A growing economy and a stable macroeconomic and political environment are fundamental conditions for job creation and employment for all age groups. Yet even when employment is growing, youth lag behind adults in the labor, asset, and credit markets. As a result, they have a higher job turnover rate than adults and take longer to find work. Youth are also more likely to be among the working poor than adults, and are at higher risk of unemployment, underemployment, or working in jobs with low earnings.
 
The early work situation of young people has welfare consequences for their future. Addressing youth employment issues is a major concern for governments, and is all the more challenging where stable economic policies are not in place and institutions are weak.

What Are the World Bank and IFC Doing in Youth Employment?

The World Bank and IFC provide support for youth employment programs through lending, investment, and analytical work. But evaluating their assistance to youth employment is a challenge because employment outcomes are the result of actions across many sectors. In addition, interventions that affect youth employment are often not “tagged” as youth interventions.
 
The World Bank lending portfolio for youth employment is relatively small, although components of programs appear in 57 countries. Most projects include interventions in skills development and school-to-work transition. Half of the projects include interventions to foster job creation and work opportunities for youth.

IFC has a broad approach to job creation. Between FY01and FY11 youth employment has not been specifically targeted, except in the Middle East and North Africa region and in a small number of other interventions. IFC invested $500 million to 50 investment operations and 18 advisory services to education.
 
Although youth employment is addressed in education, social protection, and labor strategies, it is not recognized as an issue in most country strategies— even where youth unemployment is serious. Youth employment is a multisectoral issue, but few youth employment projects are implemented by multisectoral teams.

The Bank most often supports skills building and school-to-work transition activities. Using the MILES framework, the portfolio review found that most Bank youth employment projects include interventions in skills development (82 percent) and school–to-work transition (79 percent). Fifty-four percent include interventions to foster job creation and work opportunities for youth. Source: IEG project portfolio. ILO 2012. Note: Appendix A describes identification of Bank support to youth employment.

What works in youth employment?

Evidence on what works in youth employment is scarce. International literature on youth employment programs suggest that a comprehensive approach - a multipronged strategy involving complementary interventions to remove key constraints to youth employment - would work best. Known factors that contribute to success of a comprehensive approach include participation of the private sector, monitoring and follow up of individual participants, and complementary interventions, such as training combined with job search and placement assistance, rather than isolated interventions. In high-unemployment environments, wage subsidies, skills training, and job search support are of little impact; and demand-side interventions are needed. Strong diagnostics are important to design interventions for youth in low-income areas. The Bank’s few impact evaluations on youth employment examine short-term effects, find limited positive results, and do not calculate the cost-effectiveness of interventions.

Recommendations

Apply an evidence-based approach to youth employment operations.

• Improve knowledge about youth employment by supporting government collection of labor market outcome data for youth in relevant surveys.

• Monitor the employment situation by age groups by providing statistics for inclusion in country strategies and Country Economic Memorandums.

• Ensure that World Bank and IFC youth employment interventions are informed by relevant analytical work or due diligence on their strategic relevance that also addresses likely costs of possible interventions.

• Monitor or evaluate age-specific employment and earning outcomes in Bank operations, IFC investments, and Bank analytic and advisory activities and IFC Advisory Services designed to address youth employment issues. This would include measures on gender and socioeconomic groups.

At the country level, take a strategic approach to youth employment by addressing the issue comprehensively, working across teams.

• Help countries address youth employment issues comprehensively, from the demand and supply side. This requires greater cross-sectoral collaboration within the World Bank Group and with other donors as appropriate. Help countries design interventions targeted to low-income youth. Examples for the private sector could include closing the gap between skills demanded by the private sector and those acquired through the educational system.