Chapter 5. Many young low-skilled Australians are not in employment, education or training (NEET)

In Australia about 600 000 of 16-29 year-olds, were not in employment, education or training (NEET) in 2015. This chapter examines the issue of NEETs, particularly the link between NEET status and low skills. Young people who leave education and training early are more likely to become NEET. Typically, students who are at risk of dropping out early from school disengage gradually, and there are early signs that can be helpful in identifying these students. Apprenticeships, or traineeships, can be a powerful tool to engage disconnected youth, as they offer an opportunity to learn and connect to the world of work. Young 16-29 year-old Australian women are three times more likely to be NEET than men. This chapter also discusses the importance of adequate access to childcare facilities for young mothers.1

The NEET challenge

Some 600 000 young Australians are not in employment, education or training

In Australia, 580 000, or 12%, of 16-29 year-olds, were NEET in 2015 (for the definition of NEET see Box 5.1). While this is less than in OECD countries on average, it still represents a challenge for the country. NEETs include young people who are unemployed and those who are outside the labour market and not looking actively for a job. Australia, with more than two-thirds of NEETs not looking for employment, has a relatively high share of inactive NEETs in comparison to other OECD countries (OECD, 2016a). This represents a serious challenge, as these young people are particularly difficult to be reached by public policies. By drawing on data from the Survey of Adult Skills, a product of the OECD Programme for the International Assessment of Adult Competencies (PIAAC), this section will examine the issue of NEETs, particularly the link between the NEET status and low skills.

Box 5.1. The definition of NEET used in this report

Drawing on the Survey of Adult skills (PIAAC), NEET are defined as 16-29 year-olds who are neither employed nor in education at the time of the assessment, but who may have participated in education or training in the last 12 months prior to the Survey.

To check the validity of the adopted definition, the results reported from the Survey of Adult Skills (PIAAC) were compared with information on NEETs from other data sources, such as the Australian Census and the Survey of Education and Work (SEW). Overall, the results reported from the Survey of Adult Skills (PIAAC) are consistent with the data from other sources, even though there may be slight differences due to different definitions used.

Characteristics of NEETs

Young people with low skills are more likely to become NEET

In most countries, young people (16-29 year-olds) with low skills are more likely to become NEET. In Australia, nearly one-fourth of young adults with low skills neither work nor study (see Figure 5.1). In the population of NEETs, one-third lack basic skills. Inactive NEETs are more often low skilled than unemployed NEET, and therefore represent a particularly vulnerable group.

Important regional variations

According to the Survey of Adult Skills (PIAAC), young NEETs are more common in some regions of the country. While only 8% of 16-29 year-olds are NEET in the Australian Capital Territory, in South Australia 16% of the youth cohort are NEET, and in Tasmania 23%.

High NEET rates among Aboriginal and Torres Strait Islander peoples

NEET rates are more than three times higher for Aboriginal and Torres Strait Islander youth than for other Australians (OECD, 2016a). While ethnicity is closely related to the NEET problem, the Survey of Adult Skills is unable to further explore this association due to the small sample size.

Parental education level has a significant impact on becoming NEET

The OECD’s Programme for International Student Assessment (PISA) evaluations show that youth from socio-economically disadvantaged backgrounds perform less well in school than children with more advantageous backgrounds. Several research studies argue that the inequalities developed in school tend to persist or widen later on in adult life, (e.g. Crawford, Macmillan, and Vignoles, 2015 on England). In line with these findings, the Survey of Adult Skills (PIAAC) shows that adults with a disadvantaged background (as measured by the level of parental education) are more likely to have low basic skills and perform less well in the labour market than those with well-educated parents (OECD, 2016a). They are also more at risk of becoming NEET. In Australia, adults whose parents did not complete upper-secondary education are twice as likely to become NEET than those whose parents attained tertiary level education (see Figure 5.2). This difference is, however, much smaller in Australia than in most participating countries, which indicates that factors other than parental education may have a stronger bearing on becoming NEET in Australia.

