Emilia Soldani
OECD
OECD Economic Surveys: Italy 2026
Abstract
Italy’s working age population is projected to shrink at a fast pace due to population ageing. At the same time, a substantial share of young Italians is not in work or training or emigrate. Building on ongoing reforms, investing in their skills and improving their prospects would help to mitigate the shrinking workforce through higher employment and productivity. Further improving outcomes in the education system through school and university reforms and strengthening school-to-work transitions would help. Permanently reducing labour taxes for those joining the labour market, reducing burdensome employment legislation to encourage permanent contracts and strengthening the public employment services would help more young people find good quality jobs.
Italy’s labour force is shrinking due to population ageing, amplified by emigration. The number of working-age individuals is projected to drop by five million by 2040 compared to its level in 2025 in ISTAT’s median demographic scenario and by more than one-third by 2060 (ISTAT, 2024[13]), a pace much faster than the OECD average. This will add to labour shortages and weigh on growth, productivity and the public finances.
While young workers are becoming an increasingly limited resource in Italy, their potential remains underused. School dropout rates have improved significantly over the past decade, from 15% in 2014 to 9.3% in 2024, and tertiary education graduation rates risen, but these rates still lag other OECD countries. In 2025 over 15% of youths aged between 15 and 29 were not in employment, education or training (NEET), 11 percentage points lower than a decade earlier but still one of the highest rates across the OECD. Among those aged 20 to 24 years, an age when young individuals have completed their education and start entering the labour market, the share who have dropped out of employment or education increases to one-in-five, the third highest across the OECD countries with available data (Figure 2.1). The share of NEET is very high even among recent graduates of vocational upper secondary and post-secondary schools, at 22.5% compared to an average of 13.8% across the EU. This weighs on today’s labour market and economy, contributes to intergenerational inequality and weakens social cohesion. In the longer run, the more time an individual spends out of employment or education, the worse their prospects of future employment, skills and earnings. NEET individuals are at greater risk of economic vulnerability, social exclusion and marginalisation and in the longer run are more exposed to mental and physical health risks (Stea et al., 2024[1]).
Share of individuals not in employment, education or training (NEET), age group 20-24, %
Source: OECD, Distribution of young adults' education and work status, for a given level of educational attainment, age group and gender; and Eurostat. For USA, data refers to 2023.
Additionally, the growing share of educated young people leaving Italy in search of better opportunities abroad is a huge loss of talent (Banca d'Italia, 2025[17]). In 2024, the migration rate reached the highest levels in 25 years, increasing by 36.5% compared with a year earlier, although the measured increase partly reflects stricter rules introduced in 2024 for Italians leaving abroad to register their departure. Between 2011 and 2024, a total of around 6% of the population aged between 18 and 34 years left Italy. Among young people leaving the country, half have a college degree, compared to only a third just a decade ago and well above the average qualification level of other young Italians, a phenomenon sometimes referred to as a brain drain. This exodus is only in part compensated by immigration. While the share of immigrants with a tertiary education degree has been steadily growing from a very low level, many migrant workers are overqualified for the occupation they take up (see Chapter 4).
There is room to improve the engagement of Italian youth in the labour market and reduce their incentives to emigrate. Section 2.2 assesses the scope to further improve education outcomes and the transition from school to work. Section 2.3 discusses labour market policies to create better career opportunities for young workers. Other measures to mitigate the declining labour force by raising the employment of older people, women and immigrants are discussed in Chapter 1.
The high NEET rate reflects, in part, challenges in the school and tertiary education systems and a complicated transition from school to work. While education has a broader social role, providing young people with job-relevant skills is very important and has been the focus of various recent policy interventions. School dropout rates have significantly improved, but there is great potential to improve young people’s transition from school to work, the take-up and completion of tertiary education and engagement in labour markets. Many young Italians leave the education system with relatively limited job-relevant skills. In 2024, the share of tertiary educated among 25–34-year-olds, at 30%, and among 25-64-year-olds, at 21.6%, was among the lowest across OECD countries, despite having nearly doubled since 2004 (OECD Adults' educational attainment distribution, by age group and gender). At age 15, students’ OECD PISA scores in maths and science are around the OECD average but, as in most other OECD countries, have declined in recent years. At ages 16-to-24, their skills, as measured by the OECD PIAAC Survey of Adult Skills, are below the OECD average, especially in problem solving (Figure 2.2). There are significant differences across students, reflecting an underlying lack of equality in the school system. In addition, significant territorial differences remain, with the share of pupils with competencies well below those expected after 8-years of school varying from below 10% in the northern regions of Lombardy and the Aosta Valley to over 25% in Sicily, Calabria and Sardinia in the South (OECD, 2024[31]). The Agenda Sud initiative aims at reducing the learning gap and improving learning opportunities for students throughout the country by funding tutoring and educational programs in over 2 000 schools in the South. Improving skills formation would improve young people’s prospects in the labour market, especially if combined with measures to improve economic activity and labour productivity growth (see the discussion on skill shortages and slow productivity growth in Chapter 4). Enhanced targeted measures for NEETs, building on existing efforts, would further contribute to ensuring that more young people are in employment or training.
Mean performance of 16- to 24-year-olds in PIAAC 2022-23
Note: Subnational entities for GBR (England).
Source: OECD, PIAAC 2022-23 Database, Table A.2.1.
