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Seminar on Youth Employment in North America

DECEMBER, 2008

General Coordination of the National Employment Service

“Creating Job Opportunities for the Youth”

Lic. Omar Rodríguez Alarcón

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Three important tendencies at a global scale will determine the way future employment will be:

•Globalization: allows investing in foreign Nations, through international trade and globalized capital flows.

•Technology: Modifies the working nature, schedules and spaces, promotes adaption, mobility, adoption of competences, learning and updating.

•Demography: A century ago, life expectancy for a person in Mexico was 40 years, in the 21st Century it will be over 80, = Increase in the years of productive life.

Characteristics of the Future of the Economy...

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•In the Century that begins, the labor world and the creation of wealth will stop being based on the natural resources and the generation and application of information and knowledge will be even more established.

•According to the OECD, the “knowledge workers” already represent 8 of every ten new jobs, given that half the wealth of the industrialized societies comes from intangible assets.

The main resource in the New Global Economy is Knowledge.

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In the 21st Century world of labor, occupations aimed at providing technical, professional and specialized services focused on the people’s wellbeing will predominate.

PERSONS EMPLOYED IN MEXICO BY ECONOMIC SECTOR

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Surfing through the cyberspace will not only be a compulsory subject in schools, but also one of the most expansive job sources for the next decades.

In North America, the most dynamic areas are:

• Engineering• Clinic Medicine• Biomedics & Geonomy• Earth Science• Space Research• Telecommunications• Robotics• Cybernetics &• Geospatial Technology

The generation, dissemination and application of knowledge will be fundamental at generating the necessary wealth to create the jobs that the country will require during the 21st Century.

World Labor Tendencies

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PARADIGM CHANGES IN THE WORLD OF LABOR

Old Paradigm New Paradigm

Office Virtual space

Written contracts Contracts per projects

Job Security Working Mobility

Professional degrees Group of skills

Academic achievementsOngoing learning

Success = raise Success = experience

Retirement / Pension Extension of the productive life cycle

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= +[ ]Growth=

Increase on the number & quality of the work force

Increase on the capital stock +

Job generation is a result of:

Increase on capital and work productivity as a result of the technological change, the education system, innovation and scientific research.

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TOTAL POPULATION

POPULATION UNDER 14

PNEA

PEA

INACTIVE POPULATION AVAILABLE

INACTIVE POPULATION NOT AVAILABLE

YOUTH (14-29 YRS.)

PEA

PNEA

EMPLOYED POPULATION

UNEMPLOYED POPULATION

106,794,362

29,398,051

31,860,845

45,535,466

4,939,936

26,399,456

EMPLOYED POPULATION

UNEMPLOYED POPULATION

43,625,738

1,909,728

29,867,713

15,509,517

14,358,196

14,419,079

1,090,438

INACTIVE POPULATION AVAILABLE

INACTIVE POPULATION NOT AVAILABLE

2,295,267

12,062,929

Populations at the Third Quarter of 2008Populations at the Third Quarter of 2008

Source ENOE

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DIAGNOSTICS & FORECAST…

2008 (thousands) 2012 (thousands) Average growth

Population at working age (PET)

77,063* 86,100 2.2 million per year

Population Economically Active (PEA)

45365* 48,585 805 thousand per year

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EMPLOYMENT AND EDUCATION IN MEXICO

• During the last five and a half years, 1.7 million students graduated from High Education in the country.

• Also, it is estimated that for the next decade, little over 5 million students will graduate with a B.A. degree.

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EMPLOYMENT AND EDUCATION IN MEXICO

• In the last decade, the percentage of people with higher education in Mexico has increased by 40%.

• Regardless of the value of high education, the income of professionals who work has not increased

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0

100000

200000

300000

400000

500000

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Arc

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38

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500,740

The increase of the university enrollment from 1997 to 2007 has concentrated on the economic-administrative disciplines and social science, with increases of 69% & 66% respectively.

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4,5

98

EMPLOYMENT AND EDUCATION IN MEXICO

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Even though the supply of Study Programs in Mexico has duplicated in a decade …..

•From the 1.9 million students registered in higher education in the country, currently 1 of every three students studies in one of the following three Programs:

•In contrast, only 1 in every thousand students in the country studies one of the following programs: Biochemistry, Ocean Science y Biomedicine.

Law 246 thousand

Accounting 203 thousand

Administration 146 thousand

EMPLOYMENT AND EDUCATION IN MEXICO

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88.7 87.180.3 77.4 77.6

72.768.3

63.9 61.7 59.1

Average of all professionals, 69.4

0

10

20

30

40

50

60

70

80

90

100

education health sciencephysics-mathematics sciencearchitecture, urban planning & designarts humanities social science engineering biology scienceeconomic/administrative

%

other activities related actvities Average of all professionals

The lack of orientation and affiliation causes young people to study programs that are not being demanded by the economy

More than 30% of the employed professionals in the country work in activities not related to their professional education.