Many NEETs have low educational attainment

Almost 40% of Australian NEETs have qualifications below upper-secondary education (completed junior secondary school, certificate I or II qualification) compared to 22% of non NEETs in the same age group. One NEET in ten obtained certificate III as the highest qualification, and one in four completed senior secondary school.

Many NEETs have dropped out of school

Almost 45% of Australian NEET’s are dropouts, which is above the average of 30% among participating countries, and similar to countries such as Norway, the Netherlands and the United States.

NEETs have lower non-cognitive skills

NEET’s in Australia have lower levels of non-cognitive skills than non-NEET youth. The gap between NEETs and non-NEETs is significant for all of the big five personality traits (openness, extroversion, emotional stability, conscientiousness and agreeableness), and particularly large for openness to experience and conscientiousness.

Being a foreign born is not associated with being a NEET in Australia

In Australia, 16-29 year-old immigrants are as likely as natives to be NEET. This differs from most participating countries, where NEETs are over-represented among immigrants. In some countries, such as New Zealand and the United Kingdom, the situation is reversed: the native population is more likely to be NEET than immigrants.

There are more NEETs among women

In Australia, young 16-29 year-old women are three times more likely to be NEET than men. There are 13% of NEETs among young women, compared to 4% among men. As a result, the majority (70%) of 16-29 year-old NEETs are women. In nearly all participating countries, women are more likely to be NEETs than men, but in Australia, the share of women among NEETs is particularly high.

Women with childcare responsibilities

The over-representation of women among young NEETs can be related to the fact that women more often take on childcare responsibilities: 64% of female NEETs are parents compared to 15% of men. Young women with children, especially those with low levels of education and training, are particularly at risk of being NEET in Australia.

Distilling the most important factors

Some factors are particularly decisive in becoming NEET, and some characteristics are correlated. For example, students with lower performance are more likely to dropout and stop education early on. The Survey of Adult Skills (PIAAC) helps to fine tune the analysis by looking simultaneously at associations between different factors and the likelihood of becoming NEET. Analysis taking into account characteristics such as numeracy skills, dropping out from education and training, years of education, gender, spoken language, migrant status and parental education shows that in Australia, gender is very strongly associated with the NEET status. This association is stronger in Australia than in all other countries, except Turkey. Speaking a language other than English and leaving education and training early are also risk factors in Australia.

The consequences of being NEET

Disconnection from the labour market has lasting consequences

By the age of 29, one in four NEETs had some paid work, compared to almost half of nonNEET Australians of the same age. Furthermore, only 33% of Australian NEETs are actively looking for a paid job, compared to almost 50% in the United States, the United Kingdom and Sweden, and 43% in New Zealand. This group is typically much harder to reach out to and more challenging to bring into employment. Limited work exposure and disconnection from the labour market among young people can have lasting consequences, as first experience in the labour market is important. Those who go through spells of joblessness at early stages of their careers tend to suffer from a “scarring effect”, which leads to higher chances of unemployment and lower earnings later on in life than their peers with similar backgrounds and abilities (e.g. Bell and Blanchflower, 2011; Nilsen and Reiso, 2011). The longer the time spent as a NEET the more difficult the re-entry into education and working life.

Being low skilled and NEET is doubly disadvantageous

People acquire skills in different settings, such as education and training or through work. Young people who are low skilled and not working are doubly disadvantaged as they are excluded from two major institutions through which they could upgrade their skills. NEETs with low literacy and numeracy skills also face substantial hurdles to re-engage in education or employment. Many may not be able to immediately start vocational training or work due to poor basic skills and weak non-cognitive competencies. Low basic skills may also coincide with social or health problems, such as family problems, mental health, and substance abuse issues. These issues can be both a cause or a consequence of being NEET. The young person with such problems will require intensive assistance through social or health services while, and possibly before, participating in any form of training facilitating transition to employment.

