Today there are almost as many people in there 20s without jobs as there are people in the United States. Over 300 million young adults are not in school and not in work. This fantastic article in The Economist highlights the severity of this problem.
People who start their professional lives unemployed are more likely to be unemployed, and earn less for the rest of their lives. Research indicates that these folks earn 20 percent less over the next 20 years of their careers, than their peers who enter adulthood employed. In addition to this idle youth are a significant threat to the stability of society. Violent crimes are in decline across most of the rich world. But Spain, Italy and Portugal have all seen a rise in violence in the years after the Great Recession. Pair youth unemployment with the inability to find a wife in places like India and China (the result of the slaughter of 100 million baby girls) and you have kindling with the potential to ignite a violent revolution and world wars.
There are three causes of this massive unemployment:
1) Economic Slowdown. The Great Recession has caused growth to sputter across the world. Less growth, less jobs.
2) Labor Market Restrictions. The Economist says that, "Youth unemployment is worst in countries with rigid labor markets. Cartelized industries, high taxes on hiring, strict rules about firing, high minimum wages: all these condemn young people to the street corner." And all of these favor older workers, already in the job force.
3) Technology. We are the midst of a massive separation between routine tasks and innovative work. Routine tasks are quickly being automated by algorithms or offloaded to outsourcing and crowdsourcing companies, like my company TaskUs. The net effect is tighter core organizations, with jobs available to only a talented few.
This is the greatest challenge facing our generation. How can we solve this problem? How can we get the world to work again?
Like most major challenges facing our world today, this is going to require collaboration between the private and public sector. Governments around the world must relax their labor restrictions. In the Philippines, where youth unemployment stands at about 18 percent, TaskUs employs over 500 people in their 20s. But the government doesn't make it easy. The DOLE's (Department of Labor and Employment) restrictive labor laws make us hesitant to bring on new hires. We have to factor in high payroll tax, a mandatory severance cost if we ever need to remove the employee and the fact that any employee who sues us for wrongful termination is virtually guaranteed to win. Eliminate these things and we would employ another 100 people today (most of who would be in their 20s).
But a private business like mine has a responsibility here as well. A McKinsey paper based on surveys of employers in nine countries finds that just 43 percent of employers believe that they can find enough skilled entry level workers. As entrepreneurs, we cannot wait on the government to fix this skills gap. We must take this into our own hands by setting up training programs that invest in our employees.
The Economist cites the fact that in "1979 young workers received an average of two and a half weeks of training a year ... By 2011 only 21 percent of workers reported getting any training in the past five." Companies like Homeboy Industries, Kalibrr and Thumbtack are rising to the occasion and building businesses that address this challenge. Homeboy Industries is a Los Angeles-based conglomerate of businesses that employs and trains 250 high-risk, formerly gang-involved, and recently incarcerated youth in its six social enterprises. Across the world, Thumbtack employs over 200 people working from their homes in the Philippines. The company provides extensive professional training via online education tools for new employees. Also in the Philippines, free online training program Kalibbr gives young Filipinos the opportunity to pass a series of skills assessments. Can't pass the assessment? No problem, Kalibrr will provide you with online and in-person training until you can. And, after passing an assessment, there are jobs waiting. Kalibrr has partnered with a number of major call centers (including mine) to provide us with job ready applicants who we are quick to hire.
But this is just the beginning. Ironically, technology, innovation and government will be the source of many more challenges to youth employment in the years to come. But they also have the potential to put millions of people back into the workforce, growing the international economy and securing a more stable future for our world.
It's up to us to make the world work again.
The Morning Email helps you start your workday with everything you need to know: breaking news, entertainment and a dash of fun. Learn more