Q&A: IDB Lab tackles youth unemployment in Latin America

People look at lists of job openings posted at an employment agency in downtown São Paulo, Brazil. Photo by: REUTERS / Paulo Whitaker

WASHINGTON — In Latin America and the Caribbean, 40% of the working age population is between 15-29 years old, but 20% of youth are not currently working or in school.

This imbalance places a severe strain on the region’s economic and developmental growth opportunities, leaving companies scrambling to fill technical and trade jobs: 41% of businesses in Latin America and the Caribbean report being unable to find qualified workers.

IDB Lab, the Inter-American Development Bank’s innovation incubator, set out to tackle this challenge in 2012 by bringing together governments and the private sector as part of the New Employment Opportunities Initiative, or NEO. IDB Lab partnered with the bank’s Labor Markets Division, the International Youth Foundation, and private sector actors such as Microsoft, Walmart, Arcos Dorados, and the Caterpillar Foundation in 10 countries in the region to create a pipeline to successful employment for 380,000 youth.

“We have more freedom to try different approaches and to bring best practices to the table than the public sector.”

— Elena Heredero, lead specialist, IDB Lab

Elena Heredero, the lead specialist at IDB Lab, sat down with Devex to talk about how the bank has worked to forge public-private partnerships that serve both unemployed youth and companies lacking qualified workers over the last six years, and what can be done to make these achievements are sustainable.

This conversation has been edited for length and clarity.

Why is IDB Lab focusing on youth unemployment in Latin America and the Caribbean?

Because the rate of youth unemployment for young people in the region is sometimes double or triple the youth unemployment rate of the adult population. Also because we know that 1 out of 5 young people are neither working nor studying; and many of the young people that are in these categories tend to be women that have domestic responsibilities, so they have kids at a young age.

We know that even the young people that have jobs, these jobs are in the informal sector and they don’t have the same benefits as formal jobs with social security and paid vacation. That’s why we thought it was important to tackle this issue.

When we started back in 2012, the region as a whole in demographic terms was experiencing a youth bulge. You have a greater share of people that are starting to work versus older people that are in retirement age, so there’s an opportunity also to contribute further to the tax base of the economies and to support growth and development.

Why was IDB Lab equipped to take on this challenging issue?

Within the IDB group, we are the innovation laboratory. We can tackle very difficult issues using different instruments and working with the private sector and social and civil society organizations in a much more agile way. We have more freedom to try different approaches and to bring best practices to the table than the public sector. The IDB has been a pioneer in the region working on this issue of training.

The programs of the IDB had the problem of how to have a more systemic impact engaging the private sector in being part of the solution, and also bring the innovations that were taking place in the private sector and civil society. We were in a good position because of our ability to innovate and also our ability to bring to the table the public sector with the help of the IDB, especially the Labor Market Division, a strategic partner for us.

How did you go about designing this program?

It was really a collaboration between us and the Labor Market Division of the IDB and the International Youth Foundation and a group of visionary companies that also wanted to offer their insights and some of the tools that they have developed to bring more vulnerable young people to good jobs.

We decided that there were at least two issues that we were going to tackle with NEO because the problem is so complex. One was the lack of coordination among the different sectors that are working to provide good training and employment services to vulnerable youth. We wanted to tackle these problems through public-private partnerships. And then the other big problem we wanted to tackle was the issue of lack of quality of services and relevant training and education for the job market.

Those were the two main issues, but it was really a collective effort where each one of us had been working in this space for a long time and we had best practices, we had some tools and the idea was also not to reinvent the wheel so to speak. We really wanted with NEO to try to go beyond the results of a project, we really wanted to have an impact in the employability ecosystem working in a specific country with at least 25 service providers.

So getting to this issue at scale, for that we wanted to use the tools and methodologies that had some impact already and some results.

How did you engage the private sector to overcome stereotypes about youth and show them it’s in their interest to employ young people?

Companies were drawn to NEO because of two main motivations. One was really more like a corporate social responsibility motivation where they see that it’s important to tackle these problems of inclusion, diversity, and having young people in the companies. Especially now that we are immersed in the Fourth Industrial Revolution and young people are especially well positioned to bring more of a digital mindset. It’s important.

The other motivation is because companies are facing real bottlenecks in terms of talent to be able to grow and be more productive. They see that the young people coming out of the technical schools or vocational schools are not really coming with the right set of skills they need. They see they need to talk to these schools and collaborate with them in order to make very clear what are the set of skills they think are essential for young people and then other times they go beyond that and they not only influence the curricula but also they invest in some of the equipment that these technical schools are using so it’s more modern. They are even investing in these schools or they providing instructors to the schools.

The problem in many countries in Latin America is there are not many spaces where you can interact in this way with different sectors, the education sector, the productive sector. They are rare. One of the value adds of NEO is it provided this space for this communication and collaboration to happen.

Why was training the trainer a part of the program?

It’s key because many of these technical schools and vocational schools have really obsolete and very traditional ways of teaching the material. Needs are constantly changing; now with the digital transformation it’s even larger, so there is a need for the school system to understand what are the needs of the companies.

We have seen that many curricula in these public school settings don’t include life skills or social-emotional skills: how to work in teams, how to communicate, how to solve problems.

These are increasingly more important skills for private sector in this era of automatization. These social skills are really integral and robots are not going to be able to do this, yet the school system is not providing them with these skills. There’s a need for the curricula not only to improve in terms of technical areas but also in terms of including these very critical skills that the private sector is demanding.

Capacity building is very important if we want the public system to really be more in tune with all the transformations that are happening in the private sector.

How did you ensure this program is sustainable for schools and companies?

That’s really a challenge, right, the sustainability of this effort.

The strategy with NEO was to work with secondary technical schools that normally depend on the ministry of education. The idea was to institutionalize some of these curricula. There were training and certification that was provided to these professionals that were providing these services in the schools or vocational centers.

There was this professionalization of the human resources at the school level as well, trying to change the curricula, which is another process. You have some systems that have the autonomy and independence to do this and others depend on the ministry of education. That is a longer process to institutionalize and internalize and have this adoption. We have some successes in this regard of sustainability and scalability but it’s a very complex issue.

About the author

  • Teresa Welsh

    Teresa Welsh has reported from more than 10 countries and is currently based in Washington, D.C. Her coverage focuses on Latin America; U.S. foreign assistance policy; fragile states; food systems and nutrition; and refugees and migration. Prior to joining Devex, Teresa worked at McClatchy's Washington Bureau and covered foreign affairs for U.S. News and World Report. She was a reporter in Colombia, where she previously lived teaching English. Teresa earned bachelor of arts degrees in journalism and Latin American studies from the University of Wisconsin.