In their September 2012 Global Employment Outlook, the International Labour Organization (ILO) drew particular attention to the plight of the young worker worldwide.  They project that the global youth unemployment rate (youth being defined as between the ages of 15 and 24) will climb from 12.7 percent in 2012 to 12.9 percent by 2017.  This is in contrast to the overall unemployment rate, which is expected to remain steady worldwide at 6 percent between 2012 and 2017.  The projected rates of youth unemployment vary, of course, by region.  In East Asia, the youth unemployment rate is projected to increase to 10.4 percent by 2017, up from 9.5 percent, while in the developed economies and the European Union, the rate is actually projected to decline from 17.5 percent in 2012 to 15.6 percent in 2017.  However, the latter figure is not actually cause for celebration – the report notes this is “principally because discouraged young people are withdrawing from the labor market and not because of stronger hiring activity among youngsters.”

We turn to additional ILO data to see what the picture looks like in some of the countries with top-performing education systems, to see if the strength of the primary and secondary systems mitigates to some degree the proportion of young people who are struggling to find work (Figure 1).  The results are somewhat surprising.  Finland, widely acknowledged as having one of the best primary and secondary education systems in the world, also has the highest unemployment rate for people aged 15 to 19 years, and one of the highest unemployment rates for people aged 20 to 24 according to the ILO data.  Singapore and the Netherlands, which have strongly integrated vocational and technical pathways available to students before the age of 18, on the other hand (and unsurprisingly), have quite low youth unemployment rates.

Figure 1

But before jumping to conclusions, it is important to dig deeper into how countries define youth unemployment, because this in and of itself can impact how well a country appears to be doing in terms of moving young people into the workforce.  For the chart above, the ILO definition of “unemployed” included people who were not in paid employment, were available for employment, and were seeking employment.  The ILO points out that these measures are difficult to compare across countries because education systems vary widely, and in some countries a young person may be considered “employed,” for example, if they are engaging in a vocational training program part-time.  In another country, the labor force may be considered as including only the youth who have dropped out of secondary school or who have earned a secondary degree.  This may result in inflated rates of “unemployment” in some countries, for example, Nordic countries, that have more modular vocational and post-secondary education programs and other strong supports for young people, resulting in young people pursuing a combination of part-time training, employment, or other activities such as international travel before settling into a career.

Fortunately, there is another international measure that allows us to compare the proportion of young people who are struggling to enter the workforce or the education sector.  That is the percent of youth not in employment, education or training, often abbreviated as NEET.  The OECD provides data on the percent of NEET youth in most of its member countries; below, we have again shown the data for the top performers (Figure 2).  The chart provides information for three different categories of young people: youth who are unemployed (that is, looking for work), and not in education or training; youth who are inactive (that is, not looking for work), and not in education or training; and the NEET rate, which includes youth who are either unemployed or inactive, and not in education or training.  The NEET rate is represented by the total length of the bar on the chart, as it is a combination of the two other measures.

Figure 2

The Netherlands, which has one of the lowest rates of youth unemployment by ILO measures, also has a very low NEET rate.  Notably, just 1.5 percent of youth in the Netherlands who are not in education or training and are actively seeking work are unable to find jobs.  This is just over 25 percent of the overall OECD rate of 5.8 percent, and significantly smaller than the EU27 (European Union) rate of 6.6 percent.  Denmark and Finland, two Nordic countries which, by overall youth unemployment measures, do not look particularly good, also have very low NEET rates.  These low rates are likely due to the fact that these countries, and particularly the Netherlands and Denmark, have very strong school-to-work pipelines, with multiple pathways for all types of students.  Students in these countries have access to various workplace learning experiences and apprenticeships, as well as a close relationship between industry and these training programs.  On the other end of the spectrum, the United States, New Zealand and the United Kingdom all have high NEET rates in addition to their high youth unemployment rates, suggesting that job training programs or pathways into the workforce in these countries are lacking.

