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The Hangzhou Summit and the Case of Youth Unemployment

Matthew McIntosh, G20 Research Group
October 6, 2016

Youth unemployment is a persistent issue that the G20 discussed at its summit in Hangzhou, China, on September 4-5, 2016. However, it has been addressed more adequately by G20 members over the years since they first met in Washington in 2008. Accordingly, in preparation for the Hangzhou Summit, G20 labour and employment ministers met in Beijing on July 11-13, 2016, where they acknowledged entrepreneurship and apprenticeship as ways to decrease youth unemployment. However, youth unemployment has not always been a priority at the G20 summit table.

Youth unemployment was first formally addressed at the 2011 Cannes Summit when the G20 Task Force on Employment was established. This was followed by strategies to address youth unemployment at the employment ministers' meeting leading up to the 2012 Los Cabos Summit. The G20 took a major step forward at the 2013 St. Petersburg Summit, where youth unemployment was a major focus of the summit declaration. The issue gained importance at the 2014 Brisbane Summit when members made a strong, politically binding commitment to reduce youth unemployment. They expanded on this commitment at the 2015 Antalya Summit with a clear objective to decrease youth unemployment by 15% by 2025.

How Well Did Hangzhou Perform?

Although the Antalya Summit made progress, the Hangzhou Summit provided a chance to engage in new and realistic commitments on youth unemployment. In the end, the G20 came through with commitments that did make progress.

The first commitment from Hangzhou on youth employment is found in the G20's discussions on growth. Members committed to achieving greater fiscal growth to benefit young people by improving the quality of employment. Additionally, in the G20 New Industrial Revolution Action Plan, members committed to support labour forces over time and ensure that the benefits of the so-called fourth industrial revolution will extend to youth. The G20 also pledged to encourage policies that support firms of all sizes, including youth entrepreneurs, so that they may fully utilize global value chains. Furthermore, G20 members stated that they will improve their employment plans in 2017 in order to examine their progress on their commitments in reaching their goals on youth employment.

While these commitments build on those made the previous year at Antalya, Hangzhou's commitments were, understandably, less ambitious. Antalya's significant commitment to reduce youth unemployment by 15% by 2025 needs to remain a major focus for the G20 for the rest of 2016 and until the next summit in Hamburg in July 2017. Therefore, progress on the Antalya commitment needs to be monitored, and it is perhaps too early to make another commitment of a similar magnitude. Hangzhou's youth employment commitments are nonetheless strong and more achievable, although they could have been more specific in terms of identifying how they will increase youth employment. Despite this, the G20 is taking steps forward.

Hangzhou under the Lens

How well have G20 members complied with their commitments to lower youth unemployment? This question can be answered by examining which members have failed to fulfill their past commitments to youth and why, and which have been successful and why.

As host of this year's summit, China's G20 implementation record will certainly be examined by youth-focused non-governmental organizations, agencies and think tanks. According to the assessments made by the G20 Research Group, China has complied with most of its youth-related commitments from the 2013 St. Petersburg, 2014 Brisbane and 2015 Antalya summits. However, it has lacked innovation in its commitment to reduce youth unemployment. Therefore, China should engage in dialogue with other countries in order to discover new and inventive ways to encourage businesses to hire more youth, especially as this was a commitment made at the 2013 St. Petersburg Summit, which China failed to comply with.

China is not the only G20 member that has struggled to find new ways to deal with youth unemployment. Turkey and Indonesia have also faced challenges. Both countries will likely only partially fulfill any youth-related commitments that were made at Hangzhou, given that both have only partially complied with half the youth-related commitments for the 2013 and 2014 summits. In particular, both countries have struggled to establish vocational training programs for youth and have not done enough to encourage firms to hire youth.