Source: National Survey on Occupation & Employment

Relationship between school formation and occupation

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Young people face greater difficulties of access employment opportunities.

GENERAL UNEMPLOYMENT

RATE

UNEMPLOYMENT RATE

PROFESSIONALS

UNEMPLOYMENT RATE OF

PROFESSIONALS YOUNGER THAN

29 YEARS

4.19% 4.95% 8.56 %

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• The unemployment rate was 4.2 percent.• Unemployment within young people was 8.2%. The insufficient rhythm of economic growth influences youth to remain inactive, prolonging their academic formation and delaying their integration to the work force.

In the third quarter of 2008, 1.9 million people were unemployed.

0%

1%

2%

3%

4%

5%

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

I II III IV I II III IV I II III IV I II III

2005 2006 2007 2008Percentages

Mill

ions

of p

eopl

e

Unemployed Unemployment rate

0%1%2%3%4%5%6%7%8%9%

I II III IV I II III IV I II III IV I II III

2005 2006 2007 2008

Wom

en

Young people

Young people

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Average Structure (Age)

23.9 22.1 22.1 19.8 20.7 18.914.1 12.5 10.1 9.1 9.1

23.2 28.4 26.225.1

31.4

23.527.3

17.727.6 25.7 28.5

24.525.2

24.424.1

24.4

25.5 29.5

20.4

28.0 29.930.3

28.3 24.3 27.4 30.923.5

32.1 29.1

49.4

34.4 35.2 32.1

0%

20%

40%

60%

80%

100%

Tou

rism

Tra

nsfo

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Con

stru

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Com

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Pro

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Ext

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Edu

catio

n &

Hea

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Gov

ernm

ent

16-24 25-34 35-44 45 & MORE

EMPLOYED BY ACTIVITY AND AGE GROUPS

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THE YOUTH AND THEIR INCLUSION IN THE JOB MARKET IN MEXICO

• 64% of the young people in Mexico start working between 15 & 24 years old.

• 78% of those who started a job for the first time, did it through a recommendation of family or friends, and not through formal mechanisms or channels of the labor market

Source: National Youth Survey 2005

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• Adapt the labor law to a more flexible labor world (Flexi-security).

• Train the workers to perform new jobs in industries and sectors which can expand, with the goal of creating new markets.

• Increase the efficiency under which the workers are assigned to the jobs.

• Increase the workers’ opportunities through the improvement of their skills.

• Modernize and comply with the regulations and main standards of Labor Law.

International convergence on public policy to face the employment challenge :

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1. Reduction of the structural unemployment (employability of the least protected population groups and with very low levels of schooling and qualifications): train and provide “working identity” to more than 7 million workers with no formal schooling, acknowledging their working skills obtained through direct practice, through the certification of their labor competences.

2. Abating of Precarious Employment: transition from the informal activities to the structured sector of the economy, through programs that foster the entrepreneurial initiative and the organization of local productive units.

3. Management of the labor force (pertinent education and training for the future Labor Market participants : labor orientation and affiliation for students and parents)

Given the characteristics of the Labor Market in Mexico, three basic intervention lines are identified so as to stimulate theemployability:

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Divergence between education & training Supply with the Demand.

“Paradox of the lack of talent”

Make the educational systems and institutions respond to the needs of the productive sector.

Labor Observatory

Asymmetric information in the Labor Market

Friction unemployment and inefficiency in the assignment of human capital

A better articulated and with better information labor market.

Employment Website, Employment fairs, working affiliation.

Rigidness of the labor regulation.

Protection for active workers, in detriment of hiring new workers.

Access opportunities for youth into the labor market.

Modernization of the Labor Legislation.

Training for work, certification of skills.

Less capacity of the productive sector to generate paid employment.

Precarious options for occupation in the non-structured sector and economy of subsistence

Articulate the social, education and employment policies, to generate entrepreneurial capacity.

Foster self-employment Programs.

Problem Effect Goal STPS

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Objectives and actions for an Employment Policy for the Employability of the Youth:

Demand

Stimulate a productive, dynamic apparatus, capable of

maintaining and enhancing theworking conditions of

current workers

Eliminate the obstacles and barriers that hinder or dissuade

the productive sector from creating new working positions, and to absorb the newcomers in

the labor markets

Supply

Adequate and raise the qualifications of the labor force to the market conditions of the 21st

Century.Stimulate new occupations in new

markets to provide for the expected increase in the participation rates,

and to avoid the increase of informal & illegal activity.

Increase the employability ofvulnerable groups through active

policies for their employment, to avoid harmful costs in other

policy sectors (health, public security)

Increase quality at work.

Objective Action

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CONCLUSION

There is no better labor and employment policy than that which prepares and trains the youth today, to embark, innovate and create the enterprises and jobs in the 21st Century.