Latin American youth in transition: a policy paper on youth unemployment in Latin America and the Caribbean

This policy analysis looks at the economic relationships between sectors: where formal and informal sectors are intimately linked in terms of youth and adult workers, where skilled workers and their shortages exist throughout all sectors of the economy, and where downsizing and technical change shed large numbers of unskilled labour to the informal sector.

Youth unemployment lives in the shadows of the broader labour market demand and wage dynamics, whereby youth unemployment is simply a fractured reflection of larger labour market issues. Moreover, the impact of labour market policies and programs for youth is largely tied to broader labour market dynamics.

The conclusions of the paper point to eight main recommendations:
· The school-to-work transition--“distance too far”. The lengthy school-to-work transition evokes enormous uncertainty and continuous change. Policies and programs must address all aspects of the transition, as these activities are highly interwoven in the behavior of youth.
· Focusing on long-term goals. Given the length and nature of the school-to-work transition, long-term employability and productivity of youth should be a key consideration of policy and programs, and not short-term job placement. Factors that influence the transition are fundamental to determining “how” youth will move toward these long-term goals.
· Priority to youth with incomplete secondary education in most countries. Policy priority should be given to the “youth majority” within any specific country; in most countries of the Region, this is incomplete secondary education or below.
· Greater market incentives to stay in school. There is a need to better understand the market structures to promote education. Labor market policies and programs should promote skills standards attached to youth entry wages
· The informal dimension to youth policy and programs. The informal sector is the pathway to employment for most youth in Latin America. Incentives must be promoted to encourage human capital formation in the informal sector, alongside specific standards for youth’s employment in the informal sector.
· Linking the formal and informal sectors. New policies through standards and training should encourage generic skills standards relevant for both formal and informal sectors.
· No recipe card for policies and programs. The policy evaluations demonstrate that large-scale programs do not fit the needs of rural youth, low-income, the youngest participants, the least educated, and often times women participants. New designs and innovations are needed in targeting to these specific groups, incorporating local labor market characteristics.
· Linking education and labor policies and programs. The complementarity of policy and program actions would ensure more effective and long-term impact. Research, policy dialogue and pilot projects should be encouraged between labor market projects and education reform programs.
(Based on authors own Summary)