NEETs report lower levels of trust and participation in volunteer activities

NEETs are less likely to take part in other aspects of social life. As seen in Chapter 1, the Survey of Adult Skills collects information on four non-economic outcomes, such as the level of trust in others; participation in associative, religious, political or charity activities (volunteering); the sense of being able to influence the political process (i.e. political efficacy); and self-assessed health conditions. For each of these non-economic outcomes, Australian disadvantaged youth reported lower levels of engagement than their more advantaged peers. NEETs are less likely to report high levels of trust (23% vs. 15% among nonNEETs) and almost half as likely to do volunteer work (26% vs. 40%).

NEETs are costly

An OECD study, Society at a Glance 2016 (OECD, 2016b), estimated that the cost of NEETs in Australia in 2014 was around 1% of Australian GDP (see Figure 5.5). This cost includes the gross labour income (including social security contribution) that a NEET would generate had he or she worked. This estimate assumes that NEETs would receive a “low-wage”, which is two-thirds of the median wage among youth of the same gender and age. The total cost of NEETs reflects both the NEET rates and wage levels. In Australia, relatively high wages drive the cost of NEETs up, despite the relatively low NEET rates. It is important to note that these estimates are an approximation. The cost can be overestimated if some people give up work to contribute to the well-being of their families and communities. However, the presented cost can also be underestimated as it does not include out-of-work benefits some NEETs receive, and the costs associated with higher rates of health problems and criminality among NEETs.

Recommendations: How to tackle the NEET challenge

Policy pointer 1: Reach out to disconnected youth and prevent dropout from early stages of education

Reaching out to young people at risk who are still in school is easier than targeting those who have already left school and are loosely connected to the labour market. Young people who left education and training early are more likely to become NEET. Typically, students who are at risk of dropping out early from school disengage gradually, and there are early signs that can be helpful in identifying these students (see for example Lyche, 2010).

Examples of successful initiatives

Many countries have developed specific policies to increase the completion of at least upper-secondary education among young people. These involve early identification and follow up of individuals at risk.

Box 5.2. How to increase completion

Follow-up services in Norway

In response to high dropout rates among young people, Norway has set up a specific policy based on early identification and prevention. In Norway, all county (local) authorities are legally obliged to follow up on NEETs aged 16 to 21, they should also prevent youth at risk from dropping out of school. Since 1994, country services following up on NEETs reach out to all young people who are not in employment or education. They provide them with counselling and connect them with the local employment and welfare office. They also co-ordinate activities directed at NEETs that are provided by other agencies. The approach towards NEETs is tailored to the needs of individuals and combines elements of work exposure and of schooling delivered by education institutions. In Oslo, for instance, the follow-up service receives a list of dropouts four times per year, and there are 110 counsellors located directly in Oslo’s schools (both lower-and upper-secondary) (OECD, 2016a).

Municipal Youth Guidance Centres in Denmark

These centres are responsible for monitoring 15-24 year-olds’ transition from lower to upper-secondary school, and for following up on those who drop out of school. There are 45 Youth Guidance Centers covering 98 municipalities. Guidance activities include individual and group guidance sessions, as well as introductory courses and bridge-building programmes to give young people a clearer idea of their options. These bridge-building programmes combine individual counselling and teaching and last for 1-4 weeks. Counsellors prepare an education plan jointly with the pupils and their parents to ensure a smooth transition into upper-secondary education and employment. Those aged 15-17 are a special target group. In case of school non-attendance, counsellors have to get in touch with the youth’s parents within five days of being notified by the school, and youth must be able to begin an activity within 30 days. The offered activity should be agreed upon by the youth, their parents and the counsellor, but young people may still reject the offer. In fulfilling its tasks, the Youth Guidance Centers are obliged to co-operate closely with the educational institutions and the municipal job centre for those aged 18 and above (OECD, 2016a).

Case management in Switzerland

The Swiss case management system is designed to support students who are at risk of dropping out during the transition from lower to upper-secondary education, and as a result leaving school without a secondary qualification. It was created in 2006 to help increase the number of students with a secondary qualification from 89% to 95% by 2015. It aims to co-ordinate different actors and institutions involved in the support of at risk-students and can be implemented during the phase of professional orientation at the end of lower-secondary school, during the transition phase from lower to upper-secondary schools, or during basic vocational education before a post-compulsory qualification is obtained.

