Organisation for Economic Co-operation and Development Transition to adulthood: How does it affect demographic trends? Seminar with the Expert Group on Demographics Issues, 25 November 2009, Brussels, European Commission Which policies for improved access to employment? Main findings of the OECD project JOBS for YOUTH Anne SONNET Team Leader of the Youth Project, Division for Employment Analysis and Policy OECD, Directorate for Employment, Labour and Social Affairs
Outline of the Presentation 1. Thematic review on Jobs for Youth 2. Youth labour markets in OECD countries 3. Recommendations 2
Review of 16 OECD countries (2006-2009) 9 EU countries: Belgium, Denmark, France, Greece, Netherlands, Poland, Slovak Republic, Spain and UK 7 non EU countries: Australia, Canada, Japan, Korea, Norway, New Zealand and US Process: questionnaires, replies, fact-finding mission, writing up, seminar, publication 13 country reports already published, one to be published in December 2009 (US) and two in early 2010 (DNK, Greece) 3
4 JOBS for YOUTH www.oecd.org/emploi/jeunes www.oecd.org/employment/youth
Synthesis Report in 2010 The review process has highlighted a number of structural problems that affect the transition from school to work and the initial labour market experiences of young people with different levels of education The current economic crisis is exacerbating some of the underlying problems as presented in the document Helping Youth to Get a Firm Foothold in the Labour Market discussed at the OECD Labour and Employment Ministerial Meeting (28-29 September 2009) Tackling the Jobs Crisis: The Labour Market and Social Policy Response 5
The share of youth in the working-age population in the OECD and EU area has declined since the mid-70s and is projected to decrease again in 2025 On average in the OECD in 2005, the share of the population aged 15-24 represented 21% of the population aged 15-64, down from 27% in 1975 40 Mexico (15-24) as a % of (15-64) 35 Korea 30 Mexico 25 OECD France EU-19 20 15 Italy Sweden France Italy OECD Korea Sweden EU-19 Mexico France OECD Sweden EU-19 Italy Korea 6 10 Source: OECD demographic database. 1950 1975 2000 2005 2025
In general, youth face a much higher risk of unemployment than adults On average in the OECD, the ratio of 15-24 to 25-54 unemployment rates is close to 3 in mid-2009 Unemployed as a % of the labour force, 2 d quarter 2009 40 35 15-24 25+ 30 25 20 15 10 OECD 15-24 = 17.6 OECD 25+ = 6.5 5 0 7 Source: National labour force surveys.
Youth are particularly exposed to a major downturn There is a significant deterioration of 15-24 unemployment rates mid-2009 compared to end-2007 40 35 Unemployed as a % of the labour force 2007q4 2009q2 30 25 20 15 10 5 0 8 Source: National labour force surveys.
Access to employment is closely associated with education achievements and skills needed on the labour market The employment probability of school-leavers aged 15-29 was the highest for tertiary graduates, everywhere in 2006, except in Italy 140 120 Employed as a % of youth aged 15-29 having left education, 2006 Less than upper secondary education Upper secondary education Tertiary 100 80 60 40 20 0 * Share of youth in employment with less than an upper secondary education qualification or drop-outs in parenthesis. 9 Source: OECD Education database.
The transition takes time almost everywhere, particularly for low-skilled youth The expected number of years spent in employment in the five years after leaving education was 3.5 years for young European but only two years for those with low skills, 2008 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Years in employment, 2008 Total Low-skilled 10 Source: European Union labour force survey.
Combining school and work facilitates labour market entry There is a positive correlation between the employment rate of school leavers aged 25-29 and the share of students working before they reach 25 Percentages, 2008 11 Employment rate of youth aged 25-29 not ineducation 90 R² = 0.6823 88 86 84 82 80 78 76 74 72 70 PRT BEL LUX CZE GRC SVK HUN ITA NLD DNK NOR ISL CHE SWE AUT FIN FRA DEU GBR POL ESP 0 10 20 30 40 50 60 70 Source: European Union labour force survey. Share of students aged 15-24 who work
The cost of employing low-skilled youth is too high in some countries Minimum wage as a percentage of the median wage by age, 2007 70 60 Minimum adult wage Minimum wage at 17 Minimum wage at 20 50 40 30 20 10 0 12 Source: OECD, Minimum wage database.
Recommendations: Target groups Two groups of youth have difficulties in getting a firm foothold in the labour market The group of poorly integrated new entrants The group of youth left behind The size of these two groups is likely to increase during the downturn, heightening the risk of long-term scarring 13
Poorly integrated new entrants, who often have diplomas, frequently go backand-forth between temporary jobs and unemployment, even during periods of strong economic growth On average in the OECD, 35% of youth employment was temporary in 2008, 5 percentage points more than in 1998 Temporary employment as a % of employment among 15-24 80 70 60 50 40 30 20 10 0 OECD 2008 = 34.8 OECD 1998 = 30.4 2008 1998 * 14 Source: National labour force surveys.
Youth left behind cumulate disadvantages (no diploma; from immigrant/minority background; living in deprived neighbourhoods) and are at risk of dropping out of the labour market The NEET group (neither in employment, nor in education or training) represented 12 % of the 15-24-year olds in the OECD in 2006 of which almost two-thirds are inactive or long-term unemployed As a % of the age group 45 40 35 30 25 20 15 10 5 0 OECD = 11.7 Short-term unemployed Long-term unemployed Inactive * 15 Source: National labour force surveys.
Recommendations: Policy challenges A comprehensive, coherent and well coordinated approach based on four mutuallyreinforcing areas: 1. Education 2. School-to-Work Transition 3. Labour Demand 4. Active Labour Market Policies 16
Recommendations: Policy challenges 1. Education Ensure that everyone leaving the educational system is capable of gaining the skills needed on the labour market Ensure better co-operation between employment services and the education system to reach youth as soon as possible when risk of disengagement is detected Strengthen apprenticeship targeted at low-skilled youth and young immigrants Promote second-chance learning opportunities for school drop-outs 17
Recommendations: Policy challenges 2. School-to-Work-Transition Make the transition from school to work less abrupt Promote the combination of work (no more than 15 hours a week) and study Set up compulsory internships at university starting at the bachelor s level Penalise firms that abuse fake internships for young people who have already graduated 18
Recommendations: Policy challenges 3. Labour Demand Tackle the demand-side barriers to youth employment Reduce the cost of employing low-skilled youth: youth sub-minimum wage, reduction in social security contributions paid by employers for low-pay workers, apprentice wage Continue efforts to reduce labour-market duality overall: protecting workers following a flexicurity framework Fight discrimination against the hiring of visible minorities Actively encourage the mentoring of graduates with an immigrant background 19
Recommendations: Policy challenges 4. Active Labour Market Programmes Make active labour market measures for the least employable youth more effective with a rigorous mutual obligations approach Provide more resources to public employment services to personally assist unskilled young people to find jobs Make social assistance conditional to a learning obligation to get a qualification Make sure that skill-upgrading services offered are tailored to the current profiles of jobless youth 20
Recommendations during the crisis Key short-term challenges Prevent the current generation of school leavers becoming a lost generation Secure the safety net and the employment and training pathways of young workers Making active labour market measures for the least employable young people more effective and strengthening social protection for the most disadvantaged Prepare young people to be ready and equipped for work when the recovery will gather pace 21