The Global Youth Employment Challenge
Youth employment in low- and middle-income countries is in crisis, with rapid population growth outpacing job creation, leaving millions unemployed or trapped in informal, low-quality work.
Around the world, youth face disproportionately high unemployment and underemployment. The global youth unemployment rate hovers around 13% – roughly three times the adult rate (5.1%). In 2023, youth joblessness reached 20–25% in regions like the Middle East and North Africa, compared to about 9–10% in Sub-Saharan Africa and South Asia. But unemployment as an indicator understates the problem in poorer countries, where few can afford to remain jobless.
An estimated 500 million young people worldwide were unemployed, underemployed, or working insecure jobs even before the COVID-19 shock. Currently, one of out five youth (~260 million) are not in employment, education or training (NEET), a number that had been steadily rising pre-COVID and is projected to continue rising. The “youth employment crisis” cannot be explained through just a lack of jobs, but also a lack of decent work, skills mismatches, youth expectation and aspiration gaps and structural barriers that prevent young people in LMICs from securing decent livelihoods.
Unpacking the crisis in low- and middle-income countries
LMICs face a perfect storm of challenges fueling youth unemployment – a booming working-age youth population outpacing formal job growth, education and training that often fail to match labor market needs, the dominance of informal employment with poor job quality, and structural barriers like restrictive regulations and urban-rural divides. These factors combine to make the school-to-work transition difficult for millions of young people. Below we break down these key challenges:
Demographic Pressure
The “youth bulge” in developing countries means millions of new jobseekers each year, but economies are not creating enough formal jobs to absorb them. Over the next decade, about 1.1 billion young people will enter the global labor force - a demographic wave concentrated in Asia and Africa. In Sub-Saharan Africa alone, 10-12 million youth will enter the labor market across the region every year in the coming decade, yet only ~3 million new formal wage jobs are currently created each year. Such explosive growth in youth labor supply, without commensurate growth in stable jobs, creates intense competition for the limited opportunities available. Realizing the potential demographic dividend of these young populations will require economies to generate many more decent jobs, and to do so quickly.
Skills Mismatch: the educated but unemployed
More than 57 out of 108 countries have a skills mismatch rate of over 50% in their workforce. While this is primarily driven by young adult workers who are undereducated rather than overeducated, the latter has been steadily rising.
In many countries, this skills mismatch has been evident for years – for example, large numbers of university graduates remain unemployed even as industries report unfilled job vacancies in technical and skilled trades. In the early 2010s in Georgia, more than half of unemployed youth had a secondary school diploma and as many as 40% held a college degree. A 2016 study covering comparing skills mismatches across 12 LMIC from 4 regions found that on average only 52% workers were in jobs well-matched to their education. Of those mismatched, 36% were over-educated while about 12% were under-educated. Another study using school-to-work transition surveys between 2012-13 from in 27 LMICs worldwide found that less than half of employees were considered well-matched. A MENA study notes that, college-educated youth unemployment coexists with shortages of IT, engineering, and other technical workers, because many students graduate in fields with limited job prospects. This mismatch stems in part from curricula and training programs that are out of touch with labor market needs, as well as limited career guidance.
Informality and Job Quality
Because formal jobs are scarce, the vast majority of employed youth in LMICs end up in informal employment. This often means working on family farms, in petty trade, or self-employment in micro-businesses – typically without contracts, protections, or steady salaries. In 2017, 77% of working youth were in informal jobs, compared to 58% of working adults. These rates of informal employment among youth were much higher in developing and emerging economies. Young women face an even heavier burden: in Sub-Saharan Africa and South Asia, 86–88% of young female workers are self-employed (mostly in informal work), far higher than for young men.
Labor Mobility (or the lack thereof) and Structural Barriers
Labor mobility—both domestic and international—shapes youth unemployment in LMICs. Limited rural jobs push many young people to migrate to cities. While such rural-urban migration once improved individual prospects, it has been found to exacerbate urban joblessness – for example, in 2018 youth unemployment rates were higher in cities than in rural areas across Africa and the Middle East. Furthermore, structural mobility restrictions can lock youth out of opportunities. This includes poor transportation infrastructure, housing costs, or even formal restrictions on internal migration in some countries, which make it difficult for youth to relocate for jobs. International mobility offers potential opportunities but is constrained by strict visa regimes, high costs, and information asymmetries, and vulnerable to increasing geo-economic fragmentation - locking out many young people from working abroad.
In many LMICs, regulatory constraints and weak business climates impede job creation. Cumbersome business registration, high taxes or compliance costs, and rigid labor regulations (like high minimum wages or strict firing rules) may discourage firms from hiring formal employees – hitting inexperienced youth the hardest. For instance, if it’s costly or risky to take on a new worker, employers are less likely to give a chance to a first-time young jobseeker. Additionally, labor market institutions (public employment services, job information systems, etc.) are often underdeveloped, which exacerbates information gaps between youth and employers (more on this in the following section).
Rapid technological change and subsequent labor demand shifts. The Future of Jobs Report 2025 projects that, in the next 5 years, 170 million jobs will be created while 92 million jobs are displaced, constituting a structural labor market churn of 22% of the 1.2 billion formal jobs in the dataset being studied. This pace of technological change may worsen the skills mismatches and access to opportunities mentioned above as traditional education systems struggle to keep up with rapidly evolving labor demand, a much larger concern for resource- and budget-constrained LMIC institutions than for those more proximate to the global technological frontier driving these changes.
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