One concern, however, is the possibility of a growing connection between youth unemployment rates and youth NEET rates.  The ILO points out in their Global Employment Outlook that as new economic sectors grow and old sectors decline, people who were either employed in or being trained for jobs in the old sectors will face the loss of these jobs with a sense of discouragement, meaning that NEET rates will rise following the rise in unemployment rates.  This is why it is so important to have education connected to current workplace skill requirements, and particularly, to ensure that vocational and technical education programs are linked closely to industry, so that youth are being prepared for the jobs of the future.

In order to successfully help young people prepare for employment, education providers and employers must open up the lines of communication and become more engaged in each other’s worlds.  In the most innovative and effective school-to-work systems around the globe, it is common for employers to help design post-secondary training curricula or to offer their employees as faculty to training programs.  At the same time, education providers should actively encourage students to spend half their time on a job site and help them secure interview opportunities.

These findings from a McKinsey & Company report published in December are not all that surprising.  In fact, many of the education systems scoring at the top of the international league tables have already reached these conclusions and implemented similar strategies.  After returning from Singapore last year, Marc Tucker recapped what he had observed, writing, “In Singapore, young people not headed to University go either into the upper secondary vocational education system or into one of the polytechnics.  In the upper secondary vocational system, there is no sandwich program alternating time in the workplace with time in school.  [Their experience] is all in school, but the Singaporeans have persuaded the companies to give them the state-of-the-art machines they need in the classrooms (working engines for current model cars, for example, with cutaway engines for the auto mechanics program) and have also persuaded the firms that it is in their interest to regularly cycle the school instructors through their firms to keep their skills up to date.”  This city-state also boasts one of the lowest rates of youth unemployment in the industrialized world.

According to McKinsey, the second common success factor occurs when employers and education providers work with their students early and intensely so the education-to-employment journey is treated as one continuum in which employers commit to hire young people before they are even enrolled in a program and are invested in building their skills.  What the report, Education to Employment: Designing a System that Works, brings to the table is powerful examples of where this is working around the world.  One model of a cohesive school-to-work continuum can be found in China’s Vocational Training Holdings (CVTH), the largest training institute for China’s automotive industry.  This vocational education program establishes and maintains relationships with about 1,800 employers, which provide internship opportunities and “promises to hire”.  The CVTH provides their students with access to a large database that houses information on each of the employers such as company size, how many workers they need, and the type of worker required.  Prior to graduation from CVTH, students take a survey on their ideal job placement situation and are matched to an employer based on their preferences.  The Institute then provides post-graduation support to students for a year if they are not happy with their initial placement.  Within three months of graduation, 80 percent of CVTH graduates are employed and of the students that are not, many of them have exited the job market to pursue higher education degrees.

The report authors surveyed young people, education providers and employers in nine countries including Brazil, Germany, India, Mexico, Morocco, Turkey, Saudi Arabia, the United Kingdom and the United States.  They found that the road from postsecondary education to employment looks vastly different from one perspective to the next.  While 72 percent of education providers in the survey believe new graduates are ready to take on entry-level positions, fewer than half of young people and employers agreed.  The United States demonstrated one of the widest opinion gaps on this issue with 87 percent of education providers stating that graduates and new hires are adequately prepared for entry-level work and only 49 percent of employers thinking this is the case.

This disconnect is partly explained by the lack of communication between employers, educators and youth.  A third of employers in the surveyed countries said they never communicate with education providers and of those that do, fewer than half say it has proven effective.  Meanwhile, more than a third of educators report that they are unable to estimate the job-placement rates of their graduates.  When surveyed, educators were asked to identify their priorities.  Helping students find jobs after graduation fell to the middle of the list for both private and public education providers.

Young people are also failing to connect the dots with less than half considering the job openings and wage levels of the professions most commonly associated with their selected major.  And while nearly 60 percent of youth view on-the-job training and hands-on learning as the most effective instructional technique, only 24 percent of academic-program graduates and 37 percent of vocational graduates said that they were enrolled in programs that regularly provided these types of experiences.

