Dr Stefan Speckesser is an empirical economist specialising in evaluation methodology, programme and policy impacts and the returns to investments in vocational education. He has been Principal Economist of the Institute for Employment Studies since 2010.
In this blog post, we focus on the situation of 15-19 year
olds using the most recent EU micro-data available to independent researchers
(from 2012). More recent data for selective indicators and a comparison of
youth unemployment rates and youth unemployment ratios for the whole group of
young people (15-24 year olds) can be found here.
An obvious and well-established measure for understanding
the effectiveness of institutions facilitating young people’s transitions into
work are youth unemployment rates[1], which relate
unemployed jobseekers of a particular age range to this age group’s total
labour force, that is, people either working or looking for a job. The top
panel of Figure 1 shows this indicator for 15-19 year olds using consistent
data from the EU Labour Force Survey. The the data reveals, the labour market
for young people in the UK compares relatively favourably with most other EU
Member States, although the UK’s unemployment rate is higher than in Germany,
Austria or the Netherlands.
However, the comparison of unemployment rates is greatly
affected by institutional differences because countries with large-scale
apprenticeship systems, such as Germany and Austria, include apprentices in the
total labour force. In contrast, unemployment rates are higher in many
other countries, where vocational education and training (VET) is primarily
college-based and these individuals are not counted as part of the labour
force.
Therefore, comparing unemployment ratios, which relate
total youth unemployment to the whole population of the 15-19 year
olds - including those that are currently in school - , results in fewer
measurement problems. Figure 1 (bottom panel) shows that the youth unemployment
ratio in the UK is among the highest in Europe. In relation to
the other big EU economies, Germany (unemployment ratio 2.6%), France
(5.1%) and Italy (4.8%), the UK’s youth unemployment ratio is two to four times
bigger.
These findings are interesting as they suggest that countries
with very different institutional designs can show similar youth unemployment
ratios: Countries with employment-centred VET-systems like Germany and Austria
achieve relatively low youth unemployment, but – at least for the youngest
group in the labour market of the 15-19 year olds – so do countries with upper
secondary vocational education in colleges like Poland and France.
Figure 1: Unemployment rates and ratios for 15-19 year olds
in Europe
Notes: ** Countries with ‘Dual
systems’ of vocational education and employment (incl. apprenticeships).
Source: European Labour Force Survey micro data, own
calculations.
The common feature of these countries is that young people,
including those not aiming for academic education, continue to participate in
education for longer: In Germany, compulsory education participation ends when
people turn eighteen (in most states), including apprentices’ participation
in vocational education colleges. In Poland,
where compulsory education also ends with eighteen years of age, young people
outside general secondary schools participate in full-time (basic) vocational and
technical schools for two years. In France, where mandatory schooling
participation ends with sixteen years of age, post-16 participation is lower,
but about 87 per cent of all 16-19 year olds participate in general
and professional Lycées. Compared to this, young people aiming for a
non-academic route in the UK make transitions out of the education system
earlier in the life and are relatively more affected by youth unemployment.
Education and Vocational Education & Training (VET) make the difference
Obviously, education expansion itself decreases youth
unemployment because it postpones labour market entry, but there is more to it
than a simple effect on unemployment statistics. A body of robust evidence on
the substantial benefits of investment in post-compulsory education exists,
with statistically significant estimates on the percentage point improvements
of young people’s employment and earnings outcomes if they achieve general and
vocational qualifications – compared
to the counterfactual non-achievement. As suggested by Human Capital
theory, knowledge and skills remain the crucial mechanism for improving the
labour market position of young people.
Moreover, continued modernisation and technological
change increase the demand for higher level skills and reduce opportunities for
young people to move into traditional entry jobs. In such roles young people
were able to gain practical experience, initially undertaking easier tasks in
the workplace while firms trained their young employees up for their own
benefit. The loss of this labour market segment has resulted in both a lack of
opportunities for young people and an overall shortage of skills, which affects
the UK’s growth prospects. As written in Sandra’s
last blog post, policy in the UK aims to make a difference by increasing
the age of compulsory education participation to 17 (from 2013) and further to
18 from autumn 2015.
Increasing education participation seems to be the crucial
mechanism to improve the situation of young people. The comparison of EU Labour
Force Survey data in Figure 2 (top panel) shows that the UK’s position in
engaging 15-19 year olds in education is one of the lowest in EU, at 79%.