Of all the G20 members, Saudi Arabia has struggled with this issue the most. With the price of oil declining over the past two years, Saudi Arabia's oil-dependent economy is struggling. The Saudi Arabian government has cut subsidies and limited spending to encourage the private sector to provide more jobs for youth. Making things more complex, Saudi Arabia is facing a major age gap as well over half its citizens are under the age of 30. Consequently, it has begun a new revolutionary economic development plan to decrease unemployment to 7% by 2030. This goal is aimed at general unemployment, yet given the youth of most of the population it should also affect youth.

Unfortunately, this decline in oil prices is not the only reason why youth unemployment in Saudi Arabia is a cause for concern, as Saudi Arabia has only partially fulfilled its previous youth-related commitments. Following the St. Petersburg Summit, it implemented policies specifically aimed at youth but did not provide full details on its educational reform program according to the G20 Research Group. Moreover, the G20 Research Group found Saudi Arabia's fulfillment of the 2014 Brisbane commitment to youth was also limited because it did not act to increase opportunities for youth employment.

Saudi Arabia should continue to engage in discussions with other G20 members to reduce youth unemployment. Saudi Arabia, as well as China, Indonesia and Turkey, should consult Canada, Australia and the United States to develop strategies for dealing with youth unemployment as these are the three G20 members that have continued to comply with their youth employment commitments.

The Front Runners

Since the 2013 St. Petersburg Summit, Canada, Australia and the United States have consistently complied with all the commitments on youth in the labour force assessed by the G20 Research Group. This trend is expected to continue. This performance suggests that these three countries can share valuable knowledge with others that are not complying with their youth commitments.

The Hangzhou Summit was the second time that Australian prime minister Malcolm Turnbull and Canadian prime minister Justin Trudeau attended a G20 summit. Since the Antalya Summit in 2015, both their countries have done well on their commitments to reduce youth unemployment. Australia's impressive Youth Employment Package received $840.3 million so that 120,000 youth can benefit in their job search. This initiative involves pre-employment training, internships and subsidies. In February 2016, Canada doubled the amount of jobs under the Canada Summer Jobs Program through an investment of $339 million, which will result in the creation of 35,000 new jobs over the next three years.

With the U.S. presidential election approaching in November 2016, Hangzhou was Barack Obama's final G20 summit. During his administration, the United States launched successful youth employment initiatives. In early 2014, My Brother's Keeper began with the intention of helping disadvantaged young African-American and Latino men better their chances of employment and education. It was expanded in 2015 to encourage youth to engage in entrepreneurship. In 2016, the U.S. launched the Summer Opportunity Project to secure summer employment for young people and to provide better opportunities for this demographic to obtain their first job by increasing the number of youth in opportunity programs.

The United States, Australia and Canada are thus leading in combatting youth unemployment among the G20 members.

Leading Up to Hamburg

The next G20 summit will take place in Hamburg, Germany, on July 6-9, 2017. Until then, the G20 Research Group will monitor each member to determine how well it has complied with its commitments on youth employment.

China will be observed for whether it can come up with innovative ways to lower youth unemployment. Turkey and Indonesia must encourage firms to hire more youth. Saudi Arabia's significant age gap and the declining price of oil over the past two years means the country must find solutions to lower its youth unemployment rate in ways that also address employment more broadly so that its economy can thrive without relying on oil. Moreover, several countries should engage in dialogue with the United States, Canada and Australia on how to increase youth employment.

The Hangzhou Summit brought youth unemployment to the attention of world leaders. It resulted in strong commitments to address youth unemployment, allowing for concrete goals to be pursued. Overall, Hangzhou was a step forward for addressing youth employment concerns.

Hamburg offers the opportunity to make new commitments, formulate plans and programs, and, ultimately, to lower youth unemployment around the world.

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Matthew McIntoshMatthew McIntosh is a researcher with the G20 Research Group and G7 Research Group based at the Munk School of Global Affairs and Trinity College at the University of Toronto. He is in his third year of undergraduate studies at Western University in London, Ontario, where he is studying political science.

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