Jobs for Youth Des emplois pour les jeunes United Kingdom 2008 by OECD

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Getting off to a good start  in one's working life facilitates integration into the world of work and lays the foundation for a good career, while a failure can be difficult to make up. This report on the UK report contains a survey of the main barriers to employment for young people, an assessment of the adequacy and effectiveness of existing measures to improve the transition from school-to-work, and a set of policy recommendations for further action by the public authorities and social partners.

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									Jobs for Youth

UNITED KINGDOM
Des emplois pour les jeunes
       Jobs for Youth
 (Des emplois pour les jeunes)




United Kingdom
         ORGANISATION FOR ECONOMIC CO-OPERATION
                    AND DEVELOPMENT

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     The OECD member countries are: Australia, Austria, Belgium, Canada, the
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                                                                              FOREWORD – 3




                                             FOREWORD


            The OECD’s Employment, Labour and Social Affairs Committee has
        decided to carry out a thematic review of policies to facilitate the
        transition from school to work and to improve the career perspectives of
        youth. This review is a key part of the implementation of the Reassessed
        OECD Jobs Strategy.
            Sixteen countries (Australia, Belgium, Canada, Denmark, France,
        Greece, Japan, Korea, Netherlands, New Zealand, Norway, Poland,
        Slovak Republic, Spain, United Kingdom and United States) have decided
        to participate in this review which will take place between 2006 and 2009.
        Once all these countries have been reviewed, a synthesis report will be
        prepared highlighting the main issues and policy recommendations which
        will be discussed subsequently by Employment and Labour Ministers.
             In this thematic review, the term youth encompasses “teenagers”
        (i.e. youth aged 15/16-19) as well as “young adults” (aged 20-24 and 25-29).
             This report on the United Kingdom was prepared by Glenda Quintini,
        with statistical assistance provided by Sylvie Cimper and Thomas Manfredi.
        It is the eighth such country report prepared in the context of this thematic
        review. A draft of this report was presented at a seminar which was
        organised in London on 13 March 2008 by the Department for Children,
        Schools and Families, the Department for Innovation, Universities and
        Skills, and the Department for Work and Pensions.




JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
                                                                                                       TABLE OF CONTENTS – 5




                                       TABLE OF CONTENTS
List of Abbreviations ................................................................................................. 9
Summary and Main Recommendations ................................................................... 11
Résumé et principales recommandations................................................................. 23
Introduction .............................................................................................................. 39
CHAPTER 1. THE CHALLENGE AHEAD ....................................................... 41
 1. Demographics and labour market outcomes ................................................. 41
 2. Incidence and dynamics of youth non-employment...................................... 49
 3. The transition from education to employment .............................................. 52
 4. Characteristics of jobs performed by youth: stepping stones or traps? ......... 57
 5. Key points ..................................................................................................... 62
CHAPTER 2. INITIAL EDUCATION AND LEARNING ON THE JOB ....... 65
 1. Performance of the education system ........................................................... 66
 2. Improving education outcomes through quality early childhood
    education and care......................................................................................... 74
 3. Combating failure in education through financial support, guidance
    and remedial programmes ............................................................................. 77
 4. Engaging 14-19-year olds in England through a broader spectrum
    of learning options ........................................................................................ 84
 5. Raising compulsory education requirements .............................................. 100
 6. The tertiary education system and its main challenges ............................... 105
 7. Training on the job ...................................................................................... 108
 8. Key points ................................................................................................... 110
CHAPTER 3. REMOVING DEMAND-SIDE BARRIERS .......................... 113
 1. Economic growth and youth employment .................................................. 113
 2. Employers’ views of youth labour market readiness .................................. 116
 3. Wages and labour costs ............................................................................... 117
 4. The strictness of employment protection legislation
    in the United Kingdom ................................................................................ 125
 5. Key points ................................................................................................... 126
CHAPTER 4. PASSIVE AND ACTIVE LABOUR MARKET POLICIES
TO MOBILISE YOUNG PEOPLE INTO WORK .......................................... 127
 1. The role of passive labour market measures for youth ............................... 127
 2. Activation of unemployed youth ................................................................. 132
 3. Reducing NEET and engaging youth at risk ............................................... 146
 4. Key points ................................................................................................... 153
Bibliography .......................................................................................................... 155

JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
6 – TABLE OF CONTENTS

List of Boxes
Box 1.1.          Measuring the time needed to find a first job
                  after leaving education .................................................................. 55
Box 2.1.          The role of early childhood and pre-school programmes
                  in reducing school difficulties of children
                  from disadvantaged families ......................................................... 74
Box 2.2.          Evaluations of EMA pilots and national roll-out in England .......... 79
Box 3.1.          The minimum wage impact on youth employment,
                  school enrolment and on-the-job training: international evidence ...... 121
Box 3.2.          The role of the United Kingdom Low Pay Commission............. 123
Box 4.1.          Active Labour Market Policies for youth ................................... 132
Box 4.2.          New Deal for Young People: how does it work?........................ 135
Box 4.3.          The New Deal for Young People: evaluations ............................ 136
Box 4.4.          New Deal for Lone Parents and New Deal for Disabled People ........ 140
Box 4.5.          Employment Zones Pilots ........................................................... 144
Box 4.6.          The US Job Corps programme .................................................... 152

List of Figures
Figure 1.1.       Share of youth in the working-age population
                  in OECD countries, 1975-2025..................................................... 42
Figure 1.2.       Youth unemployment and employment indicators, OECD,
                  United Kingdom and Europe, 1984-2007 ..................................... 43
Figure 1.3.       Youth unemployment and employment indicators, by gender,
                  OECD countries, 2007 ................................................................... 45
Figure 1.4.       Low- to high-skilled youth unemployment ratio,
                  OECD countries, 1997 and 2005 .................................................. 46
Figure 1.5.       Youth unemployment and employment indicators
                  for teenagers and young adults, United Kingdom and OECD,
                  1984-2007 ..................................................................................... 47
Figure 1.6.       Incidence of long-term unemployment among youth,
                  OECD countries, 1997 and 2007 .................................................. 48
Figure 1.7.       Share of NEET teenagers and young adults, OECD countries,
                  1996 and 2005............................................................................... 50
Figure 1.8.       NEET dynamics, United Kingdom, 1991-96 and 2000-05 ........... 51
Figure 1.9.       Persistence of non-employment status in the United Kingdom,
                  1991-95 and 2001-05 ..................................................................... 52
Figure 1.10.      Activity status of youth aged 15-27, United Kingdom
                  and selected OECD countries, 2002/2005 .................................... 53
Figure 1.11.      Incidence of temporary work one year after leaving education,
                  selected European countries, 2005 ................................................. 57
Figure 1.12.      Transition rates from temporary to permanent employment
                  in Europe, 1996 and 2001 ............................................................. 58


                                                JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
                                                                                                    TABLE OF CONTENTS – 7


