Investing in Youth

as a strategy for a

stronger, cleaner and fairer

world economy

José Antonio ArdavínHead

OECD Mexico Centre for Latin America

World Youth Conference Mexico 2010, Parliamentary Forum

Mexico City| August 25, 2010

¿In what is richer the developing world than the most advanced economies?

…precisely in Youth

Percentage of population 0-15 years old 1950-2050, 2010 for selected countries

Source: OECD Factbook 2010

10

15

20

25

30

35

40

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

India

South Africa

Mexico

World

China

United States

OECD

EU27

Japan

Such fact makes of this global dialogue on youth policies particularly relevant

What are the policy and legislative implications?

¿In what measure is the developing ¿In what measure is the developing world’s world’s demographic bonus demographic bonus a richness?a richness?

education

innovation and technology

employment

development

Picture: Observatorio de medios FUCATELwww.observatoriofucatel.cl

¿In what measure it is ¿In what measure it is the very the very challenge of challenge of

developmentdevelopment?

International migration

sustainable development

¿In what measure is it a global ¿In what measure is it a global challengechallenge and and opportunityopportunity??

The world has been changing significantly: a process of shifting wealth is going on

development

…Poverty rates have reduced significantly over the past 15 years, China contributing significantly

The youth are said to be the hope of every nation…

What policies, what legislation?

…for them to consolidate and live in astronger, cleaner and fairer world economy?

Investing adequately in youth at the different stages of their development, is an important part of the solution

Source: OECD Doing better for children

0%

10%

20%

30%

40%

50%

60%

Hun

gary

Finl

and

Slov

ak …

Icel

and

Fran

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h …

Swed

en

Den

mar

k

Aus

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Uni

ted …

Nor

way

Ger

man

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Aus

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ium

Spai

n

Italy

Mex

ico

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and

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Net

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ands

Gre

ece

Port

ugal

New

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land USA

Japa

n

Switz

erla

nd

Kore

a

Early years share Middle years share Late years share

Public social expenditure per capita by stage of childhood, 2003

The two indispensable parts of the strategy:

education

employment

Education performacnce is closely linked with economic growth…among regions … and among countries

Source: OECD The high cost of low education performance

education

…and could be the trigger of long term growth performance

Quality matters: human capital is the key ingredient of innovation

0

5

10

15

20

Finl

and

563

New

Zea

land

530

Hon

g Ko

ng-C

hina

542

Japa

n 5

31Ch

ines

e Ta

ipei

532

Aust

ralia

527

Cana

da 5

34U

nite

d Ki

ngdo

m 5

15N

ethe

rland

s 52

5Sl

oven

ia 5

19Li

echt

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522

Ger

man

y 51

6Cz

ech

Repu

blic

513

Esto

nia

531

Switz

erla

nd 5

12Ko

rea

522

Belg

ium

510

Aust

ria 5

11Ire

land

508

Uni

ted

Stat

es 4

89O

ECD

aver

age

500

Fran

ce 4

95Sw

eden

503

Hun

gary

504

Denm

ark

496

Pola

nd 4

98Ic

elan

d 4

91N

orw

ay 4

87Lu

xem

bour

g 4

86Sl

ovak

Rep

ublic

488

Mac

ao-C

hina

511

Isra

el 4

54Cr

oatia

493

Lith

uani

a 4

88Sp

ain

488

Italy

475

Russ

ian

Fede

ratio

n 4

79La

tvia

490

Gre

ece

473

Port

ugal

474

Bulg

aria

434

Chile

438

Uru

guay

428

Turk

ey 4

24Se

rbia

436

Jord

an 4

22Br

azil

390

Rom

ania

418

Arge

ntina

391

Thai

land

421

Qat

ar 3

49M

onte

negr

o 4

12M

exic

o 4

10Co

lom

bia

388

Tuni

sia

386

Azer

baija

n 3

82In

done

sia

393

Kyrg

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an 3

22

Level 5 Level 6

Percentage of top performers on the science scale in PISA 2006

Source: OECD PISA Database 2006

Technology use matters: it clearly influences education outputs

16

innovation and technology

Source: OECD The new millenium learners

…noteworthy, not necessarily use at school…

17

300

350

400

450

500

550

600

Fin

lan

d

Lie

ch

ten

ste

in

Ne

w Z

ea

lan

d

Ja

pan

Ca

na

da

Ge

rm

an

y

Ko

rea

Ne

the

rla

nds

Hu

ng

ary

Irela

nd

Sw

itzerla

nd

Be

lgiu

m

Au

str

alia

Au

str

ia

Sw

ed

en

Gree

ce

Po

lan

d

Sp

ain

Croati

a

Ma

ca

o-Ch

ina

Lit

hua

nia

Ita

ly

Slo

ve

nia

Slo

va

k R

ep

ublic

Czech

Re

pu

blic

No

rw

ay

La

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nd

Po

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De

nm

ark

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n F

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n

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ile

Tu

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y

Urugu

ay

Bu

lga

ria

Th

aila

nd

Se

rbia

Jo

rda

n

Co

lom

bia

Qa

tar

Frequency of use of computers at school and student performance on PI SA science scale

