Three trends in youth employment highlight vulnerabilities in South America

Data from national surveys shows that the situation for youth employment in South America is precarious, and partly in light of Middle East instability, governments need to implement public-private measures to improve labor conditions for youth.

Fernando Prada of FORO writes,

Data from national surveys confirms that South American labor markets have improved along with the economies in the region. Table 1 shows three trends in labor markets for youths.

First, unemployment has been declining between 2002-04 and 2007-09, but it is consistently higher in youths than the population as a whole…Second, the informal sector absorbs a great share of youth jobs. Only in Chile does the informal sector account for less than 40 percent of total youth employment…Third, young people’s salaries are a fraction of the labor market average. In the 2002-04 period, their salaries were between half (Chile and Uruguay) and 70 percent (Bolivia and Venezuela) of average national monthly income. Yet salaries for youths have grown faster than the national average. Nevertheless, there are signs that a turbulent international economic context is affecting labor markets in the first quarter of 2011.

Implications

Un- and under-employment were key factors in Middle East instability, highlighting the need to improve labor markets in South America. The youth employment challenge has traditionally been overlooked, but governments are applying three types of policies in response, and this is opening opportunities for public-private win-win solutions.

FORO writes,

“Analysts agree that a key factor fueling Middle East instability is the lack of opportunities for youths in labor markets.

Governments are applying three types of policies to address problems in youth labor markets: (i) improving education to increase labor force productivity;5 (ii) improving labor conditions for young people through mechanisms like laws against salary discrimination, subsidies to firms that hire youths, and public labor programs; and (iii) developing public-private programs to promote youth employability, entrepreneurship, and improve self-generated jobs. Public-private initiatives in particular have emerged as a noteworthy trend promoting youth participation in labor markets. Economic growth has created an opportunity to design market-friendly public policies that can contribute to mobilize additional resources from the private sector.”