BLOG: Where’s the Economic Opportunity for the World’s Youth: Findings from the Global Youth Wellbeing Index
Economic opportunity is a critical driver of individual and family security, and national growth, development and social progress. Harnessing the capacity of youth in particular, as producers and consumers, can be a boon to both national and the global economy alike. Yet around the world, youth in developed and emerging economies continue to face significant barriers to fulfill their economic promise and prospects. No conversation about the Arab Spring overlooks the historically high unemployment and marginalization of youth among root causes. Around the world, young people are up to 4 times more likely to be unemployed than the general working population, with global youth unemployment rising above 13%, up from 11.5 percent in 2007. Less than 40% of youth worldwide are banked.
In the Global Youth Wellbeing Index, released in April by the Center for Strategic and International Studies (CSIS) and the International Youth Foundation (IYF) with principal funding from Hilton Worldwide, economic opportunity was one of six domains and sub-indices included. The Index considers the state of youth in 30 countries around the world, which hold nearly 70% of the world’s youth population. Of the forty indicators that comprise the Index, seven make up the economic opportunity domain: GDP per capita; economic climate and competitiveness; youth lending from a financial institution; youth involved in early-stage entrepreneurial activity; youth unemployment; youth not in education, employment, or training (NEET), and youths’ income and wealth expectation.
Of the 6 domains, the 30-country average is lowest in economic opportunity. This is not necessarily surprising given the global youth un- and under-employment crisis and that young people were among the hardest hit by the recessions (but often overlooked). At the same time, the Index finds a strong correlation between economic opportunity and overall levels of youth wellbeing. Countries that perform best in economic opportunity are generally those that perform best in the overall ranking of youth wellbeing; the United States, Japan, Germany, Australia, Thailand, Vietnam, Sweden, South Korea, United Kingdom, and China are the top 10 performers within the domain, eight of which place in the top ten countries in the overall rankings of youth wellbeing.
Young people in wealthy and developing nations are challenged by real and perceived constraints in employment opportunities in the formal sector, financial inclusion, and the general economic climate and future prospects. For example, the United States, which ranks first in the domain, has high GDP per capita, scores well in measurements of the general economic climate, has significantly higher levels of youth lending, and lower levels of youth unemployment and idle youth not in education, employment or training (NEET). Yet youth still express greater uncertainty about their economic future, perhaps indicative of the general social perception about their opportunity amidst the global financial crisis, housing concerns, and student debt. Significantly, youth in seven of the top 10 ranking countries in this domain, excluding Thailand, Vietnam, and China, hold pessimistic income and wealth expectations.
There are notable exceptions, however, and particularly among lower income countries, such as Uganda. Uganda ranks 11th in the economic opportunity domain, but 29th in the Index overall, is the highest ranked Sub-Saharan African country in economic opportunity. It scores well above average in youth entrepreneurial activity, and records relatively low levels of unemployed or idle youth (caveat that youth employment measures in developing countries often mask the large numbers in the informal economy), and comparatively robust lending from a financial institution. Additionally, Ugandan youth are more optimistic about their economic futures. Even so, Uganda has a weaker macroeconomic climate, and lower GDP per capita. In Asia, both China and Vietnam rank notably higher here in economic opportunity than in the composite. China ranks 10th here and 14th in the Index overall; and Vietnam ranks 6th here and 11th in the composite. Although China is experiencing lower GDP per capita, slightly higher levels of youth unemployment, and lower levels of youth lending, China scores comparatively well on rates of idle youth, entrepreneurial activity, and outlook. Vietnam displays lower NEET unemployment levels and higher youth lending, and optimism, despite lower GDP per capita, entrepreneurial activity, and a weaker general economic environment.
Conversely, a number of countries rank comparatively lower in the economic opportunity domain than their overall position. Spain, for example, places 25th here and 8th in the composite. While Spain has higher levels of GDP per capita, and comparatively fewer idle youth, Spain has staggeringly high rates of youth unemployment with less entrepreneurial activity and lending to youth; and likely to no one’s surprise, Spanish youth are very pessimistic about their economic prospects. At 21st place, Colombia drops from its 13th overall rank with relatively lower scores on each of the indicators except youth entrepreneurial activity.
First, countries that are low, middle and high-income face various, but often similar, challenges in promoting youth economic opportunity. While middle and high income countries may have the infrastructure in place that enables them to perform better on indicators related to financial inclusion, income, and general economic climate, both developed and developing countries alike are suffering from the global crisis and facing unprecedented levels of jobless and idle youth. However, among the countries included, developing countries trend better than developed countries in youth entrepreneurship (perhaps out of necessity), and youth outlook.
And, perceptions matter: beyond the Arab Spring, real and perceived economic and social marginalization is making youth more vulnerable to radicalization and has been at the heart of the often destabilizing youth-led demonstrations and movements worldwide. Ghana, Indonesia, and Nigeria’s ranking in economic opportunity decrease three places, respectively, when youth perception is not taken into account, indicating youth in these countries are generally more optimistic about their prospects. Conversely, Spain’s position increases by six, and Peru and the United Kingdom’s by three, when youth perception is not taken into account, indicating youth are generally more pessimistic about their economic opportunity.
As we’ve seen in other domains of youth wellbeing, there remain large gaps in available data, and consistent, comparable data sets to assess youths-specific global employment opportunities, constraints and outcomes are altogether lacking in many cases. For example, because of data limitations, financial literacy could not be included as an indicator. More accurate and complete data, as well as geographically- and gender-disaggregated data could help identify shared and specific challenges and possible points for intervention and partnerships among relevant stakeholders.
Recognizing and addressing the links between enabling environments, financial services, entrepreneurship, and employment – as well as education and training – is foundational to ensuring youth’s success and ability to contribute to national and global economy as both earners and consumers. This is particularly important as the world considers how to make the relevant in Post-2015 agenda more inclusive of this pivotal generation. You can explore the Index data, download the reports, and read other domain blogs and news at www.youthindex.org. For attendees of the Global Youth Economic Opportunities Summit in Washington, D.C. October 6-8, please join a breakfast workshop to engage on the Index, Tuesday, October 7th: further details on http://www.youtheosummit.org/morning_session_4_day_2_session1. If you haven’t already registered, visit http://www.youtheosummit.org/register for details.
Dr. Nicole Goldin is senior associate at the Center for Strategic and International Studies (CSIS) and was director of the Global Youth Wellbeing Index in partnership with the International Youth Foundation (IYF). Follow her on Twitter @nicolegoldin.