2016 Global Youth Development Index: Results and Analysis Youth unemployment: a growing concern Mattias Lundberg* and Matthew Hobson† Senior Economist, Global Partnership on Youth Employment; †Senior Social Protection Specialist, World Bank * Global growth and poverty reduction over the next 20 years will be driven by today’s young people, yet many of them face significant difficulties in finding productive employment. Recent estimates from the World Bank suggest that 250–300 million young people are unemployed or idle, and another 150–200 million young people around the world are in unpaid or poorly paid work. In addition, between 2015 and 2030, some 600–800 million more young people will enter the job market – that is nearly 1 million people each month in India, and 1 million each month in Sub-Saharan Africa. The global economy will need to create millions of jobs each month simply to keep employment rates constant. However, since the 2007–08 financial crisis, the pace of formal job creation has largely slowed. This is of grave concern to those who will enter the labour market, and to the hundreds of millions of youth who are currently unemployed, inactive or underemployed, or working in insecure jobs. Unemployment levels among youth are generally higher for young women than young men. In the MENA region, the unemployment rate is 50–60 per cent higher among young women than young men. In 2012, a quarter of all young people worldwide – mostly young women – were NEET. In the MENA region, South Asia, and Sub-Saharan Africa, between 40 and 70 per cent of employed youth are in the agricultural sector, where productivity is lower and access to social protection schemes is rare. In rural areas, young people may not have access to land, productive inputs, technology, capital or markets. Most young people, particularly those with little education, enter the labour market through the informal sector and take relatively unproductive and short-lived jobs. The informal sector is characterised by low pay, low productivity and high turnover. On the other hand, the informal sector is flexible, presents relatively few barriers to entry, and provides opportunities to gain experience and connections in the world of work. Agriculture is the main sector and source of youth employment globally. While this is changing, and the share of agricultural employment is falling as economies grow and develop, agriculture will still provide the majority of employment opportunities for young people in Sub-Saharan Africa for the foreseeable future. Why does youth employment matter for development? In many countries (especially across Africa and South Asia), youth will represent over 40 per cent of the population, and over 30 per cent of the labour force, by 2030. This large population of young people presents an opportunity to create a ‘demographic dividend’, such as the one that was partly responsible for the rapid economic growth of East Asian economies in the 1970s and 1980s. Young people around the world are at the forefront of innovation and entrepreneurship. The Global Entrepreneurship Monitor report for 2015 finds that young people aged 18–34 display the highest rates of entrepreneurial intention, and those aged 25–34 display the highest rates of start-up activity.15 Younger entrepreneurs are often constrained by lack of access to resources, including financial resources, and legal and customary difficulties with ownership and rights. There is some evidence that the consequences of unemployment can be more severe for youth than other age groups. For instance, prolonged unemployment in youth, or delayed entry into work, has potentially large effects on lifetime earnings.16 It can also affect human capital accumulation, physical and psychological health, and careers later in life. Youth who take longer to find stable employment are likely to accumulate less human capital, including ‘soft skills’, than those who can begin on-the-job learning at an earlier age, and this can lead to lower earnings throughout the life cycle. Lost human capital also represents a loss in productivity to firms and the economy. Unemployment can lead to delayed marriage and family formation, and delays in achieving the \ 61