Longer life expectancies and declining birth rates are two of the main contributory factors towards this trend. \u00a0But depending on the existing demographics in the countries concerned, the effects of these trends will be very different. \u00a0In particular, the number of younger people in society.<\/p>\n
The demographic transition<\/h2>\n
In many richer countries, there is growing concern over the impact that having more older people to care for will have on healthcare systems. \u00a0But in other regions, a significant growth in the number of young and working-age people, relative to those dependent on them, will lead to very different challenges and opportunities.<\/p>\n
These differences can be explained by considering what stage a country is at in what is known as its \u2018demographic transition\u2019. \u00a0Historically, most countries experienced both high birth rates and high death rates. \u00a0But as societies became wealthier, with better nutrition and healthcare, death rates tend to decline. \u00a0If the birth rate remains high, this leads to a rapid increase in population as more people are born but fewer people die.<\/p>\n
Over time, as societies modernize and become wealthier, people tend to have fewer children and birth rates also decline. \u00a0When the birth rate falls in line with the death rate, a country\u2019s population stops growing rapidly and may even start to decline.<\/p>\n
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<\/p>\n
This process has already happened in countries as different as Germany, Chile, Mauritius and China[3]<\/sup><\/a>. \u00a0Some of these are now facing the challenges of declining populations that have larger proportions of older people. \u00a0Research in 2020 forecasted that 23 countries would experience huge reductions in their populations by the end of this Century if current trends continued. \u00a0Japan’s population was projected to fall from more than 128 million in 2017, to less than 53 million by 2100, while over the same period, the population in Italy was predicted to plummet from 61 million to 28 million[4]<\/sup><\/a>. \u00a0Countries like these, face the challenge of how to support their older generations as they grow in comparison to the working age population.<\/p>\n In contrast, those countries at an earlier stage in their demographic transition have the opportunity to benefit from a \u2018demographic dividend\u2019, a window of time when their youth and working age populations grow in proportion to the number of older age dependents to care for.<\/p>\n A 2019 report from UNICEF, predicted that in the Middle East and North Africa (MENA), \u201can unprecedentedly large proportion of [the region\u2019s] population will move into their most productive years\u201d in the coming decades[5]<\/a>. \u00a0The most favorable time will be the period until 2040, when the dependency ratio will be about 50 dependents (defined as children younger than 15 and older people aged 65 and over) for every 100 working age adults (those between 15 and 64 years old).<\/p>\n Between now and 2050, there will be large increases in the overall number of children and younger people across much of the MENA region \u2013 demographic changes that are set to have a major economic impact. \u00a0By 2030, UNICEF says there will be an additional 2.4 million young people (aged between 15 and 24) across the region, and five MENA countries will see an increase of 40% or more. \u00a0In Kuwait and Iraq, the number of youths will almost double in that time, adding 200,000 more young people in the former and more than 3.2 million in the latter. \u00a0And the youth population in Egypt will rise by a third (33%), or 5.5 million. \u00a0The highest annual increases for the region as a whole are expected in 2027 and 2028, with an addition of 2.4 million young people each year.[6]<\/a><\/p>\n These countries, and others experiencing similar demographic trends, have an opportunity to leverage this \u2018demographic dividend\u2019 to help drive economic growth. \u00a0A large young population entering the workforce has the potential to inject the economy with fresh energy, innovation and creativity \u2013 many African start-up founders are under 35, for example[7]<\/a>.<\/p>\n However, Geert Cappelaere, UNICEF\u2019s MENA regional director, has warned that \u201ca demographic dividend does not emerge automatically \u2013 it must be cultivated\u201d.\u00a0 Healthy, well-nourished and well-educated young women and men, supported by inclusive policies in a climate of peace and stability, can bring unprecedented levels of growth and social progress to the region, he explained. \u00a0\u201cBut if we don\u2019t invest enough in children and young people, large numbers will continue to be excluded. \u00a0Conflict and instability will prevail, and demographic changes in the region will become a burden rather than an opportunity,\u201d he said.