Societies everywhere invest in youth in order to prepare them for the future. But what happens when a generation, educated and prepared for anticipated occupational roles, finds an absence of opportunities? This has happened over the past decade, as the youth unemployment rate increased across all regions, excluding developed economies. Youth are three times as likely as adults to be unemployed, and account for 40 percent of unemployment worldwide [International Labour Organization]. Those who have completed their education increasingly find a mismatch between their skills or aspirations and employers’ needs. These strains will intensify as the percentage of the population aged 15 to 24 will peak in the next 10 to 20 years. Entrepreneurship promises to be the best solution to youth unemployment and frustration.
In societies such as Egypt where graduates have customarily received government jobs, the public sector can no longer keep up with this demographic trend. Many entrants to the workforce now wait for employment, and those who have government jobs are often idle or unproductive. The private sector, too, is constrained. Typically in transition economies a small number of large firms dominate the economy while other firms struggle to grow. Youth disproportionately work in part-time jobs and the informal sector, where opportunities are limited. Thus, any effort to empower youth must address the fundamental challenge of job creation. This in turn means fostering the creation of new firms, growth of productive firms, and wider access to the formal economy.
Entrepreneurs and the businesses they start present new avenues for youth to engage their energies and pursue their dreams. Successful entrepreneurs further create new jobs for other youth, and meet society’s needs for innovation and economic growth. Although entrepreneurship poses real risks for individuals, for many the opportunity to start or grow a business presents an exciting, fruitful alternative to existing jobs in government, business, or the informal sector.
Young entrepreneurs have the potential to make change happen, but they need support. Training and access to finance help, as does information on business opportunities. The best support for entrepreneurs, however, is the freedom to pursue their business ideas in a positive business climate without excessive barriers. These barriers can be substantial in the developing world: in sub-Saharan Africa, the average start-up costs amount to about 111 percent of annual per capita income [World Bank]. Entrepreneurs need predictable, efficient policies that reward productive risk-taking and uphold the rule of law.
Youth require support, and must also share in creating policies that will benefit and affect them. Of course, they cannot create policy alone, but effective reforms are far less likely without their input. Youth therefore need the skills to have a voice in policymaking and improve the business environment. Policies ought to be developed in an inclusive manner that captures their insights and needs. The payoff is in the development of future leaders—involving youth in policymaking fosters democratic citizenship while opening the way for a new generation of entrepreneurs.
As we celebrate International Youth Day on August 12, 2010, CIPE invites you to take a look at a few of the young people working with CIPE partners around the world. These young leaders are already making positive changes in their communities around the world. View the slideshow here.
Published Date: August 10, 2010