The Jobless Generation

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Growing Pains
The factors that cause youth unemployment often differ among regions and labor systems. In much of Western Europe, for example, excessive labor protection makes it more difficult for youths to land good jobs. Since firing full-time workers is so complicated and expensive, employers are wary of taking on new staff, while people who are already employed, mainly older workers, often retain their jobs for life. In developing countries with high birthrates and very young populations, like the Philippines, growth isn't strong enough to absorb the wave of youngsters entering the workforce each year. Yet youth unemployment also has common roots throughout the world: young entrants to the workforce are often the most vulnerable in economic downturns — new employees are often the first to get sacked, while college grads find few employers willing to hire. Excessive red tape stifles entrepreneurship and investment and therefore job creation. Pakistan's Prime Minister Yousuf Raza Gilani, who ranks combatting youth unemployment with eradicating terrorism as his nation's top challenges, speaks for government leaders around the world: "We have to create more jobs for our young people."

Those young workers who do find employment are often trapped in lousy jobs. In Spain, Italy and Japan, for instance, companies looking to gain flexibility in regulated labor markets often offer new, young staffers only short-term contracts. These contracts, which sometimes last for only a few days, usually come with meager salaries and few benefits. Since such staff is temporary, employers have little incentive to invest in training.

Facing such hurdles, young people everywhere are finding that the traditional route to success — education — isn't paying off as much as in the past. More and more college graduates are forced to take jobs well below their skill level, anything from waiters to supermarket clerks. A March report from the U.K.'s Office for National Statistics showed that the share of recent college graduates in Britain working in lower-skilled jobs rose to nearly 36% in 2011 from less than 27% a decade earlier. In some parts of the world, such jobs are all that is available to college grads. Typical is Cairo's Ahmed Said. He graduated from college with a business degree, and after performing the obligatory year of military service, he applied for jobs in accounting and data entry. But Said, 24, had no luck, and today he works as a waiter at an upscale café near Tahrir Square. "This was my last choice," he laments, "and this is the job that I got."

With work so scarce, young graduates in rich and poor countries alike often find themselves competing with more-experienced workers for even the most basic jobs. Hara Kogkou of Greece graduated from the Agricultural University of Athens 18 months ago but hasn't been able to find a position in her field. "I don't see jobs being created, so we will be competing with Ph.D.s for entry-level work," she complains. Lowering her standards, however, hasn't yielded results either. Kogkou, 26, has started applying for any opening she can find, "like working at a cafeteria or a supermarket, just to make a living," she says. "I've sent out 500 job applications. No responses."

Scarred for Life
Those who fall behind in the job market at an early age often never fully recover. Deprived of skills and experience in their first years in the workforce, they have trouble competing for good jobs for the rest of their working lives. A study conducted by the Economic Council of the Labour Movement, a Copenhagen-based think tank, tracked young Danish workers who were jobless for at least 10 months in 1994 and discovered that 15 years later they were almost twice as likely to be unemployed and earned 14% less — or about $10,000 less — a year than those who were employed as young adults. "The most important factor in how you succeed in the workforce is how you start," says Mie Dalskov Pihl, an Economic Council economist.

Long-term joblessness can also undermine a young person's self-confidence and lead to depression. The impact is especially serious in Japan, where a man's standing in society is very much connected to his job. After graduating from college in 2000, Yoshinobu Kurashige couldn't find full-time work. Embarrassed, he locked himself in his room in his parents' house for nearly 10 years, during which he barely spoke to them and had no contact with anyone else. "If you can get full-time employment, you're O.K., but if you fail, you are forced to drop out," says Kurashige, now 37. "It's really hard to go back." His parents eventually contacted staff at New Start, a nonprofit organization that rehabilitates people who withdraw from society in this way, a phenomenon known as hikikomori; the organization's staff coaxed him out of his isolation and helped him find a temporary job at Amazon. New Start says more and more young people are becoming hikikomori, in part because of youth unemployment.