JOBS Act

Davos needs to do more, talk less, on unemployment

January 23, 2014
January 23, 2014

DAVOS, Switzerland—It is true that it can be difficult to see the forest for the trees.

Over the past few years, participants at the World Economic Forum (WEF) here in Davos, Switzerland have been staring at some pretty big trees—a global economic slowdown, alarming unemployment, and a corresponding lack of confidence in economic policies and governments.

Under such conditions, it’s been hard to blame anyone for not seeing the forest.

But this year it feels as though leaders—most notably several business leaders—are gaining some altitude on worldwide conditions and seeing the landscape of what lies ahead. And on the issue of unemployment at least, the forest is nothing but row on row of trees.

The economic and social conditions which drive and calcify unemployment (discussed here as “structural unemployment”) are more and more impacting the youngest, newest entrants into the global labor community. That’s a real problem because there are more and more young people than ever before who will be looking for jobs at a time when youth unemployment is already at dangerous levels.

In some European nations, youth unemployment tops 60%. In the US, young people are more than three times more likely to be looking for work than the population at large.

Add to that mix population trends such as that half of India’s 1.2 billion are under age 25. And over the next 25 years, Africa and China will have about a billion more young people.

That’s a big, gigantic forest of young people. And no one—anywhere— has a clear idea of where the jobs will be.

Massive numbers of unemployed and idle young people isn’t just bad for economics. The ripple effects are profound. Consider this headline of a 2011 report from the International Monetary Fund: “High youth unemployment contributes to widespread unrest in the Middle East.”

In considering the potential answers to the daunting question, there are few answers and even fewer which can be deployed in time.

Schools must be re-designed so that what they are teaching matches more closely with the needed job skills of tomorrow. STEM education (science, technology, engineering, and math) will continue to grow in importance but won’t be for everyone. A focus on creative thinking and team-oriented solutions will be at least as crucial since tomorrow’s jobs will be less about following a pre-written checklist of duties and more about innovative thinking.

To complicate matters, these changes need to happen not just in business schools or technical colleges—but earlier, in grade schools. And they must be done everywhere.

It’s unrealistic to think those changes will happen swiftly. Or a major revival in labor intensive manufacturing is on the horizon.

So teaching young people to think like entrepreneurs and create their own jobs is one of the only serious, scalable solutions on the table. Klaus Schwab, the founder and executive chairman of the World Economic Forum, led an opening-day panel on the power of entrepreneurship in changing the world—in particular using it as weapon in the unemployment war.

The best part is that entrepreneurship education is ready and it works.

An experienced-based education template is already at work in several countries from Mexico to China and it’s been created and expanded more quickly and cheaply than any government-based reforms. Moreover, research has shown that young people who are exposed to entrepreneurship, stay in school longer, do better, are more often employed and make more money than their peers.

But even large-scale, global entrepreneurship education won’t work by itself. The power of government action is needed too—especially in solidifying markets, fortifying infrastructure and reforming schools. Investments which compete for resources and take time.

Clearly, businesses will have to do their part as well.

The International Business Council (IBC) here at Davos, chaired by Coca-Cola CEO Muhtar Kent, has adopted global youth unemployment as a major concern and IBC leaders spent four hours on the topic Tuesday.

They are seeing the forest. The talking is good. Even great. Because the problem is real.

But more than talk is required. Like climate change and managing mega-cities (also on the 2014 WEF trends list), we have a limited time to select, scale, and invest in solutions to global youth unemployment before the problem becomes far worse.

We welcome your comments at ideas@qz.com.

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