How high is youth unemployment, what are its features and why it will grow in the next 10 years.

Employment among young Kazakhstanis, according to official figures, reaches 96%, but most of these jobs are in industries with low productivity and wages. In addition, more than a third of young people work in the informal sector with precarious earnings, which, moreover, depend on the level of education, as well as regional and gender factors. By 2030, the situation may worsen - new generations of citizens will enter the labor market and face a shortage of jobs due to the destruction of the previous model of the economy of Kazakhstan.

According to the Ministry of Labor and Social Protection, in 2020 2.2 million people aged 15 to 28 represent the economically active part of youth. More than 96% of these were considered employed, and the number of unemployed did not exceed 84.7 thousand people. According to a study by NCE Atameken, the employment rate of graduates in 2019 was 74%, and the average salary was 103 thousand tenge. Also, according to the former Minister of Labor and Social Protection Birzhan Nurymbetov, his department predicted the development of the labor market for 5 years ahead. According to the forecast, the annual influx of young people into the labor market will increase to 256 thousand people by 2025, and the working-age population will increase to 12.1 million people. Starting from 2022 job creation will be insufficient, and the maximum deficit by 2025 will be 87 thousand jobs.

Although 96% of young Kazakhstanis belong to the employed part of the population, this fact is rather arbitrary, since they often work in low-paid jobs where they were not provided with high social security. In the third quarter of 2020, 359.5 thousand young people worked in the trade sector, 248.9 thousand in agriculture, and 222 thousand in education. Most of these jobs are in the informal sector, which, according to a comprehensive study by sociologist Serik Beisembaev, prepared by the Strategy Foundation, employed more than 600,000 young people in 2018.

According to the researcher, there are upper and lower layers of the informally employed. The former consciously choose the informal market, do not belong to the socially vulnerable segments of the population, and potentially receive real wages higher than if they were working on a legal basis. He noted that currently available formal employment market is represented mainly by low-paid vacancies that do not attract young people and bring them about 30-40 thousand tenge. The informally employed youth in single-industry towns considered 100-120 thousand tenge an acceptable level of remuneration. According to researchers, now they earn 60-80 thousand tenge. The bottom layer of the informally employed is extremely vulnerable; they are unable to find a job on a legal basis due to a lack of qualifications or for other reasons.

Also, the desire of young Kazakhstanis to work in one area or another varies from region to region. In the Zhambyl region, young people are more focused on private sector, in Almaty - on public sector, while in Karaganda people under 29 years old are ready to work anywhere, as long as there is high salary. Such a response is characteristic of young people in almost all regions with single-industry towns, which are classified as socially depressive towns, the sociologist noted.

Researcher Dinara Alimkhan, analyzing the NEET index in 2018, which measures the share of youth who are not employed nor engaged in education processess, noted that the majority of informal workers are found in the southern regions - especially in Zhambyl region (31%), Almaty region (18.3%), Kyzylorda region (14%) and Almaty city (11%). However, given that more than half of young people live in the southern regions, they most often become informal workers. This is the reason why the southern regions have the highest level of the NEET index.

The southern part of Kazakhstan includes Almaty, Zhambyl, Turkestan and Kyzylorda regions, as well as the city of Almaty. But the researcher includes the Mangistau region as well, because "it has the highest proportion of NEET and common cultural, social and demographic characteristics with other southern regions." The researcher concludes that the high level of NEET in the southern part of the country can be explained by the fact that most school graduates enter the labor market without education and encounter a large migration of young people from rural areas to cities.

At the beginning of 2020, 23.6% of young people were listed as self-employed. According to Aiman Zhusupova, an expert at the Institute of World Economics and Politics (IMEP), self-employment is often associated with low incomes and labor productivity. And this is especially evident in rural areas, where the share of self-employed youth is twice as large as in the city, which, among other things, is associated with low employment opportunities for hire.
Entrepreneurship development has also not become attractive to young people. According to a survey by the National Research Center "Molodezh", only 16.5% of young people answered positively to the question about plans to start their own business in the next three years. 51.3% of respondents do not plan to engage in entrepreneurship, and 32.3% of respondents have not thought about it. In addition, the data of the sociological survey showed the main problems faced by young entrepreneurs. The most relevant were the lack of start-up capital (this was indicated by 55.7% of respondents), the high cost of rent (32.4%), as well as the lack of experience in doing business, filing tax returns (22%). The level of education among young people also varies: 42.9% of respondents have higher and incomplete higher education. Moreover, there is a difference between employed and self-employed youth - 48.9% of the former and only 25.2% of the latter have attained higher education.

It is also important how the unemployment statistics are made. An unemployed person needs to apply to the employment center at the place of residence, or through the e-government portal, to be included in the statistics. According to a survey conducted in the Mangistau region, only 17% of the unemployed registered as job seekers, which allows the employment department to link them to jobs. This lack of knowledge persists even though 88% of young people are active users of the Internet and social platforms. “However, most people of working age, and especially young people, do not apply to employment centers in search of work, but prefer to look for work themselves through advertisements via the Internet and through acquaintances. This is the indicator for “shadow unemployment,” which is reality for a significant part of the self-employed population, as well as the indicator for insufficient statistical coverage of the unemployed by employment centers and official statistics,” says Zhusupova.

