds of millions entering the global job force - is there enough work to go around long term?  Quite a few of the Egyptian youth actually have college degrees - but nowhere to go with them.  In the older generation, you hear stories of Egyptian adults trained in law and medicine - driving taxis ...

  • In Tunisia, the young people who helped bring down a dictator are called hittistes—French-Arabic slang for those who lean against the wall. Their counterparts in Egypt, who on Feb. 1 forced President Hosni Mubarak to say he won't seek reelection, are the shabab atileen, unemployed youths. The hittistes and shabab have brothers and sisters across the globe. 
  • In Britain, they are NEETs—"not in education, employment, or training." In Japan, they are freeters: an amalgam of the English word freelance and the German word Arbeiter, or worker. Spaniards call them mileuristas, meaning they earn no more than 1,000 euros a month. In the U.S., they're "boomerang" kids who move back home after college because they can't find work. Even fast-growing China, where labor shortages are more common than surpluses, has its "ant tribe"—recent college graduates who crowd together in cheap flats on the fringes of big cities because they can't find well-paying work. 
  • In each of these nations, an economy that can't generate enough jobs to absorb its young people has created a lost generation of the disaffected, unemployed, or underemployed—including growing numbers of recent college graduates for whom the post-crash economy has little to offer.
  • More common is the quiet desperation of a generation in "waithood," suspended short of fully employed adulthood. At 26, Sandy Brown of Brooklyn, N.Y., is a college graduate and a mother of two who hasn't worked in seven months. "I used to be a manager at a Duane Reade [drugstore] in Manhattan, but they laid me off. I've looked for work everywhere and I can't find nothing," she says. "It's like I got my diploma for nothing." 
  • While the details differ from one nation to the next, the common element is failure—not just of young people to find a place in society, but of society itself to harness the energy, intelligence, and enthusiasm of the next generation. Here's what makes it extra-worrisome: The world is aging. In many countries the young are being crushed by a gerontocracy of older workers who appear determined to cling to the better jobs as long as possible and then, when they do retire, demand impossibly rich private and public pensions that the younger generation will be forced to shoulder
  • In short, the fissure between young and old is deepening. "The older generations have eaten the future of the younger ones," former Italian Prime Minister Giuliano Amato told Corriere della Sera. In Britain, Employment Minister Chris Grayling has called chronic unemployment a "ticking time bomb." Jeffrey A. Joerres, chief executive officer of Manpower, a temporary-services firm with offices in 82 countries and territories, adds, "Youth unemployment will clearly be the epidemic of this next decade unless we get on it right away. You can't throw in the towel on this." 
  • The highest rates of youth unemployment are found in the Middle East and North Africa, at roughly 24% each, according to the International Labor Organization. Most of the rest of the world is in the high teens—except for South and East Asia, the only regions with single-­digit youth unemployment.
  • Rich democracies ignore youth unemployment at their peril. In the 34 industrialized nations in the Organization for Economic Cooperation and Development, at least 16.7 million young people are not employed, in school, or in training, and about 10 million of those aren't even looking, the OECD said in December 2010. In the most-developed nations, the job market has split between high-paying jobs that many workers aren't qualified for and low-paying jobs that they can't live on, says Harry J. Holzer, a public policy professor at Georgetown University and co-author of a new book, Where Are All the Good Jobs Going? Many of the jobs that once paid good wages to high school graduates have been automated or outsourced
  • In the U.S., 18 percent of 16- to 24-year-olds were unemployed in December 2010, according to the Labor Dept., a year and a half after the recession technically ended. For blacks of the same age it was 27 percent. What keeps the numbers from being even higher is that many teens have simply given up. Some are sitting on couches. Others are in school, which can be a dead end itself. The percentage of American 16- to 19-year-olds who are employed has fallen to below 26 percent, a record low.

Obviously in the U.S. it is not so much about future social strife (that's why we have 44M on food stamps) since there is a relative affluence and social programs in place, along with parents.  But there are still consequences....this next subject is interesting - we touched on it a few years ago in  [May 9, 2009: The Curse of the Class of 2009 - Lower Wages for Up to a Decade
  • What's more, when jobs do come back, employers might choose to reach past today's unemployed, who may appear to be damaged goods, and pick from the next crop of fresh-faced grads. Starting one's career during a recession can have long-term negative consequences.
  • There's a psychological impact as well. "Individuals growing up during recessions tend to believe that success in life depends more on luck than on effort, support more government redistribution, but are less confident in public institutions," conclude Paola Giuliano of UCLA's Anderson School of Management and Antonio Spilimbergo of the International Monetary Fund in a 2009 study. 

Then again, our university system in the aggregate does not seem to be teaching much, but just a weigh station to take government loan money and churn kids out.  [Jan 18, 2011: Report - First 2 Years of College Show Small Academic Gains]  Difficult to compete on a global playing field that way.

Even in South and East Asia (ex Japan) where  many of the jobs are migrating too - there appear to be too many workers for the amount of jobs.  And they have the best situation on a relative basis.
  • China, too, has produced more college diplomas than it can make use of. The number of graduates has quintupled in the past decade, and "the Chinese economy has just not been able to create that many jobs for high-skilled labor," says Anke Schrader, a researcher in Beijing at The Conference Board's China Center for Economics and Business. 

Tough dilemmas globally, certainly no easy answers.  But once again, Germany seems to be leading the charge on solutions - using an old method.
  • These days there's a newfound appreciation for an ancient work arrangement, the apprenticeship, because it greases the transition from learning to doing. Germany and Austria experienced milder youth unemployment in the global downturn partly because of blue-collar apprenticeship programs, says Stefano Scarpetta, deputy director of the directorate of ­employment, labor, and social affairs at the OECD in Paris. Last year, the International Labor Organization says, Germany's youth unemployment rate was 13.9%, compared with a Europe-wide average of 21.2% and 21% in the U.S
  • In an update on the apprentice idea, countries such as the Netherlands encourage university students to gain work experience while enrolled. Scarpetta says 70% of Dutch youth ages 20-24 are getting some work experience. By contrast in Italy and Portugal only about 10% work while in school. The Netherlands' youth unemployment rate is just 11.2%.

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