Another interesting finding is the general low perception of vocational schools.  While the majority of young people believe vocational training is more helpful than an academic track in finding a job, less than half of those surveyed actually enrolled in these types of programs.  Of the nine countries studied, Germany is the only place where students think academic schools and vocational schools are held in equal esteem. Germany and a number of other Northern European and Asian countries, provide young people with high quality post-secondary education and training experiences linked closely to labor market needs.  This experience provides young people with a route to good jobs so it is not surprising that perceptions about vocation training differ when quality systems are in place, students are participating in them, and they are functioning well.

Education to Employment suggests that stakeholders implement three interventions to improve the school-to-work transition.  The first intervention is to collect and disseminate more data to students and parents on career options and training pathways.  Education institutions should offer more information about their job placement rates and their graduates’ career trajectories.  In Singapore, the Ministry of Education requires education providers to take an annual survey of their graduates about six months after graduation to collect data on employment status and salary.

Secondly, the report calls for multiple providers and employers to work together within a particular industry.  As an example, the report references Apprenticeship 2000, an industry-led coalition founded in Charlotte, North Carolina by two German companies, Blum (a hardware fabricator) and Daetwyler (a printing equipment manufacturer).  Blum and Daetwyler wanted to establish a strong pipeline of employees that would have the guaranteed specialized skills they needed.  So using the German apprenticeship model, they worked with a local community college to set-up the program and made it available to qualified high school students and experienced workers.  The employer coalition has grown to include eight members that commit to covering the cost of training and wages of its apprenticeships over a 3.5-year period.  Students who complete the program earn an associates degree in manufacturing technology, bring in $9 an hour while studying and are guaranteed employment upon successful completion of the program.  Member companies agree to a common curriculum, recruit as a group and are forbidden from poaching employees.

The last recommendation is to create “system integrators”, an individual or a group responsible for the high-level view of the fragmented education-to-employment system.  These “system integrators” would be charged with working with education providers and employers to develop skill solutions, gather data and identify and share positive examples.  In Australia, the Australian Workforce and Productivity Agency (formerly known as Skills Australia) serves as the “system integrator” and is responsible for driving greater collaboration between industry providers and the government on workforce development issues.  The agency is responsible for critical functions such as administering the new National Workforce Development Fund to deliver training for high-priority industries and occupations and to conduct skills and workforce research on the quality of jobs and future working life in Australia.

The full report and a number of additional case studies can be found here:
http://www.mckinsey.com/client_service/public_sector/mckinsey_center_for_government/education_to_employment

The European Commission looks across member countries education and training systems and sets new targets for 2020

In a recent publication from November 2012, the European Commission identified new strategic priorities in meeting the education and training goals that have been set for European Union member countries.  This is part of the broader, ongoing Europe 2020 initiative undertaken by the European Commission in which member countries have agreed on growth and improvement targets in the areas of employment, research and development, climate change and energy sustainability, education, and fighting poverty and social exclusion to achieve in the next decade.

The education and training goals provide a glimpse into the arenas that the EU will focus its funding and technical assistance support on in the coming decade.  These include:

• developing and strengthening quality vocational education and training systems that link to the workplace;
• improving the education and training outcomes of students in at-risk groups;
• improving the teaching and learning of 21st century skills;
• helping low-skilled adults acquire usable skills;
• increasing the use of technology in teaching and assessment; and
• improving the teaching profession.

The European Commission also identified priority roles for the EU to take to help their member countries meet these goals.  These include monitoring progress towards these goals in the member countries; creating an apprenticeship alliance across the EU; and creating a European Area for Skills and Qualifications.

Along with setting new goals for 2020, the European Commission also released a country-level analysis that provides a baseline of 27 member countries against the new 2020 goals.  The report also provides descriptions of major policy initiatives and reforms that they plan to implement as they work toward these goals.  You can learn more about the initiative here.

