Latest labour market developments in the OECD area: the recovery continues, but unevenly

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LATEST LABOUR MARKET DEVELOPMENTS IN THE OECD AREA

UNDERSTANDING AND MEETING THE NEET CHALLENGE

Council Meeting, 29 April 2016

Mark Pearson Deputy Director

Employment, Labour and Social Affairs OECD

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Latest labour market developments in the OECD area: the recovery continues, but unevenly

• OECD unemployment remained stable at 6.5% in February 2016, down from a peak of 8.5%, but there are still 7.5 million more people unemployed than before the crisis:

– Euro-area unemployment remains high at 10.3% but is now falling quite rapidly:

• Some of the countries where unemployment remains very high have seen large reductions in the past year (2.8, 1.9 and 1.2 %pts reductions respectively in Spain, Greece, and Portugal, but only 0.5% pts. In Italy)

• German unemployment fell by only 0.5 %pts. in the past year, but is very low at 4.3%.

– Unemployment rates are under 4% in Iceland and Japan, and only moderately higher in the Czech Republic, Germany, Korea, Mexico, Norway and Switzerland.

– US unemployment was unchanged at 5% in March 2016, down 0.5 %pts. from 1 year earlier. While unemployment is back to its pre-crisis level, employment and participation remain well below their pre-crisis levels.

• The OECD area employment rate rose to 66.5% in 2015Q4, just shy of its pre-crisis

peak. The post-crisis rise in the participation rate explains why unemployment remains

significantly above its pre-crisis level despite employment having essentially recovered.

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Youth unemployment is falling faster than overall unemployment, but remains high in a number of OECD countries

Percentage of youth (aged 15-24) labour force, Q4 2007

^a

- Q4 2015

^b

a) Q2 2007 for Switzerland.

b) Q1 2016 for Canada and the United States.

Source: OECD calculations based on the OECD Short-Term Labour Market Statistics (database), http://dx.doi.org/10.1787/data-00046-en.

0 10 20 30 40 50 60 70%

Q4 2007 Peak (↗) Q4 2015

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While many jobless youth are either studying or only temporarily unemployed, some are at risk of being left behind permanently in the labour market

• Youth Neither Employed nor in Education or Training (NEETs) are of particular concern.

– The number of NEETs is rising, especially among low-educated youth

– The majority of NEETs are inactive with young women often being inactive because of caring responsibilities

– NEETs suffer from various forms of disadvantage – One in five youth become long-term NEETs

– Comprehensive programmes are needed to re-engage NEETs

• Forthcoming analyses of vulnerable youth from ELS

– The 2016 issues of Society At a Glance and the Employment Outlook

– Investing in Youth country reports are due for Australia in June and then for Japan, Norway and Sweden in the fall

– Also on-going work for the G20 labour track

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NEET rates are high in many OECD countries and the majority of NEETs are inactive

Inactive and unemployed NEETs as a share of all youth 15-29, 2014

^a

Note: OECD is the unweighted average of countries shown.

a) 2011 for Israel, 2013 for Chile and the United States. Youth aged 15-24 for Japan.

Source: OECD calculations based on national labour force surveys.

0 5 10 15 20 25 30

%

Unemployed NEET Inactive NEET

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The post-crisis rise in NEET rates mostly reflects higher unemployment

Percentage-point change in the rates of inactive and unemployed NEETs, 2007-14

^a

a) 2007-11 for Israel, 2006-13 for Chile, 2008-14 for Korea, 2007-13 for the United States. Youth aged 15-24 for Japan.

-15 -10 -5 0 5 10 15

%

Unemployed NEET Inactive NEET NEET rate (↗)

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NEET rates are higher for low-skilled youth

Incidence of NEET among youth aged 25-29 by education,

^a

2013/14

^b

a) The term “low-skilled” is used to describe individuals with at most lower-secondary education (ISCED levels 0-2); “medium-skilled” refers to individuals with upper- or post-secondary education (ISCED levels 3-4), and “high-skilled” is used to describe individuals with tertiary education (ISCED levels 5-6).

b) Data refer to 2013 except for Canada and Mexico (2014). No data were available for the United States and Japan.

Source: OECD calculations based on the EU-LFS and national labour force surveys except for Australia, Israel, Korea, New Zealand and Turkey (OECD Education Database).

0 10 20 30 40 50 60 70 80

%

Total (↗) Low-skilled Medium-skilled High-skilled

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Women are more likely to be NEET than men, especially after they become mothers

Incidence of NEET among youth aged 15-29 by gender and age, 2013/14

^a

a) Unweighted average of 33 OECD countries (Japan is not included) in 2013 except for Canada, Mexico and the United States (2014).

Source: OECD calculations based on EU-LFS, SEW (Australia), LFS (Canada), CASEN (Chile), ENOE (Mexico), CPS (United States) and OECD Education Database (Israel, Japan, Korea, Mexico, New Zealand and Turkey).

A. Men B. Women

0.0 20.0

15-19 Inactive NEETs20-24 25-29 Unemployed NEETs

3.0

9.5 9.1

4.2

6.1 5.0

0 5 10 15 20 25 30

15-19 20-24 25-29

%

2.1

7.0 7.6

5.2

11.7

17.3

0 5 10 15 20 25 30

15-19 20-24 25-29

%

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Migrants are more likely to be NEET than native-born youth

Percentage of youth aged 15-29 by migration status, 2013

Note: OECD is the unweighted average of countries shown. No information on country of birth for Canada, Israel, Japan, Korea, Mexico and New Zealand.