Figure 1.13.          Incidence of work-based training among employees,
                      United Kingdom, 1998 and 2005 .................................................. 59
Figure 1.14.          Destination of youth and adults in jobs without training,
                      United Kingdom, 1999 and 2005 .................................................. 60
Figure 1.15.          Incidence of low pay and no pay, United Kingdom,
                      1995 and 2005............................................................................... 61
Figure 1.16.          Persistence of low pay, United Kingdom, 1991-95 and 2001-05 ......... 62
Figure 2.1.           United Kingdom students’ performance, based on PISA 2006.......... 67
Figure 2.2.           Score dispersion on the PISA 2006 science scale, OECD countries.. 67
Figure 2.3.           School drop-outs in OECD countries, 2005.................................. 69
Figure 2.4.           Share of youth neither in employment nor in education
                      or training by educational attainment, OECD countries, 2005........... 69
Figure 2.5.           Employment rates by educational attainment
                      in OECD countries, 2005 .............................................................. 70
Figure 2.6.           Earnings distribution of adults without an upper secondary
                      qualification, OECD countries, 2005 ............................................ 71
Figure 2.7.           Enrolment in vocational versus general education
                      in upper secondary education in OECD countries, 2005 .............. 72
Figure 2.8.           Population that has attained tertiary education
                      in OECD countries, 2005 .............................................................. 73
Figure 2.9.           Returns to vocational and academic tertiary qualifications,
                      selected OECD countries, 2004 .................................................... 73
Figure 2.10.          Access to licensed ECEC services for children under three,
                      selected OECD countries, 2004 .................................................... 75
Figure 2.11.          Distribution of apprentices across industry, 2007 ......................... 91
Figure 2.12.          Gender distribution of apprenticeships in selected industries,
                      2007 .............................................................................................. 92
Figure 2.13.          Average net weekly pay of apprentices in selected industries,
                      United Kingdom, 2004.................................................................. 94
Figure 2.14.          Average net pay by gender, age and apprenticeship level,
                      United Kingdom, 2004.................................................................. 94
Figure 2.15.          Apprenticeship completion rates in selected industries,
                      United Kingdom, 2006.................................................................. 96
Figure 2.16.          Hours of training and working per week in selected industries,
                      United Kingdom, 2004 ......................................................................... 97
Figure 2.17.          Projected participation in education and training
                      of 16-17-year olds, United Kingdom, 2007-2017 ....................... 101
Figure 2.18.          Incidence of job-related training by duration of the training course,
                      United Kingdom and European countries, 2003 .............................. 109
Figure 3.1.           Youth employment rates and GDP, 1985-1995 and 1996-2006 ........ 114
Figure 3.2.           Youth and adult employment rates and economic cycles,
                      United Kingdom, 1985-2006 ...................................................... 115



JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
8 – TABLE OF CONTENTS

Figure 3.3.      Employers dissatisfied with the key skills of young recruits,
                 United Kingdom, 2006................................................................ 116
Figure 3.4.      Employers’ views of government priorities in improving skills
                 and education, United Kingdom, 2006 .............................................. 117
Figure 3.5.      Wage profiles of full-time workers by gender
                 in the United Kingdom and selected OECD countries,
                 1997-2006 ................................................................................... 118
Figure 3.6.      Overall strictness of employment protection legislation
                 and its three main components, OECD countries, 2003 ............. 125
Figure 4.1.      Net unemployment benefit replacement rates,
                 in OECD countries, 2005 ............................................................ 129
Figure 4.2.      Trends in benefit recipiency in the United Kingdom,
                 youth aged 18-24, 1999-2007 ..................................................... 131
Figure 4.3.      Sustainability of employment outcomes for NDYP leavers,
                 1998-2007 ................................................................................... 138
Figure 4.4.      Immediate destination of young people leaving the NDYP,
                 1998-2007 ................................................................................... 138
Figure 4.5.      Distribution of youth across NDYP options, 1999-2006 ............ 139
Figure 4.6.      The reformed New Deal programme .......................................... 142

List of Tables
Table 1.1.       Youth labour market indicators by age group, United Kingdom,
                 1987, 1997 and 2007 ...................................................................... 46
Table 1.2.       Scoreboard for youth aged 16-24, United Kingdom, 1997, 2002
                 and 2007........................................................................................ 63
Table 2.1.       Tomlinson’s Diploma Framework proposal ................................. 87
Table 3.1.       Minimum wages for adults and youth
                 in OECD countries, 2006 ............................................................ 120
Table 3.2.       Tax wedge including employers’ social security contributions
                 in OECD countries, 2000 and 2006............................................... 124
Table 4.1.       The cost of youth activation schemes in the United Kingdom,
                 2005 ............................................................................................ 134
Table 4.2.       Connexions Services by level of disadvantage ........................... 148




                                                JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
                                                                            LIST OF ABBREVIATIONS – 9




                                     List of Abbreviations


             ALMPs                      Active Labour Market Policies
             CBI                        Confederation of British Industry
             E2E                        Entry to Employment
             ECEC                       Early Childhood Education and Care
             EMA                        Education Maintenance Allowance
             EZs                        Employment Zones
             FD                         Foundation Degree
             FE                         Further Education
             FLT                        Foundation Learning Tier
             GDP                        Gross Domestic Product
             GBP                        British Pound
             GCSEs                      General Certificates of Education
             IFP                        Increased Flexibility Programme
             JSA                        Jobseeker’s Allowance
             LEPs                       Local Employment Partnerships
             LPC                        Low Pay Commission
             LSC                        Learning and Skills Council
             MPEZs                      Multiple Employment Zones
             NDDP                       New Deal for Disabled People
             NDLP                       New Deal for Lone Parents
             NDYP                       New Deal for Young People
             NEET                       Neither in Employment nor in Education or
                                        Training


JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
10 – LIST OF ABBREVIATIONS

          PISA               Programme for International Student Assessment
          SMEs               Small and Medium Enterprises
          SSC                Sector Skills Council
          SSCCs              Sure Start Children’s Centres
          SSLPs              Sure Start Local Programmes
          YAs                Young Apprenticeships




                                    JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
                                                                  SUMMARY AND MAIN RECOMMENDATIONS – 11




           SUMMARY AND MAIN RECOMMENDATIONS



The labour market performance of young people

            In the United Kingdom, measures of youth labour market performance
        and indicators describing the transition from education to work over the past
        15 years paint a mixed picture. On the one hand, there is evidence that youth
        labour market integration and career progression have improved considerably
        since the mid-1990s thanks to a combination of specific youth labour market
        measures, sound reforms of the welfare system and favourable economic
        conditions. In 2007, the incidence of long-term unemployment among youth
        was just 16% – 7 percentage points lower than in 1997 and 4 percentage
        points below the OECD average. Upward wage mobility for youth holding
        low-paid jobs also increased significantly between the early 1990s and the
        early 2000s.
             However, other indicators paint a less rosy picture. First, employment and
        unemployment rates have deteriorated recently. In 2007, 56% of
        16-24-year-old youth were employed, 5 percentage points fewer than in 1997
        although 12 percentage points above the OECD average. More importantly,
        the significant improvement in the youth unemployment rate achieved
        between the mid-1990s and the early 2000s has partly been undone since
        2004. In 2007, the youth unemployment rate was 14%, slightly above the
        OECD average, compared with just 11% in 2004. These figures hide
        significant differences between teenagers (16-19-year olds) and young adults
        (20-24-year olds). The decline in the youth employment rate between 1997
        and 2007 was entirely driven by the worsening employment prospects of
        teenagers while the position of young adults improved up until 2004.
        However, both age groups were affected by the recent deterioration in labour
        market performance and this trend could well continue in the short term as
        projected GDP growth for 2008 and 2009 is revised downwards in the wake
        of the current uncertain economic climate.
            Second, 13% of 16-24-year olds were neither in employment nor in
        education or training (NEET) in 2005 (the latest year for which comparable
        data are available), and many youth in this group are at high risk of poor

JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
12 – SUMMARY AND MAIN RECOMMENDATIONS

     labour market outcomes and social exclusion. This rate is just above the
     OECD average of 12% and has increased slightly over the past decade.
     Low-skilled youth are more than twice as likely to be NEET as their more
     educated counterparts and there is evidence that some become trapped in
     this status.
          Third, while the main activation programme for young people in the
     United Kingdom – the New Deal for Young People – has helped many
     youth return to work, sustainable employment outcomes have proved
     difficult to achieve and there are signs that the programme is no longer as
     effective as in the early days. In 2007, one in five young people who found
     work through the programme held a job lasting less than 13 weeks. As a
     result, the most difficult clients alternate short employment spells with
     benefit dependency.
         The government is well aware of the challenges described above and is
     taking specific actions to address them. The English education system and the
     UK activation framework are currently undergoing considerable change and a
     number of ambitious reforms will be implemented over the coming years. The
     purpose of this report is: i) to analyse the barriers to further progress in youth
     employment, particularly among the least skilled; ii) to suggest improvements
     and fine-tuning to the current reform plans; and iii) to put forward policy
     options to tackle issues that the current reforms do not address.


        Note that most of the education system discussion here and in Chapter 2,
        unless otherwise specified, relates solely to England given the different
        education systems in parts of the United Kingdom.


Recent reforms

          Over the past five years, efforts have been stepped up to encourage more
     young people to stay on in education and training after completing
     compulsory education, particularly in England. A number of measures have
     been introduced to this effect, including financial support – through the
     Education Maintenance Allowance rolled out nationally in 2004 – and the
     guarantee of a place in an educational institution after age 16 – the
     September Guarantee launched in 2007. Evaluations have shown that the
     Allowance has improved beneficiaries’ attendance, retention and achievement
     in post-16 education and training. The Guarantee has only just been
     introduced, but it is likely to help keep youth in learning longer by ensuring
     that every 16-year-old receives an offer to stay in education or training. The
     Guarantee is currently being extended to cover 17-year olds in 2008.


                                       JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
                                                                  SUMMARY AND MAIN RECOMMENDATIONS – 13


             In 2003, new services for advice and support to 13-19-year olds –
        Connexions services – were rolled out in England. Connexions were given
        the double mandate of providing advice and guidance to all 13-19-year olds
        and of helping youth at high risk of marginalisation in this age group.
        Notably, they play a key role for 16-17-year olds who are NEET and are not
        entitled to the financial support or re-employment services that their older
        counterparts receive from Jobcentre Plus – the public employment service.
        In 2006, the role played by Connexions for at-risk 16-17-year olds was
        strengthened by the launch of Activity Agreement pilots in eight areas. This
        new scheme mimics the mutual obligations approach applied to older
        unemployed youth and, if successful, could inform the future activation
        strategy for this specific age group.
            In 2005, the English administration also launched an ambitious
        programme – the 14-19 Strategy – aimed at broadening learning options to
        ensure that every young person finds a learning pathway that suits him/her
        beyond compulsory schooling. The strategy comprises various initiatives,
        including an apprenticeship entitlement for suitably qualified
        16-19-year olds wanting to engage in work-based learning and the
        introduction of 17 new Diplomas – composite qualifications combining
        theoretical and practical learning and designed to bridge the gap between
        academic and vocational programmes of learning.
             In addition to financial support, the September Guarantee and the
        provision of more learning options, England is in the process of approving
        legislation – the Education and Skills Bill – requiring young people to
        participate in education and training until they are 18 or until a qualification
        is obtained (A-levels or equivalent), whichever is earlier. The changes will
        come into force gradually, requiring youth to participate until they turn 17
        from 2013 and until they turn 18 from 2015. Despite its compulsory nature,
        the reform is designed to allow more flexible participation than just keeping
        young people in full-time education until they are 18: i) available learning
        options will be broadened through the 14-19 Strategy; ii) participation will
        be either at school, in a college, with a private training provider, in
        work-based learning or in accredited training provided by an employer; and
        iii) young people working more than 20 hours per week will be allowed to
        participate in training on a part-time basis.
            In terms of the activation framework, starting in October 2009,
        long-term unemployed youth will be referred to a new, more flexible, New
        Deal programme. With the new programme, the government hopes to
        improve the sustainability of employment outcomes and to increase cost-
        effectiveness. Changes will be informed by experience with existing New
        Deal programmes and by two pilots launched in the early 2000s –
        Employment Zones running since 2000 and the Employment Retention and

JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
14 – SUMMARY AND MAIN RECOMMENDATIONS

     Advancement scheme since 2003. The pilots have involved testing
     partnerships with private sector providers, increasing competition among
     providers to drive better value services, and rewarding both providers and
     clients for sustainable outcomes.
          Finally, for employees in jobs without training who lack basic
     qualifications – including youth – the Train-to-Gain programme was
     rolled-out in England in April 2006. The scheme helps businesses get the
     training their employees need through impartial advice, referrals to suitable
     training providers and guidance on funding. In addition, for 16-17-year olds
     in jobs without accredited training, pilots for Learning Agreements were
     launched in 2006 in eight areas. The pilots are testing the combination of
     individually tailored learning agreements and financial incentives to
     encourage both 16-17-year olds in jobs with no accredited training and their
     employers to engage in training.

Suggested recommendations in response to the remaining challenges
         The recent efforts to raise the share of youth who participate in post-
     compulsory education and training and to improve activation services go in
     the right direction. However, some of the reforms may need fine-tuning to
     ensure that their objectives are met. In addition, particular attention needs to
     be paid in order to ensure that the new initiatives will improve significantly
     labour market outcomes for the NEET group.
          Some additional measures are needed to draw up a more effective and
     coherent strategy. These measures would ideally help achieve three main
     objectives: improving retention rates in post-compulsory education and
     training; ensuring the effectiveness of the 14-19 Strategy; and improving the
     design and coherence of the new activation strategy for disadvantaged youth.

