Importance of Policymakers (Policy) In Targeting Pressing Issues Concerning NEETs, Labour Market Changes & Sustainability
Assisting youths who are not in Education, Employment, or Training (NEETs) is a critical issue in today's society that policymakers must urgently address. The global labor market has changed significantly in recent years, necessitating adequate adaptation measures. However, many factors must be taken into account in this process, one of which is sustainability.
In Europe, unemployment has hit the young population hard. A peak of 24.4% average unemployment was observed in the EU27 in 2013, but in some Member States, the rate reached 50% and addressing youth unemployment became a top political priority. From 2014 onwards, the EU authorities launched the largest financial package specifically targeted at the youth population (Europe 2020 flagship initiative Youth on the Move), as it aimed to enhance the performance of education systems, boost job creation and facilitate the entry of young people into the labour market.
The effective design of policies is crucial, as according to ILO young people can greatly benefit from the growth of green and blue economies. By implementing policies to support these areas, an estimated 8.4 million jobs for young people could be created by 2030. Additionally, investments in digital technologies could also create job opportunities for young people, with achieving universal broadband coverage potentially leading to a net increase of 24 million jobs worldwide, 6.4 million of which would be for young people. Investments in care sectors, such as health and education, could also have positive effects on young people in terms of improving employment prospects, promoting well-being, and reducing youth NEET rates. Such investments are estimated to create 17.9 million more jobs for young people by 2030, with 14.4 million jobs in care sectors and 3.4 million jobs in other sectors. Overall, combining green, digital, and care measures in a significant investment effort could increase global GDP by 4.2 percent and generate an additional 139 million jobs for workers of all ages worldwide, including 32 million jobs for young people.[1]
Why is it important to target pressing issues?
In the past thirty years, the labor market has undergone significant changes, driven by globalization, technological advancements, and a highly educated population. Traditional mass production jobs have become less important, with manufacturing jobs shifting to specialized, high-value added production. The service sector has become increasingly important, with a rise in employment in knowledge-based services. While professional and managerial occupations have seen significant job growth, there has also been an increase in lower-wage service jobs and a reduction in middle-wage occupations, resulting in concerns about employment polarization and the potential hollowing out of the labor market.[2]
In this context NEETs face significant challenges, such as social exclusion, poverty, and low self-esteem, among others. These challenges can have long-lasting effects. Although some young people may experience brief periods of unemployment as they transition from school to work, extended periods of disengagement from both the labor market and education at a young age can have long-term negative effects on their employment opportunities and earning potential. This type of exclusion also increases the risk of social exclusion and can lead to negative behaviors that affect the individual's well-being and relationship with society. This can include a disconnection from democratic engagement and civic participation.[3]
Expanding the understanding of the economic benefits that come from re-engaging and encouraging young people to stay in education, training, or employment is crucial for governments and social partners who aim to reintegrate NEETs back into the labor market. According to Eurofound, the economic costs of the NEETs phenomenon are significant and go beyond the loss of earnings and welfare benefits. The estimate suggests that the inability to effectively employ young people in the labor market resulted in a loss of almost 120 billion Euros in 2008, which is equivalent to approximately 1% of European GDP. The ongoing crisis continues to increase the NEET population, and by 2011, the loss had risen to an estimated 153 billion Euros, or more than 1.2% of European GDP.[4]
How to address these challenges in a sustainable way?
Policymakers typically have two aims when responding to the NEET issue. The first aim is to prevent young people from becoming NEET in the first place. This is done by identifying potential NEET individuals and providing support to reduce their likelihood of becoming NEET. Strategies for achieving this include increasing academic attainment, creating pathways from school to further education, and providing career guidance and individualized support for vulnerable youth.
The second aim is to reduce the existing NEET population through engagement and transition support strategies. It is important for policymakers to create sustainable outcomes for NEET individuals by providing progression pathways, rather than simply diverting them temporarily. Strategies for achieving this include building employability skills, offering basic skills programs and apprenticeships, and creating opportunities in intermediate labor markets.
There are two types of interventions for preventing and managing NEETs: supply-side and demand-side solutions. The supply-side interventions focus on developing the young people's skills and qualifications to increase their employability. The demand-side interventions seek to shape employer demand through financial incentives or by shaping employer perceptions. The challenge for policymakers is to align both supply- and demand-side approaches, which requires coordination across several government departments.[5]
Member States have implemented various policies to intervene at different stages in the path towards employment. These policies have diverse aims, objectives, and activities, and it is challenging to evaluate their effectiveness. However, some good practices in policy design and implementation can be identified by European Foundation for the Improvement of Living and Working Conditions[6]. These include:
Policy measures should be diversified to address various issues along the employment path and focus on vulnerable groups with multiple disadvantages.
Beneficiaries' labor market readiness should be considered, as some may benefit from initiatives grounded in labor market needs, while others may need to address personal barriers before participating in employment programs.
Long-term, sustainable solutions are needed to provide young people with good-quality, stable employment that equips them with the qualifications necessary for successful labor market integration.
Stakeholder involvement is crucial in designing and delivering youth employment measures, particularly engagement with employers and their representatives.
Youth employment measures should prioritize clients' needs over providers and cater to different pathways, including mainstream and tailored learning.
Innovative policies are successful in engaging marginalized young people through outreach activities, incentives, branding, and marketing campaigns for more universal youth employment services.
Conclusion
In conclusion, policymakers play a crucial role in addressing the pressing issues related to NEETs, labor market changes, and sustainability. NEETs face significant challenges, and extended periods of disengagement from the labor market and education can have long-term negative effects on their employment opportunities, earning potential, and well-being. Therefore, policymakers must focus on preventing young people from becoming NEET in the first place and reducing the existing NEET population through engagement and transition support strategies.
Article written by Michalina Wacław, Economist at CASE - Center for Social and Economic Research (Poland).
References:
[1] ILO (2022), Global Employment Trends for Youth 2022. Investing in transforming futures for young people, Geneva.
[2] Sissons P. (2022), Lost in transition? The changing labour market and young people not in employment, education or training, The Work Foundation.
[3] Arulampalam, W. (2001), Is unemployment really scarring? Effects of unemployment experiences on wages, The Economic Journal, Vol. 111, No. 475, pp. F585-F606
[4] Eurofound (2012), NEETs – Young people not in employment, education or training: Characteristics, costs and policy responses in Europe, Publications Office of the European Union, Luxembourg.
[5] Bördős K. et al (2022), Analysis of the policy context addressing 25+ NEETs, HÉTFA Research Institute.
[6] Eurofound (2012), NEETs – Young people not in employment, education or training: Characteristics, costs and policy responses in Europe, Publications Office of the European Union, Luxembourg.
