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Improved Education and Employment for Young People Are Key for Taking Advantage of the Demographic Dividend

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Photo: Marcos Delgado/EFE

Most Ibero-American countries are in a good position for economic development, thanks to what is known as the "demographic dividend" - and this is particularly important for the region's young people.

The demographic dividend refers to a phase in which the age balance in a certain population provides an opportunity for development. This happens when the dependency ratio between the working age population (young people and adults) and the dependent population (children and older adults) changes to favour a larger proportion of the former compared with the latter.

A larger proportion of workers not only represents a reduction in spending on dependents, but also tends to boost economic growth through higher revenues and rapid capital accumulation.

According to the document Youth and the demographic dividend in Ibero-America (in Spanish only), published by ECLAC and the Ibero-American Youth Organization (OIJ) with the support of the United Nations Population Fund (UNFPA) and the Latin American Development Bank (CAF), the region is in a period where the population's dependency rates have fallen to historic lows, which opens new windows of opportunity (particularly for young people).

The document does, however, state that this dividend will only result in real benefits for this age group if investment is made in human capital (especially education and employment).

The document affirms that the steady fall in fertility in several countries has liberated financial resources that would facilitate greater investment in education coverage and quality. This has been observed in all of the region's countries, and has expanded the available resources per child of school age by an average of 19% over the past decade.

A substantial increase averaging 15% is predicted for the next decade, which would make it economically possible to sustain an expansion of educational coverage in the secondary and higher education sectors.

The study also shows that young workers who joined the labour market in the past decade without having completed secondary education have faced worse labour conditions (unemployment, low income and participation in low-productivity jobs).

In the immediate future for some of the region's countries and the still fairly near future for others, steady ageing in all Latin American countries will reverse the dependency ratio. In other words, there will be a rising number of dependent older people compared with working-age adults and young people.

According to the document "This situation will require the adjustment of programmes and public policies in various areas such as the provision of long-term care and pension funding for a progressively ageing population".

The document concludes that more inclusive societies, with greater youth participation in quality education systems and productive employment, will be more successful in facing up to the challenges of population ageing.


 

 


 

 

 

The demographic dividend refers to a phase in which the balance between ages in a given population provides an opportunity for development.

This dividend will only result in real benefits for young people if investment is made in human capital (in education and employment in particular).