Policy highlights:

• In Africa and South Asia, young people make up nearly a third of the population. Unemployment during youth and early adulthood results in lower earnings, a higher probability of unemployment, and lower health and job satisfaction in the future. In addition, youth are among those most severely impacted by economic crises. In addition, data on various youth employment indicators mask the high rates of underemployment, vulnerable employment, informal work, and working poverty. Many interventions are based on little more than faith and theory, as opposed to evidence, and generally fail to deliver jobs.

• Much of the existing evidence focuses on formal employment in urban areas, instead of informal and agricultural labour markets, and there is even less evidence on the youth specifics of these labour markets. Investing in youth labour market analysis (including new policy areas, like the role of urbanization) and data infrastructure is an important first step.
• This review identifies two critical factors that limit employment opportunities for young people: 1) human capital, including education, training and skills, and 2) a business environment that facilitates access to key resources such as credit, infrastructure and markets.
• Because of the complex nature of labour markets in developing countries, the youth employment challenge requires an integrated approach to policy action, beyond basic education and labour markets. The determinants of the youth labour market include: 1) labour demand – which is located primarily in low-productivity (service-sector) jobs and is affected by growth, economic crises, and the mobility of jobs in industrial sectors, 2) labour supply – the quantity, quality and relevance of education and skills in formal and non-formal education, 3) migration, 4) labour market functioning (information, intermediation and regulation).
• Policymakers should focus on: 1) private investment in labour-intensive sectors or sectors with large employment multipliers, 2) the promotion of entrepreneurship and self-employment by strengthening financial infrastructure, 3) training that includes both ‘core’ (accounting) and ‘soft’ (problem solving, networking) entrepreneurial skills and that screens young people for entrepreneurial characteristics, separates programme training and financing functions, and works towards a culture that rewards competition and innovation, 4) labour demand (for example, by public works programmes in infrastructure and service delivery), 5) addressing skills shortages among disadvantaged youth and mismatches on several fronts (including formal and non-formal general education, agricultural and non-agricultural informal employment, VET and apprenticeship training), with a focus on new technologies and increasing the possibility of moving between types and levels of education, 6) improving labour market information systems through educational institutions and youth centres, making transportation more available, and considering overseas employment programmes when growth is weak and productive jobs are lacking, 7) regulation in public administration hiring and promotion, wage subsidies and social contributions.
• This article is sourced from the IDS Bulletin ‘Africa’s youth employment challenge: new perspectives’.