Employment strategies for Urban Youth

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Employment strategies for Urban Youth

• Richard Curtain

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Outline of paper

• Why Invest in Young People
• PRSPs and Young People
• Programs for youth
• Role of labour market intermediaries
• Youth entrepreneurships opportunities and
  limits

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Biographical note

• Completed PhD at The Australian National
  University in 1980 with a thesis on rural urban
  migration and urban unemployment in Papua New
  Guinea.
• Visited Kenya for three weeks in 1979.
• As a consultant since 1993 specialising in public
  policy
• reports on young people at risk in the labour
  market
• In 1998, he was part of a five member team that
  evaluated emergency job creation schemes in
  Indonesia.
• Since 2000, completed several reports for the UN
  on youth employment.

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Public policy approach

• a realistic discussion of opportunities must
  address not just the question of what should be
  done but also who should do it and why it is not
  already being done.

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2. Why invest in young people?

• Seven reasons or arguments offered
• Giving young people their fair share of resources
• MDGs
• Young people as vulnerable
• Economic benefits of investing in young people
• Long term benefits available
• Young people as a liability

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Young people and the Millennium Development Goals

• Five MDGs cover activities in which mostly young
  people are engaged.
• education attainment,
• gender balance in education,
• improved maternal health,
• combating HIV/AIDS and other diseases such as
  malaria and tuberculosis and
• decent employment opportunities for young people.

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MDG 8

• Youth employment is seen as a by-product of Goal
  8 of developing a Global Partnership for
  Development to develop and implement strategies
  for decent and productive work for youth
• Just who is responsible for achieving this target
  is not clear.

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Other arguments

• Economic benefits of investing in young people
• Young people as vulnerable
• Long term benefits available
• Demographic bonus or dividend.

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Young people as a liability

• A greater chance of civil conflict for a poor
  country has also been linked to its young
  peoples lack of education and access to jobs.
• Countries whose young people have low levels of
  participation in education are more likely, other
  things being equal, to be engaged in civil
  strife.

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PRSPs and youth employment

• Cambodias PRSP (December 2002)
• Republic of Djibouti (May 2004)
• Cameroons PRSP (August 2003)
• Zambias PRSP (March 2002, p 64)
• The PRSP of the Islamic Republic of Mauritania
  (March 2002)
• Republic of Senegals PRSP (May 2002)

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4. Programs for urban youth

• Neglect of young people in the past
• World Bank projects for urban youth
• Projects highlighted by the Economic Commission
  for Africa

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Information on cost effective initiatives is
scarce

• In developing countries, there is very little
  evaluation of the effectiveness of existing youth
  programs. Where reliable estimates of
  effectiveness exist, the measurement is often
  over too short a period of time to be useful. In
  other cases, there is reliable information only
  on one or two effects of an investment ...
  Information on other effects, including many of
  those needed to obtain estimates of social
  benefits, is often lacking. This is clearly a
  major gap in the information base on investments
  in youth.
• Knowles James C and Behrman, Jere R 2003, p23.

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Programs for young people that have a broader
impact

• formal schooling where it is to improve the
  quality of schooling in general or through
  targeted scholarship programs aimed at
  individuals
• adult basic education and literacy targeted to
  adolescents,
• selected investments in school-based health
  services such as micronutrient supplements, and
• investments designed to reduce the use of tobacco
  products.

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5. A range of policy options

• A youth friendly labour market
• providing ample opportunities for young people to
  be trained within enterprises under wage
  arrangements and employment contracts that
  encourage their recruitment and training
• providing ample opportunities for young people to
  gain experience of paid work while they are
  students and
• limiting the restrictions that are attached to
  hiring them.

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Some key considerations related to a youth
employment strategy

• Promote youth entrepreneurship as a viable option
• Link efforts to promote youth employment to
  information and communication technologies
• Work through private/public partnerships where
  possible
• Target the poor
• Put young people in charge.

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ICT as a job creator

• The potential of information and communication
  technologies
• Challenges facing the use of ICT for young
  entrepreneurs

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6. Use of labour market intermediaries or brokers

• Table 1 Proportion of employment gained through
  employment services agencies, EU 1999, USA, 2000
  and Australia 1999

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Group training companies

• Primary employer of apprentices and trainees, and
  then arrange placements or rotations with host
  employers.
• Host employers pay an all-up fee to the group
  training company for the hire of the apprentice
  or trainee
• Their other role is to organise complementary
  off-the-job, classroom-based training with
  registered training providers

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Employment and training outcomes

• Apprenticeship completion rates are high relative
  to other forms of education and training.
• Over 90 percent of group training apprentices and
  trainees who successfully completed their
  training achieved a successful employment
  outcome.
• This outcome consisted of either retention as an
  ongoing employee by their host employer or
  alternatively, finding work with a new employer
  in an unsubsidised job within three months after
  completing their apprenticeship or traineeship.
  .