2.2.1. Raising standards for all in the school system
The relatively weak outcomes of the school system, in terms of skills acquired and of dropout rates, can be addressed through stronger investment in the quality of teaching and by addressing structural issues. Italy is already taking action through a wide array of complementary reforms and interventions, although results may take time to materialise. Despite total spending per child being just below the OECD average, teachers’ wages are low compared to the EU and OECD averages and to the wages of other tertiary-educated Italian workers (Figure 2.3) and the process to obtain a standard contract as teacher is cumbersome and lengthy, reducing schools’ ability to hire and retain good candidates. The share of new teachers who report that teaching was their first career choice, 49%, is lower than the OECD average of 58% (OECD TALIS Database, 2024[4]). The teaching workforce is also relatively old, especially in southern regions where permanent teacher contracts are more frequent: more than half of the teachers were older than 50 in 2023, among the highest share across the OECD, although recent recruits have lowered this share from 70% a decade ago. This creates an opportunity to revitalise the workforce as half of the overall teaching workforce is approaching retirement age and will need to be renewed over the next decade, despite the projected decrease in the number of school students. The National Recovery and Resilience Programme (NRRP) includes policy actions and investments to strengthen the teacher workforce, including the hiring of over 58 000 new teachers through a competitive examination process. One-fifth of teachers were employed on contracts shorter than 12 months, compared to an average 12% across all countries participating in the OECD TALIS in 2024, and down from 25% in 2018 (resulting in Italy infringing the EU Council Directive 1999/70/EC). Ensuring that the new hires are integrated through long-term or permanent job contracts, as is already the case for the 70 000 hired through the NRRP, will help recruit and retain good teachers and ensure a lasting improvement in the quality of education. The implementation of the new teacher recruitment process introduced through the NRRP is expected to sustain progress in this direction.
Average salaries of upper secondary teachers relative to earnings of tertiary-educated workers, ratio, 2022
Note: Data refer to ratio of salary, using annual average salaries (including bonuses and allowances) of teachers and school heads in general education public institutions relative to the earnings of workers with tertiary education. Data for Great Britain show England only and the Flemish Region for Belgium.
Source: (OECD, 2023[18]), Table D3.3. For more information see Education at a Glance 2023 Sources, Methodologies and Technical Notes.
To strengthen quality education and rejuvenate the teaching workforce while containing expenditures, it will be key to link new hires’ salaries to qualifications, while also acting on other dimensions to improve teachers’ working conditions. The current salary scale is relatively compressed and mostly based on seniority rather than performance, offering limited incentives and often failing to retain younger and higher qualified teachers (OECD, 2025[19]). As older more senior teachers retire, resources will become available to offer new recruits more attractive contracts that better link salary with qualifications and performance. Improving the career prospects, professional development, mobility and perceived role in society, which is generally worse than the OECD average (OECD TALIS Database, 2024[4]), would help attract and retain qualified teachers. Teachers’ recognition in society and their working conditions can be improved through greater autonomy, more collaborative school environments, developing mentoring, and better engagement with broader society. Recent progress in these directions has been made with the 2025 reform of the evaluation protocol for school principals, which reinforced the focus on quantitatively assessed achievements (Ministero dell'Istruzione e del Merito, 2025[24]), and with the creation of Schools for Advanced Training in the Field of Education (SAFI) and of incentivised teacher training pathways, including through dedicated learning platform (Scuola Futura).
Italy is reforming school curricula in primary and secondary schools, which used to be generally focused on theoretical knowledge and centred around traditional structuring of instructional hours, rather than student-centred teaching strategies. The extent of this varies across schools, as they have autonomy in applying national guidelines to their own educational and instructional needs. Rethinking the curricula to improve students’ engagement in their learning and demonstrate its career relevance may reduce school dropouts. To this end, Italy has recently adopted a strategy to enhance mathematical, scientific, technological and digital skills through innovative teaching methodologies through all levels of education (STEM Guidelines, 2023, School 4.0 and New Skills and Languages measures). While the use of AI in teaching (Ministerial Decree 166/2025) and upgrading classrooms and laboratories to next generation learning environments can support the personalisation of learning paths, careful monitoring and a continuous assessment of the risks and benefits of different approaches will be necessary. Building on recent reforms to technical education, strengthening learning environments that adapt to students’ learning progress and engaging local businesses in work-based learning can support students’ engagement. A shift towards developing technical skills, teamwork, problem-solving and workplace communication, alongside recruiting industry professionals to teach part-time courses can improve the job relevance of school curricula, especially but not exclusively in technical schools (OECD, 2024[3]). Job-search skills including training on how to prepare a curriculum vitae, how to perform well in job interviews and how job contracts work can help make students more employable and can be offered in schools, to complement the materials students can access online or at local employment services.
In 2023, Italy adopted a new framework to guide secondary school students in their choice of further education. The framework introduces dedicated orientation modules of at least 30 hours, to be documented in a digital portfolio (E-portfolio) and two new professional figures: the tutor teacher (docente tutor), who supports the development of personalised learning paths, and the mentor teacher (docente orientatore), who provides information and guidance on educational, vocational and employment opportunities. Beyond formal arrangements, continuing to strengthen guidance for career and educational choices in lower secondary schools can support students’ engagement and their successful integration in society and the economy.
Improving the engagement and learning outcomes of students from disadvantaged socio-economic backgrounds and schools is a key challenge. As in other OECD countries, there is a strong link between social background and educational performance. In the Italian context, relatively high income inequality and differences between the North and the South are reflected in higher school dropout rates in the South. Early choice between general, technical or vocational educational paths, which in Italy happens at age 14, can further exacerbate social differences, as parents’ educational attainment and socio-economic background are strong predictors of their children’s educational choices, even in contexts, like Italy, where all students with an upper secondary degree can enrol in tertiary education (Égert, de la Maisonneuve and Turner, 2023[9]). Recent measures to increase flexibility in reorienting the educational pathways (Law 164/2025) or further postponing the choice between educational pathways to age 15 or 16, as it is in most OECD countries could help reduce inequalities without significant negative impacts on average performance.
