The World Economic Forum and the International Finance Corporation, a member of the World Bank Group, have announced the winners of their global essay competition on youth unemployment, The Youth Jobs Innovation Challenge. The competition aims to give voice to young people on how to tackle the growing crisis of youth unemployment.  More than 1.2 billion young people will enter the labour market in the next 10 years with only 300 million jobs awaiting them. Ravi Subramanian was awarded third place for his entry.

“What can I do to create jobs for my generation?” Considering there is a 900-million global employment gap, this is no easy question to answer, especially in the developing world that will see 1.2 billion youth entering the workforce in the next 10 years.

Solutions to the youth unemployment problem in developing countries often emphasize the need for policy measures and support from the private sector for supply side interventions such as skills development and demand side interventions in terms of creating jobs. These measures, however, have largely had only an incremental impact due to the fact that much of the labour force in the developing world is in the informal sector, where there are little to no support services and benefits.

Employees working in the informal sector are estimated to contribute to 92% of the total workforce in India; the number is similar for Africa.

The informal sector is characterized by low productivity, with most workers being unskilled and working for very low wages. The challenge of working in this sector is compounded by limited access to scarce capital, bureaucratic bottlenecks and quality equipment. While there are a few institutions trying to provide training geared towards the needs of the informal sector, these efforts are few, not well coordinated and are not up to date with rapidly changing skill-set needs.

The informal sector comprises all the unincorporated private enterprises owned by individuals or households engaged in the sale and production of goods and services operating on a proprietary or partnership basis. This is in contrast to the formal sector, which is characterized by medium to large enterprises that source employees from government institutions and have their own internal training centres where employees are trained in skills that their job demands.

But the hurdles and challenges facing the informal sector can be overcome. Examples from two private sector enterprises in India show that opportunities for work can be enabled from outside the formal employment market:

B-ABLE (Basix Academy for Building Lifelong Employability) focuses on enhancing the ability of the undereducated and uderskilled to become self-employed, find meaningful work and continually upgrade their competencies by offering them technical, commercial and life skills. B-ABLE has been successful in training and enabling employment for over 1,000 youth in its first year of operation, particularly in mobile phone repair, and hopes to train and enable self-employment among 1 million youth over the next decade.

Empower Pragati was set up in 2010 as a social sector enterprise, focusing on livelihood skill development to empower India’s disadvantaged youth. One successful programme has helped provide high-quality and reliable home management services to urban households, which includes babysitting and old age and patient care. Empower Pragati has trained more than 10,000 youth for various positions across urban families to global firms, and plans on training and enabling employment for more than 2 million youth in India in the next decade.

Although both examples come from India, these models of success can be applied throughout the developing world. Self-employment and the creation of commercial enterprises for the informal sector can have a substantial impact on job creation. But this will need support from the international community by playing the role of enablers to the organizations working on the ground.

Ravi Subramanian is a World Economic Forum Global Shaper from Mumbai, India. Find a full version of his essay for the World Economic Forum’s Youth Jobs Innovation Challenge here.

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