Where you are born makes a big difference to the chances of getting a job when you leave school. In 2015, youth unemployment rates in some OECD countries such as Greece (49.8%), Spain (48.3%) and Italy (40.3%) were all close to 50%. In others such as Germany (7.2%), Austria (10.6%) and Switzerland (8.6%), youth unemployment was far lower. Why? The Young Workers Index 2016, an annual report by PWC, offers some insights.
PWC’s analysis ranks 35 OECD countries on eight things: NEET rates – the share of 20-24 year olds not in employment education or training, employment, relative unemployment – the level of youth unemployment relative to that of older workers, long-term youth unemployment, school drop-out rates, and educational enrollment rates.
Europe contains the very best and worst performers out of the 35 countries examined. Switzerland (1st), Germany (2nd) and Austria (3rd) scored well in all areas, receiving aggregate scores of 66.7, 66.1 and 63.6 respectively. Spain (22.4), Greece (21.9) and Italy (11.6) took the bottom three spots.
According to the report, Switzerland, Germany and Austria all operate dual education systems, where students work and study in parallel. These dual education-apprenticeship schemes offer a mix of theory and practice, ensuring that education fits the workplace, allowing a smoother transition from the classroom to the workplace.
In addition, these practices boost social mobility by widening the range of higher education options beyond highly academic study. In Switzerland, more than 70% of youth follow vocational education, including apprenticeships and other training, across 200 different fields.
Around one third of Swiss companies offer apprenticeship training. Vevey-based Nestlé has created more than 1,400 openings for young people since 2013, according to the study.
This article describes a Swiss example of someone who started working at 16. By 27, he expects to have a PhD, ten years of work experience, and no student debt.
Another area of Swiss strength is low school dropout rates. Only 9.4% of youth dropout of school, compared to 35.3% in Spain, 17.3% in Greece, and 20.3% in Italy.
The report found other factors which correlated with high performance: GDP per capita, educational investment, digital skills, mathematical skills and the number of older workers. The authors were careful not to assume any causal links, but were pleased to see no evidence of older workers crowding out younger ones.
On these things Switzerland was top or close to the top on GDP per capita (1st), educational spend (2nd behind Luxembourg) and PISA mean mathematics scores (2nd behind Japan). On internet penetration rates, a proxy for digital skills, it was eleventh, a fair margin behind leader Iceland. Switzerland could do with a few more older workers to mentor younger members of its workforce. Here Switzerland came eleventh, well behind the leader Iceland.
At the other end of the spectrum, Spain, Greece and Italy performed averagely to poorly on all of these things, in particular, older workers (all three) and internet penetration (Italy and Greece).
Potential gains from getting young people working are huge. PWC estimates that the 34 countries combined could add US$1 trillion to the global economy if they could bring youth unemployment (NEET) to Germany’s level of 10.1%. If Switzerland took its NEET from 12.4% to 10.1%, GDP would rise by 0.8%. Italy, Greece and Spain could respectively add 8.4%, 7.2% and 6.4% to their current GDP.