One in six young people in OECD (Organisation for Economic Co-operation and Development) countries is not in employment, education or training, and of these, two-thirds are not actively looking for work, thus raising both immediate and longer-term challenges for individuals and society at large. Research has shown that young people who experience joblessness early in their careers tend to suffer from a “scarring effect”, leading to a higher chance of unemployment and lower earnings later in life.The cost to OECD economies of these unused skills and time is estimated to be in the range of USD $560 billion. Moreover, high youth unemployment leads to greater crime and poorer health among youth, thus imposing further costs on society.
This report, by Viktória Kis of the OECD, focuses on work-based learning as a way of addressing the employment challenges of at-risk youth, defined as “young people who are, or at the greatest risk of being, not in employment, education or training.” In her review, the author examines, and draws delivery and design lessons from, program and policy tools that have been introduced to encourage employers to participate in work-based learning for vulnerable groups, particularly at-risk youth. The report focuses on programs with explicit learning outcomes typically leading to a credential: apprenticeships, dual vocational education and training, traineeships, internships and co-operative education. As apprenticeship is a particularly useful way of analyzing the different parameters affecting the costs and benefits of work-based learning, and there is much evidence to draw on, this report used the apprenticeship model to draw out policy implications. Canada, Australia, Germany, Norway, Scotland, Switzerland, the United Kingdom, the United States and the European Commission contributed to this project.
The findings of the study are two-fold. First, the author found that work-based training is more appealing to youth than conventional school programs for learning new skills. Moreover, such training equips them with relevant skills that are in demand in the labour market and it has proven to be a good way of re-engaging them, smoothing their transition into work, and improving their job and life prospects. However, it may be less attractive for employers to provide apprenticeships to at-risk youth, who tend to have weaker literacy and soft skills and thus may be less productive at work.
To engage employers to hire and train at-risk youth, appealing just to their sense of social responsibility is not sufficient; for them to do so, the activity needs to align with their business interests. That is, the business case must be made to employers for participating in training for at-risk youth: it must be shown that benefits (apprentices’ contributions at work during and following training) will outweigh the costs (apprentices’ pay, instructors’ time and salary, tools and equipment used by apprentices, and administrative costs). Also, there is a large number of program design and context factors that influence costs and outcomes, some which can be altered by program changes. These factors include: the learner’s characteristics, the occupation (length of training needed, wages while being trained, cost of equipment), firm size (economies of scale – the larger the firm, the lower the unit costs), mix of time spent on-the-job and off-the-job, and policy context (government hiring/training incentives, minimum wage and collective bargaining laws).
Second, the author found that financial incentives have been less than effective in encouraging employers to provide apprenticeships to at-risk youth. Universal incentives have limited impact and can impose significant “deadweight loss” (financing something the employers would have done without the incentive), while targeted incentives are hard to get right and run the risk of displacing those for whom there is no incentive. The better way to encourage employers to provide training (apprenticeships in this case) to at-risk youth, and to encourage the youth to participate in it, is to focus on non-financial measures that reduce its costs and/or improve its benefits.
Suggested non-financial measures include the following:
- Adjust parameters of apprenticeship programs for at-risk youth:
- Duration of apprenticeship: Ensure there is enough time for employers to recoup their investment in training apprentices, taking into account how the productivity of apprentices rises over time.
- Occupation and flexibility: Offer at-risk youth apprenticeship in occupations for which duration is shorter (e.g., apprenticeships targeting a smaller skill set) or be flexible in giving apprentices additional time to complete it if needed.
- Wage: Give flexibility to employers to compensate at-risk youth apprenticeships in occupations with below-average wages, reflecting their productivity, but with wages high enough to ensure that apprenticeships remain attractive to them.
- Better prepare at-risk youth for apprenticeships:
- Pre-apprenticeship programs: Encourage and offer financial resources to support initiatives that successfully prepare at-risk youth for apprenticeships, while gathering evidence on success and failure factors in order to inform policy development.
- Re-engagement programs: Document, evaluate and implement the most promising examples of local innovations that use work-based learning to re-engage at-risk youth.
- During apprenticeships, provide support to at-risk youth and employers:
- Youth: Provide them with remedial courses (in particular in literacy and numeracy), mentoring and coaching, which should help apprentices complete their training and build their skills more effectively.
- Employers: Assist firms in building capacity to provide apprenticeships to at-risk youth, such as by encouraging targeted training for apprentice supervisors and offering tools and resources (e.g., website, online forum for instructors) that help firms effectively manage apprentices and overcome any difficulties.
This is one of six reports that have been or will be completed as part of an OECD study aiming “to deliver policy messages about how to use work-based learning in vocational education and training to achieve better economic and social outcomes.” All reports will be accessible on the OECD website, where a synthesis of all results will be available later in 2017.
This report will be of value and interest to policy makers and practitioners wishing to improve the design and delivery of employer training for at-risk youth as a way of improving outcomes and increasing the number of work-based learning opportunities for this population.