Indeed, economists know that deep recessions are typically occasions for transformations in national economies, and it looks as though this one is no exception.  Companies facing stunted demand and plenty of cash have used the opportunity to make major investments in automation.  That means that many of the jobs requiring relatively routine skills are never coming back and many of the jobs that are created as demand comes back will call for considerably higher skills.  This was the general direction before the Great Recession, but that trend, it seems, as been greatly accelerated by those events, ratcheting up skills requirements considerably.

The 2012 issue of Education at a Glance focuses, in particular, on the relationship of compulsory and higher education investments by nations to their economic outcomes noting that, despite the financial constraints on governments because of the recession, spending on education (both public and private) has, in many cases, increased across OECD countries.  The OECD considers secondary education to be the “baseline” qualification needed in today’s economy, with many of their indicators measuring the proportion of the population who hope to achieve or have achieved education beyond this baseline.

There are also a host of new indicators included in this year’s Education at a Glance.  Two are specifically directed at the relationship between the global economy and the education level of a population: how education influences economic growth, labor costs and earning power; and the extent of social mobility in each country studied.  The former supports the growing body of evidence about the importance of workers having some post-secondary education:  the OECD found that labor income growth among highly educated people has contributed to more than half of GDP growth in OECD countries, whereas workers with less than a secondary education actually serve as a drag on labor income growth.

As policymakers around the world have turned their attention to increasing post-secondary education attainment rates, students, too, seem to grasp the increasing importance of higher education in most OECD countries, with educational attainment levels on the rise across the board.  Across all OECD countries, an average of 31 percent of adults have completed a post-secondary education.  Canada is the only country where more than half of all adults (people aged 25-64) have some higher education.  While many countries have steadily increased their percentage of adults with a college degree, some have increased at a much faster rate.  From 2000 to 2010, Canada’s average annual growth rate was 2.4 percent, the United States’ was 1.3 percent, and Finland’s was 1.8 percent.  But, during the same time frame, Ireland, Luxembourg, and Poland experienced growth rates ranging from 6.9 to 7.3 percent. The OECD average growth rate is 3.7 percent.  South Korea is also moving up fast with an average annual growth rate of 5.2 percent and they lead the world in higher education attainment rates for their young adult population, with 65 percent of their people aged 25-34 years completing post-secondary education.  In other high performing countries, like Japan, students who hope to enter higher education are hobbled by high tuition and low student supports.

Another new indicator in this year’s edition of Education at a Glance asks to what extent does parents’ education influence access to tertiary education?  Not surprisingly, the data shows that if at least one parent has completed post-secondary education, students are more than twice as likely than the average student to attend higher education themselves, while students whose parents did not complete upper secondary education have a 44 percent chance of attending post-secondary education.  Some countries are better than others in creating a pipeline to post secondary education even for students whose parents did not complete upper secondary school. Students whose parents have low education levels have greater chances of attending higher education in Iceland, Turkey, Portugal, Ireland, the United Kingdom, Denmark and Sweden, where the odds of attending are greater than 50 percent.  While not all students in this group who attend higher education actually graduate, some of these countries are also adept at ensuring fairly high rates of completion.  In Australia, the tertiary attainment rate of students without highly educated parents is more than 40 percent; in Ireland, Iceland, Sweden, and Finland, about 30 percent of students from this group attain tertiary degrees.  The OECD average for this group is just 20 percent.  Many of these countries employ a number of strategies to strengthen the educational pipeline for students whose parents are less educated including providing equal access to high-quality K-12 educational experiences, offering robust student support systems such as college and career counseling, and maintaining reasonable college and university tuition costs.  Australia, perhaps the most successful country when judged by the metrics of both the participation and attainment of students whose parents have low levels of education, has annual tuition fees at public institutions of $4200 US per year (fairly high compared to other OECD countries, though not as high as in the United States or the United Kingdom), but more than 75 percent of students receive financial aid.  Sweden, which also has high rates of tertiary participation among students whose parents have low education levels, and a fairly high rate of completion among this group, takes a different tack, not charging tuition fees at all.