Case management is preventive rather than reactive in nature. Students at risk are first identified and their development monitored. Identification takes place at 7th and 8th grade in compulsory school, or later if students cannot find an apprenticeship or dropout of an apprenticeship or school-based VET course. A network of bodies (the case managers) is then mobilised to support the student in different tasks leading up to a full post-compulsory qualification.

Support is tailor-made to individual needs, but can include help in choosing a pathway or finding an apprenticeship place upon finishing compulsory education, in getting back to education after dropout, as well as a range of additional support measures for young people with more general educational and social problems. The duration of case management is variable and depends on individual needs. The VET Offices in the Cantons (Berufsbildungsämter) have been responsible for the implementation of case management since 2008. They had to develop a concrete project proposal for approval by the federal government (Bundesamt für Berufsbildung und Technologie, BBT), who fund the initiative and are regularly monitored.

Source: BBT (Bundesamt für Berufsbildung und Technologie) (2007), Case Management, Grundsätze und Umsetzung in den Kantonen, BBT, Bern.

A systematic approach that involves the identification and follow up of youth at risk is currently missing in Australia. One OECD (OECD, 2016a) study points to the fact that the current approach is fragmented as schools do not have to co-operate with social and healthcare providers. The role of local authorities in preventing dropout could also be reinforced. Currently, local authorities have no obligation to offer alternative options to school leavers or to follow up on those who left.

Policy pointer 2: Use pre-apprenticeships to help NEETs re-enter education and training and to find employment

Apprenticeships, or traineeships, can be a powerful tool to engage disconnected youth, as they offer an opportunity to learn and connect to the world of work. However, those most in need are likely to struggle to find and successfully complete an apprenticeship. Various initiatives that facilitate the transition from joblessness to training, or that provide a bridge between schools and apprenticeships, can be used to better prepare young people for their apprenticeship. These initiatives are called pre-apprenticeships.

Pre-apprenticeship programmes aim to develop skills that enable young people to find and successfully complete a work-based learning opportunity. They typically target the following skills:

General academic skills, in particular literacy and numeracy instruction, and sometimes foreign language training.
Vocational skills. In some programmes the focus is on career exploration, and participants learn about various occupations, and in others, participants develop skills related to a particular industry or apprenticeship occupation.
Soft skills, covering both skills that young people need to find and be selected for a work-based learning opportunity (e.g. job search, CV writing and interview skills), as well as skills needed to succeed in a workplace (e.g. time-keeping, teamwork, resilience).

Australia has extensive experience with pre-apprenticeship programmes (such as the Kickstart Programme, Australian Access Programme, Group Training in Trades Programmes) that target young people who are already or run the risk of becoming NEET. However, the evidence on their effectiveness is mixed. Many initiatives did not meet their targets, and outcomes varied across states and territories. These two issues are further discussed below.

How to evaluate pre-apprenticeships?

Pre-apprenticeship programmes tend to be costly, and an important challenge is to identify which approaches work best. Various challenges arise in obtaining solid evaluation evidence on programmes that provide a bridge into apprenticeships (see Kis, 2016):

Within each country, state or region, the programmes offered tend to vary considerably in terms of content, duration, funding and mode of delivery. This means that average results may inadequately capture the quality of individual programmes.
Indicators, such as transition rate into apprenticeship or subsequent apprenticeship completion, need to be interpreted against the counterfactual: what would have happened to the youth had they not participated in a pre-apprenticeship? However, this is very difficult to measure, as young people who enter pre-apprenticeships tend to be more disadvantaged and have weaker skills than those who enter other education or training programmes or employment at the same age.
Various outcome measures could be envisaged, such as transition into apprenticeship, other education or training programme, or employment. However, a participant not entering an apprenticeship is necessarily a negative outcome, especially if the aim of the programme is to allow young people to test out whether an occupation suits them.
The costs and benefits of these programmes need to be compared with those of alternative scenarios (e.g. higher chance of reliance on unemployment benefits).