Education participation is almost 10 percentage points higher in France
(89.9%), more than 14 percentage points higher in Germany and more than 15
percentage points higher in Poland.
When considering that the UK’s tertiary education
achievement rate is 40%+ of 30-34 year olds (ten percentage points higher than
in Germany, see Target
Tertiary Education of Europe 2020), the statistics are evidence that the UK
education system delivers very successfully education at highest levels, but
offers fewer opportunities for school leavers to acquire skills and recognition
for professional roles at intermediate levels than other countries.
In recent years, an important element of improving such
opportunities was the reform and extension of apprenticeships and traineeships,
combining employment with formal education.[2] The
comparison of the UK and other EU Member States supports this strategy. Figure
2 (bottom panel) show transition to VET rates - the share of pupils
who leave full-time education and move on to combining work and
education. As can be seen in the chart, there are large differences
across countries in terms of how much employers are involved in vocational
education. Countries with “Dual systems” combining apprenticeships in firms
with state-run schools providing vocational education (Germany, Austria,
Netherlands, Denmark) have a very high VET transition rates. Those with
mainly classroom based systems, like France, have very little
employer involvement in vocational education and consequently have a low
transition to VET rate. Recall from Figure 1 (top panel) that countries
with dual systems are also the countries with relatively lower youth
unemployment rates.
Figure 2: Education and training participation indicators
for 15-19 year olds in Europe
Notes: Transition to VET: Those
combining education and work as a % of all in full-time education who left
since the previous year (based on the retrospective question of the European
Labour Force Survey on individual’s status a year ago.)
** Countries
with ‘Dual systems’ of vocational education and employment (incl.
apprenticeships).
Source: European Labour Force Survey micro data, own
calculations.
Improvements the UK, but more has to be done
While the labour market situation for young people has been
improving significantly over the last years in the UK, the European comparison
shows that higher youth unemployment is associated with lower post-compulsory
participation in education, in particular vocational education. However,
it is crucial that the courses and routes offered to young learners are of high
quality if the expansion of post-16 education is to reduce youth unemployment
and increase skills among the population.
We can learn a lot from other countries about how to improve
education for young people and prepare them for occupational roles. There are
many elements from ‘Dual systems’ in Germany and Austria combining work in
firms, high quality vocational education and clear educational standards, which
can help to further develop UK vocational education.
Similar to England’s vocational education system, the Dutch
system offers both mainly school-based
programmes and apprenticeships, with both resulting in the same
qualifications, while producing much lower youth unemployment. Poland achieves
high intermediate skills levels and relatively low youth unemployment with a
primarily college-based system.
In the medium term, the UK will not be able to move to a system where most of Vocational and Further Education consists in apprenticeships, even though the recent calls for more apprenticeships by all
parties suggest a desire by policy makers for this to happen. We must ensure
that the alternatives for those not able to get an apprenticeship are of a
high standard and lead to similarly desirable qualifications.
CVER’s aim is to produce robust evidence to further
understand the impact of vocational education on students’ transition to jobs
and earnings later in life. This research will help inform the policy
debate on education and labour market integration of young people.
This analysis is part of a report on “Performance and Key
Drivers of Youth Labour Markets in Europe” for research on “Strategic
Transitions for Youth Labour in Europe (STYLE)”, funded by the European Union’s
Seventh Framework Programme. The project aims to provide a
comprehensive understanding of the causes of very high unemployment among young
people and to assess the effectiveness of labour market policies designed to
mitigate this phenomenon. The forthcoming research report will
be published here.
[1] Unemployment is defined
according to ILO convention and covers all young people, who are out of work,
have been looking actively for work in the last four weeks and are available to
start working in the two weeks or who found work and will start within the next
two weeks. Unemployment rates express total number of unemployed as a
percentage of the economically active population (i.e. people in employment or
ILO-unemployed) of the age group in focus. Unemployment ratios relate total
15-19 ILO-unemployment to the whole population of the15-19 year olds.
[2] Since we do not have EU-wide
data on apprenticeships, we focus in this description on 15-19 year olds
leaving full-time education to start employment combined with education
participation as a percentage of all young people leaving full-time education.