In the United States, the odds of a student going on to college if his or her parents have not finished high school is just 29 percent.  The odds are lower in just two countries, Canada and New Zealand (figure 2).  However, the figures may not be as dire as they seem at first reading.  In his webinar presentation prior to the launch of this year’s report, Andreas Schleicher, Deputy Director for Education and Special Advisor on Education Policy to the Secretary-General of the OECD, points out that the OECD did not count associate’s degrees in their analysis. When the definition of higher education is expanded, the United States most certainly will improve in this category; however, this still brings into question the quality of the post-secondary credentials that many young people in the United States acquire compared to those in other OECD countries.

Schleicher also mentioned that OECD researchers had initially hypothesized that high tuition would be a barrier to disadvantaged students attending higher education.  However, the evidence shows this is not always the case.  In countries with high tuition rates and strong student support systems (for example, widespread access to loans and grants and manageable debt repayment plans), high tuition does not generally seem to prevent students from pursuing higher education.  Schleicher highlighted the system in the United Kingdom, which bases student loan repayments on salaries.  If former students do not meet a certain income threshold, they are not required to repay their loans.  Therefore, pursuing higher education is less of a gamble for low-income students; when students do not have to worry about repaying their loans if they cannot find a job, more students are willing to continue their studies.  This is a notable lesson for other countries with high tuition rates and less forgiving repayment programs – Schleicher stated that the UK government has found that the social returns of investing in getting more students into higher education are worth the risk.

Other new indicators ask:

• What is the difference between the career aspirations of boys and girls and the fields of study they pursue as young adults?
• How well do immigrant students perform in school?
• How do early childhood education systems differ around the world?
• Who makes key decisions in education systems?
• What are the pathways and gateways to secondary and tertiary education?

A few highlights from these new indicators tell us that key decisions in education systems are least commonly made at the intermediate level of governance; 16 of 36 countries allow schools to make key decisions (and half of those decisions are made within a framework created by a more centralized structure), and 12 countries fall at the other end of the spectrum, with key decisions made at the central level.  The Netherlands is the most autonomous system in the OECD, with 85 percent of decisions made at the school level.  However, school autonomy does not necessarily predict student performance; the top performers are scattered across the spectrum.

Another indicator looks at secondary and post-secondary gateways in education systems.  Twenty-three of the 36 OECD countries require students to take examinations at the upper secondary level and 22 make those examinations a requirement for passing a grade, graduating from school or earning a certificate.  Very few, however, require national examinations in elementary school, with the United States, Indonesia and Turkey being the only exceptions.  This suggests that most OECD countries value mastery of content and skills at the upper secondary level as an essential component of their education systems.

Some of the top-performing countries in primary and secondary education seem to be slightly behind the curve when it comes to early childhood education – at least early childhood education supported by government expenditures – a point which was driven home in three of the four country notes.  Three countries rely on private investment to drive their systems.  In South Korea, for example, more than 80 percent of four-year-olds are enrolled in a preschool program, but the vast majority (79 percent) attend private preschools, whereas across the OECD, just under 16 percent of students attend private ECE programs.  In Japan, preschool attendance for four-year-olds is nearly universal (97.2 percent), but spending on ECE is among the lowest in the OECD, and household spending makes up nearly 40 percent of all spending on ECE.  In Australia, both enrollment and spending lag; enrollment is the fourth lowest in the OECD at just 52 percent, and spending on ECE as a proportion of GDP is also among the lowest.

The annual publication of Education at a Glance once again serves as the go-to source for up-to-date information on the measurable features of education systems in OECD countries.  New indicators on higher education certainly make this year’s issue the most comprehensive yet.