     Improving retention rates in post-compulsory education and training
          In terms of the education system, the priority is to reduce early leaving
     from education and training. In 2005, the latest year for which comparable data
     are available, 16% of youth left education without an upper secondary
     qualification or with just a basic school-leaving certificate.1 This compares
     with an average of 14% for the OECD area. The labour market performance of
     these low-skilled youth is rather poor. In 2005, one in five was NEET and the
     ratio of low-skilled to high-skilled youth unemployment rates stood at five, the
     second highest in the OECD after Finland. Overall, the labour market

1.       For a definition of “upper secondary education” and a “basic school-leaving
         certificate” and how these concepts are measured for the United Kingdom and
         other OECD countries, see Chapter 2.

                                      JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
                                                                  SUMMARY AND MAIN RECOMMENDATIONS – 15


        performance of this group in the United Kingdom is below the OECD average,
        while better qualified youth tend to outperform their OECD counterparts.
             Provision of free early childhood education, which helps reduce early
        leaving from education and training particularly when interventions are
        sustained beyond the pre-school period, is lower in England than in many
        OECD countries. For children aged 3-4, the current entitlement to
        12.5 hours per week of free childcare is due to increase to 20 hours per week
        by 2010. While this is a significant step in the right direction, it still falls
        short of current international good practice of full-time, year-round, publicly
        funded pre-school services. For 0-3-year olds, there is no entitlement to
        early childhood education and care at all, and in 2004 only 25% of children
        in this age group used licensed childcare facilities. To extend participation in
        early childhood education and care of children aged 0-3, Sure Start
        Children’s Centres are due to open in each local community in England by
        2010; the initiative began with the 30% most disadvantaged areas in 2006.
        In disadvantaged communities, the Centres provide child-care services while
        they focus on guidance for families in the most affluent ones. Recent
        evidence has found significant beneficial effects for all children and families
        living in the Centres’ areas, including the most disadvantaged. It has also
        suggested that stronger effects of the Centres on disadvantaged children than
        were found in the first evaluations may be due to more pro-active targeting
        of families in need.
             Raising the age of compulsory participation in education and training
        to 18 by 2015 has the potential to ensure that youth enter the labour market
        better prepared for work. However, the part-time learning participation
        option may bring in its wake some enforcement problems when job
        separation occurs. Under the current reform proposal, young people
        participating part-time who are fired by their employers or who quit
        voluntarily would not necessarily be required to participate in education or
        training full-time. Connexions services would support them with meeting
        the requirement to participate in learning – be it full-time or part-time
        alongside employment. As a result, there is a risk that unemployed youth
        allowed to continue to combine part-time learning participation and job
        search will spend much of their time looking for work. This raises important
        enforcement issues such as: i) how long these young people should be
        allowed to search for a job before they are required to participate in
        education and training full-time; and ii) what mechanisms can be used to
        ensure active job search. On the other hand, for youth who become subject
        to a full-time attendance requirement, it may be difficult to find quality
        education and training provision starting soon after they stop working,
        although it has to be acknowledged that learning provision has become more
        flexible recently.


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16 – SUMMARY AND MAIN RECOMMENDATIONS

         To improve retention rates in secondary education and ensure that youth
     have the basic skills needed to enter and progress on the labour market, the
     following measures could be envisaged:
    •    Increase regular participation in quality early childhood education and
         care and ensure sustained intervention. The planned entitlement to
         20 hours of publicly funded pre-school education for 3-4-year olds
         could be extended further, particularly for disadvantaged families, to
         align practice in England to that of many OECD countries. Special
         attention should also be paid to the transition into primary education.
         Children and their parents should be supported during this phase to
         ensure that the benefits of pre-school interventions are sustained. In
         addition, childcare services provided by Sure Start Children’s Centres to
         0-3-year olds should be targeted to disadvantaged families.
    •    Consider full-time participation in education or training for unemployed
         youth who have not found a job within three months of active searching
         and ensure that there is quality learning provision available starting at
         least once per quarter. This would moderate the enforcement issues
         arising from the possible combination of unemployment and part-time
         participation in training by clarifying that 16-17-year-old youth will not
         be allowed to remain unemployed or inactive for long if a job separation
         occurs, and there is adequate supply of quality full-time learning options
         available to them without much delay.
     Ensuring the effectiveness of the 14-19 Strategy
         To increase retention in post-compulsory education and training,
     England has undertaken to broaden the learning options available to youth
     through the 14-19 Strategy. This broader offer of education pathways will
     also be instrumental to the introduction of the longer compulsory education
     and training requirement. Along with existing A-levels and GCSEs, the
     14-19 Strategy includes the 14-19 Diplomas and Apprenticeships. Besides,
     this 14-19 learning offer will be underpinned by the Foundation and
     Learning Tier, available from 2010, which will rationalise and simplify the
     mix of qualifications available at entry and Level 1, and provide clear
     progression pathways to Level 2 qualifications.
         Seventeen 14-19 Diplomas will be rolled out between 2008 and 2013
     and will be available as an entitlement from 2013 on. The Diplomas will be
     available at three levels from foundation to advanced. Extended Diplomas
     have also been announced recently and will offer young people
     opportunities to broaden their studies at each level, with particular attention
     paid to additional English, maths and science learning. Diplomas will
     combine academic and vocational learning and will include work experience
     for a minimum of ten days as a key feature. In the longer term, the

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        government envisages that Diplomas will simplify the qualifications
        framework by building on the best of existing vocational qualifications. In
        addition, the government is planning to review A-levels in light of the
        outcomes achieved by the new Diplomas in 2013.
            From 2013, all suitably qualified 16-19-year olds who wish to enter an
        apprenticeship will be entitled to a placement. In early 2008, the government
        also launched a two-month consultation phase on new legislation to expand
        the use of apprenticeships in the United Kingdom. Proposals include: i) the
        creation of a national apprenticeship service to lead the expansion; ii) targets
        for increasing apprenticeships in the public sector; and iii) a pilot wage
        subsidy programme to make it more attractive for small businesses to
        offer apprenticeships.
            As apprenticeships will take on a more prominent role in the transition
        process, it is important that current problems with the framework are solved
        before the entitlement takes effect. First, gender segregation is a problem with
        current apprenticeships and, despite recent improvements, ethnic minorities
        continue to be under-represented. Second, apprenticeship places are currently
        insufficient to match demand and the situation is likely to worsen when
        compulsory participation in education and training is extended to the age
        of 18. Third, considerable variation exists across industries in terms of
        apprenticeship quality. Apprenticeships in the traditional trades – particularly
        in the manufacturing sector – provide more and better training, enjoy higher
        completion rates and guarantee higher post-completion returns. Manufacturing
        apprenticeships also record the largest share of apprentices hired externally –
        as opposed to existing employees starting an apprenticeship – which tends to
        favour new labour market entrants. Many service sector apprenticeships, on
        the other hand, are problematic under all these aspects.
            Overall, active participation of employers in the delivery of the
        14-19 Strategy, particularly through the offer of sufficient work placements
        for apprenticeships, will be essential to the success of all the initiatives. The
        cost of taking a trainee may be an issue for apprenticeship schemes in some
        industries, as well as for small and medium-sized enterprises. On the other
        hand, the 10% of employers currently offering apprenticeship places often
        pay well above the minimum recommended, suggesting that too-high
        apprenticeship wages may not be the only cause of insufficient placements.
        Some studies have suggested that other aspects of apprenticeships may
        involve high opportunity costs for employers. For instance, because returns
        from apprenticeships for employers tend to accrue closer to completion
        while costs are borne upfront, high drop-out rates turn out to be very
        expensive. Besides, small employers may find it difficult to provide training
        internally or to identify suitable training providers in remote communities,
        keeping them from offering placements.