A large body of empirical evidence suggests that early children education is important in determining children’s learning outcomes and their engagement in school, especially for children with less educated parents. Compulsory education in Italy lasts 10 years, typically from age 6 to 16 (with eligibility for early enrolment at age five depending on the exact date of birth), slightly below the OECD average of 11 years. Increasing the take-up of early childhood education and care would help reduce inequalities in educational outcomes. Sustaining efforts to expand access to early childhood education under the NRRP and MTFSP will be key.
At 13 weeks, the average summer break in Italy is very long, leading to a drop in performance particularly for students from poorer backgrounds. Reducing the length of the summer break towards the OECD average of 9 weeks (Figure 2.4) would help improve continuity in education and reduce learning losses and keep young students engaged. If paired with measures to improve school cooling for the summer heat, these interventions may reduce the developmental and learning gaps experienced by children from disadvantaged households. Further strengthening the provision of extra-curricular activities, like sports, tutored learning and recreation, on-site after school hours and during summer breaks, would further help strengthening students’ engagement and reduce inequalities. Preliminary evidence suggests a good impact on students’ engagement and learning outcomes of various similar initiatives in both primary and secondary schools carried out on a small sample of school in 2022 (Azzolini et al., 2025[30]) and at larger scale, in part thanks to NRRP funding, between 2023 and 2025 (Piano Estate).
The high rate of school dropouts has historically contributed to the NEET rates, but significant progress has been made. While it remains just above the EU average (9.3% in 2024), the share of youth aged 18 to 24 abandoning school before completing upper secondary education decreased from 15% to 9.3% between 2014 and 2024, thanks to the strengthening of teacher training and school-work alternance and the investments in vocational training undertaken through Agenda Nord, Agenda Sud and the Piano Nazionale Scuola e Competenze (National Plan for Schools and Skills). Some of these measures have been temporarily financed by the NRRP and aimed at combining educational, social, and community-based interventions and promoting the role of schools as hubs within broader protective networks. They should be continued beyond the NRRP to avoid reversing the recent progress. Retaining and building on the policy measures that have been effective, such as the extension of school hours and the collaboration between schools and other local entities to raise parents’ engagement in their children’s education, would help to reduce the number of children leaving school without minimal qualifications. While educators can identify at-risk students, formal monitoring systems to activate providers of broader social support, like the newly established National Education Registry (ANIST), are expected be more effective (Autorità garante per l’infanzia e l'adoloscenza, 2022[15]). For example, within Latvia’s ‘Tackling early school leaving’ project, teachers assess the risk factors and create individual support plans for each student at the beginning of each school year (OECD, 2021[10]).
School breaks, number of weeks, 2023
Note: Breaks exclude public/religious days, except if these days are included in longer breaks. Length of breaks may vary by region, by programme and/or by individual school.
Source: OECD Education at a Glance 2023.
2.2.2. Expanding the use of apprenticeships and curricular internships
There is a large gap between the education system and the world of work, which makes it harder for students to prepare and engage with the workforce or make appropriate career choices. Work experience, including internships and apprenticeships, can lead to better occupational outcomes. Across several OECD countries, like Germany, the US and UK, work experience has been linked to higher employment rates and to wage premia of up to 10% compared to individuals with similar academic achievements and socioeconomic background (OECD, 2025[7]). However, only 17.5% of Italian students in any school at the time of the 2022 OECD PISA Survey had completed an internship, compared to 33.2% on average across OECD countries (Mann, 2025[16]), with even lower shares among students in general education (Figure 2.5). Even in vocational and professional schools (FP), almost three-quarters of student completed no form of substantial work-based training. In fact, Italian upper secondary and post-secondary non-tertiary vocational schools are widely school-based programs, with relatively small work components (Eurostat, 2025[5]). In 2023, 30% of Italian students interviewed had never completed any job shadowing or work site visit, compared to an average of 22% across the OECD (PISA 2022 Dataset), but recent reforms aim to address this. To improve school-to-work transitions, Italy has introduced and repeatedly extended mandatory work-based learning in secondary schools (in the forms of Alternanza Scuola Lavoro, Law No. 107/2015, PCTO Law in 2019, and Law Decree Formazione Scuola Lavoro in 2025). In the current setting, depending on the school type, students must complete 90 to 210 hours over the final three years of upper secondary education. Extending the duration and ensuring the formative quality of curricular internships (tirocini formativi), which give students formative work experience and build their job skills, can help students transition into the labour force with better longer-term career prospects, in contrast with non-curricular internships or stages (tirocini extracurriculari), which are often work contracts with low pay rates, little employment protection and limited investment in the participants' skills. Job shadowing programs, where students visit workplaces for shorter periods, can further help youth explore careers. For instance, internships (stage obligatoire en fin de seconde) are mandatory in France for all tenth-grade students and some school degrees require additional paid internships of up to six months. Box 2.1 presents examples of successful interventions across several OECD countries. For example, Wales has favoured a targeted approach, offering work experience, strengthened by professional career advice, to students at high risk of becoming NEET, identified based on school attendance, attainment and behaviour (Mann and Diaz, 2025[6]).
Percentage of students at age 15 enrolled in general education who have completed an internship
Note: The chart is based on answers to the question ST330 “Have you done any of the following to find out about future study or types of work?”. Source: OECD PISA 2022 Database.
Many OECD countries have taken steps to help young people not in education employment or training to make the transition into work. The strategies generally involve the development of VET education and internships, with characteristics tailored to the country context.
