Engaging and re-engaging youth: Labour market activation and challenges

Central and Western Asia’s economies were affected by the decline in commodity prices and a decline in demand for exports in the first half of 2020, the effects of which were partly offset by targeted fiscal and monetary policies in the second half of that year and by the partial

recovery of demand from Europe (UNCTAD 2021). In Central and Western Asia, challenges posed by the pandemic included massive labour force exits, which accounted for nearly all job losses (table2.5), and a large gap in social protection coverage and financing (Durán-Valverde et al. 2020; ILO 2021a). Job and income losses in the region, and a rise in poverty, were compounded by a decline in remittances in many countries and added pressures on local labour markets from returning migrants in 2020. Migrant workers, including the circular and seasonal workers who constitute an important share of the workforce in many countries in the subregion, were disproportionately or highly affected, particularly in the first stages of the crisis (ILO 2021a). Central and Western Asia is expected to have had a moderate recovery in 2021, weakened by the phasing out of fiscal and monetary support measures.

Across Europe and Central Asia the crisis fell harder on some firms and workers than others.

It has had a severe impact on MSMEs, owing to their over-representation in hard-hit sectors, including retail and tourism, and their more limited access to support measures (OECD 2020b). The groups of workers identified as particularly vulnerable include temporary workers and those in diverse forms of employment (see Chapter 3), workers in low-paid occupations and migrant workers.

As in most other regions, youth have been heavily affected by the pandemic and accounted for a disproportionate share (over a third) of

net job losses in 2020. The youth share of job losses was particularly high in Northern Europe (77percent) and Central Asia (61percent). The pandemic’s impact on youth and the challenges of engaging and re-engaging them in the labour market are discussed in the thematic section below.

The gender impact of the pandemic varied sig-

nificantly across subregions. Women’s share of net job losses in 2020 was higher than their share of employment in Western Asia, and somewhat higher in Southern Europe, Eastern Europe and Central Asia. However, in Northern and Western Europe women accounted for a smaller proportion of net job losses than men and experienced a much lower decline in labour force participation (Appendix C, tableC17).

Unemployment rates in Northern, Southern and Western Europe are projected to fall back to or below their pre-pandemic levels by 2022,

and in Eastern Europe by 2023 (table2.5). The recovery in unemployment rates will be aided by the likelihood that labour force participation will remain depressed below pre-pandemic levels until 2023 in all subregions. Similarly, EPRs are expected to remain below pre-pandemic levels in all subregions.

There is a concern that, in the wake of the pandemic, inequality could widen in Europe’s

large economies. Higher-earning workers may have lost fewer working hours and less income, may have saved more and may see their incomes recover faster than lower-wage earners, who have had less access to remote work, lost more income and saved less; and, at the same time, governments may come under pressure to cut spending in the coming years (UNCTAD 2021; OECD 2021a). Moreover, a continued policy emphasis on supporting export sectors could widen the wage gap between workers in lead sectors and those in lagging sectors, which has been growing over the past decade, low-wage workers bearing most of the decline in the labour share of income (UNCTAD 2021).

Before the pandemic, labour markets were already unfavourable for youth in much of Europe and Central Asia, as in most other re-

gions. On the demand side, there was a disconnect between high economic growth and employment creation in many countries. The limited availability of formal, decent work opportunities was a key driver of labour migration from Central Asian countries (ILO 2021a, 2020h). On the supply side, a gap persisted between outputs of education and training systems and labour market demand (ILO 2021e). These structural challenges were reflected in difficult school-to-work transitions, high youth unemployment, high rates of “youth not in employment, education or training” (NEET), and large gender disparities.