Co-ordination across various stakeholders and administrative levels is key for effective pre-apprenticeships

Programmes that create a bridge into apprenticeships are often at the intersection of education, employment and social policy. Diverse stakeholders may be involved in the funding, regulation and delivery of programmes, including federal and state level authorities, local authorities, and private entities (e.g. associations, foundations). One challenge associated with the diversity of programmes and actors involved is that provision is sometimes fragmented and leads to a confusing variety of isolated measures. In response to this challenge, Germany provided federal funding between 2008 and 2013 to an initiative to improve the co-ordination of transition offers at the regional level (Perspektive Berufsabschluss - Regionales Übergangsmanagement). This initiative included implementation strategies regarding networking, transparency of provision, parental involvement, and school/company co-operation (Aram et al., 2014). In addition, the “Educational chains” (Bildungsketten) initiative, launched in 2010, encourages a coherent and structured approach in career orientation and in the transition system (Kis, 2016).

Policy pointer 3: Improve access to childcare facilities for young mothers

Young women in Australia are much more likely to become NEET than young men. In Australia, this association is one of the highest among countries participating in the Survey, which signals the level of importance of the problem.

An analysis of various factors associated with being NEET among women used the Survey of Adult Skills to show that young women with children are more likely to become NEET in Australia. The majority of inactive young women mention flexibility in the workplace (including the ability to work part-time, to work from home, and flexibility in arranging working hours) as one of the key requirements for labour force participation. This is very likely related to their childcare responsibilities and the desire to combine childcare and work responsibilities. Australia’s relatively high childcare costs also contribute to the very high NEET rates among young mothers with young children. More than half of young inactive women report that more childcare places, which are less expensive, would encourage them to work or search for a job (OECD, 2016a).

In order to help NEETs with children, particularly women, to enter the labour market or facilitate a return to education and training, childcare should be easy to access and costs should be kept at an affordable level. Several OECD countries offer good examples. Denmark operates a system whereby municipalities are obliged to offer all children older than six months a place in publicly subsidised childcare. In Sweden, municipalities must provide at least 15 hours of childcare per week to children over one. This obligation rises to full-time hours in cases where both parents are employed or in education. Other countries provide additional support for single parents, with Iceland (specifically Reykjavik) providing reduced childcare fees, and Belgium (Flemish Community) providing priority access to childcare services for lone parents.

References

Bell, D. and D. Blanchflower (2011), “Young people and the Great Recession”, Oxford Review of Economic Policy, Vol. 27/2, pp. 241–67, https://doi.org/10.1093/oxrep/grr011.

Bundesamt für Berufsbildung und Technologie (2007), Case Management, Grundsätze und Umsetzung in den Kantonen, BBT, Bern.

Crawford, C., L. Macmillan and A. Vignoles (2015), “When and why do initially high attaining poor children fall behind?”, CASE - Social Policy in a Cold Climate Working Paper 20, Centre for Analysis of Social Exclusion, LSE, https://ideas.repec.org/p/cep/spccwp/20.html.

Kis, V. (2016), “Work-based learning for youth at risk: Getting employers on board”, OECD Education Working Papers, No. 150, OECD Publishing, Paris, https://doi.org/10.1787/5e122a91-en.

Lyche, C. (2010), “Taking on the completion challenge: A literature review on policies to prevent dropout and early school leaving”, OECD Education Working Papers, No. 53. OECD Publishing, Paris, https://doi.org/10.1787/5km4m2t59cmr-en.

Nilsen, Ø. and K. Reiso (2011), “Scarring effects of unemployment”, IZA Discussion Paper 6198, Institute for the Study of Labor (IZA), https://ideas.repec.org/p/iza/izadps/dp6198.html.

OECD (2016a), Investing in Youth: Australia, OECD Publishing, Paris, https://doi.org/10.1787/9789264257498-en.

OECD (2016b), Society at a Glance 2016: OECD Social Indicators, OECD Publishing, Paris,https://doi.org/10.1787/9789264261488-en.

← 1. The statistical data for Israel are supplied by and are under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.