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18 – SUMMARY AND MAIN RECOMMENDATIONS

          To ensure that the provision planned within the 14-19 Strategy is met and
     is of high quality, the following measures should be considered:
    •    Consider using Diplomas to simplify the academic and vocational
         qualifications framework. The new Diplomas should be seen as a first
         step towards the full implementation, in the longer term, of the proposals
         put forward in the Tomlinson report. The report recommended the
         creation of a unified framework of Diplomas under which young people
         would learn literacy, numeracy and other core subjects and would be able
         to choose a number of options including vocational courses. This
         recommendation will be particularly relevant when the administration
         reviews A-levels vis-à-vis the new Diplomas in 2013.
    •    Fight gender segregation in apprenticeship training and improve
         participation of youth from ethnic minorities. Recruitment of new
         apprenticeships should focus on improving gender and ethnic balance in
         all apprenticeship schemes, through the use of case studies and the
         provision of information to school pupils on the pay rates and working
         conditions in different industries. Current government proposals for
         so-called “critical-mass” pilots informed by positive discrimination rules
         in targeted areas may also have the intended effect of providing strong
         case studies and changing expectations among underrepresented groups.
    •    Set guidelines on the minimum number of hours of training to be
         provided on an apprenticeship. The existence of a substantial training
         component – whether on-the-job or off-the-job – is essential to
         apprenticeship training and should be ensured. Unfortunately, at present
         total hours of training per week – both on-the-job and off-the-job – vary
         considerably across industries, ranging from 5 in customer service
         apprenticeships to 29 in electrotechnical apprenticeships.
    •    Promote employer-provided off-the-job training and the involvement
         of Group Training Associations in apprenticeship schemes. There is
         evidence that the best quality training is provided by employers
         themselves. Training provided in-house also tends to promote the
         development of a training culture within firms with little experience of
         training. However, this option is often only available to large
         employers. For smaller employers in remote local communities, Group
         Training Associations – bodies bringing together a number of small
         employers for the purpose of training provision – have proved to be an
         effective way to offer apprenticeship places that provide high-quality
         training and should be promoted. Dedicated help to set up Group
         Training Associations should be among the tasks of the envisaged
         national apprenticeship service.


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                                                                  SUMMARY AND MAIN RECOMMENDATIONS – 19


       •     Set apprentice recruitment targets that favour jobless candidates. At
             present, on average only 55% of apprentices are new to their employer,
             ranging from 70% in manufacturing industries to just 21% in hospitality.
             The remainder were already employees of the firm before training started.
             This is partly because providers in charge of recruiting apprentices tend to
             concentrate on those who already have a job to fulfil their targets, making
             little effort to attract and place new applicants. Remuneration schemes
             could seek to offset this hiring bias by including targets for the placement
             of new applicants, particularly in industries where they are
             under-represented.
       •     Take action to raise apprenticeship completion rates. Several actions may
             help increase completion rates: i) better selection of apprentices; ii) better
             quality of off-the-job training; iii) more monitoring and follow-up during
             the apprenticeship to identify trainees at risk; and iv) greater efforts to
             re-direct drop-outs to another, more suitable apprenticeship, as is done in
             Denmark and Germany where completion rates are higher. The
             introduction of a trial period may also help eliminate, within a short
             timeframe, those who have made the wrong choices. Finally, mentoring
             of apprentices, alongside supervision, could help raise completion rate
             and this is an area where Union Learning Representatives could help.
       •     Ensure more involvement of unions in the design of new qualifications
             with a work-based component. In countries with a long tradition of
             apprenticeship training, unions are a key player alongside employers
             and the institutional actors. In Germany, unions have been instrumental
             in securing action from employers when apprenticeship places proved to
             be insufficient to meet demand. In England, unions should be involved
             in the design of apprenticeships and other work-based learning
             initiatives alongside Sector Skills Councils – industry-specific bodies
             actively involved with government to develop the skills that business
             needs. While some Sector Skills Councils include trade union
             representatives, this is not a requirement and serious consideration
             should be given to making it one.
        Improving the design and coherence of the new activation strategy
        for disadvantaged youth
            The United Kingdom moved from passive to active management of
        unemployment benefits a decade ago and the mutual obligations approach
        has informed public employment services for the unemployed ever since.
            In terms of action for unemployed youth, the New Deal for Young
        People (NDYP) was introduced in 1998 with the objective of improving the
        employability of long-term unemployed youth and helping them find a job.
        Early evaluations of the NDYP were rather positive although they already

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20 – SUMMARY AND MAIN RECOMMENDATIONS

     pointed to limited sustainability of outcomes – i.e. some young people fell
     back into unemployment soon after exiting the scheme. However, the
     performance of the NDYP has worsened over time. The share of young
     people leaving it for employment was very high immediately after the
     programme was introduced – in 1998, it stood at 64% – but fell rapidly
     thereafter, from 55% in 1999 to 47% in 2006. This deterioration is partly
     explained by the fact that significantly fewer youth are able to participate in
     the subsidised employment option – which evaluations have shown to be the
     most effective one – than when the programme was launched because of a
     shortage of placements. Sustainability of outcomes still remains a major
     issue, with one in five youth who leave the programme entering jobs lasting
     less than 13 weeks.
          In light of these developments, the government is in the process of
     reforming the various New Deal schemes – including the NDYP – to create
     a single new programme. The new scheme will have a more flexible and
     personalised approach for more disadvantaged customers. For young people,
     two features will be key. First, youth will be able to count time spent in
     NEET before they turn 18 towards the six months required for entry into the
     new programme. Second, the new system will allow fast-tracking of
     individuals facing particularly severe barriers to work. Hence, young people
     who lack the skills required to find a job will get faster access to the right
     training provision.
          The flexible New Deal will make increased use of partnerships with
     private, public and voluntary sector providers and will place fewer
     restrictions governing their activities. The government will also introduce a
     Star Rating system that will inform performance management and contribute
     to decisions on awarding future contracts to providers. In this way, the
     government is hoping to improve performance, increase competition and
     obtain better cost-effectiveness. The experience with the Employment Zones
     pilots shows that more freedom to design tailored interventions and payment
     schemes aimed at incentivising early entry to jobs and sustainable outcomes
     yield significantly better employment outcomes than the current New Deal
     programmes. Unfortunately, the Employment Zones pilots were not
     tendered for on a competitive basis so it is difficult to draw conclusions on
     the procurement strategy that the government is planning for the flexible
     New Deal. However, since 2007, Employment Zones have allowed
     jobseekers to choose their provider, a mechanism that could improve
     cost-effectiveness if jobseekers are informed about providers’ performances
     and exercise their choice on the basis of such performance.
         With few exceptions, the programmes mentioned above are available
     from age 18, leaving behind a hard-core group at high risk of labour market
     and social exclusion. This group includes many youth who disengage from


