We don’t need rebels, we just need to create effective policies to support young people

sag-2016Alastair Wood and Stéphane Carcillo, OECD Employment, Labour and Social Affairs Directorate

In the 1955 film Rebel without a cause, Jim Stark (played by James Dean) is an alienated and unhappy young man in mid-1950s America. He and his friends form a trio that evokes youthful pain, torment and bewilderment. The film’s focus is on teenage rebellion and parental neglect, and it conveys an important message about listening to the needs and desires of our youth population. Today’s youth (aged between 15-29) have been hit particularly hard by the financial crisis and Great Recession; they have been struggling to make a successful start to their working lives in very difficult times. At its peak, youth unemployment reached an average of 17% in OECD countries (far higher than the rest of society) and hit an astonishing 60% in Greece. OECD’s Society at a Glance 2016 puts young people under the spotlight, looks at how they are holding up in society and shows which of their needs are not being met.

But it is not just about unemployment. Many young people are not at school and are not even looking for a job. Taking the unemployed and the inactive together shows that in 2015, about 40 million young people, a total of 15% of all OECD youth, were not in employment, education or training (the so-called NEETs). Beyond the moral dilemma, the opportunity cost of having such a large number of young people being isolated from society is estimated to have been between 360-605 billion US dollars in 2014 alone (0.9-1.5% of OECD-wide GDP, depending on the wage level used to impute income – minimum wage or median wage) – this is the income that could have been generated had they been better integrated into society.

neets

Low-skilled youth are particularly at risk of long-term isolation and disengagement from society. Those who have not finished high-school are 3 times more likely to be unemployed or “inactive” while only one quarter of NEETs have higher education qualifications. People with low-skilled parents or unemployed parents are also more likely to be NEET, suggesting an intergenerational transmission of disadvantage. Lower educated parents may not be able to encourage higher education as much, they may not be able to help as much with homework, and they often lack social networks to help their children get their first work experience. For similar reasons, and due to language difficulties and possibly also discrimination, youth born outside their country of residence are 1.5 times more likely to be NEET than native youth. Being female adds to the NEET risk. Young women are one and a half times more likely than men to be unemployed or “inactive”, often because they are caring for children and other family members, especially in Mexico and Turkey.

Fortunately, for many young people, inactivity and unemployment is only temporary. But for a significant fraction, it is a lasting curse. About half of all NEETs experience such isolation for more than a year. The low educated account for 17% of the youth population, but represent 30% of those who spend more than 12 months as a NEET; young people with health problems are also over-represented. Taking a short time out of work to care for children or to travel can be great and have no negative effects, but longer periods risk harming future employment opportunities and earnings.

Better policies are needed to foster self-sufficiency among young people and bring back their trust in society and politics: the report shows that we need to continue fighting early school leaving; it also documents how apprenticeships are a valuable alternative to academic schooling and can help bring more young people smoothly into the labour market. Intensive second chance programmes targeted at high-school dropouts motivated to catch up on their skills are also needed. For women, ensuring access to high quality childcare helps them re-join the labour market (France, Denmark and Sweden are good examples), and improving uptake by fathers in parental leave can also help young women’s careers. Efforts are also being made at the international level. Policy makers from the G20 economies collectively committed to reduce the share of young people most at risk of being left permanently behind in the labour market by 15% by 2025. At the EU level, the Youth Guarantee is also a good opportunity to reduce the number of youth who fall through the cracks and make them an employment or training offer.

Not surprisingly, NEETs are less satisfied with their lives compared with their peers – 22% reporting low levels of life satisfaction compared to 14% overall. Feeling isolated and disconnected means that they often have no interest in society  and only 18% report that they trust others compared to 29% of youth overall. Sixty years after Nicholas Ray’s film, they can probably understand Jim when he says “Boy, if, if I had one day when…I felt that I belonged someplace, you know?”

