Making labour markets work for youth
In developing economies, most work is in the informal sector where pay and productivity are low, growth prospects are limited, and workers enjoy few benefits or protections. IDRC-supported research provides policymakers with credible assessments and practical options for labour market policies and safety nets to tackle inequality while promoting growth. They demonstrate how, even where there is deep poverty and a limited tax base, well-targeted social protection and employment incentive programs can be cost effective in increasing jobs and incomes.
A national apprenticeship law in Brazil, for example, obliges medium and large firms to hire a percentage of young workers as trainees, with government subsidies for up to two years. In 2010, some 200,000 youth took part in the program. Analysis by the Institute for Applied Economic Research found that while the apprenticeships brought only modest improvements in income, they appeared to help youth transition to a more permanent job between their first and third years in the program. Research findings have helped shape its expansion. This was just one of the interventions captured in a meta-study undertaken by the Center for Distributive, Labor and Social Studies of Argentina’s Universidad Nacional de la Plata. It analyzed 65 different youth labour market policies and interventions in 18 Latin American countries. An interactive map that illustrates its findings lets policymakers learn from others’ attempts to enhance youth employment.
In Peru, the Ministry of Labour and Employment Promotion collaborated with Pontificia Universidad Catolica and the Consorcio de Investigación Económica y Social on a research agenda to inform youth employment policies. It focused in particular on school-to-work transitions and the needs of rural youth. In an event cohosted with the Ministry in August 2014, findings were shared with participants from Argentina, Brazil, Costa Rica, Honduras, Peru, and the International Labour Organization.
Governments in many countries provide a range of social grants to reduce poverty and income inequality. In South Africa, the University of Cape Town explored the impact of social grants on the youth labour market supply. Such grants have been criticized for creating “a culture of dependency,” but research showed that the transfers actually increased participation by young women and other vulnerable groups, by offsetting some of the costs of their job search. Findings on the poverty alleviation impacts of social grants were shared with South Africa’s National Planning Commission and have fed into its thinking on social protection policy.
In East Africa, where impressive growth rates have done little to create jobs among youth, the Institute for Policy Analysis–Rwanda is coordinating a team that is exploring the links between growth, employment, and poverty reduction in Kenya, Tanzania, Uganda, and Rwanda. By combining analysis of household survey data with input from youth groups, government officials, and other stakeholders, researchers aim to help relevant ministries and business leaders design responses to the region’s alarmingly high youth unemployment rates.