Tackling Youth Employment Challenges in Western Balkans William Bartlett London School of Economics and Political Science 1

Outline Introduction – youth unemployment Demographic change Structural change Economic crisis Education systems Transition from school to work Policies 2

Determinants of youth employment Labour supply – The demographic structure, determines the supply of young people to the labour market – Institutional arrangements for education and training determine quality of labour supply Labour demand – Economic structure and rate of economic growth – Labour market institutions such as minimum wage and employment protection laws 3

Labour supply 4

Western Balkans: change in population aged 14-17, (%) 5

Labour demand 6

GDP growth rates, Source: Eurostat and Central Bank of Bosnia Herzegovina 7

Real GDP Growth rates 2012 (%) 8

GDP growth rates, Serbia, , % Source: 9

Employment and unemployment, Serbia, LFS data, Total Employment Total Unemployment Rate of Unemployment (%) 2008April2,652,429432, October2,646,215457, April2,486,734486, October2,450,643516, April2,278,504572, October2,269,565565, April2,191,392649, October2,141,920690, April2,083,604735, April April ,825302, p.p. 10

Youth unemployment 11

Youth unemployment rates 2012 (%) 12

Youth unemployment rate, (%) 13

Unemployment rate in BiH by age group, 2012 (%) 14

Effects of unemployment Following an initial spell of unemployment young people are – vulnerable to new rounds of unemployment (“unemployment scar”), – lower post-unemployment wages (“wage scar”), or both. 15

Education systems 16

Education systems Better educated young workers have better access to well paid jobs Education systems in Western Balkans are mainly selective – with the exception of Albania – Gymnasia versus vocational schools – 3-year programmes versus 4-year programmes The latter offer a pathway to university – Differences between countries in proportion of students in vocational programmes 17

Similar school systems 18

Gross enrolment all programmes (Index 2001/02=100) 19

Gross enrolment rate all programmes (%) 20

Student-teacher ratio in upper secondary education (2011) 21

% of vocational students in all upper secondary enrolment (ISCED 3) 22

Vocational programmes gross enrolment (index 2001/02 = 100) 23

Transition from school to work Countries with a dual training system have: – a smoother transition from school to work – lower NEET rates – lower youth unemployment – fewer repeat unemployment spells Graduates from dual education have: – higher wages – stronger labour market attachment The general low reputation of VET schools related – selection of students – underfunding 24

Life-cycle effects of dual system Although vocational education programmes may lead to better integration into the workplace, some evidence exists that advantages of VET in the labour market diminish over time (Hanushek et al., 2011) Moreover, in Western Balkan countries there is less evidence of the advantages of VET as vocational programmes: – Are under-resourced – Use inappropriate curricula – Generate skills gaps which persist over time 25

Policies 26

‘Two-step Integration’ Vocational education can bring benefits of skills for employability – provided that it provides relevant skills matching employer demand Complementary active labour market policies benefit disadvantaged youth – Providing they are designed and implemented effectively 27

School-based training School-based training can provide occupational skills but these are often outdated or irrelevant to the needs of employers It is therefore very important that schools should forge strong links with local employers In the Western Balkans school based training tends to be too theoretical and not sufficiently linked to practical lessons wither in school or in company work placements 28

How much students learn at school (ETF survey, vocational schools) 29

Apprenticeships Well designed pathways from school to work can help young people Importance of establishing a link with employers who should participate in the design of curricula Apprenticeships make better initial contracts than fixed-term contracts without training VET systems should provide the right balance between – general skills – occupational-specific skills – work-based learning 30

Career guidance In advanced countries, most young people can access information and make independent decisions, so career guidance services (CGS) are targeted to disadvantaged youth In low or middle income countries, young people make decisions in different cultural contexts and concept of individual choice may be shaped more by family expectations, while public employment services may be less supportive 31

Vocational school student expectations in finding a job ETF student survey on vocational schools in 9 countries (N=2,900) – Over three quarters expect to receive help from their families (75.2%) – Just over two fifths (43.2%) expect to receive help from friends – Just over one third (37.1%) expect help from the public employment service – Just over one third (35.7%) expect to have similar level of help from their school – Three tenths (30%) from a school career guidance centre, – Over one quarter from teachers (28.2%) – Over one fifth from a youth centre (22.3%). 32

Active labour market programmes Several research studies have shown that – Job search assistance helps young people into work – Publicly subsidized training has positive effects in medium term – Targeted and temporary hiring subsidies are effective but costly – Direct public job creation is not very effective in helping young people find a permanent job – Small business start-up assistance can be quite effective for young people 33

ALMPs for young people in the Western Balkans Employment policy in the Western Balkans is fragmented and narrowly focused – Little coordination among different actors – Lack of attention to skill mismatch problems Spending per person on ALMPs is much lower than in Public Employment Services are understaffed and underfunded – PES staff ratio in Macedonia 1:600; in Montenegro 1:84; in EU 1: 150 unemployed 34

Mapping VET Education Policies and Practices for Social Inclusion and Social Cohesion What can be done? – student views What do young people think could be done by schools to improve their job prospects? Almost two thirds - better access to computers Almost two thirds - better teaching methods Three fifths of - better job counselling More than half - better equipment More than half - more relevant curricula Almost half - better buildings Just under a half - better out-of-school training in companies 35

Thank you for your attention!!! 36