school to work transitions in emerging and advanced economies

School-to-work transitions in Emerging and Advanced Economies

By Glenda Quintini.

Improving school-to-work transitions and ensuring better career opportunities for youth after labour market entrance are common goals in emerging and advanced economies as they can contribute to raising the productive potential of the economy and to increasing social cohesion. However, the challenges faced in achieving these objectives and the policies required vary between emerging and advanced economies.

A paper I wrote jointly with Sebastien Martin in 2014 addresses precisely these issues and unveils key differences and similarities in youth labour market outcomes in eight emerging countries and eight advanced economies. In light of this analysis, the study also discusses differences and similarities in the policy measures countries have at their disposal to address the key challenges in this area.

Youth in emerging economies leave school 3 to 4 years earlier

Unsurprisingly, youth in advanced economies tend to stay in education longer than in emerging countries – the median age of school leaving is around 21-22 in the advanced economies shown in Figure 1 compared with 17-18 in Brazil, India, Indonesia, Mexico and Turkey and 19-20 in Argentina, Chile and South Africa. But major differences in school enrollment are already evident at younger ages. By age 15, many youth in emerging economies have already left education – 25‑30% in Indonesia, India and Turkey, 20% in Mexico and 10% in Argentina. This compares with close to 100% enrollment among 15‑year‑olds in advanced economies where school is still compulsory at this age.

Overall, these figures suggest that while the median young person enters the labour market with a few years of tertiary education in advanced economies, she does so with just a high-school diploma in emerging economies. Indeed, the share of youth leaving education before the typical age of completion of upper secondary education – a proxy for school drop outs and an education level that experts consider essential to embark on a promising career path – is higher in emerging economies.

Blog15.1Link: Quintini and Martin (2014). 

Out-of-school youth in emerging economies are more likely to become NEET at school leaving and under-employment is more widespread

In Brazil, Chile, Indonesia, South Africa and Turkey, at the median age of school leaving, fewer than one in four young people are working as employees or are self-employed or in unpaid work. This is comparable to employment shares at the median age of school leaving in Italy and Spain but well below employment shares of about 35% in Australia, Canada and Germany (Figure 2). In addition, some emerging countries – notably, India and Indonesia and, to a lesser extent, Mexico and Turkey – have much higher incidences of self-employment and unpaid work among youth than advanced economies, suggesting that under-employment may be an issue in these countries.

These differences in employment shares are reflected in higher shares of inactive and unemployed youth not enrolled in education (NEET) at the median age of school leaving in emerging economies. South Africa is a particularly striking case, with around 40% of out‑of‑school youth in inactivity or unemployment at age 19, rising to 50% at age 22 as more youth leave education but fail to find employment quickly. By age 29, the share of NEET youth is still 30% or more in all emerging economies except Argentina and Brazil compared to shares of just over 15% in Canada and Germany.

Blog15.2Link: Quintini and Martin (2014). 

Action is needed both the education and the labour market fronts

In terms of educational attainment, while advanced economies are focusing on school retention until high school completion, emerging economies need to act on lower secondary schooling – through better learning inputs and more equality of access – before they can turn to upper secondary education. In addition, while all countries are looking at work-based learning to help engage youth who are at-risk of leaving school too early and without qualifications, the challenges in this area are bigger for emerging countries where few youth attend vocational schools and even fewer have access to apprenticeship training. Finally, over‑qualification is a particularly daunting challenge in emerging countries where, in addition to better career guidance and high-quality labour market information and projections, innovation policy is needed to increase the responsiveness of labour demand to the availability of a better educated workforce.

On the labour market side, differences are even more marked. While advanced economies are thinking of more and more sophisticated ways of providing individualised re-employment support to youth entitled to unemployment benefits, emerging economies often need to start from scratch. Some emerging countries covered in this paper do not have an unemployment insurance system while, in several others, the system exists but provides only limited support during non-employment spells. In addition, some emerging countries lack the institutional features required to run cost-effective activation programmes – notably, effective public employment services, employers’ co-operation and good performance measurement systems for programme evaluation. In both sets of countries, high labour costs and stringent employment protection regulation are likely to discourage employers from hiring youth in stable entry jobs. However, the consequences, differ across countries, raising the incidence of temporary work in advanced economies while contributing to the growth of informality in emerging economies.

Of course, the 16 countries covered cannot always be easily classified into two homogeneous groups and country-specific characteristics need to be taken into account in policy design. This is particularly the case when it comes to employment protection regulation, labour costs and minimum wages where no clear distinction between emerging and advanced economies emerges. In addition, to be effective in improving school-to-work transitions, the policy measures analysed in this paper, need to be seen as a package rather than in isolation. This requires further in-depth analysis of the barriers that youth face in individual countries and rigorous evaluation of existing youth programmes to ensure that limited resources are put to their best use. Finally, these measures also need to be part of wider policies to promote stronger, sustainable economic growth which will create more and better job opportunities for people at all ages.

Complete reference: Quintini, G. and S. Martin (2014), “Same Same but Different: School-to-work Transitions in Emerging and Advanced Economies”, OECD Social, Employment and Migration Working Papers, No. 154, OECD Publishing.