Remarks by Angel Gurría
27 May 2015
(as prepared for delivery)
Ladies and Gentlemen,
It is a great pleasure to be in Berlin to present the OECD Skills Outlook 2015 on Youth, Skills and Employability. Skills drive economic growth and can boost social cohesion. With growth increasingly driven by productivity improvements, the future economic and social well-being of OECD countries will depend upon providing our young people with the right skills to succeed in the 21st century job market.
Germany has a strong tradition of vocational education and training which has proved very effective in getting young people into jobs. Indeed, at under 8%, Germany has one of the lowest youth unemployment rates of the OECD. But across the OECD, millions of young people are finding the transition from school to work near impossible.
On average, young people in the OECD are twice as likely to be unemployed as prime-age workers (6% against 14.2% in the first quarter of 2015). And in countries such as Spain and Greece, every second youth in the labour force is unemployed.
In total, more than 35 million 16-29 year-olds (or 1 in 7 youth) across OECD countries are neither employed nor in education or training, the so-called NEETs. Around half of all NEETs – 20 million young people - have dropped off the radar completely. They have literally disappeared from their country’s education, social, and labour market systems.
Addressing this tragedy is not only a moral imperative, but also an economic necessity. These NEETs represent a lost investment as well as a potential burden on society: from lower tax revenues, higher welfare payments, and increased social instability.
This year’s Skills Outlook takes a close look at the skills and employability of youth through the lens of the OECD Skills Strategy to see how countries can tackle this social and economic crisis.
Let me share with you some of our findings, which also rely on the information collected by the Programme for the International Assessment of Adult Competencies (PIAAC).
According to the PIAAC Survey of Adult Skills, 10% of all recent graduates in the 22 surveyed countries and regions have poor literacy skills and 14% have poor numeracy skills. And young people need a range of skills to find a job. Not just cognitive skills, but also social and emotional skills.
It is important to create the conditions for learning and acquiring skills form an early age. The OECD Programme for International Student Assessment (PISA) finds a strong association between attendance in pre-primary education and better performance in reading, mathematics and science later on. This is particularly true among socio-economically disadvantaged students. High-quality pre-primary education for all children can therefore help mitigate disparities in education outcomes and give every child a strong start.
It is also the case that many young people find themselves in jobs where the skills they have acquired in education are not relevant or where employers do not use their skills effectively. In fact, on average 12% of employed young people are overqualified for their job. Better aligning education and training systems with the skills needed in the workforce would help to limit the incidence of mismatches between young people’s skills and their jobs.
But it is not just about acquiring the right skills in education. It’s also about building work-based learning into education programmes. Less than 50% of students in vocational education and training (VET), and less than 40% of students in academic programmes in the 22 OECD countries and regions covered by PIAAC, participate in any kind of work-based learning.
Here in Germany, almost 75% of students in upper secondary vocational education and training are in apprenticeships, and less than 10% are only studying. We can learn a lot from countries like this one, where apprenticeship and work-based learning are widespread.
Work-based learning is also an effective way to enhance students’ employability. Many firms find it too expensive to hire individuals with no labour market experience, even if they have relatively strong cognitive skills. By working as they learn, students can familiarise themselves with the skills that are valued in the workplace. And employers benefit too. They get to know the potential of new hires and can check the quality and relevance of their programmes.
So it is vital that vocational education and training have a strong work-based learning component. It should lead to the development of all types of skills -- not only job-specific ones -- and provide pathways to further education. University programmes too need to prepare people with the skills that the labour market needs and across countries we see a clear pattern: young graduates with work experience are more highly sought after by employers.
And, of course, getting the right set of skills is not just essential for those young people who are out of work or still in education. Even young people who succeed in entering the labour market face obstacles to developing skills and advancing their careers.
A quarter of all employed young people are on a temporary contract, which seldom leads to a better, more stable job. Recent estimates suggest that in almost all European countries, less than half of the workers that were on temporary contracts in a given year are employed on full-time permanent contracts three years later.
Such workers can become trapped in a cycle of precarious jobs, interspersed with unemployment and periods of inactivity. They also use their skills less and have fewer training opportunities than older workers with more stable jobs.
The asymmetry between job-protection provisions that make it costly for firms to convert fixed-term contracts into permanent contracts should be reduced. Minimum wages, taxes and social contributions should all be scrutinised and, if necessary, adjusted to promote the hiring of youth with little work experience.
And in the case of the NEETs that have disengaged completely from education and the labour market, we need to go even further, by considering a system of mutual obligations. In return for receiving social benefits, young people could be required to register with social institutions or public employment services, and take action to prepare for the labour market, including by participating in further education and training.
Ladies and Gentlemen:
Aristotle once said, “where the needs of the world and your talents cross, there lies your vocation”. But, today, many of our countries and educational institutions are struggling to adapt to the needs of the modern world and its labour market. We have to put the structures in place, find the right policy solutions, to ensure that young talents thrive and that vocations are pursued.
With this purpose, the OECD will continue to work with countries to improve the skills and employability of young citizens.
Our ‘Skills Beyond School’ Reviews have provided 13 countries -- including Germany -- with advice on how to improve post-secondary vocational education and training programmes. In 2013, we launched an OECD Action Plan for Youth to tackle youth unemployment. Our recent Latin American Outlook 2015 has focused on skills in the region. And applying our OECD Skills Strategy framework, we have been helping countries develop their own national skills strategies.
But as this Skills Outlook shows, we need to do even more. The OECD stands ready to support youth across the world develop better skills, for better jobs and better lives.