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                                                                  SUMMARY AND MAIN RECOMMENDATIONS – 21


        education after completing the compulsory schooling requirement and spend
        several months in NEET before becoming entitled to unemployment
        benefits and re-employment support. For them, intervening earlier is crucial.
        At present, in the United Kingdom, this group of difficult 16-17-year olds is
        directed to Connexions which has a double mandate of providing advice and
        guidance on learning and career options to all youth aged 13-19 and of
        providing more intensive and personalised support to at-risk youth in this
        age group. While users have expressed overall satisfaction with Connexions
        services, stakeholders have identified gaps in services, particularly in terms
        of helping youth at high risk of marginalisation and pointed to the need for
        more resources in terms of funding and staff time. The Activity Agreement
        pilot could make it easier for Connexions to reach and assist at-risk youth.
        The scheme includes a small allowance paid to such youth in exchange for
        compliance with an agreement on a series of actions they should take to
        move into education, training or employment with training. Indeed, the
        absence of benefit/services against which engagement from youth can be
        demanded makes it difficult for Connexions to provide continued support.
             In 2008, responsibility and funding for Connexions will be devolved to
        local authorities that will acquire a considerable degree of flexibility in the
        way they configure youth support services. This is an opportunity for better
        tailoring of services to local needs and for strengthening support for youth
        at-risk. The Education and Skills Bill, currently passing through Parliament,
        includes proposals that local authorities be directed to continue to deliver a
        number of operational processes and standards that are seen as key to a
        successful Connexions service. These include access to personal advisers
        with a minimum level of qualifications, retention of the Connexions brand
        and the maintenance of vital information flows to inform client tracking.
            To help the hard-core of very disadvantaged youth, the United Kingdom
        might also wish to consider the introduction of a residential programme for
        them, with a strong focus on remedial learning and employment assistance.
        The long-standing Job Corps in the United States could provide a good
        model for such a programme. However, such an initiative would be costly:
        Job Corps slots cost well over USD 22 000 each. But the social benefits can
        be significant: some, but not all, rigorous evaluations of this scheme have
        shown positive benefit-cost ratios for very disadvantaged youth.
             The following actions are recommended:
       •     Increase incentives for employers to take on long-term unemployed
             youth on work placements. In the flexible New Deal, long-term
             jobseekers who do not move into employment while with a provider
             will be required to undertake at least four weeks of full-time
             work-focused activity. To ensure sufficient placements with regular

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22 – SUMMARY AND MAIN RECOMMENDATIONS

         employers, it is important that employers’ incentives are increased
         through: i) the introduction of a New Deal employer-centred adviser to
         ensure that employers’ needs are met; ii) greater consistency in ensuring
         clients’ employability before they are sent on a placement; and iii) more
         adequate training subsidies and placement durations to meet the
         requirement that training on the placement must lead to a nationally
         recognised qualification.
    •    Lengthen the definition of a sustainable employment outcome. A change
         in the definition of a sustainable job from one lasting at least 13 weeks
         in the NDYP to one of at least 26 weeks in the flexible New Deal – as
         currently proposed by the UK government – is in line with OECD
         recommendations in this area and would help reduce churning between
         short jobs and benefits. However, the government should go further and
         tie part of providers’ remuneration to achieving sustainable employment
         outcomes of up to two years or more, in line with OECD
         recommendations in this area.
    •    Ensure greater competition between providers in the flexible New
         Deal. This could be ensured by shifting providers’ market shares in
         response to provider performance – as measured by the Star Rating
         system. Allowing jobseekers to choose their provider could also be
         considered if Employment Zones’ evaluations show that this enhances
         cost-effectiveness.
    •    Ensure that adequate provision of key Connexions services continues as
         responsibility and funding move to local authorities. The move will
         provide an opportunity to tailor services to local needs. At the same
         time, it is important that current efforts to improve services for youth
         at-risk are intensified, that numbers of suitably qualified personal
         advisors are increased in the Connexions partnerships where staff
         shortages have been identified as a constraint to service provision, and
         that vital information flows to inform client tracking are maintained.
    •    Consider the introduction of a residential-type programme to provide
         intensive support for the hardest-to-place young people. This hard-core
         group is likely to include youth with complex needs who are very
         difficult to mobilise and cumulate a number of problems ranging from
         behavioural difficulties to alcohol and drug abuse. For this group, a
         residential programme with a strong focus on remedial education, work
         experience and adult mentoring may well represent a new start in a
         proactive environment.




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                                                              RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS – 23




      RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS



    Les jeunes et le marché du travail
                 Au Royaume-Uni, les mesures des performances des jeunes sur le
            marché du travail et les indicateurs décrivant la transition de l’école à
            l’emploi au cours des quinze dernières années permettent de brosser
            un tableau contrasté. D’un côté, tout laisse penser que l’insertion
            professionnelle des jeunes et leur évolution de carrière se sont
            considérablement améliorées depuis le milieu des années 90 grâce aux
            effets conjugués des mesures expressément en faveur des jeunes sur le
            marché du travail, des solides réformes du système de protection
            sociale et des conditions économiques favorables. En 2007,
            l’incidence du chômage de longue durée des jeunes se situait à 16 % à
            peine – soit 7 points de pourcentage de moins qu’en 1997 et 4 points
            en dessous de la moyenne de l’OCDE. La mobilité salariale à la
            hausse des jeunes occupant des emplois à faible rémunération s’est
            aussi sensiblement accentuée entre le début des années 90 et des
            années 2000.
                 D’autre part, d’autres indicateurs donnent une vision moins
            optimiste. Premièrement, les taux d’emploi et de chômage se sont
            dégradés ces derniers temps. En 2007, 56 % des jeunes de 16 à 24 ans
            étaient pourvus d’un emploi, autrement dit 5 points de pourcentage de
            moins qu’en 1997 mais 12 points au dessus de la moyenne de l’OCDE.
            Chose plus importante, la nette amélioration du taux de chômage des
            jeunes obtenue entre le milieu des années 90 et le début des années 2000
            est en partie annulée depuis 2004. En 2007, le taux de chômage des
            jeunes s’élevait à 14 %, soit un taux légèrement supérieur à la moyenne
            de l’OCDE alors qu’il était de 11 % à peine en 2004. Ces chiffres
            masquent des écarts considérables entre les adolescents (16-19 ans) et
            les jeunes adultes (20-24 ans). La baisse du taux d’emploi des jeunes
            entre 1997 et 2007 a été entièrement induite par l’aggravation des
            perspectives d’emploi des adolescents alors que la situation des jeunes
            adultes s’est améliorée jusqu’en 2004. Toutefois, ces deux groupes


