Reviving Youth Unemployment

“The number of young people out of work globally is nearly as big as the population of the United States”. This headline certainly will make you wonder whether the youth unemployment is really that bad, the answer is YES. This report was published in The Economist back in April 2013, “Generation Jobless”.

It takes at least 20 years for any country to produce a generation that can take up jobs and employment. Some employees had an early start because they dropped from the main stream education and started working or build their own business. In a developed world, employees with lack of education like this are twice likely to be in unemployment compare to employee with university qualification. Interestingly, in a less developed world for example in Africa, it is the opposite. Whereby those with university graduates are twice likely to be in unemployment than the other.

This proves the point that employment is very closely related to local practice and acceptance of the local employers. A graduate can have all the qualifications in the world but if there’s little value emphasized by the local employers, he stands to be unemployed. This is also true for a more globally accepted education because if locally the graduate wont stand a chance to fully utilize his qualification, he should be allowed to improve his employment mobility to other more developed countries. That explains the brain drain phenomenon in the long run.

Employment requires strong economy and better educated population.
Employment requires strong economy and better educated population.

Two factors for this huge unemployment problem or famously termed as “arc of unemployment”; firstly slowdown in the economy hence reducing demand for labour where it is easier to fire young people than the old one. Secondly the emerging economies population growth is fastest in countries with dysfunctional labour markets such as India and Egypt. Apparently in India there are 200 laws on work and pay which make it difficult to hire and fire the right workforce. In South Africa, they posses one of the most powerful trade unions which make firing unproductive workers or right-sizing difficult. I was in Germany last year, they have tough laws as well but because their education system and employers acceptance are high, they face little labour problems. I will touch more on Germany workforce shortly.

The answer lies in economic growth, but not just an ordinary but only  double digit growth could stimulate huge demand for labours. However, only China manage to achieve double digit growth consistently the last few years (China has to deal with big piles of employees suicide cases!) With most economies plagued by debt, it is a far reaching goals to ignite growth of such size. Interestingly, on the employer side they complain of labour shortage! The employers felt the young workforce lack the right skills to perform modern jobs and highly specialized technology-related job. Of course this award-winning blamed goes to the universities and education system that failed to provide sufficient reform in making the young relevant to the job market.

My visit to Germany last year attempted to learn how they improved their labour unemployment by working very closely with the employer markets. Recently South Korea adopted similar strategy through their chaebols by introducing “meister” program. This is widely practiced in Germany where the three stakeholders work together in making the “economy work for them”. This is an important thinking and a breakthrough solution in Germany because the government (policy maker), industry (market maker) and university (talent developer). The participation of these three parties including the syllabus, labs set up, access to equipment, labour policy, re-skilling, up-skilling, wages and many more. This helps every party on the same page and “slowly” ignite the labour market and making them relevant. You also probably know that a German labour is highly mobile across Europe with high pay because of their skills. They are even more marketable when they can speak English very well. 🙂

As Germany is technologically advanced country, the university syllabus is somewhat close to what the industry practices. The labour market also allow the industry managers or practitioners teach at least 2 hours a day on weekdays (which is not allowed in Malaysia and subject to further inquiry). Another problem, the university may not fully recognized your industry experience if you decided to lecture or teach, because they only recognize your academic work. The latest requirement is to require all lecturers in the university to possess PhD for teaching position. Nonetheless, in Malaysia there is already some change with Industrial PhD introduced especially for the industry practitioners, but there’s no clear path where this PhD is taking them to.

"Young people ought not to be idle. It is very bad for them." - Margaret Thatcher
“Young people ought not to be idle. It is very bad for them.” – Margaret Thatcher

Another interesting development in global education, which is fairly interesting and should be taken into serious consideration is the development of corporate college. Corporate college is an initiative whereby the company set up its own training college/academy partnering with the university around them to help build and retain talents for their own business. This is not an ordinary training centres, where in Malaysia the training centres act as another outsource company and somewhat unstructured; corporate college is designed to use internal resources such as the top management and middle managers to teach the young employees. Corporate college also invest in learning how to properly run a holistic education initiative from the university with access to advanced researches and professors that will benefit the company’s own productivity and performance. The university also help the managers to learn how to teach effectively (most practitioners and managers only share their own experience when they teach. It has to be substantiated and verified for teaching purpose, in my opinion). Corporate college now is adopted in South Korea, China, Taiwan, USA, France and many more countries. While some initiatives can be seen in Malaysia (Mydin, Nestle, CIMB, Maybank to name a few), closer relationship between the corporates and university still needed to make this works.

Closing the unemployment gap requires change of attitude from government, business and university alike. Yes, there may be question and fear over that employees will be poached hence discourage the employers to invest in youth employment training, but the consequences for not doing anything about it is equally if not more fatal in the long run. Incremental change on the training program may work temporarily, because organization cannot rely on the current and old workforce for long time. Approximately the young generation (X and Y) already dominating as much as 50% of the workforce and they are here to stay and play.

Finally, technology adoption is also needed to democratize and free up the knowledge within the organization and university. With all variables are converging right now, the world stands a real chance of introducing an “education-and-training revolution worthy of the scale of the problem”.

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