An economic and labor market crisis has plagued the world since 2008. The labor market slowdown is dramatic with a current deficit of around 50 million jobs, in comparison to the pre-crisis si­tuation (ILO, 2012). Policymakers around the world face critical challenges in reducing unemployment and poverty (Guillén, 2001). According to the ILO, 45% of the worlds’ employed live below the poverty line (below $1.25/day), a trend, which has worsened since the onset of the financial crisis. Further deterioration in the global economy may push as many as 200 million workers, mostly in developing economies, into extreme poverty. One of the UN Millenium Development Goals is that “full and productive employment and decent work must be achieved by all means”. 

The International Year of Youth (2011) came at a time of strategic importance. A lack of job opportunities disproportionately affects youth, permitting only a small percentage of these young men and women to follow their professional dreams. This trend prevails even during positive economic situations and is worse during bad economic times (ManpowerGroup, 2012). According to a recent report published by the International Labor Organization (ILO), of the 620 million economically active youth between the ages of 15 and 24, 81 million were out of work by the end of 2009. This was a noticeable increase of over 2% from the 2007 figures of 11.9%, therefore making it the highest rate ever. The ILO predicts that there will be a huge number of unemployed youth adding to this number (ILO, 2010). Youth population figures may more than double by 2050, with 90% of the world’s youth living in developing countries (Population Reference Bureau, PRB). “Young people are the drivers of economic development […]. Forgoing this potential is an economic waste and can undermine social stability”, stressed Mr. Juan Somavia, ILO’s General Director. 

The average youth unemployment rates in OECD countries are consistently in the range of 1.5 - 4.5 times higher than the adult unemployment rates (see figure below). There is not a single OECD country, which has a youth unemployment rate that is equal to or lower than the adult unemployment rate. The global ratio of youth unemployment to adult unemployment is 2.9. In certain countries, for example in Sweden and New Zealand, the youth unemployment rate is roughly four times as high as the adult unemployment rate. In other countries, such as Spain, Greece and Portugal, the total rates of youth unemployment have reached shocking numbers with every second young person being unemployed (ILO, 2012), a trend which has worsened rapidly in the past years.

There are already significant numbers of young people who would rather start their own business than work for someone else. Entrepreneurship is an important driver of economic prosperity and social well being, creating jobs and econo­mic competitiveness (Thurik & Wennekers, 2004; Monitor Company Group, 2009; ManpowerGroup, 2012).

In order to solve the youth unemployment challenge, we cannot rely on the large corporations to create sufficient amounts of jobs for the next generation. Instead, all stakeholders (policymakers, educators, large and small corporations and other support organizations) need to adapt and prepare the next generation to become job creators instead of job seekers. Youth entrepreneurship must be considered a critical pathway to decent work for young people and has to form a strategic component of national efforts to address youth unemployment. The number of entrepreneurship programs has rapidly increased in the past years; however, little knowledge exists about their inter-connection as well as their effectiveness. Picturing the components that make up an entrepreneurial ecosystem as well as providing measurement indices has been missing to date. 

The Entrepreneurs' Ship works with governments and universities to solve the challenge by establishing sustainable long-term strategies and the implementation of solutions.

The founder of The Entrepreneurs' Ship, Peter Vogel, recently gave a TED talk at the IMD in Lausanne.

In his presentation, Peter explores the future of the labor market and the role of entrepreneurial ecosystems. The technological revolution not only changed the way we work and live, but who we are. The “Next Generations” are facing the highest youth unemployment rates and at the same time employers have entered a fierce competition for talents. This huge challenge can only be solved by the next generation itself, in re-defining the labor market of the future. Establishing assessable and healthy entrepreneurial ecosystems has to become priority #1 of policymakers and practitioners if we want to ensure that the terminology “Lost Generation” will always remain a piece of history.

See the full talk:

The global labor market crisis for young people is getting worse and worse. Governments around the world are struggling to reduce unemployment. Special attention needs to be given to youth unemployment, as the earliest years on the labor market have the most significant impact on a persons' professional development. 

While employers argue that there is a war for talents and that universities do not produce enough talented workers, the unemployment rates in several developed countries are rising beyond what one has thought could be possible. The scariest chart of the labor market has now become even more scary!

Source: Eurostat

More than 75 million young people were unemployed in late 2010 (UN World Youth Report 2012). This is a trend that disproportionately affects the developed world, which might sound somewhat counter-intuitive if we consider the shrinking birth-rates. However, there are some logical reasons for this trend:

• An aging population.
• Pension systems that cannot afford financing people for 30 years or more after having paid into the system for maybe 30-35 years.
• An older generation that therefore needs to and wants to work longer.
• An academization of the younger generations as a result of the misconception that everyone needs to go to university in order to become successful.
• A mismatch between what is being taught at schools and universities and what is being required on the labor market.
• A lack of experience among the younger generations and at the same time a lack of available jobs for younger people to develop their professional track-record and gain work experience.
• An increase of productivity and automation in the manufacturing industry leading to job-cuts
• Universities that are too ignorant to develop function career-guidance services that help their students prepare for the labor market.

If no suitable labor market incentives are identified, the result will be economic waste as well as an undermined social stability and a marginalization of the local workforce, a valuable natural resource for any country. Entrepreneurship is one of many active labor market policies that need to be focused on. Supporting young people in gaining work experience through starting projects and companies is an effective mechanism to by-pass the challenges of getting an entry-level position. Of course, not everyone is made for entrepreneurship. However, by helping young people realize entrepreneurial projects and ideas, relevant skills for the general labor market are being learned.