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         d’âges sont touchés par la récente dégradation des performances du
         marché du travail et cette tendance pourrait bien se poursuivre à court
         terme dans la mesure où la croissance du PIB projetée pour 2008 et
         2009 est révisée à la baisse à la suite des incertitudes qui règnent
         actuellement sur la situation économique.
             Deuxièmement, 13 % des jeunes de 16 à 24 ans n’étaient ni en
         emploi ni en formation en 2005 (l’année la plus récente pour laquelle
         on dispose de données comparables), et nombre de ces jeunes risquent
         fort de connaître un avenir professionnel médiocre et l’exclusion
         sociale. Ce taux dépasse à peine la moyenne de l’OCDE de 12 % et a
         légèrement progressé au cours de la décennie passée. Les jeunes peu
         qualifiés risquent deux fois plus de n’être ni en emploi ni en formation
         que leurs congénères dont le niveau d’instruction est plus élevé, et on
         constate que certains restent piégés dans cette situation.
              Troisièmement, s’il est vrai que le principal programme
         d’activation en faveur des jeunes au Royaume-Uni – le New Deal for
         Young People – a contribué au retour à l’emploi de nombre d’entre
         eux, il s’est révélé difficile d’obtenir des résultats en matière d’emploi
         durable et ce dispositif n’est plus aussi efficace qu’à ses débuts. En
         2007, un jeune sur cinq qui a trouvé du travail grâce à ce programme
         est resté dans l’emploi moins de 13 semaines. De ce fait, les clients les
         plus difficiles connaissent une alternance de courtes périodes d’emploi
         et de dépendance à l’égard de l’assistance sociale.
             Le gouvernement est tout à fait conscient des défis qui viennent
         d’être décrits et adopte des mesures spécifiques pour les relever. Le
         système éducatif anglais et le cadre d’activation britannique sont
         actuellement en pleine mutation et un certain nombre de réformes
         ambitieuses seront mises en œuvre au cours des années à venir2. Le
         présent rapport a les finalités suivantes : i) analyser les obstacles à une
         nouvelle progression de l’emploi des jeunes en particulier parmi les
         moins qualifiés ; ii) proposer des améliorations et des ajustements dans
         les projets actuels de réforme ; et iii) proposer des mesures destinées à
         surmonter les difficultés qui échappent aux réformes actuelles.




2.        À noter que dans le présent résumé, ainsi que dans le chapitre 2, l’examen du
          système éducatif porte pour l’essentiel sur l’Angleterre, sauf indication contraire,
          étant donné que les systèmes d’enseignement varient d’une région à l’autre au
          Royaume-Uni.

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                                                              RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS – 25




    Réformes récentes
                Au cours des cinq dernières années, on a redoublé d’efforts pour
            encourager un plus grand nombre de jeunes à poursuivre leur scolarité
            ou compléter leur formation à l’issue de l’enseignement obligatoire,
            en particulier en Angleterre. Un certain nombre de mesures ont été
            adoptées à cet effet, parmi lesquelles une aide financière – l’Education
            Maintenance Allowance – mise en place à l’échelle nationale en
            2004 – et l’assurance d’obtenir une place dans un établissement
            d’enseignement après l’âge de 16 ans – la September Guarantee,
            lancée en 2007. Les évaluations faites ont montré que l’aide financière
            a amélioré l’assiduité scolaire, la poursuite des études et la réussite des
            formations parmi ses bénéficiaires de plus de 16 ans. La Guarantee
            vient tout juste d’être instaurée mais elle va probablement faciliter le
            maintien des jeunes en formation plus longtemps en assurant une
            place de formation à chaque jeune de 16 ans. Ce dispositif est
            actuellement étendu aux jeunes de 17 ans en 2008.
                 En 2003, de nouveaux services de conseils et d’aide aux jeunes de
            13 à 19 ans – Connexions services – ont été proposés en Angleterre.
            Connexions a pour double mandat de fournir des conseils et une
            orientation à tous les jeunes de 13 à 19 ans et d’apporter une aide à
            ceux d’entre eux qui risquent fort d’être marginalisés. Ces services
            jouent en particulier un rôle essentiel auprès des jeunes de 16 à 17 ans
            qui ne sont ni en emploi ni en formation et qui ne peuvent prétendre à
            l’aide financière ou aux services de réemploi dont disposent leurs
            aînés grâce à Jobcentre Plus, le service public de l’emploi. En 2006, le
            rôle joué par Connexions pour les jeunes de 16 à 17 ans en situation
            précaire a été renforcé par le lancement dans huit régions de
            programmes expérimentaux relevant de l’Activity Agreement. Ce
            nouveau dispositif reproduit la méthode des obligations mutuelles
            appliquée aux jeunes chômeurs plus âgés et, s’il est couronné de
            succès, il pourrait inspirer la future stratégie d’activation destinée à ce
            groupe d’âge spécifique.
                En 2005, l’administration anglaise a également lancé un programme
            ambitieux, la 14-19 Strategy, qui vise à élargir les possibilités de
            formation pour que chaque jeune trouve une filière d’études qui lui
            convienne au-delà de l’enseignement obligatoire. Cette stratégie
            comprend diverses mesures, notamment un droit à la formation par
            apprentissage pour les jeunes de 16 à 19 ans, qui ont les compétences
            requises et souhaitent entreprendre une formation professionnelle
            pratique, et l’instauration de 17 nouveaux Diplomas – formation


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26 – RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS

         composite associant des acquis théoriques et pratiques et conçue pour
         relier les programmes d’enseignement général et professionnel.
             En plus du soutien financier, de la September Guarantee et des
         possibilités de formation plus nombreuses, l’Angleterre est en voie
         d’approuver un texte de loi – l’Education and Skills Bill – qui exige
         des jeunes de suivre un enseignement ou une formation jusqu’à l’âge
         de 18 ans ou moins s’ils obtiennent une qualification du 2e cycle du
         secondaire (A-levels ou équivalent) avant d’atteindre cet âge. Ces
         changements seront mis en œuvre de façon progressive, et la
         scolarisation des jeunes deviendra obligatoire jusqu’à leur
         17e anniversaire à partir de 2013 et jusqu’à leur 18e anniversaire à
         partir de 2015. Malgré son caractère contraignant, cette réforme est
         conçue pour ménager une formule plus souple que celle qui consiste à
         simplement scolariser les jeunes à plein temps jusqu’à leur
         18e anniversaire : i) les possibilités de formation disponibles seront
         élargies grâce à la 14-19 Strategy ; ii) ces jeunes participeront dans un
         établissement scolaire, un établissement supérieur ou auprès d’un
         prestataire privé à des formations professionnelles pratiques ou à des
         formations agréées assurées par un employeur ; et iii) les jeunes
         travaillant plus de 20 heures par semaine seront autorisés à participer à
         des activités de formation à temps partiel.
              Dans le cadre des dispositifs d’activation, à partir d’octobre 2009
         les jeunes chômeurs de longue durée seront orientés vers un nouveau
         programme plus souple appelé Flexible New Deal. Avec ce nouveau
         programme, le gouvernement espère augmenter le placement dans des
         emplois stables et accroître le rapport coût-efficacité. Les changements
         apportés tiendront compte des enseignements tirés des programmes New
         Deal existants et des deux projets expérimentaux lancés au début des
         années 2000 – les Employment Zones qui existent depuis 2000 et le
         dispositif Employment Retention and Advancement en place depuis
         2003. Ces programmes expérimentaux ont consisté à mettre à l’essai des
         partenariats avec des prestataires du secteur privé, à accroître la
         concurrence entre les prestataires pour obtenir des services à un meilleur
         rapport qualité-prix, et récompenser à la fois les prestataires et les
         clients si les bonnes performances s’inscrivent dans la durée.
             Enfin, pour les salariés sans formation qui ne maîtrisent pas les
         compétences de base – y compris les jeunes – le programme
         Train to Gain a été instauré en Angleterre en avril 2006. Ce dispositif
         aide les entreprises à obtenir les formations dont leurs salariés ont
         besoin grâce à des conseils impartiaux, des orientations vers des
         prestataires adaptés et des conseils en matière de financement. En outre,


