Italy’s skills and labour market challenges in an ageing society

By Fabio Manca.

blog51-0In Italy there is an interesting link between age, skills and labour market challenges. Italy is one of many developed countries where youth represent an increasingly smaller fraction of the overall population. This is the result of both low birth rates but also of longer life expectancy, both of which can, at least partly, explained by education, skills development and access to the labour market.

Young Italians aged 15-24 make up less than 25% of the total population. In France, a country with a similar average life expectancy as Italy, this share is 34%. This is equivalent to around six million more young people in France than in Italy. The main difference, as  observed by ISTAT (the Italian National Statistical Office), lies in the French birth rate, which picked up some time ago and has grown to exceed two children per family.

Low birth rates have become a pressing issue that led the Italian Government to institute a somewhat controversial (see media discussion example) “fertility day”, which will be celebrated on the 22nd of September with the aim to encourage Italian youth to procreate.

Much (but not all) of the controversy over the establishment of the Italian “fertility day” revolved around the fact that many young Italians feel they do not enjoy the necessary economic stability to plan ahead and start a family even if they wanted to. This has roots in the country’s economic situation and in the many labour market challenges faced by Italian youth.

In Italy, more than in many other European countries, youth feel that the economic crisis has marginalised them. Around 78% of Italian youth interviewed for the new study “European Youth 2016” (EU, 2016) – sponsored by the European Parliament in 2016 – reported feeling excluded from economic and social life as a consequence of the economic crisis (Figure 1).

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ISTAT, in its annual report “Rapporto annuale 2016 – La situazione del Paese“, also notes that many of the so-called “millennials,” (i.e. young adults born in the 1980s through the first half of the 1990s) still live at home and have delayed getting married. In 2015, 70.1% of Italian men aged 25-29, and 54.7% of women, still lived at home, a sharp increase relative to the same figures in 1995, 62% and 39.8% respectively.

Some youth do better than others, however, in terms of finding work and obtaining an adequate income to live independently. Education on its own does not seem to account for all of the differences in labour market outcomes among youth. Even many better educated youth are struggling to enter the labour market. The key for better outcomes appears to be education that matches the skill needs of employers or which leads to work-based learning in the form of apprenticeships or internships.

Recent research carried out by the New Observatory of the Association of Human Resources  Directors (Nuovo osservatorio dell’associazione di direttori del personale GIPD) surveyed 115 of its members across Italy and collected information from youth who started an internship in the last 12 months in the firms represented by those member. The results of the study seem to suggest that those who are able to enter the world of work through an internship programme are more likely to be hired at the end of it (72%) and are, therefore, in a better position to plan for the future in terms of starting a family. This result is even stronger if the internship takes place with a firm in the North of Italy or in a large firm of 500+ employees.

While some young Italians are able to access the world of work through an internship (potentially leading to be hired on a more permanent basis), many others struggle to enter the labour market after education.

Results from the EU (2016) survey also highlight, for instance, that Italy needs to do much more to strengthen access to and take-up of internships by youth not only in Italy – where young Italians may struggle to match their skills to the needs of the national labour market- but also in other international labour markets where Italian youth’s skills may be matching the requests of employers better.

Interestingly, 41% of young Italians aged 16 to 30 say they are willing to test their skills with some professional or academic experience abroad. This is higher than the European average of 32%. Only 5% of them, however, have actually done so.

All in all, despite the controversy over the way some of the messages of the fertility day’s campaign were communicated to the public, the initiative has surely the merit to point to the problem of Italy’s rapidly ageing population and to the need to find solutions so as to help youth establish themselves in the labour market and start a new family if they want to.

 “With age comes wisdom, but sometimes age comes alone” (Oscar Wilde). The lack of strong links between the world of education and the world of work can help explain the low incentives to procreate for young Italians. Developing the right skills and strengthening the education system so that this is conducive to high quality jobs play a key role in this story.

To cope with its ageing population, reflecting low birth rates, Italian youth must be trained and ready to take on increasingly high-quality jobs once they enter the labour market. Much more should be done, especially in the current economic climate, to provide incentives to make internships and apprenticeships programmes available both nationally and internationally. This can have substantial effects on Italian youth’s perception of their ability to plan ahead and to sustain the much needed increase in the birth rate.

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