National worry: Youth unemployment has become a closely watched indicator in many Asian countries including China. — Reuters
BATTLING deteriorating economic conditions, political turmoil and waves of popular unrest, a country is brought to its knees and the leader ousted.
This story seems fresh and recent after anti-government protests overthrew Bangladesh Prime Minister Sheikh Hasina last month.
But back in 2011, the description aptly captures the unfolding of the Arab Spring, as six countries – Tunisia, Egypt, Libya, Syria, Yemen and Bahrain – underwent upheaval.
Deep sectarian divisions and distrust of government made these societies an explosive powder keg. But the economic roots of the unrest were undeniable, as youth unemployment fuelled disenfranchisement and despair.
Many of the uprisings were led by young people frustrated by the lack of economic opportunities and fed up with what they saw as a system of patronage and vested interests.
The average unemployment rate in these six nations was 27% before the unrest, more than double the global average. Worse, joblessness was higher among the more educated.
The young and restless
As Bangladesh emerges from its student-led summer revolution, with 650 estimated dead and hospitals overwhelmed, and Hasina gone, any relief is temporary.
Revolt is easy, but now the hard work of governing and rebuilding must begin in earnest.
The spark that lit a fuse may have been job quotas for civil servant hires and pork barrel politics reserving jobs for allies.
But the roots of this violent expulsion run deeper. Bangladesh must move swiftly to put 18 million of its youth to work and sketch out a pathway towards inclusive growth.
Youth unemployment is coming into sharper focus as a challenge for most countries as the global economy undergoes tectonic shifts wrought by derisking, the re-emergence of industrial policy and the reshaping of global supply chains.
Most countries are still grappling with these effects, with few decisive responses.
Big macro statistics like the tempering global unemployment rate and rising median income mask the volatility of this turbulent policy environment, where constant restructuring and cost-cutting mean youth with the least work experience are last in but first out.
The highest stakes are in Asia, where a youth bulge once touted as a demographic dividend is at risk of becoming a demographic disaster.
Youth unemployment has become a closely watched indicator in a China racing against the clock to get rich before it gets old. It has ticked up to 17.1%, reflecting a growing challenge as 12 million graduates complete university each year.
As more are forced to accept low-paying work, even jobs in rural areas are attracting top diploma holders.
The authorities may have revised their calculation to more accurately reflect employment among those looking for a job. But few can forget how the youth-led protests in end-2022 felt like a harbinger of more difficult days ahead for China.
This is a story playing out across the region, with political consequences. Across the Indian Ocean, where more than half of India’s population is under 30, the ruling Bharatiya Janata Party lost its decade-old parliamentary majority following widening unemployment among the young.
The trend could reverberate in South Korea, where youth unemployment stands at 7%, which is a deceptively low figure, considering seven in 10 have a bachelor’s degree.
Imagine sacrificing so much to beat the competition to get into a prestigious university in a society that prizes higher education only to find yourself unemployable and laden with a university education debt. More have given up on finding employment entirely, citing “the unavailability of jobs offering desirable wages and working conditions”, according to Statistics Korea.
The Asian epicentre
The driving forces behind this crisis are multifaceted, but the primary reason why Asia is feeling these effects is most of the new global economic growth – in fast-evolving sustainability, digital technology and advanced manufacturing sectors – and restructuring are happening here.
Here, restructuring is simply a more neutral term obscuring the painful but perhaps necessary creative destruction under way.
In financial services, even entry-level relationship managers and retail bankers must transform to become wealth advisers managing portfolios, risk and algorithmic trading.
In an increasingly digital marketplace, to capture e-commerce opportunities and survive, businesses must build the necessary marketing, logistics and payments infrastructure.
Even with jobs, the propensity for underemployment is high, given the secular decline in productivity around the world.
This puts a downward pressure on wages and renders many unable to keep up with rising costs of living, without suitable government intervention.
Economic despair can fray the social fabric. Fault lines provide convenient scapegoats for economic woes, as young and not-so-young British thugs who overturned UK cities and burned community libraries demonstrated, following a fatal stabbing of three girls.
They may be linked to supporters of far-right groups and to Islamophobia, but the European Consortium for Political Research had identified deprivation and the lack of economic prospects as the root causes of their frustration.
The fraying social contract
States must fashion a new role for themselves to arrest the deleterious effects of this era of economic hardship that will have profound impact on the lifetime earnings of Gen Z, their economic security, their opportunities for social mobility and their sense of hope for the future.
In a world that feels increasingly extractive and exploitative, countries must forge an agenda for broad-based prosperity with a focus on economic participation and marshal up public support for this repurposing of the state.
This is a context few political leaders understand. As boomers, Gen X and millennials, they lived through a long period of prosperity ushered in by the unipolar moment.
All this is not to negate the first order of self-reliance and agency – an attitude we should encourage in every young person in every country as the world becomes more troubled and the future of work uncertain, given automation, artificial intelligence and shifting trade and investment flows.
But public policymaking must fully grasp the reality that the global economic order has been upended. Attracting foreign investments and boosting domestic business activity to generate employment are just not as easy as before.
The institutions of free and fair trade have been supplanted as nation states wrestled back control, with muscular industrial policy and onshoring their fundamental tenets.
The situation is worsened by the fact that the really good jobs for the middle class are really hard to create.
Economists have highlighted the dangers of the polarisation of the labour market, as middle class jobs requiring a moderate level of skills are disappearing relative to those at the bottom and the top.
Some 85 % of the jobs today’s students will do in 2030 don’t exist yet, the Institute for the Future had predicted back in 2018. That might sound exciting and amazing, but is a harrowing prospect as the onus falls on countries to shape a conducive environment for businesses to create these jobs.
The tendency may be for the public sector to be an employer of last resort to buffer against economic malaise. In China, it’s the first port of call as more than half of all new graduates prefer jobs in government agencies, public institutions or state-owned enterprises in 2024.
But the public sector can absorb only so many workers.
That’s why bigger reforms are sorely needed to restore confidence, match people to purposeful jobs and create social safety nets so they can easily bounce back from retrenchment.
Here, much has been said about addressing the supply of labour – on boosting skills, education and training.
Yet in most countries where there is already a tight labour market, the urgency lies in remedying demand: to incentivise the creation of jobs by businesses, and more broadly to catalyse private sector investment and revitalise economies.
During China’s economic boom, the famous Chinese sociologist Lian Si coined a term in 2009 to describe highly educated young people stuck in low-paying temp jobs – “ant tribe”.
“When these college graduates – once regarded as the pride of the family – later find out that the four years they spent toiling away in the ivory tower don’t automatically mean a bright future or even a decent life, when their dreams of big-city success finally shatter against reality, they lose trust in the government and start to feel dissatisfaction with society,” he said in an interview with The Wall Street Journal in 2010.
“In the end, this leads the young to band together and fight against this society that let them down, triggering social instability.” — The Straits Times/Asia News Network
