Is there a youth employment crisis today? A new report released from the Canadian Centre for Policy Alternatives (CCPA) shows that Ontario’s youth unemployment rate is among the worst in Canada, fluctuating between 16% and 17%. More alarming, the report goes on to say that the recent recession has “locked things in” and that the youth unemployment rate in Ontario is “turning out to be chronic, rather than a short-term result of a global economic crisis.” There is a silver lining in the CCPA report for this region. The Hamilton/ Burlington metropolitan area has the lowest unemployment rate for 15-24 year olds in Ontario, and one of the lowest unemployment rates for Ontarians 25 years old and over. The issue of youth unemployment is a complex one. Globally, there are over 1.2 billion people between the ages of 15 and 24. The International Labour Organization (ILO) estimates that 75 million in this group are unemployed.
However, that number doesn’t include young people who are classified as “NEETS” (not in employment, education or training). According to The Economist, almost 290 million young people are neither working nor studying: that’s almost a quarter of the world’s youth population. Despite all this negative news, I think young people today are going to be just fine. There are three powerful developments that point to a brighter future for the next generation: Education: Education has always been highly correlated to high paying jobs. The vast majority of young Canadians today hold at least a high school diploma, and an increasing number of them are pursuing postsecondary education. Globally, technology and new innovation are driving down the costs of basic education.
One example is the Khan Academy, a non-profit website with a stated mission to provide “a free world-class education for anyone anywhere.” Participation by women Up to this point, the world economy has effectively utilized only half of its talent. Women have historically been relegated to the economic sidelines, and this problem has only recently begun to be corrected. In Canada, employment rates for women between the ages of 25 and 34 have almost doubled since 1976. In addition, women are increasingly participating in high growth industries like health care and engineering. For example, 80% of the health care workforce in Hamilton is female. Technology: The World Bank estimates that three-quarters of the world’s population has access to a mobile phone, and there are many examples of innovative youths using this technology to produce significant socioeconomic benefits (i.e. combating corruption in South America, opposing violence against women in South Asia). The advance and quick adoption of new technology will continue to transform societies and markets in ways we cannot dream of today. Youth unemployment is certainly a challenge, but it’s far from a locked-in crisis. Franklin D. Roosevelt said, “We cannot always build the future for our youth, but we can build our youth for the future.” Although it’s difficult to imagine a world different than the one we see today, I have no doubt that the world’s youth, especially young Canadians, have both the tools and the imagination to build a brighter future.
Paul Carvalho MA CFA
President, Chief Economist and Wealth Advisor with Reeves Private Wealth. He has spent 15 years in finance with a global custodian bank, a major investment firm and a Canadian Chartered Bank.