Frequent use Moderate use Rare or no use

Source: OECD The new millenium learners

…but familiarity with technology in their daily lives

300

350

400

450

500

550

600

Fin

lan

d

Ja

pan

Ko

rea

Sw

ed

en

Ca

nad

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Ma

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Irela

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Ne

w Z

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Ne

the

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Lie

chte

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in

Slo

ve

nia

Ru

ssia

n

…

Po

lan

d

La

tvia

Ge

rm

any

Sw

itzerla

nd

Hu

nga

ry

Au

str

alia

Au

str

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…

Croati

a

Be

lgiu

m

Greece

Slo

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k

…

Lit

hua

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De

nm

ark

Sp

ain

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nd

No

rw

ay

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Po

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Urugu

ay

Jo

rda

n

Se

rbia

Bu

lga

ria

Th

aila

nd

Co

lom

bia

Qa

tar

Frequency of use of computers at home and student performance on PISA science scale

Frequent use Moderate use Rare or no use

Source: OECD The new millenium learners

0

10

20

30

40

50

60

70

80

90

100

Ko

rea

Cze

ch R

epub

lic

Slo

vak

Rep

ublic

S

love

nia

Can

ada

Rus

sian

Fed

erat

ion

1S

wed

en

Fin

land

D

enm

ark

Sw

itzer

land

E

sto

nia

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d S

tate

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rael

H

ung

ary

Ger

man

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ay

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nd

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nce

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our

g

New

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land

U

nite

d K

ing

do

m

Gre

ece

Icel

and

Ita

ly

Chi

le 2

Sp

ain

Po

land

P

ort

ugal

M

exic

o

Bra

zil 2

Turk

ey

Chart A1.2 Population that has attained at least upper secondary education (2006)

Percentage, by age group

25-to-34-year-olds 55-to-64-year-olds

Countries are ranked in descending order of the percentage of the 25-to-34-year-olds who have attained at least upper secondary education.1. Year of reference 20022. Year of reference 2004Source: OECD. Table A1.2a. See Annex 3 for notes (www.oecd.org/edu/eag2008).

Countries are ranked in descending order of the percentage of the 25-to-34-year-olds who have attained tertiary education.1. Year of reference 20022. Year of reference 2004Source: OECD. Table A1.3a. See Annex 3 for notes (www.oecd.org/edu/eag2008).

Inclusion matters: countries that have made bigger generational leaps among OECD countries are also

those that have grown faster in the past few decadesPercentage of population in each cohort with at least upper secondary education

Completion matters: Many countries have extraordinary intergenerational advances in

access to university…

0

10

20

30

40

50

60

Rus

sian

Fed

erat

ion

1C

anad

a Ja

pan

K

ore

a Is

rael

N

ew Z

eala

nd

Irela

nd

Bel

giu

m

No

rway

F

ranc

e D

enm

ark

Uni

ted

Sta

tes

Sp

ain

Sw

eden

A

ustr

alia

F

inla

nd

Uni

ted

Kin

gd

om

N

ethe

rland

s Lu

xem

bo

urg

E

sto

nia

Sw

itzer

land

Ic

elan

d

Po

land

G

reec

e S

love

nia

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man

y H

ung

ary

Po

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al

Aus

tria

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exic

o

Chi

le 2

Italy

S

lova

k R

epub

lic

Cze

ch R

epub

lic

Turk

ey

Bra

zil 2

Chart A1.3 Population that has attained at least tertiary education (2006)

Percentage, by age group

25-to-34-year-olds 55-to-64-year-olds

Countries are ranked in descending order of the percentage of the 25-to-34-year-olds who have attained tertiary education.1. Year of reference 20022. Year of reference 2004Source: OECD. Table A1.3a. See Annex 3 for notes (www.oecd.org/edu/eag2008).

Percentage of population in each cohort with at least tertiary education

…quite unfortunately, in many developing countries, youth leave education without having

a degree recognized by the job market

Source: OECD PISA en Iberoamerica

…thus profoundly eroding the demographic bonus

Percentage of Students attending school at 15(2006)

… and seriously limiting their employability

Employment probability of 15-29 school-leavers based on their education completion

0

20

40

60

80

100

120

140Less than upper secondary educationUpper secondary educationTertiary

Source: OECD Education database.

* Share of youth in employment with less than an upper secondary education qualification or ”drop-outs” in parenthesis.

employment

In general, youth face a much higher risk of unemployment than adults…

0

5

10

15

20

25

30

35

4015-24 25+

OECD 15-24 = 17.6

OECD 25+ = 6.5

Unemployed as a % of the labour force , 2d quarter 2009

Source: National labour force surveys.

…sometimes reaching between 2 and 4 times higher unemployment rates

Scarpetta, S., A. Sonnet and T. Manfredi (2010), “Rising Youth Unemployment During The Crisis: How to Prevent Negative Long-term Consequences on a Generation?”,OECD Social, Employment and Migration Working Papers, No. 106, OECD Publishing. doi: 10.1787/5kmh79zb2mmv-en

… and are particularly exposed to a major downturn…

0

5

10

15

20

25

30

35

402007q4 2009q2

15-24 unemployed as a % of the labour force

Source: National labour force surveys.

