Youth unemployment is rising. Is AI getting too much of the blame?

Key reasons to read this article

● Youth populations are booming in developing economies. But where are the jobs?
● Is AI taking young people’s jobs or just taking the blame?
● More university degrees, fewer opportunities. What’s gone wrong?
● A young population can drive growth or deepen economic pressure. Which way will it go?

Youth populations are growing faster than economies are generating decent jobs, which is leaving hundreds of millions struggling to find work. The 2026 Global Employment Trends for Youth published by the International Labor Organization (ILO) highlights that while AI is a focal point for blame, broader economic issues are actually a more fundamental cause of the problem.

More young people, too few jobs

The World Bank has indicated that the next decade will see a substantial rise in youth populations, particularly in emerging and developing economies, with around 1.2 billion individuals expected to reach working age between 2025 and 2035. Sub-Saharan Africa will notably account for over 330 million youths aged 15 to 24, alongside significant increases in the Middle East and North Africa.

However, unemployment among young people is alarmingly high. Recent data from the ILO indicates a 12.4% unemployment rate among youths in 2025, representing approximately 67 million individuals. Additionally, around 20% of youth – approximately 257 million –- are neither employed nor engaged in education or training (NEET).

The ILO has identified that only 110 countries, representing just over half the world’s youth, are currently on track to meet the SDG target on youth employment. In some regions, the numbers are stark with less than a quarter of young people in the Middle East and North Africa being employed.

According to a Mastercard Foundation report, only 3 million formal jobs are created annually for the 10 million African youths reaching working age. Meanwhile, in South Asia, only 59% of working-age individuals are employed, with just 10% of these employed by the formal sector, the World Bank highlighted.

These trends reflect persistent challenges, including slower economic growth, geopolitical tensions, and a long-term shortage of productive jobs.

Underemployment is masking the problem

The youth unemployment figure often conceals substantial underemployment across the globe. Many young individuals, particularly in low- and middle-income economies, resort to informal work that lacks contracts and benefits. The ILO estimates that more than three out of four young workers globally hold informal jobs, a figure that rises above 90% in some countries, such as Egypt.

In regions like Latin America and Asia, young workers face high rates of informal or gig employment. In the Asia-Pacific region, 86% of working youth aged 15–24 are informally employed.

This situation fosters a false sense of job security while contributing to working poverty, as high employment rates can coexist with poor job quality, widening inequalities and placing a growing number of young people in working poverty, as warned by the ILO.

The education-to-employment gap

On top of weak job growth, education systems in many lower- and middle-income countries are misaligned with employer needs, a mismatch that has been widely documented by international development agencies. Curricula often fail to keep pace with globalization and digitalization.

In the Southern and Eastern Mediterranean region, which includes North Africa, unemployment is highest among those with tertiary education, reaching an average of 30%, the reverse of the pattern seen in most other regions, where higher education levels normally lower the risk of unemployment. In Egypt, 43.4% of unemployed people hold university or postgraduate degrees.

Is AI really the underlying cause of the employment crisis?

Naturally, the headlines have pointed to AI as the latest threat to youth jobs. Automation and AI are indeed eroding mid‑skilled, entry-level jobs, with generative AI increasingly able to undertake routine office tasks.

For example, India’s massive IT services industry is moving toward AI-driven delivery models that require fewer workers to perform routine tasks, while major companies have reduced their staff numbers and limited new hires.

But attributing India’s layoffs entirely to AI would be misleading. TCS, a global leader in technology services, explained its 2025 workforce reduction was primarily linked to skill mismatches and changing business requirements, together with more pressure on IT expenditure.

This illustrates a broader point: changes in employment cannot automatically be attributed to AI when companies are also reacting to weaker demand, cost pressures and changing skill requirements.

At the same time, experts have highlighted the capacity of AI to create job opportunities, especially in developing regions.

According to the 2026 In-Demand Skills report, demand for AI-related skills on Upwork grew 109% year-on-year, reshaping the range of tasks that African outsourcing workers can perform.

Programs like Google’s AfCFTA Digital Inclusion& Entrepreneurship Program, which ran from November 2025 through June 2026, trained 7,500 SMEs across 19 African countries in AI productivity tools and digital trade. AI is expected to add US$2.9 trillion to Africa’s economy by 2030. The same projections estimate that 230 million existing and future jobs in sub-Saharan Africa will require digital skills by the same year.

Demographic dividend or disaster?

What does all this mean for the “demographic dividend”? A young population could be an asset, fueling growth and innovation. But that depends on whether economies can create productive jobs for those young people. If they cannot, instead of representing a benefit, the demographic dividend risks becoming a source of greater economic and social pressure, including unrest, brain drain, and stagnation.

To turn that wave into a dividend, policymakers must focus on the fundamentals of job creation, not simply tech hype. Sustained employment growth relies on stronger economic activity and investment. The World Bank highlights the three pillars that are necessary for success:

• Building the essential infrastructure (roads, power, and digital networks)
• Creating a business-friendly environment
• Mobilizing private investment

Complementary priorities, experts have identified, include focusing on labor-intensive sectors such as agriculture, manufacturing, tourism, and health services, which have significant potential to generate large numbers of decent jobs.

Education and training systems must also reform in order for young people to acquire the skills that employers actually need.

The ILO also stresses that technology and growth must be steered in ways that benefit young workers, rather than work against them. That means enforcing labor rights in gig jobs, expanding social protection to cover informal work, and ensuring young women are not left behind by systemic barriers.

In a nutshell

Youth unemployment is indeed a multifaceted development challenge. AI is reshaping jobs and will demand new skills. But the surge in joblessness is mainly being driven by deeper issues: more young jobseekers entering weak economies with too few decent jobs, widespread informal work, and outdated education-to-employment pipelines. Only by tackling those root issues can countries hope to channel their young population into productive work. If those foundations are not addressed, AI could amplify existing inequalities rather than causing the employment crisis in the first place.