The Global Economy and the Youth Unemployment Crisis

The Global Economy and the Youth Unemployment Crisis

The world is not ready for the long grind to come, according to a commentator on the global economy. While governments have injected trillions of dollars into the economy, consumers are still sitting on much of it. Investment by US and European businesses barely broke stride, which may delay the next recession. However, the impact of COVID-19 on work and wage inflation may be the most lasting legacy. The number of hours people want to work has plunged, and social media now celebrates “quiet quitting” and “acting your wage”. This fundamental change may push the new normal for inflation closer to 4% than to 2%. This will make it harder for central banks to cut rates to counter the next recession.

Meanwhile, the number of non-active young people is a global problem. The Neet rate, measuring the share of young people not in employment, education, or training, has quietly risen above 20% globally, a level not seen in almost two decades. This worrying trend is most problematic for the poorest, most fragile economies. Niger, Yemen, and Somalia have seen soaring Neet rates that lead to catastrophic economic and social outcomes. This is now exacerbated by exorbitant food and energy prices.

The platinum economy could reverse rising Neet rates globally. A high-tech job is more than a job. For every new high-tech job, five additional non-high tech jobs are generated in a city. This digitalization will need to be embraced by governments and businesses alike, as elevated financial volatility, rising borrowing costs, and geopolitical turmoil could mean successive and multiple shocks ahead. The Neet rate is an essential bellwether for a broad array of vulnerabilities for the young, and an essential barometer of wellbeing for the next generation.

In conclusion, the global economy and the youth unemployment crisis are interconnected. The impact of COVID-19 on work and wage inflation may push the new normal for inflation higher, making it harder for central banks to cut rates to counter the next recession. Meanwhile, the rising Neet rate is a global problem that needs to be addressed urgently. The platinum economy could reverse this trend, but it will require governments and businesses to embrace digitalization. The Neet rate is not only an essential bellwether for the young but also an essential barometer of wellbeing for the next generation.