0 5 10 15 20 25 30 35 40 45 50

%

Native born (↗) Foreign born

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About 20% of all youth become long-term NEETs

Percentage share of youth by total time NEET over four years, 2008-12

^a

Note: Average is the unweighted average of countries shown.

a) Sample members are aged 15-29 years in January 2009 and are observed for 48 consecutive months until December 2012. For Estonia the observation period is January 2008 to December 2011. Censored spells are included in the calculations with their observed lengths.

0 20 40 60 80 100

Iceland Norway Slovenia Australia Luxembourg Belgium Slovak Republic Portugal France AVERAGE Estonia Czech Republic Austria Hungary Spain Italy Greece

% Never NEET 1 to 6 months NEET 7 to 12 months NEET More than 12 months NEET (↘)

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Policies to re-engage NEETs

• Strengthening safety nets for low-income youth

– Out of work benefits can be less accessible for youth and benefit levels low – Income losses during the crisis were particularly large for youth – Youth face a greater risk of poverty than older groups

• Promoting self-sufficiency among youth

– Fighting early school leaving is essential for tackling the NEET challenge – Quality vocational education and training can smooth school-to-work transitions

Latest labour market developments in the OECD area: the recovery continues, but unevenly

LATEST LABOUR MARKET DEVELOPMENTS IN THE OECD AREA

UNDERSTANDING AND MEETING THE NEET CHALLENGE

Council Meeting, 29 April 2016

Mark Pearson Deputy Director

Employment, Labour and Social Affairs OECD

Latest labour market developments in the OECD area: the recovery continues, but unevenly

• OECD unemployment remained stable at 6.5% in February 2016, down from a peak of 8.5%, but there are still 7.5 million more people unemployed than before the crisis:

– Euro-area unemployment remains high at 10.3% but is now falling quite rapidly:

• Some of the countries where unemployment remains very high have seen large reductions in the past year (2.8, 1.9 and 1.2 %pts reductions respectively in Spain, Greece, and Portugal, but only 0.5% pts. In Italy)

• German unemployment fell by only 0.5 %pts. in the past year, but is very low at 4.3%.

– Unemployment rates are under 4% in Iceland and Japan, and only moderately higher in the Czech Republic, Germany, Korea, Mexico, Norway and Switzerland.

– US unemployment was unchanged at 5% in March 2016, down 0.5 %pts. from 1 year earlier. While unemployment is back to its pre-crisis level, employment and participation remain well below their pre-crisis levels.

• The OECD area employment rate rose to 66.5% in 2015Q4, just shy of its pre-crisis

peak. The post-crisis rise in the participation rate explains why unemployment remains

significantly above its pre-crisis level despite employment having essentially recovered.

Youth unemployment is falling faster than overall unemployment, but remains high in a number of OECD countries

Percentage of youth (aged 15-24) labour force, Q4 2007

- Q4 2015

While many jobless youth are either studying or only temporarily unemployed, some are at risk of being left behind permanently in the labour market

• Youth Neither Employed nor in Education or Training (NEETs) are of particular concern.

– The number of NEETs is rising, especially among low-educated youth

– The majority of NEETs are inactive with young women often being inactive because of caring responsibilities

– NEETs suffer from various forms of disadvantage – One in five youth become long-term NEETs

– Comprehensive programmes are needed to re-engage NEETs

• Forthcoming analyses of vulnerable youth from ELS

– The 2016 issues of Society At a Glance and the Employment Outlook

– Investing in Youth country reports are due for Australia in June and then for Japan, Norway and Sweden in the fall

– Also on-going work for the G20 labour track

NEET rates are high in many OECD countries and the majority of NEETs are inactive

Inactive and unemployed NEETs as a share of all youth 15-29, 2014

The post-crisis rise in NEET rates mostly reflects higher unemployment

Percentage-point change in the rates of inactive and unemployed NEETs, 2007-14

NEET rates are higher for low-skilled youth

Incidence of NEET among youth aged 25-29 by education,

2013/14

Women are more likely to be NEET than men, especially after they become mothers

Incidence of NEET among youth aged 15-29 by gender and age, 2013/14

A. Men B. Women

Migrants are more likely to be NEET than native-born youth

Percentage of youth aged 15-29 by migration status, 2013

About 20% of all youth become long-term NEETs

Percentage share of youth by total time NEET over four years, 2008-12

Policies to re-engage NEETs

• Strengthening safety nets for low-income youth

– Out of work benefits can be less accessible for youth and benefit levels low – Income losses during the crisis were particularly large for youth – Youth face a greater risk of poverty than older groups

• Promoting self-sufficiency among youth

– Fighting early school leaving is essential for tackling the NEET challenge – Quality vocational education and training can smooth school-to-work transitions

– Second choice schools/programmes for disadvantaged youth (school drop-outs) e.g. Job Corps; Ecoles de le deuxième chance

• Comprehensive programmes are needed to re-engage NEETs

– Outreach and effective profiling are crucial

– Many issues may need to be addressed (housing, psychological support, language training for immigrant youth)

Contact: [email protected]

OECD Directorate for Employment, Labour and Social Affairs, via www.oecd.org/els

OECD work on Youth Employment and Unemployment www.oecd.org/employment/action-plan-youth.htm Family Database

www.oecd.org/social/family/database.htm

OECD Society at A Glance

www.oecd.org/social/societyataglance.htm Employment Database

www.oecd.org/els/emp/onlineoecdemploymentdatabase.htm

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