Risk Atlas by Nathan Skinner

RISKS [ THREATS ][ OPPORTUNITIES ][ MANAGEMENT ]

RISK ATLAS YOUTH UNEMPLOYMENT

Lost generation

DEALING WITH RIOTS When it comes to riots on the streets of Europe, there is much to learn from the recent UK events, especially for retailers. Arcadia’s head of risk management, Colin Campbell, suggests the following strategies for retailers and others:

Youth unemployment has reached staggering levels, and disaffected young people can trigger many more risks

IGURES RELEASED IN JANUARY SHOW THAT YOUTH unemployment in Spain reached 51.4% among those aged 16 to 24. A shocking one in two young people in Spain is without a job. As the Risk Atlas shows, the situation is not much better in several other parts of the world. High rates of joblessness among young people is a risk that can easily be correlated with other social problems, such as civil unrest, drug use and crime. The collective frustration among youth has been a contributing factor to protest movements around the world this year, as it becomes increasingly difficult for young people to ﬁnd anything other than part-time and temporary work. High rates of joblessness among young men was certainly a factor in the Arab Spring uprisings that continue to sweep across the Middle East. Going back further, a er the ﬁnancial crisis in Argentina in 2001, which led to the collapse of the Argentinean economy, large numbers of young people became addicted to the drug Paco (short for ‘pasta base de cocaine’ – a substance created at the early stage of cocaine production). The highly addictive and

Where there is high unemployment in the 18-30 year old category, there is a tendency for discontented youth to take to the streets to try to accelerate change cheap drug expanded out of the ghettos to the Argentine middle class. No definitive numbers exist on deaths. Youth unemployment was high on the agenda at the World Economic Forum in Davos, where politicians, economists and bankers said action was essential to stimulate growth and prevent a ‘lost generation’. This is set against a backdrop of rising frustration among millions of young people worldwide who are facing high unemployment, increased inactivity and precarious work. As recent figures show, the global economic crisis has led to a substantial increase in youth unemployment around the world. And it’s not just a problem confined to poorer countries. At the peak of the crisis period in 2009, the global youth unemployment rate saw its highest annual increase on record, going from 11.8% to 12.7% between 2008 and 2009 – an unprecedented increase of 4.5 million unemployed youth worldwide. The average increase of the pre-crisis period (1997-2007) was less than 100,000 young people per year. A report from the International Labour Organisation (ILO) on youth unemployment in January said: “For the generation

StrategicRISK [ MARCH 2012 ] www.strategic-risk.eu

Make sure your security

1 precautions – perimeter barriers, doors, gates, grilles, shutters – are functioning properly

51.4%

Consider temporarily boarding up

2 vulnerable access points, such as windows, and main entry points

Spain

Remove combustible materials and

3 make sure ﬁre risk assessments are up to date, ﬁghting equipment is adequate and maintained, and that people are trained to use it

NB: 2011 ﬁgures

Remove anything that could be

4 used as a projectile to break

windows, such as advertising boards Consider removing high-value items

5 from display or even premises

Have emergency assistance on

6 standby to help with any necessary boarding up and cleaning

entering the labour market in the years of the Great Recession, there is not only current discomfort from unemployment, under-employment and the stress of social hazards associated with joblessness and prolonged inactivity, but also possible longer-term consequences in terms of lower future wages and distrust of the political and economic system.” Executive director of the ILO employment sector José Manuel Salazar-Xirinachs said that ultimately the job market will only ever pick up if “obstacles to growth recovery” are removed, “such as accelerating the repair of the ﬁnancial system, bank restructuring and recapitalisation to re-launch credit to small- and medium-sized enterprises, and real progress in global demand rebalancing”. As with every risk, there’s an upside too. Countries and companies that are still in a position to offer employment should easily be able to attract the best workers. Chancellor Angela Merkel only had to mention Germany’s shortage of healthcare professionals at a recent European summit to trigger an inﬂux of migrant workers from Spain into her country. Those companies that are still growing should, similarly, be able to pick and choose from a large pool of talented and enthusiastic young people. SR [READ MORE ONLINE] Download a PDF of this risk map at www.strategic-risk.eu or goo.gl/joFlH

FOCUS ON: EUROPE

The unemployed take to the streets IN EUROPE, MEASURES DESIGNED TO REMEDY national financial problems are likely to spark off further public protests. Greece is expected to make further spending cuts as one of the conditions of its bail-out package from the EU and IMF. The same could be true in other European countries as governments struggle to ward off a return to recession. French finance minister François Baroin has announced austerity measures, while UK chancellor of the Exchequer George Osborne has pledged to continue the country’s fiscal squeeze, despite the fact that unemployment is now at its highest level in 15 years. Spain and, to a lesser extent, Italy have both seen protests against cuts in spending. There could be a

number of disasters waiting to happen as disaffected citizens take to the streets. Pincipal of Paris-based Adageo, an independent risk management resource, Chris Lajtha says: “The likelihood of civil commotion is largely determined ﬁrst by the hardship – real or perceived – felt by various segments of a population, and second by the availability and accessibility of channels to voice discontent/demands for change. In countries in both the developing and developed world where there is a high rate of unemployment in the 18-30-year-old category, there is a tendency for discontented youth to take to the streets to try to accelerate change.”

Key Youth unemployment rate (16-24 year olds) 50% and over 31-49% 21-30% 10-20% 0-9% no data Source: UN ﬁgures for 2009 (most recent available)