Useful links

OECD work on youth

Quality of jobs created is vital not just for young people, but for the economy too

EYFMarianna Georgallis, Policy & Advocacy Coordinator at the European Youth Forum

One month ago, all eyes turned to the Greek drama playing out in Europe. It has been a month of fraught negotiations, a shock referendum and a European Union and its leaders put under the spotlight, with European values of solidarity and unity questioned and, some might say, threatened. The focus has been largely on numbers – on the billions needed to avoid a Grexit, on the daily €60 cash withdrawal limit currently in place. But the ultimate reason for the past weeks of drama has not been figures – it has been people. The Greek government’s actions, right or wrong, are attempting to reverse the trend of years of wage cuts, welfare cuts, growing poverty, inequality and dire levels of unemployment. Undercutting all talk of currencies, of bailouts and banks has been the grave social impact of the economic and financial crisis and Europe’s response to it.

The statistics are there and are by now well known. The OECD Employment Outlook 2015, published earlier this month, highlights what has been mentioned in countless political speeches over the past years: Europe is suffering a social crisis. Unemployment rates give the first indication of this: Whereas unemployment has fallen below 6% in the United States and is under 4% in Japan and Korea, in the euro area the unemployment rate remains above 11%. It is clear that Europe is still lagging behind the rest of the world when it comes to employment.

These statistics are higher and more shocking when it comes to young people specifically. The share of young people neither employed nor in education or training, the so-called NEETs, has reached a staggering 40 million across OECD countries – with 27 million of these NEETs totally off the radar – a disappeared mass of young people, registered nowhere.

The enduring effects of this are a serious cause for concern. More than one in three jobseekers in the OECD has been out of work for 12 months or more. Long-term unemployment has serious consequences, ranging from deterioration of skills, lack of confidence which can lead to mental health issues and an impact on the economy through inactivity and costs of welfare provision such as unemployment benefits. However, the new finding of this year’s Employment Outlook is that a person’s long-term career prospects are largely determined in the first ten years of their working life. Long-term spells of unemployment can have an influence well into one’s career in terms of earnings – meaning that upward earnings mobility can be reduced having been long-term unemployed as a young person. This in turn raises income inequality and thus impacts economic growth through, amongst others, perpetuating under-investment and lower aggregate output.

However, it’s not just about having a job. The European Youth Forum has been calling for an end to the ‘any-job-will-do’ approach which has persisted since the onset of the crisis, with no real attempt from European policy-makers to address this. The Outlook shows that youth, alongside low-skilled and informal workers, typically hold the poorest quality jobs. The disproportionate increase of young people on temporary contracts over recent years is not a case of voluntary temporary employment – it is clearly a situation of forced, precarious work. Unpaid internships are a clear example of this – you would be hard pushed to find a young person, fresh out of their studies, willing and happy to work for free for 6 months – yet the 5 million interns in Europe, almost half of whom are unpaid, show that this is unfortunately the current reality.

Quality employment is a right, enshrined in several universal legal frameworks. Unfortunately this has been ignored by too many governments and EU leaders; focusing on job quality is perceived as a drag on job creation. The Employment Outlook disproves this, however, showing that the best performing OECD countries in terms of employment rates are also the ones that have the highest level of job quality. This is why the clear message of the Outlook is that governments must take action to foster stronger employment growth, implementing direct measures to improve workers’ access to productive and rewarding quality jobs.

The European Youth Forum views the new Investment Plan for Europe as an opportunity to do this. If the focus is on investment in quality job creation, particularly in emerging sectors with great potential such as the green economy and ICT, there is hope yet that the social crisis, experienced in Greece but also across the board, can begin to be reversed. Governments need to fulfil their duty of ensuring that all young people are able to access their social and economic rights, in order to achieve independence and autonomy, and thus contribute to a healthy economy and an inclusive society in Europe and the world.