Denmark, Germany and Switzerland have large shares of students enrolled in dual VET upper-secondary schools, where they follow a mixed curriculum of school-based learning (30-40% of the total time) and paid firm-based apprenticeships (Ausbildung), regulated by formal employment contracts. Programmes are generally also open to foreigners with a residence permit. As students in dual VET programmes accumulate meaningful work experience, they tend to have better early employment outcomes than peers in school-based vocational tracks. In the case of Germany, by age 23-25 the individuals who had completed an internship in their teenage years were 0.24 times less likely to be NEET, reported higher job satisfaction and up to 10% higher earnings.
High-quality career guidance can support smoother school-to-work transitions. Countries like Sweden, Denmark, and Finland have adopted the Youth Guarantee approach, which aims to offer school leavers a personalised action plan and pathway to apprenticeships, subsidised job or continued education. These programs typically involve the collaboration of municipalities, schools, public employment services, and social services.
In 2022, Wales launched the ‘Tailored Work Experience’ programme for students aged 14 to 16 facing a heightened risk of becoming NEET, identified through low attendance, low attainment or challenging behaviour in the classroom. Within the programme, students engage in dual learning, with an alternance of theoretical learning and firm-based apprenticeships and receive one-on-one career guidance by professional advisers.
2.2.3. Improving the job-relevance of tertiary education
Higher tertiary graduation rates, especially in fields that are in high demand by employers, would help young people get better quality jobs and support innovation and productivity. Despite a significant increase, participation in higher education, especially in science, technology, engineering and mathematics (STEM) fields (Figure 2.7), is still low in Italy: in 2023 only 30.6% of individuals in the age group 25 to 34 had completed a tertiary degree, the third lowest value across the OECD and well below the OECD average of 47.6%. While Italy has several leading universities, the sector is generally underfunded, with poor infrastructure and conditions for academics and rigid procedures, although recent efforts are trying to raise performance and financial support for students. Many universities are not selective and there is a bias towards studying arts and humanities rather than STEM subjects. Effective time to complete the studies is typically long and there is a high rate of non-completion of degrees. In 2023, only 37% of the students enrolled in a bachelor’s degree had completed their studies within the theoretical duration of their programme, compared to an average of 43% in the OECD and 44% in the EU area (OECD, 2025[19]). While in the short run selection mechanisms, such as entry-tests could impact the university enrolment rate, they may in the longer run support the quality of the system, help contain drop-out and late completion rates, and improve the employability of graduates.
The low shares of tertiary graduates are linked to low average returns to tertiary education compared to high costs faced by students, in terms of living costs and of foregone income from working. Among 25- to 29-year-olds the gains associated with having a tertiary degree are significantly lower in Italy than the average of EU countries, both in terms of higher employment rates and higher wages. In 2022/2023, for example, bachelor’s degree graduates aged 25- to 34-years enjoyed a wage premium of around 45% relative to the earnings of workers who had completed less than upper secondary education in Italy, compared to the OECD average of 72% (OECD Education at a Glance data). While this is also linked to issues in the labour markets and to slow productivity growth, improving the job-relevance of tertiary education can improve its returns for graduates and society. The poor availability of low-cost housing for students and early-career workers makes it harder for people to enrol in tertiary education or move to areas offering better study and work opportunities. Improving the funding of the existing system with means-tested subsidies for students from poorer backgrounds and expanding the availability of publicly or privately managed student housing, including by easing the procedures to obtain building permits for these developments in large cities, would help support higher enrolment in tertiary education. While progress has been achieved through the NRRP funds, the gap between student housing supply and demand remains substantial.
The low labour market returns to tertiary education are in part due to Italy having one of the highest mismatch rates across the OECD between the skills demanded by firms and the fields of study chosen by graduates, with many people ending up in jobs for which they are not well-suited (OECD, 2024[31]). Mismatches lead to over-qualification, underemployment and longer transitions from education to work as young people wait to find an appropriate position and risk being discouraged. This partly reflects imbalances between supply of students and demand by firms: very few students enrol in mathematics, statistics, IT and engineering, all fields in very high demand. Survey evidence suggests that high school graduates tend to choose their field of university studies based on personal considerations other than career prospects, often reflecting gender stereotypes or even their family’s socio-economic status, with a risk of reinforcing inequality (Anelli and Peri, 2013[29]; Bleemer and Quincy, 2025[28]).
Total expenditure per full-time equivalent student in bachelor’s, master’s and doctoral or equivalent, public institutions, 2022, thousands equivalent USD, PPP
Source: OECD Education at a Glance 2025 database.
The platforms launched by the Ministry of Education and Merit (Unica) and jointly by Unioncamere, INAPP, Almalaurea and the OECD (Competenze e Lavoro) can help students make better-informed choices by offering accessible and up-to-date information on firms’ demand for skills and qualifications, and on the alternative educational paths to secure such skills. Partnerships and collaborations between universities and enterprises and applied-research doctorates (dottorati di interesse nazionale, dottorati innovativi) can help align education with skill demand. However, deeper changes are needed to address imbalances in field choices, reduce skill mismatch, improve the university-to-work transitions and strengthen the private and public returns to tertiary education. This could be achieved through schemes to reward universities’ job placement effectiveness or to adjust enrolment based on labour demand, while monitoring and maintaining the quality of teaching. For instance, many OECD countries have adopted funding mechanisms and enrolment controls to steer university students toward fields with stronger or emerging demand. Examples of funding mechanisms include direct grants, housing subsidies or scholarships for STEM students (a measure also adopted in Italy) and setting department funding loosely based on job placement and academic performance. In general, the public funding of tertiary education in Italy is lower than the OECD average (Figure 2.6). To improve university funding, universities in about two thirds of OECD countries charge foreign students higher tuition fees than national students, without significant detrimental effect on international enrolment (OECD, 2025[19]). Adopting a similar approach could be an option, with due attention to maintaining the quality standards of education.