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Employer satisfaction

• Table 2 Host employer levels of satisfaction
  with group training companies, Australia, 2001

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Group training key lessons

• Like apprenticeship systems in general, group
  training companies are not necessarily easy to
  transplant to other countries.
• A range of supporting institutions and funding
  from governments needed
• The idea is a valuable one, even if the
  implementation is more complex than the simple
  application of a template would suggest.

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7. Entrepreneurship and urban employment
generation

• Global Entrepreneurship Monitor (GEM) research
  2002 and 2003
• 40 countries surveyed
• Representative national surveys

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Gap between potential and actual prevalence of
entrepreneurship

• In South Africa, for example, just a quarter of
  the population (26 per cent) they had the
  knowledge, skill and experience required to
  start a new business.
• Adults who believed they had the requisite skills
  were eight times more likely to become involved
  in starting a business
• Among the young Black population in South Africa
  with upper secondary schooling completed, a
  quarter of those aged under 23 years believe they
  have the requisite enterprise start-up skills.

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South African results

• The more formally educated the population, the
  more likely they are to see themselves as having
  the requisite skills to engage in entrepreneurial
  activity.
• Only 7 per cent of the population surveyed could
  be classified as entrepreneurs compared with just
  over a quarter of the population who said they
  had the knowledge, skill and experience required
  to start a new business.

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Two types of entrepreneurship

• Entrepreneurial activity in South Africa and
  Uganda
• Informal sector entrepreneurs in South Africa

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Conclusion from South Africa survey of informal
sector

• To address the objective of maximising job
  creation, more resources should be targeted at
  formal entrepreneurs rather than informal
  entrepreneurs in the townships.
• The informal sector remains enormously important
  in generating self-employment income for a large
  number of low-income households but is not
  generally important in the creation of employment
  for others.

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Important Distinction

• A distinction needs to be made between
  self-employment or entrepreneurship by necessity
  and opportunity oriented entrepreneurship.
• The former activity, in common with most
  activities in the informal sector, is more likely
  to be focused on an individual and on his or her
  efforts to generate enough income to survive.
• This type of activity has only limited prospects
  of growing sufficiently in turnover to employ
  others.

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Important distinction

• Fostering entrepreneurship in the sense of
  starting a new business with the potential to
  grow compared with self employment requires a
  different starting points and set of supportive
  services.
• Running a business is much more complex an
  undertaking than being self employed.
• It involves not only making a product or
  providing a service.
• It also requires marketing to customers, dealing
  with suppliers, complying with regulations and
  supervising and paying employees.

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Conditions needed to foster entrepreneurship

• Self employed
• Self financing
• Demonstrated capacity to save
• Loan to match savings
• Loans matter only when skills and savings are
  present

• Business start up
• Access to low cost loan for asset capital
  purchase only
• 3 to 5 year repayment schedule, negotiable with
  debt manager
• 18 month milestone for major repayment and
  release of next tranche of loan

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Pathway in two steps

• Need to view self employment as a stepping stone
  to the other two streams.
• Specific incentives could be devised to encourage
  young people to move from self employment to
  economic or social entrepreneurship.
• For example, a young person who has achieved
  certain savings benchmarks could be offered a
  loan related to an entrepreneurial activity on
  more favourable terms than other borrowers.

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Different profile Training needs

• Need to devise a risk profile to identifies
  what characteristics of young people are more
  likely to be associated with running a business.
  
• A risk profile based on threshold education
  level (eg secondary school completed) and work
  experience, for example, could be developed.
• Training needs of self employed are different to
  the training needs of business start ups

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Micro credit

• Training should be available in terms of content
  and timing on a as needed basis as determined
  by the self employed person or new business.
• The management of loans and delivery of training
  need to done separately. Programs that mix loans
  and training are likely to find that good
  instructors are not always good lenders and vice
  versa. Borrowers are also likely to get mixed
  messages if the training is free but the loan has
  to be repaid with interest

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8. Barriers to success

• Who among young people to target?
• Targeting young people who are poor is one
  option.

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Changes needed at 3 levels

• Micro grassroots eg training for self employed
• Middle level institutions and processes eg type
  of training provided and who provides it
• Macro operating framework

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Need for supporting infrastructure

• Lack of access to credit is one likely barrier to
  self employment.
• Other major problems identified are lack of own
  transport, competition, theft, unavailability of
  electricity and lack of business skills.
• Lack of a means of communicating with suppliers
  or customers as well as transport may be
  important barriers to operating a business.
• Lack of knowledge about basic business practices
  may also be a major barrier to success.

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Need to change education

• Education systems at secondary and tertiary
  levels are too narrowly focussed on academic
  knowledge and skills
• Need to promote, within education, opportunities
  to develop entrepreneurial skills
• Practice firms at secondary and tertiary levels
  are one option students develop an enterprise
• Business plan competitions are another way to
  promote an entrepreneurial culture

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Conclusion

• Importance of shift from a focus on supply side
  to demand side
• role of intermediaries as risk deflectors
• Distinction between self employment and business
  start up
• Different needs in terms of training and support
  services