Useful links

Employment Outlook editor Paul Swaim writes about this year’s edition here

OECD work on employment

OECD work on youth employment and unemployment

OECD employment database

World Youth Skills Day

worldyouthskillsdayGlenda Quintini and Stéphane Carcillo, OECD Employment, Labour and Social Affairs Directorate

Agnès attended a French High School but left at 16 with poor qualifications. She had not enjoyed school and was pleased to leave but now she would be pleased to go back as work has not been as pleasant or easy as she had expected. She found a job at a local burger company but hated it and felt that she had been very badly treated. She then got into restaurant work with some basic training which was much better but had then been laid off because they were cutting back on staff. She is living with her boyfriend who is also unemployed.

One of today’s top policy priorities around the world is to help people like Agnès and reduce extremely high youth unemployment while easing young people’s access to good quality jobs. As the first edition of “Youth Skills day” unfolds, about 40 million youth aged 15-29 in OECD countries are either looking for work or entirely disconnected from the labour market and from education and training. For the young people affected, this is a major setback that could have long lasting negative implications. For countries, not only does this represent human capital that is not being productively used but it also constitutes a financial cost as marginalisation from the labour market at such a young age is likely to bring about benefit dependency for life.

The so-called NEET rate (the share of youth neither in employment nor in education or training) currently stands at 14% in the OECD on average, up from 12.5% before the Great Recession. But in some countries, the problem is much bigger and has been exacerbated by the crisis. For example, the NEET rate rose by about 10 percentage points to exceed 20% in Greece, Italy and Spain.

NEET rates

The lack of skills is a major factor behind being NEET, along with a number of other barriers to employment – poor health, substance abuse, housing – that put NEETs at high risk of social and economic marginalisation. In Spain and England and Northern Ireland, 40% of NEET youth score at level 1 or below in literacy in the Survey of Adult Skills (PIAAC) – the lowest level of proficiency. And about a third do so in Canada and Norway. In addition, many have dropped out of general education – 40% of NEETs on average only have lower secondary qualifications – and have no recognised qualification to show for in the labour market.

NEET composition

To bring down this alarmingly high rate, the OECD Action Plan for Youth proposes a set of policies to tackle the current youth unemployment crisis and strengthen the long-term employment prospects of youth. It encourages countries to act fast to strengthen and expand cost-effective active measures such as short-term training, job search counselling or hiring subsidies – all crucial to prevent unemployed youth from disconnecting from job search, particularly in times of poor job creation. It also suggests acting now in areas that may take a while to bear fruit. For instance, prevention is better than cure and the accent is put on ensuring that the education system provides youth with the skills needed for the labour market.

A major challenge is how to deal with those young people who are not even looking for work. These youth typically fall through the cracks of safety nets. Reaching out to them and (re)motivating them in participating in education, training or any form of active programmes is challenging and requires frequent contacts as well as a good cooperation and information sharing between social and employment services.

Some programmes have been successful in helping NEETs get back into learning or employment – such as YouthBuild or JobCorps in the United States. They tend to have a significant hands-on learning component and often partner with employers to provide in-work learning modules. However, all this tends to be rather costly – often in excess of $10,000 per participant. Acting early, to prevent disengagement in the first place is therefore crucial. Apprenticeships and VET programmes, if available to all youth in education, can help prevent dropping out without qualifications in the first place, reducing the likelihood of becoming NEET.

Effective action to reduce NEET rates requires coordinated measures across all relevant ministerial portfolios and at the national and local level to ensure that youth acquire the right skills, bring those skills to the labour market and are able to utilise them effectively.

The OECD Action Plan for Youth is intended to build on and support existing national and local initiatives as well as the ILO Resolution on “The youth employment crisis: a call for action”, the G20 commitments on youth employment and the EU Council’s agreement on the Youth Guarantee.

Useful links

OECD work on youth employment and unemployment

Stéphane Carcillo et al.  (2015), NEET Youth in the Aftermath of the Crisis : Challenges and Policies, OECD Social, Employment and Migration Working Papers, No. 164

The OECD Action Plan for Youth