Since 2022, in the context of the NRRP and the Industry 4.0 program, Italy introduced 147 Istituti Tecnologici Superiori (ITS Academies), which are vocational tertiary education institutes. ITS academies are co-founded by the state and regional governments and can access European funding or accept private donations for laboratories, materials and scholarships. Within the context of the NRRP, their expansion was identified as a strategic objective. They offer two- and three-year post-diploma courses to develop technological skills through lectures and internships in collaboration with businesses, research centres and universities. This is a welcome development. Preliminary data from 2024 suggest that 84% of the participating students found employment within a year of completing the courses, yet the take-up has historically been very low, especially among young women, partly due to the scarce availability in many Central and Southern regions, and dropout rates in certain regions have been high. Vocational tertiary education remains relatively less common in Italy than in countries like France, Germany, Spain and Switzerland, where it accounts for over 30% of all tertiary education. The reform of technical institutes, which introduced the 4+2 pathway, aims to increase the take up of vocational tertiary education by strengthening its continuity with upper secondary education. Preliminary data suggest that from 2023 to 2025, the number of ITS programs and their take up cross the territory have increased significantly (from 450 to 947 courses and from 11,834 to 22,000 first-year students). Ensuring the stable availability of resources through a multi-year programming consistent with the training offer and further expanding the system of ITS Academies across the national territory would help maintain the progress achieved. Further strengthening the recognition of university formative credits (CFU) for ITS graduates who intend to continue their studies and obtain an additional tertiary degree would help to train people with advanced skills that match labour market needs. This will require close cooperation between the three ministries of Education, University and Research and Enterprises and Made in Italy, and with the regional governments.
Work experience completed in the early stages of upper secondary and tertiary education can help students identify the skills they should strengthen, in a country where qualifications and grades are not a good indicator of students’ actual skills (OECD, 2017[25]). Closer cooperation between schools, universities and businesses could improve the skill-signalling power of educational qualifications, as already happens for universities characterised by particularly good professional and technical training curricula. The ongoing shift away from the traditional degree-based hiring to micro-credentials, agile occupational and training standards and a skill-first approach, based on specific skills and experience rather than qualification and degrees, should help better match people with jobs (OECD, 2024[1]).
Note: Tertiary level graduates are individuals who obtained a degree at Levels 5 to 8 of the International Standard Classification of Education (2011) (i.e. bachelor, master, doctoral or equivalent qualifications as well as short-cycle tertiary courses) in 2023.
Source: OECD Education at a Glance Database.
2.2.4. Re-engaging those not in work, employment or training
Thanks to past policy initiatives, the NEET rate has fallen substantially over time. While some NEET have high educational attainment and relatively affluent economic backgrounds and live in highly developed Northern regions, the share of NEET is markedly higher among youth with low and middle education and those in the South or Islands (Figure 2.8). In the South and Islands, for example, over one-in-five young individuals is neither working nor studying. A key feature of the Italian system is a relatively underdeveloped social safety net, with young people relying on family support networks or informal work rather than engaging with public programmes for support that can entail training and work obligations.
For young men, the main cause of becoming NEET is long-term unemployment, highlighting the need for training and career guidance programmes. For young women the leading reason for NEET status is inactivity due to family responsibilities, especially among foreign-born women, highlighting the need to strengthen family policies and access to childcare (Fondazione Gi Group, 2025[23]). Given the multi-faceted nature of the challenges faced by NEET individuals, a variety of institutions, including public employment centres, employers, local authorities, day-care centres, educational communities for minors, schools, urban civic networks, and sport and cultural centres can be activated. Such a multi-level approach, where the various stakeholders collaborate, can improve the chances to intercept and engage NEET youth and to best address their individual needs. The effectiveness and complementarity of different policies and initiatives can be improved through coordination and carefully monitoring and evaluation. In addition, national policies need to be integrated with place-based ones, as the incidence of NEET for both men and women is higher in the southern regions and in rural and suburban areas, where training opportunities and jobs are scarcer and gender norms stronger.
The main public offices to support Italian NEETs are the Public Employment Services (PES), and the Youth Offices. To facilitate young people’s access to employment opportunities the Ministry of Labour and Social Affairs has recently launched an AI-powered platform (AppLI) offering career guidance, information on training and employment opportunities and practical tools. While such initiatives can certainly not substitute in-person services, they can integrate them and improve access, especially in remote areas. However, not all NEETs will reach out to or register with these offices and the platform, either because they cannot access them or are unaware of their existence or are uninterested in the services offered or not looking for a job or training (Rilevazione INAPP 2023). Differences in regional and local funding levels translate into gaps in access in several regions, not only in the South. Expanding state investments or the use of European funds for areas with lacking service and high NEET rates could support access. Focal points or one‑stop-shops, information stands and open days in schools and at public events, and the use of social and other media can help intercept and engage unregistered NEET individuals. Sweden and Bulgaria have successfully implemented projects to reach isolated and unengaged NEETs, many of whom had developed a distrust of government agencies, through the recruitment of young mediators or marketers with similar backgrounds who promoted and shared information about local public employment services at concerts, sport events, meeting points and schools and on social media (see (OECD, 2021[21]) for related policies across OECD member Countries).
2024
Note: Youth not in employment, education or training (NEET) refers to the share of young people who are not engaged in any form of employment, formal education, or training activities.