Youth unemployment is high, especially in cities. This is attributed to internal migration from rural areas. One of the main factors behind the outflow of young people is poor access to quality education in rural areas. This is indicated at least by the fact that the vast majority (87%) of vocational schools are located in cities.

The gender factor also affects youth employment. Unemployment among women remained at 4.6% versus 3.4% for men. The so-called "female" professions are less competitive and often less paid. “Today, the labor market is in demand for STEM graduates, and positions are more often received by men. In particular, male labor prevails in the coal and mining, oil-refining regions, while there is a small number of enterprises where female employees are fully used,” Zhusupova notes.

When digging deeper on the problem of youth unemployment, several more reasons can be identified: “First hire trap”, when employers require 3-5 years of work experience from a hired worker. Orientation of young people to the prestige of certain professions, leading to an overabundance of lawyers and economists. Also, the choice of a profession among young people is not always dictated by personal interest. The results of a study conducted by the Research Center "Molodezh" in 2020 showed that only a little more than a third of young people chose their profession based on personal interests. The choice of a profession for 23.7% of the young people surveyed was influenced by their parents, another 6.4% were based on the availability of grants for education, 4% - on friends’ recommendations,” Zhusupova states.

In addition to them, it is important to consider the macroeconomic situation. Over the past 10 years, two simultaneous trends have been superimposed on youth unemployment - the economic “pie” has begun to expand much more slowly, and a record large group of young people have entered the labor market. This was the generation who were born in the second half of the 1980s, a peak birth rate year. Hence the problem with unemployment and unproductive self-employment, says Kuanysh Zhaikov, a partner at the Research and Consulting Center (CRC).

2020 has only exacerbated the problems of youth employment and employment. According to the International Labor Organization, one in five young people in the world have lost their jobs due to the pandemic. A survey by the Research Center "Molodezh" in 2020 claims that due to the state of emergency and quarantine, 13.2% of respondents noted that they had lost their jobs. “This was most evident, for example, in the field of trade, since all over the world online commerce received a new impetus, the spread of which was strongly influenced by the period of forced movement restrictions, when citizens developed new buying habits,” Zhusupova emphasized. She also noted that in the short term, we should expect a contraction in the areas of tourism, restaurant and hotel business, although, in the long term, they may recover. In addition, due to the deteriorating economic situation, further reductions in employment in the arts, entertainment and recreation sectors are possible.

All this gives rise to negative phenomena in the Kazakhstani labor market and in the economy, since one of the mechanisms for solving the problems of low-quality youth employment is educational or labor migration. According to a 2019 study by the International Organization for Migration, young people leave their place of birth for the following reasons: systemic poverty and material crisis in the family; lack of jobs in the country or difficulties with employment (the need for seniority, patronage or bribes); lack of jobs in certain professions; low wages at existing jobs; the predominance of jobs in the labor market that involve heavy monotonous work. Otherwise, young people stay with their parents for a long time and become prone to antisocial behavior.

In the next 5-10 years, youth unemployment may decrease, but after 2030 the situation may worsen again: “In the next 10 years, the generation of the late 1990s is expected to enter the labor market. At this time, the birth rate in the country reached a historical "bottom". They are 1,5 times less in sheer numbers than young employees of today. There may even be some shortage of starting positions in all sectors of the economy and all regions. According to official forecasts, the largest decline in youth - by 25-30% by 2025 - is expected in all areas bordering Russia. The situation with youth unemployment will again become acute after 2030, when the current children will join the labor market. Let me remind you that Kazakhstan took the 1st place in the world in terms of the increase in the share of children in the structure of the population over the past 10 years.

The expert also notes that regional circumstances will differ, since the local labor market is highly dependent on the demand for workers from the local economy: “First of all, the entire “industrial” arc is under a threat, from the western-oil to the metallurgical-eastern regions. There is the concept of “rust belt,” which characterizes the situation with single-industry towns dependent on heavy industry. In many "rust belts" of developed countries, mass labor emigration gradually occurred. It affected 50% of the population of these single-industry towns. Government policy partially softened this trend through the artificial creation of employment in the "social" sectors - education and health care.

In the next 10 years Kazakhstan is expected to peak in its production capacity, but then the resources will gradually deplete, according to Zhaikov. This risk is already a reality in Kyzylorda, Aktobe and, partially, in Mangystau regions. “In the conditions of our country, we could also talk about the possible migration of a million people from industrial regions. In this case, the conservation of the problem is possible in the following form: a) high youth unemployment with negative social consequences in the western, central and eastern regions; b) a shortage of young personnel and lower incomes in cities with a population of more than million people,” the economist believes.
The replacement of people by machines and the automation of labor processes can also affect the growth of youth unemployment. “According to various experts, up to 66% of existing professions will disappear in the next 10-20 years, and at the same time, more than 47% of professions will only appear on the market in the next 5-10 years,” Zhusupova concluded.