…due to their disproportionate presence of youth holding temporary jobs and their concentration in

cyclically-sensitive industries

Scarpetta, S., A. Sonnet and T. Manfredi (2010), “Rising Youth Unemployment During The Crisis: How to Prevent Negative Long-term Consequences on a Generation?”,OECD Social, Employment and Migration Working Papers, No. 106, OECD Publishing. doi: 10.1787/5kmh79zb2mmv-en

The risk is an unemployment trap for millions of youth worldwide

Souurce: OECD Projectiions, Employment Outlook 2010

Can we avoid a hope generation becoming a lost generation…

Legislation can do significantly about it

The transition matters: takes time almost everywhere, particularly for low-skilled youth

Source: National labour force surveys.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0Total Low-skilled

Expected number of years spent in employment in the five years after leaving education, 2008

Internship helps: combining school and work facilitates labor market entry

AUT

BEL

CHE

CZE

DEU

DNK

ESP

FIN

FRA

GRC

HUN

ISL

ITA

LUX

NLD

NOR

POL

PRT

SWE

SVK

GBR

R² = 0.6823

70

72

74

76

78

80

82

84

86

88

90

0 10 20 30 40 50 60 70

Em

plo

ymen

t rat

e o

f yo

uth

aged

25-

29 n

ot

ined

ucat

ion

Share of students aged 15-24 who work

Correlation between the employment rate of school leavers aged 25-29 and the share of students working before they reach 25

Source: European Union labour force survey.

Regulation matters: temporary jobs, are an important way of entry for youth

AUSAUT

BEL

CAN

CZE

DNK

FIN

FRADEU

GRC

HUN

ISL

IRL

ITA

JPN

KOR LUX

NLDNZL

NOR

POL

PRT

SVK

ESP

SWE CHE

TUR

GBRUSA

0

10

20

30

40

50

60

0 10 20 30Share of part-time workers

in the population (%)

Share of inactive in the population (%)

Correlation: -0.66***

AUSAUT

BEL

CAN

CZE

DNK

FIN

FRA

DEU

GRC

HUN

ISL

IRL

ITA

JPN

KOR LUX

NLDNZLNOR

POL

PRT

SVK

ESP

SWECHE

TUR

GBRUSA

40

45

50

55

60

65

70

75

80

85

90

0 10 20 30Share of part-time workers

in the population (%)

Employment rate (%)

Correlation: 0.69***

Population shares in part-time jobs, full-time jobs and inactivityPopulation aged 20-64, 2007

***, **, *: statistically significant at 1%, 5%, 10% levels, respectively.

Source: OECD Labour Force Statistics Database.

… and could have a stepping-stone effect, where available

However, unbalanced employment protection legislation between temporary and permanent

contracts can become a trap and even discourage youth from the labour market

***

***

***

-15

-10

-5

0

5

10

15

20

25

30

35

Training Permanent contract Training Permanent contract

Women Men

High unemployment Low unemployment

Impact of equal-treatment laws on training and job securityProbability of part-time compared to full-time employees, percentage points

Note: *** statistically significant at 1% level.

Source: OECD calculations using data from the 1995, 2000 and 2005 European Working Conditions Survey.

Focused active policies: tacke demand-side barriers to youth employment for the

“poorly-integrated new entrants”

… and a second chance to gain the skills needed on the labour market for the “Youth

left behind”

0

5

10

15

20

25

30

35

40

45

Inactive

Long-term unemployed

Short-term unemployed

The NEET group (neither in employment, nor in education or training)

…many of which fall under the category of migrants

0

0.5

1

1.5

2

2.5

3

HUN USA GBR CAN IRL ITA FRA ESP DEU LUX NLD AUT NOR BEL0

5

10

15

20

25

30

HUN AUT USA DEU SWE BEL ESP

Native-born

Foreign-born

International migration

Unemployment rate differencial of migrant population vs native-born population

Source: International Migration Outlook 2010

Unemployment rates (15-64) by place of birth in selected OECD countries, 2007-2009

…who have contributed substantially to the employment growth and productivity of recipient

countries

Distribution of the components of change in employment, 2005-2008, selected OECD countries

Source: International Migration Outlook 2010

-100%

-50%

0%

50%

100%

150%

200%

Change in immigrant population Change in native-born population

Change in the employment rate of residents Residual

Group A Group B Group C

The solution to the main social and global challenges ahead us….

Largely depend upon…

…the policies in favor of and investment in the world youth population

sustainable development

…if we do so, we might probably induce a positive answer to the question below

Investing in Youth

as a strategy for a

stronger, cleaner and fairer

world economy

José Antonio ArdavínHead

OECD Mexico Centre for Latin America

World Youth Conference Mexico 2010, Parliamentary Forum

Mexico City| August 25, 2010

Presentation available at

www.oecd.org/centrodemexico