<\/p>\n So, what can countries with booming youth populations do to make sure they make the most of these opportunities? \u00a0This question is particularly pertinent in Africa, where 70% of people are under the age of 30 and more than 400 million young people are expected to enter working age by 2035. \u00a0According to UN forecasts, more than a third of the world\u2019s young people will live in Africa by 2050[8]<\/a>.<\/p>\n But the continent\u2019s rapidly increasing young population faces serious challenges in finding work. \u00a0While up to one million African people enter the labor market every month, fewer than one in four land a formal job[9]<\/a>. \u00a0According to the International Labor Organization (ILO<\/a>), more than a quarter of young people in Sub-Saharan Africa are neither employed, nor in education or training (NEET)[10]<\/a>. \u00a0The Cities Alliance global partnership says that in the same region, informal employment as a percentage of total employment is 89% \u2013 meaning \u201cmany youths lack access to social safety nets, or any form of workers\u2019 rights\u201d.<\/p>\n At a summit in Tanzania in 2023, bringing together heads of state, heads of government and ministers from 43 African countries, Mamta Murthi, the World Bank\u2019s vice president for human development, said in an interview that political commitment was more important than resources for addressing this challenge. \u00a0\u201cThere needs to be more investment in young people,\u201d she said. \u00a0\u201cThey need to be well educated and there needs to be the kind of investment that creates jobs so that these young people with skills can be employed.\u201d[11]<\/a><\/p>\n Delegates at the summit acknowledged that developing human capital in Africa requires coordinated planning and financing as well as resolute effort to strengthen the quantity, efficiency, and impact of investments in people. \u00a0Their declaration made a number of commitments, including reducing learning poverty by at least a quarter by 2030 and improving literacy rates to reach 75% by 2030. \u00a0To boost health, they committed to reducing the proportion of people with wasting, stunting, and underweight, and achieving 90% immunization coverage by 2030[12]<\/a>.<\/p>\n The summit also agreed a range of measures to promote job creation and economic opportunities. \u00a0These included attracting domestic and foreign investment, promoting entrepreneurship, and supporting the growth of small and medium-sized enterprises. \u00a0In addition, the countries will prioritize high-potential sectors such as agriculture, renewable energy, and digital technologies \u2013 and have committed to provide training to an additional 19 million people to gain digital skills for jobs by 2030.<\/p>\n The challenges of realizing the human capital of an increasing number of young people are highly complex \u2013 as India is finding. \u00a0Last year the country overtook China as the world\u2019s most populous nation[13]<\/a>. \u00a0About two-thirds of its population is under 35, and its labor force is growing by millions each year[14]<\/a>. \u00a0India is experiencing rapid economic expansion \u2013 recently confirmed as the world\u2019s fastest growing major economy, at a rate of 8.4%[15]<\/a>. \u00a0But despite this positive outlook, unemployment remains a problem for the country, particularly among the young. \u00a0Last year a report from Azim Premji University in Bangalore found the unemployment rate for graduates younger than 25 reached 42% in June 2022[16]<\/a>. \u00a0The authors warned that over the long term, growth in GDP and employment growth were \u201cuncorrelated\u201d, suggesting that \u201cpolicies oriented towards achieving faster GDP growth will not necessarily speed up job creation”.<\/p>\n A lack of skills among young people is one important concern. \u00a0One survey last year found that three quarters of Indian manufacturers \u2013 in sectors including automative, engineering and electronics \u2013 were experiencing a skilled labor shortage that was hampering their profitability. \u00a0More than a third of these (35%) said that the impact was severe[17]<\/a>. \u00a0These findings are backed up by an S&P Global analysis, which found that lower skill levels within Indian manufacturing meant in 2021 each employee was on average contributing just US$ $8,076 of value \u2013 far less than other countries such as Thailand (US$ $18,308) and Malaysia (US$ $34,402)[18]<\/a>. \u00a0Skills shortages are also occurring in other key parts of the economy. \u00a0The country\u2019s telecoms sector has a shortage of 2.41 million skilled workers, an industry body said in 2023 \u2013 expected to grow almost four-fold by 2030.