Economy

Impact of Youth Unemployment

Young people are a key factor in human resource development. They are considered as the driving force for social change, economic growth and technological advancement. The utilisation of human resources to maximise production capacity and to facilitate economic growth and development has been one of the major critical challenges of the 21st century. Many policies have been adopted recently to reduce population growth. However, there is rise in the number of the young working population, often termed as the demographic dividend. One of the great concerns about the working population is the need to harness their capabilities for the prosperity of the nation. The challenges faced are mostly related to the labour market entry where young people encounter difficulties in finding and maintaining a decent job. Youth unemployment haunts not only India but also many other countries; hence, youth unemployment has become a topic in many international agendas.

The definition of youth differs from place to place. According to the United Nations, youth is defined as a person between the ages of 15 and 24 which is the transitional period from childhood to adulthood. But according to the National Youth Policy of India (2014), youth is defined as a person from the age of 15 to 29. Sarah Ayers’s 2013 research indicates that youth unemployment has long term negative effects on the whole country’s economy. Unemployed youth earn low wages for many years post their joblessness because of the foregone work experience and missed opportunities to develop skills. This leads to reduced future earnings for the individual. As result, the purchasing power during the lifetime of an individual is reduced, causing increased debt and inability to adequately save for retirement. This has a serious negative consequence on the country’s economic growth as the economy faces a loss in aggregate demand due to less income. The falling in consumption expenditure results in slower economic growth which in turn leads to less job creation and greater taxpayer burden. In the form of lost revenues, the need for government-provided health care increases. Unstable economy leads to increased crime rates and need for additional welfare payments.

Downward labour participation can also imply greater enrolment in schools which could result in more earnings and economic growth. However, the high rate of youth unemployment suggests that there are too many people who are willing to work but they are unable to find jobs. Lack of proper housing is also a serious concern as most unemployed young people in lesser developed countries end up in urban slums and streets and they engage in dangerous activities such as drug abuse, alcoholism, and crime. The youth, thus, have a difficult time integrating into the society on an economic as well as social level.

The economic crises of 2008 caused the magnitude of youth unemployment. Statistics suggested that the unemployment rate was twice more during the economic crises in the EU countries. The initiatives adopted by the Government and EU gave importance to the demand side of the youth unemployment dilemma while neglecting the supply part of the problem. The ill-effects of the persistent unemployment as a consequence of the 2008 financial crises have been severe due to the lack of efficient macroeconomic policies delivered at a national level. Also, incentives for companies to encourage hiring young prospective employees have been severely neglected. If employers provide long term employment to young people, they must be awarded incentives in the form of tax returns, social security contributions and wage substitutes by the government. The European Union signed the EU agreement, thereby paving way for the highest level of economic integration. The economic and monetary union aims to trigger automatic shocks to deliver re-equilibrium after destabilising macroeconomic shocks. The southern members of the EU face a higher unemployment rate, thus policies to improve intra EU migration, by easing of rigidities, promote mobility from low employment regions to high employment regions.

In terms of mental health, deprivation of a paid job often leads to a risk of social exclusion and isolation also termed as social disqualification. This potentially affects an individual’s personal life and the well-being of the unemployed people, especially when one is unemployed for a sustained period. Further, it can lead to social isolation, decreased social contact and reduction in collective participation of individuals as they feel lonely and psychologically depressed. It often affects the mental health of people and they develop a pessimistic attitude on life which can lead to involvement in negative activities or suicide. Unemployment can cause a person’s self-esteem to fall and a feeling of being a burden on their family and society might arise. Social isolation causes the unemployed youth to feel useless. Hence, long term unemployment produces financial distress as individuals have to spend from their savings or live on borrowings; it gives rise to several anxiety related health problems and diminishes overall level of happiness. Hence, youth unemployment is a serious issue to be dealt with for the betterment of the society.

Picture Credits : peacechild.org



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