Source: OECD and Eurostat.
Despite recent improvements, the labour market conditions and the attractiveness of jobs for young people remain relatively weak in Italy. Young workers have been hit particularly hard by the stagnation of real wages, which on average remained below the 1990 level in 2025, reflecting stagnating labour productivity as well as inflation (Chapter 1). At the same time, the tax wedge on low-income workers, often new entrants to the labour market, is high, and many young people end up with temporary contracts or precarious or informal jobs. The low attractiveness of formal employment for lower skilled youth contributes to low youth employment rates and high NEET rates, despite the improvements observed over the past decade with the NEET rate declining by 12.7% between 2021 and 2025. At the same time, this leaves many young people at risk of poverty or dependent on their parents until their 30s (Figure 2.9) and encourages emigration.
2024
Source: OECD Employment Statistics; and Eurostat (yth_demo_030).
Italy lost over 400 000 youth aged between 18 and 34 years to emigration between 2012 and 2023, or 6% of the age group, many of whom appear unlikely to return to work in Italy. This reflects stagnating wages in Italy, growing intergenerational inequality and high shares of unemployment and precarious work contracts. Not only are wages generally low, they also tend to increase with tenure more than with performance or qualification and the increase happens relatively late in life. Compared to peers in Germany for example, workers in Italy on average face similar wages (around EUR 20 000 per year) at age 20, when first entering the workforce, but afterwards their wages remain flat, while those of their German peers more than double in the next ten years of work life (Figure 2.10). To reach the same average wage level of a German 30-year-old (around EUR 45 000 per year), an Italian worker on average has to wait till their late 40s (Grevenbrock, Ludwig and Siassi, 2023[12]). This contributes to higher risks of poverty for youth relative to older generations (Figure 2.10, Panel B). In terms of foregone production and lost educational investments, the loss associated with brain drain has been estimated to be around 1% of GDP per year (Centro Studi Confindustria, 2017[2]). This outflow undermines the stock of human capital and accentuates the existing skill shortages, as nearly 60% of the 18- to 34-year-olds who emigrated to other EU countries took up jobs in occupations suffering large labour shortages in Italy, like technical professions and specialised workers.
Source: (Grevenbrock, Ludwig and Siassi, 2023[12]); and Eurostat in-work poverty dataset [ilc_iw01].
2.3.1. Labour taxes fall heavily on young people starting their careers
Labour income taxation and social security contributions make up a very high share of total labour costs in Italy, also for younger people starting their careers on relatively low wages. For instance, the tax wedge for single workers without children earning the average wage (47.1%) and for those earning 67% of the average wage (38.1%) are among the highest across the OECD (Chapter 1). This large gap between the cost of employing a worker and that worker’s take-home pay contributes to low post-tax wages, reduces the attractiveness of working formally and can dampen labour demand. The relatively large size of the informal economy, estimated at about 10% of GDP, further contributes to the low attractiveness of formal employment when the tax wedge is high (tackling undeclared activity is discussed in Chapter 1).
A series of temporary bonuses and credits have been introduced to reduce this wedge and encourage employment of under-employed groups. The Bonus Giovani, introduced in 2024, offers a relief for employers’ social contributions when hiring a person under 35 for their first permanent contract (substituting the former NEET23 scheme). The relief can be received for up to 24 months up to a maximum of EUR 500 per month, raised to EUR 600 in areas of high youth unemployment. The bonus requires an online application process and in 2024 only around 60% of new hirings of young workers benefitted from it, possibly due to difficulties in completing the application process within the allocated timeframe (Martino, 2025[11]). A careful evaluation exercise is needed to properly assess the overall effectiveness of this measure in supporting youth employment. The 2026 budget law introduced additional measures to reduce the tax burden on labour and attenuate the fiscal drag, including a reduced tax rate on the second tax bracket from 35% to 33% (see Chapter 1). While these measures reduce labour taxation, they only have a modest effect on the overall tax wedge and are not targeted to younger or lower skilled workers. Targeting the subsidies to lower-income individuals or those with longer spells of unemployment can improve their cost-effectiveness and help the most vulnerable young unemployed people into jobs. In the medium term, in light of the relative strong resilience of the labour market, measures to enhance productivity and reduce structural barriers to employment should be given priority over hiring subsidies and temporary tax reliefs. Temporary tax cuts, hiring incentives and bonuses to firms should be phased out and the focus should be on streamlining the tax system and permanently reducing the tax wedge (as set out in the MTFSP), especially on low paid employees, while increasing the tax burden on less distortive sources like property, business and inheritance taxes (Chapter 1).
2.3.2. Job quality for young workers is low
Contract instability, worktime inflexibility and the limited scope for career progression further contribute to making formal employment unappealing for young workers in Italy. While the overall share of temporary contracts in the workforce has recently fallen to its 15-year minimum, temporary contracts remain common among younger workers. Over 39% of workers in the age group 15-29 (and 53% of those in the age group 15-24, compared to 47% across the EU27) have a temporary job contract in Italy, compared to 33% across the EU, nearly three times the rate for older workers (Figure 2.11). Compared to other EU countries with high shares of temporary contracts, Italy has relatively high shares of involuntary temporary and part-time jobs and lower frequencies of transition to more stable forms of employment (Causa, Luu and Abendschein, 2021[32]), with many young workers stuck in a pattern of long-term precarious employment (ISTAT, 2024[33]). This creates unstable working relationships and makes it harder for young workers to acquire skills, not least as their employers have few incentives to invest in training. While improving economic conditions might help reduce the incidence of temporary job contracts, addressing the underlying structural issues would help prevent further increases in periods of lower labour demand.
