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Developing policies to respond to youth unemployment

Read how Christine Bigler points out the challenge of youth (un)employment and presents a useful tool for the development of policies in this area.
© University of Basel
The question of how young people participate in the labour market is an important one. Youth unemployment rate is one indicator to answer it. However, as Christine Bigler points out, in countries in the Global South, this indicator is too crude to develop policies that may tackle the problem. Read which other approach might help to create better measures.

Youth (un)employment, especially in sub-Saharan Africa, is high on the agenda of many policymakers (Sumberg et al. 2020). Globally, out of 1.2 billion people, nearly one billion are located in developing countries. Additionally, the number of people in the 15-25 age group is growing rapidly in these countries (International Fund for Agricultural Development 2019).

In sub-Saharan Africa, 60 percent of the population, or 800 million people, belong to the youth age group, and by 2100, 50 percent of the world’s youth population will reside in Africa (International Labour Office 2020). This fact can be seen as an opportunity, as the best-educated people entering the labour market have the potential for transformative change. Alternatively, it can be seen as a multiplier of inequality and poverty and a factor of instability for security and peace (World Economic Forum 2020).

Rwanda as an example of a country with a growing youth population

Rwanda is a small, agriculturally-based and densely populated country in Central East Africa. The population continues to grow, and 20,000 jobs should be created each year to integrate youth into the labour market (Bigler et al. 2017). In urban areas, the youth unemployment rate is around 30 percent among secondary school and university graduates (Government of Rwanda 2021).

However, the youth unemployment rate in countries from the Global South is a weak indicator by itself, as it provides a limited picture of the labour market. To develop policies addressing youth unemployment, decision-makers need a more differentiated approach.

An index for a more differentiated approach

There is a research project that focuses on this problem. “Linking Education and Labour Markets: Under what conditions can Technical Vocational Education and Training (TVET) improve the income of the youth?”1 develops a new multidimensional approach to quantify the youth labour market situation in low- and middle-income countries. The project designed an index to better grasp the situation in a given market. It is called the “Youth Labour Market Index for Low Income Countries (YLILI)”2. The index consists of 12 indicators that are classified into three domains:

  • transition into the labour market
  • working conditions
  • education

Table showing the indicators of the Youth Labour Market Index according to (Kudrzycki et al., 2020). In the left column under the title “transition”, there are three indicators: Share of youth not in employment, education or training (NEET), Relative unemployment ratio, and Skills mismatch rate. In the middle column under the heading “working conditions", there are six indicators: Working poverty rate, underemployment rate, informal employment rate, vulnerable employment rate, share in elementary occupations and share in agriculture, fishery or forestry. In the right column under “education”, there are three indicators: Share with no secondary education, illiteracy rate and harmonised test scores.Youth Labour Market Index: Indicators according to Kudrzycki et al., 2020. Table visually adapted.

The index provides a more holistic picture of youth in the labour market. It allows for cross-country comparisons. The scale of the index ranges from a functional youth labour market (100) to a dysfunctional one.

Applying the index

All countries analysed show weak labour markets for the youth group. In sub-Saharan Africa, on the one hand, youth are confronted with poor working conditions and a lack of education. On the other hand, the transition from school to the labour market is rapid. This can be a sign of poverty. Young people have to work to earn their livelihoods.

Additionally, the index is an important tool for policymakers, especially at the national level. As mentioned above, the index consists of three dimensions. By splitting the index, policymakers can obtain evidence-based results to identify which of the three dimensions represents the most pressing issues. With the “KOF3 Youth Labour Market Index”, policymakers can estimate the youth labour market situation for 193 countries. This helps them develop evidence-based labour market policies (Kudrzycki et al 2020).

To get back to the example of Rwanda: the country shows a very low score on the indicator “share of youth not in employment, education or training”. This could be a signal for policymakers to invest more in education and the TVET programme (KOF 2021).

References

Bigler, Christine; Amacker, Michèle; Ingabire, Chantal; Birachi, Eliud (2017): Rwanda’s gendered agricultural transformation. A mixed-method study on the rural labour market, wage gap and care penalty. In Women’s Studies International Forum 64, pp. 17–27. DOI: 10.1016/j.wsif.2017.08.004.

Government of Rwanda (2021): Labour Force Survey 2020. Thematic Report on Gender. With assistance of UN Women. National Institute of Statistics of Rwanda (NISR). Kigali, Rwanda, checked on 5/18/2021.

International Fund for Agricultural Development (2019): Creating opportunities for rural youth. 2019 Rural Development Report. International Fund for Agricultural Development, checked on 5/20/2021.

International Labour Office (2020): Getting Africa’s youth working. Taking a systems approach to create more & better g y jobs for young people in sub-Saharan Africa. With assistance of the LAB. International Labour Organization, checked on 5/20/2021.

KOF (2021): Youth Labour Market Index. Rwanda. Swiss Economic Institute, Switzerland.

Kudrzycki, Bartlomiej; Lefoll, Erwin; Günther, Isabel (2020): Youth Labor Market Index for Africa and Asia. LELAM-TVET4INCOME PROJECT – R4D-Employment Module, NADEL, ETH Zürich.

Kudrzycki, Bartlomiej; Günther, Isabel; Lefoll, Erwin (2020): Youth Labor Index for Low Income Countries. Working Papers, No. 13. NADEL Center for Development Cooperation, ETH Zurich, Switzerland.

Sumberg, James; Flynn, Justin; Mader, Philip; Mwaura, Grace; Oosterom, Marjoke; Sam‐Kpakra, Robert; Shittu, Ayodele Ibrahim (2020): Formal‐sector employment and Africa’s youth employment crisis: Irrelevance or policy priority? In Dev Policy Rev 38 (4), pp. 428–440. DOI: 10.1111/dpr.12436.

World Economic Forum (2020): The children’s continent: keeping up with Africa’s growth. Edited by Bandar Hajjar. Available from: https://www.weforum.org/agenda/2020/01/the-children-s-continent/

  1. Research for Development (r4d) project. For more information, visit https://r4d.tvet4income.ethz.ch/the-project.html 
  2. See: https://kof.ethz.ch/en/forecasts-and-indicators/indicators/kof-youth-labour-market-index.html 
  3. KOF: Swiss Economic Institute. For more information, visit https://kof.ethz.ch/en/ 
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