Italy: no country for young people?

By Alessia Forti

Blog61.3Nearly one-third of all jobs held by young people in Italy were destroyed during the recession[i]. Young people were hit hard – harder than their elders – probably because they were more likely to hold temporary jobs (easier to terminate) at the time of the crisis, and/or were new entrants to the labour market at a time when firms were not hiring.

Years after the start of the recession the situation of youth in the Italian labour market remains quite bleak. Nearly one in four young people[ii] in Italy are neither in employment, education, or training (NEETs) – the highest share among OECD countries after Turkey. The school-to-work transition – i.e. the time it takes for young people to transit from the education system to the world of work[iii] – is also among the longest in the OECD (see Quintini and Martin, 2014). Young people do not even have the consolation of being “in it together” with the rest of the population: the youth unemployment rate is nearly 4 times as high as adult unemployment (double the gap found in most OECD countries) (Figure).

Blog61.1

Sluggish economic growth, weak job creation, and the ongoing freeze in public sector jobs are among the factors limiting young people’ employment opportunities. Reforms to generate a favourable business environment for firms to develop and grow has been and continues to be a policy priority for the country; and steps to create jobs in the public sector are also underway (e.g. recently many new teachers/staff were hired in schools within the context of the Buona Scuola reform).

But in the views of many stakeholders who participated to the OECD Skills Strategy Workshops (see OECD, 2017), there are challenges on the supply side too.

Many young people lack the right skills. Indeed, some of the skills (e.g. soft skills) that are in demand in the labour market are rarely taught at school (see the Skills for Jobs database). In addition, opportunities to develop relevant skills through work experience are limited because working while in education – for instance, on internships – is rare in Italy. Most students leave the education system and only then start looking for a job. Only one in twenty students in Italy combine work and study compared with over half of students in Iceland, the Netherlands, and Switzerland (OECD, 2016a).

Information on labour market needs is rarely available to young people deciding what course of study to pursue. This lack of adequate career orientation may lead to bad education decisions and ultimately poor labour market prospects. Data from the OECD’s Programme for International Student Assessment (PISA) show that only around 35% of 15-year-olds in Italy access guidance through schools, well below the rate of 80-90% in OECD countries such as Denmark or Finland (OECD, 2016a). Lacking solid career advice from teachers/counsellors, many students seek out for advice from their families. But this advice can be biased, is often uninformed, and may contribute to perpetuating inequalities by preventing social mobility.

Finally, although tertiary education enrolments have increased rapidly over the past few decades, Italy still lags behind most OECD countries in the share of tertiary graduates. Many university students fail to finish their degree courses in the prescribed time, a situation which can also translate into a delayed entrance into the labour market. Others drop out altogether. Quality is also an issue as Italian university graduates perform rather poorly in literacy and numeracy compared to their OECD counterparts (OECD, 2016b).

Italy is not alone facing these challenges and many other OECD countries are in a similar situation (see OECD, 2016a). However, in the context of an ageing society and a shrinking labour force, Italy has a lot to lose from not fully using the talents of its young people.

Failing to equip young people with the skills they need to thrive in the labour market may have consequences for both young people and the society at large.  For young people, it may mean hardship and poor future prospects. For society, it translates into a waste of human capital, and represents large economic losses. OECD estimates show that the “NEET cost” (i.e. the gross labour income NEETs could command if they were employed), represents 1.4% of GDP in Italy, above most OECD countries[iv] (OECD, 2016a).

Within this context, the government is taking steps to give young people a better start in the world of work.

The introduction of a new permanent contract with employment protection increasing with job tenure (a tutele crescenti) – introduced under the umbrella of the Jobs Act – has helped young people get access to more stable positions.

The compulsory work-based learning scheme (Alternanza scuola lavoro) – introduced with the Buona Scuola reform – is also expected to bring young people closer to the labour market and possibly help them make more informed career and education choices.

The continued implementation of the European Youth Guarantee, the expansion of post-secondary vocational education and training (e.g. Istituti Tecnici Superiori – ITS), and the introduction of many targeted subsidies for firms to hire youth, are other examples of steps in the right direction.

These reforms are promising and some are already showing results. Hopefully they will live up to young people’ expectations in the longer term, too.

References:

OECD (2016a), Society at a Glance, OECD Publishing.

OECD (2016b), Skills Matter: Further Results from the Survey of Adult Skills, OECD Publishing, Paris.

OECD (2017), Skills Strategy Diagnostic Report: Italy, OECD Publishing.

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, Paris. http://dx.doi.org/10.1787/5jzbb2t1rcwc-en.

[i] See OECD (2016a).

[ii] (ages 15-29).

[iii] There are different ways to measure school-to-work transitions, and Italy underperforms in all of them. For more details, see Quintini and Martin (2014).

[iv] Only after by Belgium, Turkey and Greece. The OECD average is 0.9%.

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