AI, Gig Work, Rising Income Inequality Are Reshaping Youth Futures, Says WEF Report

With young people now forming the largest demographic cohort in many emerging economies, their economic prospects are increasingly shaped by inequality, job insecurity, and uneven access to opportunity. In recent years, these pressures have translated into rising youth discontent and declining trust in institutions across regions including the unrest in Nepal,Bangladesh, and the US. At the same time, labour markets are undergoing structural change driven by artificial intelligence, automation, and platform-based work, reshaping traditional pathways to employment.

Against this backdrop, the World Economic Forum’s Youth Pulse 2026 report identifies widening inequality—both within and between generations—as one of the most pressing challenges facing young people globally. According to the United Nations, 71% of the world’s population now lives in societies where inequality is increasing. “Increasingly, this divide is generational,” the report said, “as young people face higher living costs, job precarity, and limited access to affordable housing and capital compared with previous generations.”

The report highlights sharp regional contrasts in how these pressures are experienced. In Europe and North America, young respondents point to widening wealth gaps and weakening social safety nets as defining economic concerns. In contrast, respondents in Sub-Saharan Africa and South Asia identify entrepreneurship as the most powerful force shaping future economic prospects, reflecting both aspiration and the absence of stable formal employment opportunities.

Despite these differences, financial insecurity remains the dominant source of stress for young people worldwide. The report found that 57% of respondents cited inflation and economic instability as the greatest threats to their lives. In response, many young people are diversifying incomes through freelance work, side businesses, and informal ventures. While these adaptive strategies reflect resilience, the report cautioned that “individual creativity cannot compensate for systemic inequality.”

Employment, the report argues, remains the central economic priority for this generation. Inclusive growth, it noted, begins with work that provides not only income but also stability and progression. Globally, youth unemployment exceeds 25% in parts of North Africa and Southern Europe. In East and South Asia, employment growth has increasingly taken the form of gig and platform-based work, offering flexibility but limited security. Reflecting this trend, Zomato Chief Executive Officer Deepinder Goyal recently said that gig work such as food delivery is inherently temporary, with most workers exiting within a year.

India’s structural constraints

In India, labour-market outcomes reflect broader structural constraints rather than short-term fluctuations. As of November, India’s unemployment rate stood at 4.7%, down from around 5.2% in September, with declines observed in both rural and urban areas, according to Periodic Labour Force Survery (PLFS).

However, unlike many advanced economies, India lacks comprehensive social security mechanisms for the unemployed, leaving young workers more exposed to income shocks and job transitions. Over 90% of the total workforce is employed in informal sector, as per the Ministry of Labour Employment and International Labour Organisation reports.

Policy measures aimed at stimulating investment and employment, including the corporate tax cuts introduced in 2019, have not translated into a commensurate expansion of job opportunities.

The Economic Survey of India has flagged persistent skill gaps as a key contributor to unemployment, noting that only 51–56% of Indian graduates are considered employable by industry standards. This reflects structural weaknesses in the education and training ecosystem, where limited infrastructure and inadequate alignment with labour-market needs have constrained effective upskilling and employability outcomes.

A key constraint has been limited fiscal space. With a large share of central and state revenues allocated to committed expenditures, public investment in industry expansion, job creation, and core infrastructure—particularly healthcare and education—remains crunched.

These fiscal limitations have broader implications for human capital formation. Weak public spending on education and healthcare risks slowing improvements in labour productivity, with long-term consequences for economic growth. In a recent interview with Outlook Business, Shamika Ravi, a member of the Economic Advisory Council to the Prime Minister, said India’s labour force productivity has seen limited improvement in recent years, partly due to stagnation in healthcare and education outcomes.

Trust, institutions, and political stability

Beyond employment, the report highlights growing frustration among young people with corruption, unemployment, and perceived political inertia. Declining trust in institutions, it warned, can heighten the risk of political instability, particularly in societies where economic mobility appears increasingly out of reach.

Recent unrest in Nepal illustrates how youth dissatisfaction with state institutions can translate into political volatility. Protests driven by economic grievances and perceived governance failures have underscored how eroding institutional trust can amplify instability, with potential spillover effects in the region.

The Youth Pulse 2026 report stresses that trust in leadership strengthens when governments act collaboratively and remain visibly committed to community outcomes.

However, across many countries—including India—persistent fiscal pressures and unmet policy promises continue to strain this relationship, reinforcing perceptions of unequal opportunity and uneven access to a dignified livelihood.

“Investing in young people’s potential is not a social concession; it is a growth strategy,” the report concluded. Addressing pressures around employment, affordability, entrepreneurship, and education, it argued, will determine whether the next generation inherits systems marked by stagnation or renewal.