Barbara Rambousek, EBRD Associate Director, Lead Inclusion Economist
Crystal Gateway Marriott, Arlington, VA
11th Global Youth Economic Opportunities Summit, Washington D.C.
Good afternoon, ladies and gentlemen.
It is my great pleasure to be here today to discuss with you all one of the defining challenges of our time – how to create economic opportunities for young people in a changing world.
I want to first highlight some of the key opportunities and challenges, but then – importantly – focus on the ‘what we can do’ to unlock access to employment, skills and entrepreneurship for young people and women.
For this I will drawn on our experience at the European Bank for Reconstruction and Development in Central and Eastern Europe, Central Asia, the Caucasus and the North Africa Region.
In particular, I will emphasise how we can better harness the power of the private sector, which creates 9 out of 10 jobs in developing countries, to play a pro-active role in providing access to skills, employment and entrepreneurship opportunities for young people.
Globalisation, technological process and demographic changes are altering the types and value of jobs available and offer unparalleled opportunities.
New technologies and new markets will generate many opportunities for new and more productive and rewarding jobs.
Workers are likely to have more flexibility about their work arrangements.
This will offer greater opportunities for young people – and in particularly young women - entering the labour market, those in remote regions or those with disabilities.
But there are also challenges:
These changes do not come without substantial adjustment costs:
- Labour markets are increasingly polarised. Demand for high-skilled and low-skilled workers exceeds that for semi-skilled ones, hollowing out the middle.
- For example, in Egypt, Morocco, and Turkey over 50 percent of work activities are susceptible to automation whereas demand for skills is growing particularly in high value-adding formal sectors.
- In the Western Balkans, labour markets have struggled to adjust to the structural changes in the local economies from industry-based to service-oriented economies.
- Increased migration and refugee flows place further strains on regional labour markets.
So what we see today is that global youth unemployment is on the rise.
Over 40 per cent of the world’s active youth population is either unemployed or living in poverty despite being employed.
Such mass unemployment faced by young people – and in particular young women - is an immense waste of talent.
It is also a source of social unrest, individual despair and reduced lifetime earnings.
Large informal sectors absorbing the overflow of young labour market entrants further contribute to problems of employment instability and wage insecurity.
By some estimates, we will need to create 600 million productive jobs for young people over the next decade to absorb those currently unemployed and provide job opportunities for the 40 million youth entering the labour market each year.
Inequality is rising in many parts of the world, and factors such as place of birth, parents level of education and gender account for between 20 and 50 percent of income inequality across the EBRD region today.
Youth and gender inclusion has therefore become one of the critical social, economic and political issues of our day.
At the same time, companies often struggle to recruit and retain people with the right technical and soft skills as well as motivation, to diversify their workforce, innovate and grown their businesses.
According to our Business Environment and Enterprise Performance Survey close to 20% of firms surveyed in South-Eastern Europe and the SEMED region identify an inadequately skilled workforce as a major constraint on their current business operations.
So what can we do about this?
How can we harness the role of the private sector in addressing these challenges?
What partnerships are essential to effect change?
At the EBRD we work with and invest directly in the private sector to enhance economic inclusion of young people, particularly young women.
Drawing on this experience, I would like to set out 3 different ways, where I feel that the engagement of the private sector is critical – and needs upscaling – to enhance youth inclusion:
Firstly, the private sector has an important stake in enhancing education and training provision to equip young people with the skills they need in the labour market today.
Simply relying on state education systems to turn out graduates at vocational or university levels who can seamlessly slot into jobs is no longer an option for employers – especially those who want to innovate, break into new markets and grow.
This requires a broader re-thinking and re-designing of more effective work based learning models – such as internships, apprenticeships or traineeships.
It requires the closer cooperation of the private sector in providing realistic and relevant career advice to young people AND their families to inform their educational choices.
It requires improving long term career prospects for young people entering a sector, particularly ones such as manufacturing or others that often lack appeal for young people. An example here is the introduction of clear progression routes from blue to white collar jobs.
And it also requires the full integration of gender considerations across all activities – to ensure that young women are encourage and able to take advantage of the opportunities that exist.
What do we need to do to make this happen?
We need to work closely with business to show that
- by addressing some of their key operational challenges – such as lack of qualified talent – they can also achieve positive inclusion outcomes for all.
- And that they can do this at a price that they can afford and sustain.
We need to provide access to international best practice examples and technical advice to help companies and local schools or colleges to establish effective partnerships.
And we need to encourage the use of public procurement to enhance access to work based learning opportunities for young people and open up supply chains for SMEs led by young women.
Secondly, national education systems need to be upgraded through direct input from the private sector.
- To define national level skills standards and curricula that reflect the needs of employers today;
- To introduce more effective dual learning models and policies at national level that incentivise schools and colleges to forge direct partnerships with local employers;
- To institute and promote standards and accreditation mechanisms for equal opportunities employers. These help companies demonstrate their credentials and track record as fair and high quality employers and attract – and retain - qualified and motivated staff.
How can we facilitate this process?
We can help set up functioning platforms for this policy exchange. This could include Sector Skills Councils or more informal structures such as policy partnerships that focus on one or two specific challenges.
We can also bring in specific sectoral and policy expertise on inclusive practices – for example actors such as the UN World Tourism Organisation who has a wealth of experience in designing and implementing inclusive and sustainable tourism policies and practices.
We can bring together international and national expertise to establish equal opportunities standards and promote these through public procurement mechanisms as well as the engagement with sectoral bodies.
A good example is the equal opportunities standard developed by the Turkish Women’s Business Association Kagider.
And thirdly, we need to take advantage of and scale up the huge opportunities that innovations in finance and investments can bring.
- Impact financing
- access to finance for non-traditional groups that lack credit history or access to collateral – such as young people, women, refugees, and others.
- through innovative risk assessments – for example those that based on psychometric analysis rather than standard collateral requirements
- or the introduction and support of non-cash based payments to enhance financial inclusion are just some examples.
What we can do to promote this is to come together and share ideas, undertake robust impact evaluations, see what works and why, peer review new ideas and form partnerships to disburse this knowledge and best practice.
These are some examples of what can be done, but the list is by no means exhaustive.
At the EBRD, our mandate is to invest in the private sector to help countries transition towards becoming sustainable market economies.
By that we mean economies that are not only competitive, integrated, resilient, well governed and green – but importantly, those that create economic opportunities for all.
Specifically young people – young women, refugees, or those who live in remote, underdeveloped regions.
Our strong commitment to this approach is underlined by the Bank’s new – and first – Economic Inclusion Strategy that we launched in May this year.
By working in partnership with the private sector, we feel that we can effectively engage our clients in addressing some of the key challenges of today – and create routes into viable economic opportunities for young people across our countries of operation.