The Challenge of Youth Unemployment in Latin America and the Caribbean
Youth in Latin America and the Caribbean should be playing a major role in driving regional growth. The region’s population is young: nearly one-third of the population will be age 15-34 by 2015. Yet with 1 out of every 5 youth – 32 million people—neither working nor in school, the region’s demographic bonus is a turning into a growing risk. Excluded, disaffected youth are cut off from productive jobs and instead turn to unproductive informal activities, and even crime and violence.
The core deficit is job skills. While employers struggle to find qualified workers, youth unemployment stands at nearly 3 times that of adults. Many youth lack critical skills to make them attractive job candidates – both technical skills and, most importantly, “life skills” such as communication, reliability and teamwork – long-term skills that are needed in any kind of job or career. The challenge is to find job training models which are relatively low-cost, scalable, and effective.
Providing Job Training to One Million Youth
An innovative new regional partnership will address these urgent issues by scaling up the most effective training and job placement models for youth. The partnership is NEO: New Employment Opportunities/Nuevos Empleos y Oportunidades. Its purpose is to increase job entry among poor and low-income youth. To this end, the alliance brings together key private, public, and civil society actors to provide high-impact, market-relevant youth training and job placement services on a large scale.
NEO’s 10-Year Goals:
- Train one million disadvantaged youth, ages 16-29, using models that incorporate best practices of job training programs
- Achieve job placement rates of at least 50 percent for its graduates
- Ensure that 50 percent or more of the youth trained are girls and young women
- Promote the adoption of high-impact training models in the government programs of at least 10 countries in the region
- Mobilize 1,000 companies to offer internships and employment opportunities for youth
- Strengthen the capacity of 200 job training providers
NEO’s Founding Members
As of its official launch at the Summit of the Americas in April 2012, the members of NEO are:
- The Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank (IDB) Group, was founded in 1993 and is the largest provider of technical assistance for private sector-led development in Latin America and the Caribbean (LAC). The MIF has financed and developed over 120 projects in youth employment and entrepreneurship training, working with dozens of civil society and private sector partners.
- The International Youth Foundation (IYF), founded in 1990, builds and maintains a worldwide community of businesses, governments, and civil society organizations committed to empowering youth to be healthy, productive, and engaged citizens. IYF programs are catalysts of change that help young people obtain a quality education, gain employability skills, make healthy choices, and improve their communities. In Latin America, young people in 23 countries are benefiting from IYF-led initiatives.
- The IDB’s Social Sector Department conceptualizes, prepares, and supervises the IDB’s operations related to education, social protection and health, gender and diversity, and science and technology. Its Labor Markets and Social Security Unit promotes workforce development, including specific programs for youth, in Latin America and the Caribbean.
- Walmart operates 10,130 retail units under 69 different banners in 27 countries. With fiscal year 2012 sales of approximately $444 billion, Walmart employs more than 2 million associates worldwide. Walmart has a significant presence in Latin America, with more than 2,700 stores and more than 315,000 associates.
- CEMEX is a global building materials company, based in Mexico. CEMEX produces, distributes, and sells cement, ready-mix concrete, aggregates, and related building materials in more than 50 countries, and maintains trade relationships in over 100 nations. CEMEX employs 16,000 people in the region.
- Microsoft, founded in 1975, is a worldwide leader in software, services and solutions. The company established its presence in Latin America and the Caribbean in 1986, and currently operates in 21 countries throughout the region, employing more than 2,000 direct employees, with an ecosystem of 70,000 partners.
- Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company also is a leading services provider through Caterpillar Financial Services, Caterpillar Remanufacturing Services, Caterpillar Logistics Services and Progress Rail Services. Caterpillar has business in every country in Latin America, excluding Cuba. Its total employment in the region is nearly 20,000 people.
- Arcos Dorados, the world’s largest McDonald’s franchisee, has the exclusive right to own, operate and grant franchises of McDonald’s restaurants in 20 Latin American and Caribbean countries and territories. It operates or franchises more than 1,840 McDonald’s-branded restaurants with over 90,000 employees serving approximately 4.3 million customers a day.
Achieving Scale and Systemic Impact through NEO
As of its launch in April 2012, the founding partners have committed a total of $37 million in cash and in-kind resources to support the goals of NEO. More importantly, they are taking a leadership role in calling on other companies, organizations and governments to join the effort. NEO’s strategy for reaching one million youth on a region-wide scale calls for governments, companies, civil society, and youth themselves to agree to a common strategic agenda and to act collectively, with ongoing communication, adoption of best practices and commitment to the shared measurement of progress towards the common objectives. Ultimately, the long-term goal of NEO is to leave in place a strengthened national employment service and job training institutions with greater capacity to respond to the growing demands of both companies and disadvantaged youth.
Role of Implementing Partners—MIF, IYF, and IDB:
- The MIF, IDB, and IYF will jointly lead design, implementation, and evaluation of NEO.
Role of Corporate Partners:
- Founding partners Walmart, Caterpillar, Microsoft, CEMEX, and Arcos Dorados are major corporate actors and employers in the region, with the shared goal of expanding the pool of employable youth. Through the resources they are contributing to this effort, they are demonstrating their strong commitment not only to the region’s economic success but to sharing that success across a broader range of the population.
- Up to 1,000 additional companies with presence in the region are expected to participate in NEO in a number of ways, including but not limited to: contributing money or other resources, providing internships, mentorships, or entry-level jobs to graduates of NEO training programs, advising training providers on the needs of their industries, and reaching out to other companies and to governments to participate in NEO.
Role of Government Partners:
- Many governments in the region are interested in strengthening their support for youth employment training programs, particularly in improving their job placement results.
- NEO partners will work closely with participating governments to help them put in place the most effective training and job placement models that have been identified and refined under NEO. The result will be greater impact from public expenditures, greater scale in the reach of these programs, and, over time, significant reductions in cost as scale is achieved.
Regional Partnership Structure of NEO
In each country in which it is active, NEO will build a multi-stakeholder partnership involving the public, private, and civil society sectors, in order to design shared youth employability strategy, action, financing plans for that specific country. Youth employability will be addressed in a systemic way, rather than as a series of isolated initiatives, thereby increasing the quality, scale and effectiveness of joint actions. It is expected that at least 10 partnerships with clear strategic objectives and financing plans will be developed at the country level, and that 200 service providers will increase the quality and scale of their job training programs.
Further Information
Visit the NEO website, hosted by the MIF, at www.neo.fomin.org for current information on NEO members, activities, events, and more.
Companies interested in joining NEO should contact the IDB’s Office of Outreach and Partnerships, partnerships@iadb.org (English) or alianzas@iadb.org (Spanish). The IDB’s Office of Outreach and Partnerships is charged with strengthening the Inter-American Development Bank’s alliances with key partners for development, including governments, co-financing agencies, foundations, individual philanthropists and the private sector. It specializes in the identification and implementation of joint initiatives with relevant private sector partners that, by enhancing their Corporate Social Responsibility and sustainability initiatives in the region, contribute towards the fulfillment of the IDB’s mandate.
Contact neo@fomin.org with any other questions related to NEO.