While protecting workers’ employment is important, excessively strict employment protection legislation on job contracts raises the costs and risks of hiring new workers and adds incentives to retain existing workers. Employment protection legislation in Italy is relatively strict. This discourages hiring workers on permanent contract, and contributes to an insider-outsider dynamic, disadvantaging younger new workers in favour of older more entrenched workers (Figure 2.11, Panel A). The procedures for severance are heavy, costs are high and subject to uncertainty, and legal risks are significant. Despite a series of reforms aimed at increasing job flexibility (including the Fornero Reform in 2012, Jobs Act in 2016), in 2019 Italy still had one of the strongest employment protection legislations in the OECD (Figure 2.11, Panel B). Simplifying the severance arrangements for permanent contracts and reducing the gap in employment protection between permanent and temporary job contracts, for example by increasing the link between job tenure and employment protection, including severance pay, would help reduce the duality of the labour market. The Constitutional Court decisions through 2024 highlight the need to ensure that such reforms do not introduce discrimination and preferential treatment between workers and that they comply with both constitutional principles and the European Union Law and Social Charter. High uncertainty about the costs of dismissing workers can deter hiring. Excessive judicial discretion can lead to high transaction costs, delays and unpredictable outcomes. While the Constitution requires some discretion to remain in setting individual severance pay, reducing uncertainty regarding the costs of dismissing workers with permanent contracts could support employment and deter the use of temporary job contracts. One possibility would be to fix in law a narrow range of severance pay based on job tenure and, possibly, a small number of other criteria (such as the severity of violations which led to the worker’s dismissal), to minimise uncertainty, while leaving some margin for judges to adjust the exact amount of compensation.
Source: Eurostat; and OECD Data Explorer • Strictness of employment protection
Alternatively, the government could extend the support to temporary workers or further constrain the use of temporary job contracts. Switzerland has for example introduced several guarantees and supports for temporary workers, like a dedicated training fund, a dedicated pension system and an effective job placement system. Other countries, like Spain, have restricted the use of temporary contracts by limiting how often they can be renewed or what share of an employer’s workforce in a given sector they can cover (see Box 2.2), though overall employment effects must be carefully evaluated (OECD, 2025[20]). A more fundamental reform to support the re-employability of dismissed young workers would be to strengthen the conditionality of time-limited unemployment insurance (NASPI) on participation in activation measures. Countries like Belgium, Denmark, Luxembourg, and Sweden for example offer time-limited unemployment insurance to all youth, irrespective of their employment histories.
Spain’s 2021 labour market reform significantly reduced contractual duality by sharply restricting the use of temporary contracts and promoting open ended forms. Prior to the 2021 reform, Spain had one of the highest incidences of temporary work across the OECD, while employment protection on open ended contracts was very strong. The 2021 reform (RDL 32/2021) was the result of an agreement among social partners and its approval was one of the milestones of the Spanish NRRP to unlock one of the tranches of Next Generation EU funds disbursed in 2022.
The reform lowered dismissal costs for permanent contracts, strengthened the applicability of collective bargaining rules, and restricted the use of temporary contracts by narrowing the permissible grounds for their use, reducing their maximum duration and penalising successive renewals. The reform favoured the use of fixed-discontinuous job contracts, which grant the same protection as permanent contracts and hence provide more stability to workers, over temporary ones. The loss of flexibility due to the restrictions on the use of temporary contracts was compensated by expanded furlough and job retention schemes (ERTE and RED), which support employment through cuts in social security contributions for employers and special benefits paid to employees. The RED mechanism additionally allows firms to cut working hours in response to cyclical downturns.
Impacts of the reform
Employment, especially in permanent contracts, increased sharply in Spain in the years following the reform, however this also coincided with a period of economic recovery. Within a year of the reform, the number of temporary contracts fell by about 30%, and the incidence of temporary employment dropped by nearly 10 percentage points, with especially large declines (over 20 percentage points) among young workers. Preliminary studies find strong increases in open ended and fixed discontinuous contracts in segments previously relying heavily on very short-fixed term hiring, suggesting that many temporary contracts were converted to open-ended. While overall turnover has declined, the impact of the reform on employment remains unclear due to the contemporaneous rise in economic activity.
Source: (OECD, 2025[20])
Italy has taken several steps to encourage businesses to offer permanent job contracts to young workers, and particularly young women, with mixed results. A number of incentives have come into force since 2021 (among others the Programma Nazionale Giovani, Donne, e Lavoro, from 2021 until 2027), for a total cost of around EUR 1.6 billion. Preliminary evidence suggests that such incentives mostly benefitted individuals who were already relatively strongly placed in the labour market, such as males with higher educational attainment, highlighting the importance of better targeting such incentives towards weaker workers (ANPAL, 2023[14]). The subsequent Bonus Giovani (youth bonus) and Bonus Donne (women bonus), launched in 2024, were associated with increased permanent youth employment, but the cost-effectiveness and causal impact of the intervention should be carefully assessed before extending these programmes.
