Youth Employment in 2025: Four Challenges, Four Opportunities
In the best of times, tackling youth unemployment is complicated. In 2025 the future of youth economic opportunity takes on a new level of complexity: a sudden $1 billion gap in bilateral funding for education and skills development, and in regions facing the most acute challenges.
As summarized in a new report by The European Training Foundation (EFT), the near and long term impacts of the USG’s foreign aid withdrawal impact primary education, vocational and technical training, and higher education could result in millions of children and youth without access to quality education.
EFT, and others, have offered a range of recommendations for how to pivot in this moment, bridging resource and partnership gaps through sustained financial support, increased private sector engagement, stronger local engagement, and a focus on long-term sustainable approaches.
At the heart of these ideas is a fundamental question: how do we achieve real and transformative impact for young people’s economic prospects in a time of rapid change, and amidst so much uncertainty?
The answer to this question will be informed by who we are, where we sit, and what drives us but we all have a role to play as we adapt and recover. Beyond summarizing what’s been lost, it is vital to learn from what has not served communities well to-date, and to be open to finding new ways to work and partner differently. The following are four challenges and four opportunities to consider as we look ahead:
1) Our systems are changing, fast. (Re)building new ones is a chance to center young peoples’ agency, well being, and economic security - if we choose to.
In 2025, many of the systems and that have shaped domestic and global community development - and by extension child and youth development - have been profoundly impacted. This moment requires us to do several things at once: mitigate immediate harms, stretch existing resources or mobilize new ones, and begin to re-imagine how to achieve transformative impact for young people in an environment of unpredictability.
Adopting a creative impact model in a time of systems change or collapse offers a compelling framework for youth economic opportunities that may help us to better understand our current context. If we zoom out, what relationships and anchor spaces can support information and resource sharing on youth economic opportunities? What projects, ideas and approaches can be supported and advanced in this new context, and what can we learn from past efforts that have not served young people’s economic mobility? Where are there opportunities to foster leadership among those who have in the past been excluded from strategy and decision-making, including youth?
Answering these questions - and building a new, shared vision - requires a much more diverse coalition of domestic and global actors who are willing to work together, and to do this work differently. Amidst so much upheaval, there is also a unique chance - if we choose to take it - to learn from the past as a lesson for the present, and for insights on where we go from here.
2) Past social, economic, and environmental shocks yield important lessons for how to navigate current uncertainty.
The pandemic may have ended, but its impact on young people’s development and economic outlook continues. Human capital is the knowledge, skills, and health that people accumulate over their lives, and is essential for achieving young people’s potential. A 2023 global study by the World Bank found that the pandemic caused a massive collapse in human capital for children and youth at three key development stages between 0 - 24 years. For example, disruption to schooling means that today’s students could lose up to 10% of their future earnings, resulting in lower productivity and greater inequality.
The pandemic revealed many of the existing weaknesses of our systems and structures. Fast forward to 2025 and the landscape is even more uncertain for closing developmental gaps for children and youth. For those focused on finding solutions to youth economic opportunities today, we must account for the pandemic’s continued impact on young people’s development. We should also consider the lessons the pandemic yielded about our systems, our ability to adapt and leverage new technologies and strategies for learning, and the essential power of community for building more agile, resilient, and adaptive systems for young people in the decade to come.
3) Alongside unemployment data, understanding how young people feel about their future is vital intelligence for youth economic opportunity.
Since 2006, levels of reported youth happiness have declined in North America, South America, Europe, South Asia, the Middle East and North Africa. In 2025, the ILO found that many young people express uncertainty about their social and economic prospects (2 out of 3 young people who are employed express concerns about losing their jobs). Young people’s outlook is not simply about getting and keeping a decent job: youth are grappling with a combination of economic, social and technological pressures that are unfolding within a context of increasing ecological and political uncertainty.
So, how do we meet this moment? A good place to start is by engaging youth directly: they are, after all, experts on what it is like to navigate today’s global economy. Young people are often overlooked partners in research, problem solving, and innovation - or if this is acknowledged, as organizations we often fail to follow through. Paying attention to what young people are telling us and engaging them in practices such as youth-led research, evaluation, co-creation and design, advising, and implementation can can result in more relevant and targeted interventions, while building young peoples’ skills and leadership experience. We can also couple engagement with stronger investments in mentorship and support networks - peer to peer and inter-generational - that encourage young people on their economic journey, while offering safe spaces, connection, and care.
4) Skills matter, so does a healthy workforce.
Our lives don’t pause when we go to work, we bring them with us. All of us have experienced a job search or been on the job while navigating the loss of a loved one, a broken heart, a health crisis, or worse. For young people navigating school to work transition in an uncertain job landscape, the pressures can be enormous - the data on youth mental health bears this out. We cannot achieve healthy economic growth without addressing young peoples’ mental health. Yet in our siloed systems, the prospect of integrating mental health and psychosocial (MH-PSS) support into workforce readiness or career programs can feel daunting, costly, or outside scope.
The economic case for doing so is strong however: a growing body of evidence supports the effectiveness, including cost-effectiveness, of both mental health and psychosocial support interventions across the lifespan. The WHO estimates that investing in the treatment of anxiety and depression alone results in a fourfold return. In adolescents, preventing and treating mental health disorders and suicide among adolescents is even greater, yielding a return of $24 for every $1 invested. A study by USAID’s former Chief Economist evaluating poverty reduction interventions found that providing psychosocial support not only improved economic outcomes but was also cost-effective.
As we grapple with today’s global changes, integrating MH-PSS is not only possible but fundamental to achieving sustainable youth economic opportunity, and broader economic growth. There is no doubt that this current moment is chaotic and harmful to vulnerable people, and to community development efforts write large. It is also exactly why breaking down silos and finding new opportunities for MH-PSS integration in ongoing efforts is so vital.