[19]<\/a> \u00a0Also in 2023, the chairman of the major Indian conglomerate RPG Group posted about skills shortages on social media, saying[20]<\/a>: “We want construction workers \u2013 we can\u2019t find enough! \u00a0We want truck drivers \u2013 huge shortage! \u00a0We want plantation workers \u2013 they are not available! \u00a0Can\u2019t understand solution”.<\/p>\n To address such concerns, the Indian government has launched a range of initiatives aimed at boosting the skills of its population \u2013 particularly young people. \u00a0The country\u2019s National Education Policy[21]<\/a>, announced in 2020, sets out a comprehensive framework to transform the education system. \u00a0It puts a key focus on foundational numeracy and literacy, with an aim to attain universal numeracy and literacy in primary schools by 2025, and 100% youth and adult literacy by 2035. \u00a0Another important goal is improving participation in higher education, where it aims to increase the gross enrolment rate to 50% by 2035 (almost double its level in 2018) and propel Indian universities into the top 100 globally[22]<\/a>.<\/p>\n In addition, India\u2019s Ministry of Skill Development and Entrepreneurship was set up in 2014, overseeing a range of funding and training opportunities for both businesses and individuals. \u00a0Its flagship scheme, the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), was created in 2015 to develop industry-relevant skills in young people across the country to help them find employment[23]<\/a>. \u00a0To the end of 2023, it had provided training or orientation to about 14 million candidates. \u00a0However, many of these have not yet found work. \u00a0One analysis last year said that fewer than a quarter of candidates certified under PMKVY programs had been placed in a job[24]<\/a>.<\/p>\n These statistics underline how there are no easy answers to seizing the demographic dividend \u2013 and that success is likely to come down to a complex interaction between connected factors.<\/p>\n In many countries, economists believe that gender is a crucial consideration. \u00a0In India and many other countries with the potential for a demographic dividend, the participation of women in the workforce is low. \u00a0The employment rate for Indian working-age women fell to 24% last year, compared to 29% in 2010. \u00a0And there was a bigger fall for those under 25: from 20% to 12%.<\/p>\n Similarly, across Africa, more than a quarter of young people (72 million) are NEET (Not in Education, Employment or Training) \u2013 and two thirds of these are women[25]<\/a>. \u00a0In 2022, the NEET rate among young women in sub-Saharan Africa was 33%. \u00a0And the ILO found that across seven countries it examined in this region, women aged between 15 and 29 had higher NEET rates and lower employment rates than young men.<\/p>\n These trends are influenced by social attitudes and practices. \u00a0In sub-Saharan Africa, young women typically take on more household tasks such as cooking and childcare, leaving them less available to participate in education and the workforce. \u00a0Social norms are also believed to be a factor in India \u2013 where in addition, there is a lack of jobs accessible to women, and safety concerns due to an increasingly urbanized population[26]<\/a>. \u00a0Many experts believe that overcoming such problems will be crucial to countries reaching their economic potential. \u00a0As Radhicka Kapoor, a visiting professor at the Indian Council for Research on International Economic Relations think-tank, told the Financial Times<\/em>, \u201cyou really cannot realize your demographic dividend with half of your population not even in the labor force\u201d.[27]<\/a><\/p>\n One country that has seen a notable improvement in this area is Saudi Arabia \u2013 which with its median age of 22, is well-placed to reap a demographic dividend in the coming decades[28]<\/a>. \u00a0An analysis last year by S&P Global found that female participation in the country\u2019s workforce reached 36% in 2022, nearly double its level of 19% in 2016. \u00a0The change is believed to be down to factors including \u201cimproved access to education, declining fertility rates, and a more inclusive cultural environment\u201d, according to Arab News[29]<\/a>. \u00a0In 2020, almost a third (32%) of women aged 25 and above in the country held at least a bachelor\u2019s degree \u2013 a significant increase from 2017, when the proportion was about a quarter (26%).