By Isabel Morales
The World Bank estimates that in the next decade, around one billion young people will enter the job market, but less than half will find formal jobs (Mercy Corps, 2020). This is especially true for those living in developing countries. Young populations in Latin America and the Caribbean face several barriers when accessing the labor market due to structural issues such as low overall economic growth, low-private sector investment, and a lack of entrepreneurship (Salazar, 2012). Additionally, they face age-specific barriers that make it even harder for them to access a formal job. Protests throughout the region led by young populations before and during the pandemic reflect their dissatisfaction with these barriers and current job opportunities (ILO, 2021). The claims made during the protests should be a major concern because youth employment issues affect the welfare of young citizens and the long-term growth and stability of the rest of the economy.
This phenomenon of youth unemployment happening throughout Latin America and the Caribbean is exemplified by the current situation in Colombia. Colombia is a suitable case study because it has one of the highest rates of youth unemployment for those with college degrees in Latin America (The World Bank, 2021). Though the rapid rise in the youth unemployment rate in Colombia is partially due to the COVID-19 pandemic, it is a phenomenon that was observed well before it (Chavarro Mayusa et al., 2021). The independent Colombian organization, Fundación Ideas Para la Paz (Ideas for Peace Foundation), finds that youth unemployment in Colombia is the result of “myths, traditionalism, biases, and numerous obstacles that create a complex panorama” for the youth in the country (Chavarro Mayusa et al., 2021).
One of the main myths they mention is that of social mobility. There is a notion that education is one of the main factors promoting dynamics of social mobility. Therefore, families usually pay large sums of money for their children’s education with the confidence that it will bring results in the future in the form of a stable job with a decent salary (Chavarro Mayusa et al., 2021). In this case, education is not viewed as an expense, but rather an investment that will have high returns in the future through increased job offers and higher wages (Castillo Robayo & García Estévez, 2019). However, recent statistics reflecting youth unemployment in Colombia show that this investment on education might not be yielding the expected results. According to the Colombian government’s National Administrative Department of Statistics (DANE), the youth unemployment rate between December 2020 and February 2021 was 23.5 percent. This is an increase from 18.7 percent between December 2019 to February 2020 (Díaz Lotero, 2021).
Even when some individuals manage to get a job, they are not compensated enough for it (Ortiz, 2021). This is especially seen with college graduates. The minimum salary in Colombia is around 908.526 Colombian pesos ($230 dollars) and the average salary for a recent graduate is about two million pesos (around $495 dollars). In cities such as Bogotá, the average salary for a recent college graduate is too low for many to live comfortably (Hide, 2020). However, they will usually accept jobs with these low salaries because there are few jobs available to begin with (Hide, 2020). The average salary might be enough in the beginning, but it becomes difficult to live off of if they stay in the same position for more than a short period of time (Maldonado, 2020).
This issue of youth unemployment for those with higher education in Colombia and throughout Latin America can be attributed to numerous reasons (ILO, n.d.). Some of them are age-specific difficulties young people face in making the transition from a university to a workplace, such as statistical discrimination and a lack of part-time experiences available.
It is known that statistical discrimination is present in several areas of the Colombian labor market (Chavarro Mayusa et al., 2021). Statistical discrimination is an economic theory that explains racial profiling and gender and aged-based discrimination in the labor market when the decision-maker has a profit-maximizing mentality (Moffatt, 2019). In other words, it is based on the idea that employers have limited information about the skills and productivity of their applicants, causing them to use observable characteristics such as race, sex, gender, and age to decide whether to offer the applicant the job or not (Chavarro Mayusa et al., 2021). This phenomenon of statistical discrimination is reflective of barriers of entry specific to young people because employers may judge applicants based on age-group characteristics. For instance, employers might consider young people to not be as productive or economically valuable due to their limited experience, so they refuse to offer them the job (Chavarro Mayusa et al., 2021; Salazar, 2012). This is significantly limiting because employers do not base their decision off of individual skills, but rather off of generalizations that do not effectively determine productivity. Furthermore, it not only potentially robs the individual of the opportunity for a better life, but it also undervalues their skills and potential.
Another age-specific challenge is the lack of part-time experiences available, such as internships, that limit people’s chances of getting a job. In 2017, the Citi Foundation surveyed several young individuals in Latin America. The survey found that 81 percent of these individuals believe that internships determine career success, but they claim there are not enough of these opportunities available to them (Mchale & Awad, 2017). This creates a vicious cycle where young adults become unemployed due to a lack of experience, but experience cannot be obtained in the first place because there are no internships available (Chavarro Mayusa et al., 2021).
These causes leading to unemployment at a young age can have long-term negative effects throughout an individual’s life. Young people that are unemployed are more likely to earn poor wages, have negative expectations for better jobs, and have low pensions in the future (Mercy Corps, 2020). As a result, many young people in Latin America are demotivated by the employment situation in their countries. So, they either decide to not study and enter the informal market or decide to leave the country and find a job elsewhere. This also has severe repercussions on a country’s stability because there are fewer government resources as a result of low tax collections, greater poverty, and weaker investment and productivity (World Bank Group, 2021).
Young generations are the future, which is why it is crucial to provide more incentives and opportunities for them to enter the labor market (Herranz, 2020). Though countries in Latin America have structural issues that require complex and systemic solutions, youth unemployment can be mitigated by tackling age-specific barriers within labor markets through collaboration between companies, governments, and society. Some of these efforts could be offering more internships within companies, changing hiring procedures, or creating age-specific education and skills training programs that match market demands (Herranz, 2020). These are all small steps that can be taken to combat labor market inequalities in Latin American and Caribbean countries, despite these issues being part of greater structural economic problems in the region.