Public employment services (PES) can play a key role ensuring that workers find the right jobs and acquire the skills and experience needed to secure them. The PES system has traditionally played a modest role in Italy, where jobs are often filled through informal networks and the limited social system reduces the scope to pursue an activation approach. In 2023, only 2.6% of jobseekers were helped by public employment services to find their job (compared to an average of 6.4% across the EU, based on EU-LFS data). Differences in regional and local funding to PES result in gaps in access. Improving the presence of public employment services through the territory, including by developing local public-private partnerships and scaling up the share of EU and state funds allocate to PES in struggling areas, would help improve access for job seekers and employed workers interested in switching jobs. This can be achieved by further developing the partnership with private providers or by increasing public funding to the service, which is one of the lowest across the OECD as a share of GDP (Figure 2.1). PES have undergone a series of reforms to improve their support to workers through career guidance, job placement and training. Within the NRRP framework, Italy has expanded the availability of PES across its territory by contracting-out employment services, including in southern regions, where access is lacking. This approach allows jobseekers to select their preferred provider and should allow them to obtain tailored support. Accelerating the accreditation of providers will help reduce fragmentation and improve access. In the case of Spain, the effectiveness of the reform of the PES system was enhanced by the introduction of a digital career counselling tool (Send@) and an accountability framework to monitor and share good-practices and foster cooperation between regional PES.
Public employment services and administration, 2023
Source: OECD Labour market policy (LMP) database.
Since 2014, Italy participates in the Youth Guarantee (YG) scheme, funded by the European Union and administered by regional authorities and the Ministries of Labour and Social Affairs, of Education and of University and Research. The scheme offers short vocational training courses (50 hours on average), career orientation, apprenticeships and internships for youth aged 15 to 29. It was then replaced by the analogous Employability Guarantee programme (GOL), which targeted all registered unemployed, and not just youth and was discontinued in 2025. In September 2025, women represented the majority of GOL beneficiaries. The YG/GOL programme also provided access to paid traineeships (tirocini) and internships. Registration in the YG scheme was required to benefit from some of Italy’s temporary hiring incentive schemes, for example the Incentivo NEET 2023, which, for 12 months, covered up to 60% of the monthly gross wages for NEETs younger than 30 hired in 2023. Take-up of the YG programme and engagement among Italian youth remain lower than in other participating EU countries. For example, in 2024, about 25% of NEET individuals were registered in the YG scheme, compared to 40% across the EU. In Italy, young individuals need to express their interest through an online portal or by contacting the regional PES, and applications are then screened before formal registration. In most countries, registration is automatic when a young person registers as unemployed, and participants are required to attend regular interviews or regularly confirm that they remain unemployed. Simplifying the registration process and strengthening the requirement of participation in training and interviews would help engage more NEETs in training and internships.
Supporting mobility between jobs and regions
Better job-to-job mobility can allow workers to relocate to better paid jobs, improving their earnings and careers and supporting productivity growth. The impact on earnings would be particularly significant for younger workers: not only are young workers most likely to change jobs based on wage considerations, but also the wage increases they gain through switching employers account for a significant share of their early-career wage growth (OECD, 2025[20]). Continuing to strengthen public job-search assistance and career guidance open to all individuals, irrespective of their working status, would help workers stuck in low-quality or low-pay jobs switch to better jobs.
While place-based interventions are needed to improve conditions and working opportunities in vulnerable territories, reducing the barriers to geographical mobility, such as low housing affordability, would enhance job-to-job mobility and the employment opportunities of new entrants in the labour market. This is particularly important due to the strong regional differences in employment opportunities and costs of living. High rates of home ownership (among older generations), strong renter protection and low taxation of real estate (discussed in Chapter 1) limit housing options for young people. Accessing housing in high job opportunity areas is particularly difficult for new entrants to the job market and those with temporary job contracts, who are less able to rent a dwelling or obtain a mortgage. The severity of the issue is underlined by the fact that youth on average live with their parents until age 30, the second highest across the OECD and well above the EU average of 26.6 years (OECD, 2023[22]). Meanwhile, up to 30% of apartments are unoccupied (ISTAT Censimento Permanente delle Abitazioni, 2021). The fact that wages in Italy tend to be lower for new entrants and increase later in life adds to the issue. A recent study estimates that differences in rental market efficiency, captured by price-rent ratios, and in the age profile of wage income can explain a large share of the gap in home ownership between Italian and German youth (Grevenbrock, Ludwig and Siassi, 2023[12]). Policies aimed at reducing barriers to geographic mobility, including a reconsideration of the regulations and fiscal regime on real estate, short-term rentals and vacant flats, might help alleviate the geographical mismatch between workers and jobs. Expanding the stock of social rental housing, which between 2010 and 2022 declined from 4.2% of the total number of dwellings to 2.4%, compared to 7.1% across the OECD, would support these efforts. While exchange programmes for students between universities in the North and South (Erasmus Italiano) can support mobility, their effectiveness should be carefully assessed.
Young workers’ ability to secure housing is significantly affected by their access to mortgages. While in late 2025 the average interest rate on mortgages in Italy, at 3.19%, was the lowest across the EU, new entrants into the labour market can still face difficulties and higher costs of borrowing for house purchases, if they have temporary job contracts and lack collateral. Recent schemes to support young homeowners include the Bonus Prima Casa, which grants a reduction of administrative registration fees, cadastre contributions and income tax (IRPEF). Linking the eligibility or at least the generosity of the Bonus to the recipient’s overall income level (ISEE index) would help improve its progressivity and cost-effectiveness. In addition, the Consap Fund, introduced in 2013, grants buyers younger than 36 years a state guarantee of up to 80% of the principal amount on the mortgage, which facilitates access to credit and reduces the costs and initial downpayments. The guarantee is available for individuals younger than 36, large families, young couples or single parents with income and wealth levels below given thresholds (annual ISEE index below EUR 40,000). Through 2024, about one-in-five new mortgages benefitted from this public guarantee scheme, and the budget allocated to the fund for 2026 and 2027 is 270 million Euros in each year. When coupled with efforts to avoid the misuse of the acquired housing unit for short-term rental, this measure can support access to housing and improve geographical mobility.
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