<\/p>\n The growth in workforce participation is expected to boost the Saudi economy by US$ $39 billion (3.5%) by 2032 and underlines the importance of government action in realizing the demographic dividend. \u00a0The change follows the government\u2019s Vision 2030<\/a> program, which among other goals, seeks to boost \u201cwomen\u2019s empowerment and youth engagement\u201d[30]<\/a>. \u00a0A report this year from the World Bank[31]<\/a> said the Saudi government\u2019s \u201cstrong display of commitment and vigorous communication around female empowerment\u201d was an important factor supporting the rise in participation.<\/p>\n It also highlighted the importance of \u201cmajor legal reforms and new programs to promote female employment\u201d, alongside structural economic changes and the impact of the COVID-19 pandemic.<\/p>\n Although state activity is important, successful attempts to reap a demographic dividend will also need to mobilize the power of private investment. \u00a0According to UNICEF, in MENA countries the necessary job creation must be \u201cprivate-sector driven\u201d[32]<\/a> to reduce a previous reliance on the public sector to absorb new labor market entrants. \u00a0Its report on the region calls for countries to \u201clevel the regulatory playing field\u201d to support the growth of small and medium enterprises and position themselves to take advantage of the rapid changes in technology that constitute the fourth industrial revolution.<\/p>\n Education is one key area where the potential for partnerships between governments and businesses is being explored.<\/p>\n In Saudi Arabia, the government has recently been focusing on the potential of technology in transforming and enhancing the education sector, a ministerial adviser recently wrote[33]<\/a>. \u00a0The Saudi government believes the country\u2019s sizeable youth population, combined with its prioritization of both digitization and education, offers a fertile ground for both local and foreign investors in areas including virtual classrooms, online learning platforms, and developing educational content. \u00a0It is supporting the EduTech sector\u2019s growth through initiatives such as regulatory reform, financial incentives, and working with schools and colleges.<\/p>\n Hicham El Habti, the president of Mohammed VI Polytechnic University in Morocco, believes the transformations needed within Africa\u2019s higher education system must also involve the private sector[34]<\/a>. \u00a0Education programs \u201cmust be reimagined to nurture the entrepreneurial spirit that benefits society\u201d, he argues, saying that any viable system \u201cmust harness multiple synergies between Africa\u2019s universities, industry and business\u201d.<\/p>\n A decade ago, his own university was established with a focus on the priorities of its industrial partner \u2013 the mining and manufacturing business OCP Group \u2013 but it now supports study in a wide range of areas across science and technology, business and management, and the humanities. \u00a0Encouraging collaborations are also evident in India, where global firms including Microsoft and IBM are supporting programs to develop digital skills among young people in areas such as AI and cybersecurity.[35]<\/a>,[36]<\/a><\/sup><\/p>\n Such partnerships offer exciting examples of how governments and businesses can work together to help unleash the capacities of youth populations \u2013 a task that will be crucial to many countries\u2019 future prospects. \u00a0Describing young Africans as his continent\u2019s \u201cmost valuable asset by far\u201d, El Habti writes that \u201conly through embracing their drive can Africa truly reach its potential\u201d.<\/p>\n The Jameel family is playing its part to enable young people in the MENA region and elsewhere to achieve their potential and make a meaningful contribution to the growth of their communities.\u00a0 Since 1994, for example, we\u2019ve helped around 200 young people from around the world to achieve their potential by studying at the Massachusetts Institute of Technology (MIT<\/a>) in the US, through Community Jameel\u2019s<\/a> Jameel-Toyota scholarship program<\/a>.\u00a0 Many alumni of this scheme go on to successful careers in business and academia, where they can contribute to building a sustainable future.<\/p>\nDependency ratios<\/h2>\n
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<\/p>\n![\"\"](\"https:\/\/media.alj.com\/app\/uploads\/2024\/07\/1976-ALJ-Investing-in-Youth-New-v2_003-scaled.jpg\")
<\/p>\nOpportunities and risks<\/h2>\n
Investment in young people<\/h2>\n
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<\/p>\nEyes on India<\/h2>\n
Gender disparity<\/h2>\n
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<\/p>\nSaudi success<\/h2>\n
![\"\"](\"https:\/\/media.alj.com\/app\/uploads\/2024\/07\/1976-ALJ-Investing-in-Youth-New-v2_006-scaled.jpg\")
<\/p>\nBuilding partnerships<\/h2>\n