Why employed youth is essential for the economy

Stefano Scarpetta is Deputy Director for Employment, Labour and Social Affairs (DELSA) at the Organisation for Economic Co-operation and Development (OECD) in Paris.

Young people around the world have been hard hit by the recent global financial crisis up to a point that some have argued that we may be facing a “lost” generation. Youth, in particular, have suffered a disproportionate share of job losses during the downturn and the recovery has been too weak to allow many of them get a foothold into the labour market.

In all G20 countries, youth (aged 15-24) are two to three times more likely than their adult counterparts to be unemployed. In the second quarter of 2012, the OECD average youth unemployment rate represented 16.1% of the labour force, but more than one in two youth in the labour market were unemployed in Greece, Spain and South Africa and one in three in Italy and Portugal.

However, unemployment does not capture the full hardship for youth. Many of those who have left the education do not even appear in the labour statistics. In the first quarter of 2012, the proportion of youth aged 15-24 who were “not in education, employment or training” (the so-called NEET), stood at 15.9% of the total OECD youth population, or 21 million young people; 13.8 million inactive and not studying and 7.6 million unemployed.

Improving the youth labour market situation requires actions on different fronts. The first step is to tackle the steep rise in youth joblessness. Targeted programmes, including counselling, job search assistance and temporary hiring subsidies for low‑skilled youth, can make a difference in facilitating the transition to productive jobs for young jobseekers. But, it is also important to address long-term failure to give all youth a better start in the labour market.

In many countries, completion of high school (i.e. usually between the age of 15 and 18) is becoming a key policy goal to ensure a smooth transition to work and for career progression. In those countries where enrolment in education through lower secondary education is almost universal, the focus has been on improving retention in upper secondary education, for example by raising the age of compulsory education.

In other countries where enrolment is low, particularly among children from disadvantaged backgrounds, school attendance has been added as a condition to the receipt of cash transfers through so-called Conditional Cash Transfers. In several emerging economies, these schemes have proven successful at improving school enrolment and attendance as well as child nutrition and health.

Moreover, vocational education pathways in upper secondary education can help engage youth, improve graduation rates and ensure a smooth transition to work. Dual schooling systems combining class-based learning with work-based apprenticeships can play a decisive role, and Germany is a shining example among G20 countries in this regard.

But, many youth leave the education system unprepared for the labour market. Career guidance can help youth make better informed decisions about their future and part-time work while still studying can help youth acquire some of the skills required in the labour market before they leave the education system.

Equipping youth with the skills needed for today and giving them opportunities in the labour market is key not only for their own well-being, but also for the economy as a whole and for social cohesion.

 Image: Job seekers wait in line to meet prospective employers at a career fair in New York City REUTERS/Mike Segar