Youth unemployment is a preventable situation with multiple consequences. By addressing youth unemployment, TaYA will positively impact Ethiopia’s youth.
The root causes of youth unemployment and underemployment in Ethiopia are both demand and supply side factors as well as factors pertaining to the mismatch between the two.
A On the demand side: There are also pervasive challenges for youth entrepreneurship and self-employment. Most young people face difficulty in accessing affordable financing because of lack of collateral. Some have been out of work for a short period of time. This severely affects youth who lack opportunities for work experience through internships, apprenticeships, volunteerism, student jobs or summer jobs. In most cases job vacancies require 5 to 10 years’ experience in addition to a high academic level which excludes most if not all youth. Youth are often caught in the experience trap where they have no work experience to show in their job applications because they have been unable to get a job in the first place. Some employers also hold negative stereotypes against youth seeing them as irresponsible and unable to deliver on the job. Many employers consider hiring young people as costly since they may require more training and guidance than adult workers.
B On the supply side: youth population growth that outpaces employment growth is a major factor as a one percent increase in population usually results in a 0.5% per cent increase in youth unemployment. Urban youth, including those with high education levels, suffer from a high level of unemployment. The youth unemployment rate reached 25% in 2018, with a high gender gap: 31% of young urban female are unemployed vs. 19% for their male peers. The level of unemployment in urban areas does not decrease with increasing levels of education, as 36% of unemployed in urban areas hold a secondary education, and 20% of them have a higher education level. Also, the unemployment for youth in urban areas is structural, as almost 1/3 of them have been unemployed for more than eight years, according to the CSA survey.
The challenge of job creation and youth employment is aggravated by a low level of educational attainment, despite the huge improvement in the last decade. Ethiopia still suffers from a huge drop-out between primary and secondary education, as secondary school enrolment represents only 12% of the primary school enrolment. The number of children enrolled in primary education represents almost 21 million, but there are only around 140,000 youth graduates from higher-education and 130,000 graduates from TVET programmes.
However, the levels of enrolment in higher education and graduation from the university have been steadily increasing over the last years and are expected to continue growing. The number of students enrolled in undergraduate and postgraduate courses reached 901,798 in 2018, up from 585,152 in 2013, with an increasing share of enrolment in postgraduate courses (8.5% in 2018 vs. 5.3% in 2013). The same trend exists in graduation, as the number of university graduates has almost doubled between 2013 and 2018 (160,000 in 2018 vs. 85,000 in 2013). These increasing levels will lead to higher expectations from the labour market, including the type of jobs and the level of wages and compensation.
- Mismatch between demand and supply: The urban labour market suffers as well from a strong skill mismatch, including in technical and soft skills, as employers find it difficult to hire candidates with the technical and soft skills required. According to a recent survey, 43% of employers reported that recruiting employees with the required soft skills is very difficult and 46% reported the same for the technical skills. This reflects a significant skill shortage in the labour market.
Lack of information of the skills needed in the labour market, absence of links between training institutes and the labour market, lack of transparency of hiring mechanisms, limited placement mechanisms and weak institutional mechanisms to match job seekers with employers exacerbate the problem by fueling the mismatch between the demand and supply side of the labour market. At the heart of the mismatch is the absence of robust labour market information systems that provide necessary information on important labour market indicators.
- Gender barriers – Employment challenges of young women -The unemployment situation is more severe for female youth where the gender gap in youth unemployment is a striking 13.8 percentage points. Even though there might be regions where unemployment is lower for young women than for young men, this often only means that women do not even try to find a job but leave the labour market, altogether discouraged. When they find employment young women also are more likely to work in the informal economy in unprotected low-skill jobs which imply greater job insecurity, as well as lack of access to training, social protection and other resources, making them comparatively more vulnerable to poverty and marginalization. Social norms that hinder girls’ education along with early pregnancies lead to low access to education and early dropouts. In addition, discrimination because of the perception that when women have children they will be less productive and lack of training for women in nontraditional occupations lead to preference for male recruits in many formal economy jobs.
Consequences of the problem – Why we should give attention to youth employment
Studies have shown that difficult working conditions or unemployment at an early age increase the likelihood of subsequent unemployment. If you are unemployed in your first year of your career, it tends to affect our entire life. Early unemployment diminishes future employability and earning because the attitudes and behaviors established at a young age tend to persist. Economically, high youth unemployment and underemployment result in smaller tax revenue. It also means that the youth, who constitute the largest population cohort in our country, have less to spend on products and services with little or no saving for investment. Moreover, youth unemployment and underemployment is a waste of potential human resources and talent. It also means that investment in education and training is wasted, especially since more than ever educated youth struggle to find decent work. The potential consequences of the tension between an increasing output of educated and trained young people and the limited absorptive capacities of labor markets has been illustrated by the wave of discontent that swept North Africa during the Arab Spring. The revolutions have shown the extent of economic and political upheaval that neglect of youth unemployment can cause in a country if no proper corrective policy and programme level measures are taken.
The urgency of prioritizing youth employment is not only a question of meeting young people’s aspirations for a better life, but also a necessity for enhancing the well-being of societies at large through turning youth bulges into developmental assets.