Full Report - Subregional Office for East and North-East Asia - escap

MACROECONOMIC PERFORMANCE AND POLICY CHALLENGES AT THE SUBREGIONAL LEVEL CHAPTER 2
environment (beaches, forests, rivers, coral reefs
etc.) provides these countries with a comparative
advantage in tourism products. The management of
the environment in a sustainable manner will ensure
long-term comparative advantages for tourism.
The largest social problem facing many of these
economies is the high level of youth unemployment
(see box 2.3). Performance of these economies will
depend on how they are able to address youth
issues. About 20% of the total population in the
subregion is aged between 15 and 24. The majority
of the youth that are unemployed are also not
skilled, and many do not have secondary or even
primary education. The improvement in agricultural
productivity, including downstream value added
processing and better linkages of the tourism sector
with the wider community, could help address the
high youth unemployment levels.
Aid and remittances also contribute significantly to
these economies. While remittances are likely to
continue to increase, the importance of aid cannot
be understated in some of the countries. Donor
assistance for infrastructure, health and education
will have to continue, as some of them will not
have the budgetary capacity to develop those areas.
While improving household freedom and capabilities,
Box 2.3. Youth unemployment in the Pacific island developing countries
Young people make up a large proportion of the population of the Pacific island developing countries. Young people in the age
group of 15-24 years account for nearly one fifth of the total population and one third of the total working-age population.
Almost one quarter of the total population is in the wider age group of 15-30 years, and the more populous Pacific island
countries are facing a “youth bulge”— the proportion of youth in the population is much higher than that of other age groups
(UNICEF and SPC, 2011).
Younger people are disproportionately unemployed in the Pacific, and youth from all across this subregion have identified lack
of employment opportunities as the top problem facing their generation (UNICEF and SPC, 2011). For example, those between
the age of 18 and 30 accounted for one third of the Fiji labour force in 2004/05, but accounted for almost two thirds of the
total unemployed. In Kiribati, young people 15-24 years of age made up a quarter of the labour force in 2005 but made up
58% of the unemployed (EPOC, 2007). In Tonga, youth accounted for 42% of the total unemployed in 2003. The magnitude of
the unemployment problem among the young people might be even higher than these figures suggest, as many youth might
drop out of the labour force and give up looking for jobs once it becomes clear that few opportunities exist. The extent of the
problem is so severe that an ESCAP report compared unemployed youth in the Pacific to a “social time bomb” (EPOC, 2007).
There are several causes of high youth unemployment in the region. First, economic growth is an absolute prerequisite for
providing employment opportunities, and only an expanding economy can provide jobs for a growing labour force. However,
most Pacific economies are growing very slowly and cannot keep pace with the increasing number of young people entering their
labour forces every year. Additionally, young people are also less experienced and thus face structural disadvantages compared
with older cohorts in an already squeezed labour market. Second, in most Pacific island developing countries there is a great
mismatch between skills gained through the education system and the skills required to be employed given the country’s economic
structures (ILO, 2010a; World Bank, 2009). While the curriculum of most educational institutions prepares students for jobs in
the formal sector, there are very few jobs in that sector. The few that exist are predominantly based in the public sector and in
urban areas. Given the high population growth and low economic growth rates, it is inevitable that young people in the Pacific
will end up in the informal sector (ILO, 2010b), and the education system does not increase a young person’s employability in
the informal economy. This results in a large number of school leavers — for example, half of school leavers in Fiji in 2005 —
not having a job in the formal sector and not having any skills to use in the informal sector (World Bank, 2009). The weak
linkages between education and the job market are often exacerbated by the lack of support/counselling furnished to students
concerning opportunities available after they leave school (UNICEF and SPC, 2011).
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