The tectonic shifts in the labor market are affecting young people in particular. The business community and policymakers need to help them – but fortunately millennials are taking charge of their own destiny.
IMF head Christine Lagarde talks about “young people today.”
T“The old,” as Oscar Wilde once remarked, “believe everything, the middle-aged suspect everything – and the young know everything.” That’s why I appreciate hearing young voices – from students to budding entrepreneurs to newly elected local policymakers. Their stories resonate with me because they are deeply felt, insightful and inspiring. Young people’s concerns vary by region and culture. But there are some questions that I hear nearly everywhere I go: Can I find meaningful work that allows me to help my community and support my family? Can I start my own business – and if so, how successful will it be?
There is much hope in these questions, but they also convey a sense of doubt and trepidation – and for good reason. Unfortunately, young people today are twice as likely to be unemployed as the general population. In France, for example, youth unemployment is nearly 20 percent, while overall unemployment is about 10 percent, with countries like Brazil and Egypt facing similar problems. Around the world, youth unemployment reached 71 million last year, according to estimates by the International Labour Organization (ILO).
To make matters more complicated, young people are confronted with technological innovations that could eliminate their jobs. This transformation leaves everyone – especially young workers – guessing which jobs will still be around a decade from now and how they can prepare themselves for them.
Ever New Skills Fortunately, young people have the tools in hand to prepare themselves for these tectonic shifts in the labor market.
In my conversations, I quickly pick up on the fact that this generation operates on a steep learning curve. Many students now embrace the idea of continuous training and take it as a given that they must add new skills throughout their lives.
I have seen firsthand the incredible resourcefulness of millennials as they try to take control of their future. Many are not willing to wait for a job in the civil service or in a large company. They strike out and start their own businesses. They devise new online platforms and discover markets that previously did not exist. What I see is a generation that, if faced with unemployment, innovates to create new opportunities.
But this approach alone is not enough. Governments have a responsibility to build an environment that allows
young people to fully realize their potential. This means breaking down regulatory barriers, supporting entrepreneurs who may not succeed on their first attempt, and investing in mentorship programs. How can this be done?
No Magic Formula There is no magic formula that works in all countries, but I see several practical solutions. One is structured vocational training, which has kept youth unemployment low in countries such as Switzerland, Germany and the Netherlands.
Another solution is giving young women better access to child care centers and flexible maternity benefits. These efforts can reinvigorate labor markets.
In certain countries, a 10-percentage-point decrease in gender inequality could boost growth by 2 percentage points over the next five years.
At the same time, our member nations need to remove barriers to competition and cut red tape. These reforms must of course be country-specific. In advanced economies, we estimate that if research and development were increased by 40 percent, nations could grow their GDP by 5 percent in the long term.
How Can the IMF Help? Wise policy decisions can encourage young people to work for themselves or start a company. Our mission at the IMF is to help address these challenges by encouraging greater public investment in education and job training programs – and we are pushing for such reforms in our lending programs.
We also need more public-private partnerships that can make training programs more effective. A good example is Singapore’s Skills Future program, which offers unconditional grants to all adults for training throughout their working lives.
But training is only one piece of the puzzle. There is so much more that governments and business can do to harness the power of innovation. Fintech, for example, is a fascinating field where more investment is needed.
A Career in the 21st Century If I were entering the job market today, I would focus on two things. First, a willingness to learn throughout your life. There is no “end” to education; there are simply milestones of progress.
Second, openness to changing course. We no longer have the luxury of being trained only in one field or profession. In my life, I started as a lawyer, became a finance minister, and now lead the IMF. The younger generation will face even more twists and turns on their professional journey. If they embrace those changes, they can bring new perspective gained from each position into the next.
To return to Oscar Wilde: He once said, “To define is to limit.” There is no precise definition of what a career or job will look like for the world’s young in the new economy. This opacity leads to understandable anxiety and uncertainty. At the same time, there’s no limit to the possibilities. This is the great opportunity for the next generation, and I trust that the entire global community will help them seize it.
“Discovering markets that previously did not exist.”
Christine Lagarde, 61, has led the International Monetary Fund (IMF) since 2011. A lawyer, she previously served as the French government’s economics and finance minister.
© Christine Lagarde, “The Voice of Youth,” Finance & Development, June 2017