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FLEXICURITY TO THE BENEFIT OF WORKERS: MAKING TRANSITION PAY SESSION 4: TOOLS TO SECURE TRANSITION WITHIN AND INTO EMPLOYMENT Tuesday 5 October2010 Gent HELPING YOUTH ACCOMPLISH A SUCCESSFUL TRANSITION FROM SCHOOL TO WORK AND LAY THE FOUNDATION FOR A GOOD CAREER Anne Sonnet, Senior economist OECD

Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

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Page 1: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

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FLEXICURITY TO THE BENEFIT OF WORKERS: MAKING TRANSITION PAY

SESSION 4: TOOLS TO SECURE TRANSITION WITHIN AND INTO EMPLOYMENT

Tuesday 5 October2010Gent

HELPING YOUTH ACCOMPLISH A SUCCESSFUL TRANSITION FROM SCHOOL TO WORK AND LAY

THE FOUNDATION FOR A GOOD CAREER

Anne Sonnet, Senior economist

OECD

Page 2: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

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Page 3: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

�������������

• Significant improvements in the youth labour market prior to the crisis…

• ...but persisting problems of labour market integration for some disadvantaged youth.

• Two groups of youth have difficulties in getting a firm foothold in the labour market

1) A group of “youth left behind”

2) A group of “poorly integrated new entrants”

Page 4: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

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1) The group of “youth left behind”

• Youth in this group cumulate disadvantages (no diploma; from immigrant/minority background; living in deprived areas) and areat risk of dropping out of the labour market

• Indicator: The NEET group (neither in employment, nor in education or training) without an upper secondary education

• A group of “youth left behind” exists in all OECD countries

• Main policy: Help them to obtain a recognised qualification or diploma

Page 5: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

The group of “left behind” represented 10% of 15-29 having left education-year-olds in Europe in 2005

Youth left behind: NEET aged 15-29 without upper secondary education, 1995 and 2005

As a percentage of the youth aged 15-29 having left education

!

0

5

10

15

20

25

30

35

402005 1995

Source: European Union labour force survey for European countries, OECD Education database for all the other.

Page 6: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

������������

2) The group of “poorly integrated new entrants”

• Youth who often have diplomas but frequently go back-and-forth between temporary jobs and unemployment, even during periods of strong economic growth

• Proxy: A minimum size can be estimated in Europe in 2005-07: 8% of youth aged 15-29 having left education and found a temporary job were not in a stable job two years after.

• A group of poorly integrated new entrants” exists particularly in countries where there are many labour market demand obstacles for “outsiders”

• Main policy: Adjustments to the way the labour market functions in general

"

Page 7: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

In 2005-07, 8% of youth in Europe aged 15-29 having left education and found a temporary job were not in a stable job two years after

Young workers aged 15-29 on temporary employment in 2005 were poorly integrated two years after, Europe, 2005-07

As a percentage of the youth aged 15-29 having left education

#

0

5

10

15

20

25Still temporary

Unemployed

Inactive

a

b

c

Source: Estimations based on EU-SILC.

b) Unweighted average of countries shown.

Page 8: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market

outcomesEstimated size of the at-risk group: left behind and poorly integrated after a temporary job,

2005-07As a percentage of the youth aged 15-29 having left education

$

0

5

10

15

20

25

30

35

40Left behind Poorly integrated

Source: Estimations based on EU-SILC and European Union labour force survey .

b) Unweighted average of countries shown.

Page 9: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

�������������� �������������������

• The global crisis has hit youth hard and the short-term outlook for many youth is rather gloomy.

• The youth unemployment rate is likely to remain relatively high in the majority of OECD countries in the coming months.

• More youth, even those who would have performed well in good times, are pushed into the two at-risk groups.

• There is a risk of long-term negative « scarring »effects for the most disadvantaged youth

%

Page 10: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

�������������� �������������������

The youth unemployment rate should approach 23% in Europe in 2010 and 2011

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5.0

7.5

10.0

12.5

15.0

17.5

20.0

22.5

25.0

OECD Europe United States Japan

Projections

*Projections of youth unemployment rates for the 2010 and 2011 are based on the latest OECD projections of the total unemployment rate and on the ratio of youth to total unemployment rate of 2009.

Source: National labour force surveys and OECD (2010), Economic Outlook, No. 87.

Page 11: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

�������������Key short-term challenges in the jobs crisis

• Prevent the current generation of school leavers becoming a “scarred generation”

• Prepare young people to be ready and equipped for work when the recovery will gather pace

• Make active labour market measures more cost-effective and maintain the activation stance based on “mutual obligations”

• Secure the safety net and the employment and training pathways of unemployed youth and young workers

• Strengthening social protection for the most disadvantaged

&&

Page 12: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

��������������������������� ������

• Move towards ������ ���� ���������� ������������� to help youth to remain in contact with the labour market

• Assist youth unemployed in their �!��������with appropriate measures

• Extent temporarily the ���� ����� ��������������������"��and help ���������������������to complete their training

• Couple eligibility to ������������������with a rigorous “mutual obligations” approach for the most disadvantaged

&�

Page 13: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

�������������#���"����$ ��� , a ��� !�����������������

���!��� ���������!�����%����

5 &������ ����� ��������� ������"� ���� ������������ ������ ����������%���������������������!����� ��%���

(e.g. basic qualification guarantee up to a given age, strengthening apprenticeship targeted at low-skilled youth and young immigrants and promote second-chance learning opportunities for school drop-outs)

5 �%��������������������� �����������$ ��%�������!����

(e.g. more opportunities to work while studying and compulsory internships at university)

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Page 14: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

������������#���"����$ ��� , a ��� !�����������������

���!��� ���������!�����%����

5 ' ��������"���!������� ����!�����������������

�Tackle discrimination in hiring (e.g. mentorship for graduates with an immigrant background)

�Reduce the cost of employing low-skilled youth, through sub-minimum wages for youth and/or lower social security contributions for low wages

�Continue efforts to reduce labour-market duality overall and in particular the gap between regulations for temporary and permanent contracts

&

Page 15: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

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� Apprenticeship training and other dual vocational education programmes appear to be ��������������������$ ��%�����$ ���, particularly for secondary students.

� They can yield multiple dividends: -- lowering labour costs for the employer (�����������) tied together by a training commitment from the employer which yields a valuedqualification on the labour market (�%����������)-- securing the transition towards employment for the apprentice (�������"�������������) with a small wage progressing with age and duration of contract (����� ��������(

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Page 16: Anne Sonnet, Senior economist OECD · In Europe, on average in 2005-07, 18% of youth aged 15-29 who have left education were at risk of poor labour market outcomes Estimated size

���������������� � ��"���

• Most OECD countries have acted swiftly during the crisis by ������"���������������������������"��� � ���

• There is a strong need ���%��������� �� ����� , even in the early phases of the recovery and provide adequate resources for cost-effective youth measures.

• Actions are needed to prevent � �������������������from being trapped in long spells of unemployment. But the target group forintensive assistance should be the ����������"�����of youth cumulating disadvantages and at high risk of long-term unemployment and inactivity.

• It is therefore crucial that governments tackle the �����������!��������this hard-core group faces in ��������� and in the ��!����� ��%��)

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