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                                                              RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS – 27



            pour les jeunes de 16 à 17 ans qui sont pourvus d’un emploi mais n’ont
            pas suivi de formation agréée, des projets expérimentaux ont été lancés
            en 2006 dans le cadre des Learning Agreements dans huit régions. Ces
            programmes expérimentent l’association d’accords de formation
            personnalisés et d’incitations financières pour encourager les jeunes de
            16 à 17 ans concernés et leurs employeurs à s’investir dans la formation.

     Proposition de recommandations visant à surmonter les difficultés
     qui subsistent
                Les efforts récemment déployés pour accroître la proportion des
            jeunes qui participent à des activités d’enseignement et de formation
            post-obligatoires et pour améliorer les services d’activation vont dans
            la bonne direction. Toutefois, il faudra peut-être ajuster certaines des
            réformes pour s’assurer que leurs objectifs sont atteints. En outre, il
            faudra en particulier faire en sorte que les nouvelles initiatives
            améliorent sensiblement les résultats sur le marché du travail du
            groupe des jeunes qui ne sont ni en emploi ni en formation.
                 D’autres mesures sont nécessaires pour élaborer une stratégie plus
            efficace et plus cohérente. L’idéal serait que ces mesures aident à
            atteindre trois grands objectifs : améliorer le taux de poursuite dans la
            formation post-obligatoire ; s’assurer de l’efficacité de la
            14-19 Strategy; et améliorer la conception et la cohérence de la
            nouvelle stratégie d’activation en faveur des jeunes défavorisés.
            Améliorer le taux                   de     poursuite       dans   la   formation
            post-obligatoire
                S’agissant du système éducatif, l’objectif est en priorité de limiter
            les abandons précoces de scolarité. En 2005, l’année la plus récente
            pour laquelle on dispose de données comparables, 16 % des jeunes ont
            quitté le système éducatif sans diplôme de fin d’études secondaires ou
            en ayant simplement obtenu un certificat de base de fin de scolarité3.
            Ce pourcentage est à comparer à une moyenne de 14 % pour la zone
            de l’OCDE. Les performances de ces jeunes peu qualifiés sur le
            marché du travail sont assez médiocres. En 2005, parmi ces jeunes, un
            sur cinq n’était ni en emploi ni en formation, et le rapport des taux de
            chômage des jeunes peu qualifiés à ceux des jeunes très qualifiés – de
            cinq pour un –, était le plus élevé de la zone OCDE après celui de la


3.           Le chapitre 2 donne une définition du « 2e cycle de l’enseignement secondaire » et
             du « certificat de base de fin de scolarité » et indique comment ces notions sont
             mesurées pour le Royaume-Uni et les autres pays de l’OCDE.

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         Finlande. Globalement, les performances des jeunes peu qualifiés sur
         le marché du travail au Royaume-Uni sont inférieures à la moyenne de
         l’OCDE alors que les jeunes plus qualifiés devancent en général leurs
         homologues dans la zone de l’OCDE.
              Les services gratuits d’éducation de la petite enfance, qui aident à
         réduire le risque de sortie précoce du système scolaire, en particulier
         lorsque les interventions sont maintenues au-delà de la période
         préscolaire, sont moins développés en Angleterre que dans beaucoup
         de pays de l’OCDE. Actuellement, les enfants de 3 à 4 ans ont droit à
         12 heures et demie par semaine de garde gratuite, durée qui devrait
         passer à 20 heures par semaine d’ici à 2010. S’il s’agit d’une initiative
         importante dans la bonne direction, elle est encore insuffisante au
         regard des bonnes pratiques actuelles dans d’autres pays où la
         préscolarisation est assurée à temps plein, toute l’année, et financée
         par l’État. Les enfants de 0 à 3 ans, quant à eux, n’ont droit à aucun
         service de garde et d’éducation préscolaires et, en 2004, 25 %
         seulement d’entre eux étaient accueillis dans des structures agréées.
         Pour qu’un plus grand nombre des ces enfants bénéficient de services
         d’accueil et d’éducation de la petite enfance, des centres d’accueil, les
         Sure Start Children’s Centres, devraient ouvrir dans chaque
         municipalité en Angleterre d’ici à 2010. Cette mesure a été introduite
         dans 30 % des zones les plus défavorisées en 2006. Dans les localités
         défavorisées, ces centres assurent des services d’accueil et dans les
         plus nanties, ils se focalisent sur le conseil aux familles. On a constaté
         récemment des effets bénéfiques pour tous les enfants et leurs familles
         vivant dans des zones desservies par les centres, y compris les zones
         les plus démunies. Il semblerait par ailleurs que si les effets des
         centres sur les enfants défavorisés sont plus importants que ceux
         constatés au cours des premières évaluations, cela tienne peut-être au
         fait que les familles en difficulté sont mieux ciblées qu’auparavant.
              En prolongeant l’obligation de poursuivre des études ou une
         formation jusqu’à l’âge de 18 ans d’ici à 2015, on pourra s’assurer que les
         jeunes accèdent au marché du travail en étant mieux préparés pour la vie
         active. Toutefois, la possibilité de participer à temps partiel à des
         activités de formation pourrait engendrer quelques problèmes de mise en
         œuvre en cas de cessation d’emploi. Dans le projet de réforme actuel, les
         jeunes qui participent à des activités de formation à temps partiel ne sont
         pas nécessairement tenus d’y participer à temps plein lorsqu’ils sont
         licenciés par leur employeur ou démissionnent. Connexions services les
         aident à satisfaire l’obligation de participer à des activités de formation –
          à temps plein ou à temps partiel – parallèlement à un emploi. Dans ces
         conditions, les jeunes chômeurs qui sont autorisés à continuer d’associer

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            une formation à temps partiel et la recherche d’un emploi risquent de
            consacrer une grande partie de leur temps à chercher du travail. Cette
            éventualité soulève d’importantes questions de mise en œuvre
            notamment : i) pendant combien de temps convient-il de laisser ces jeunes
            chercher un emploi avant de les obliger à participer à des activités de
            formation à temps plein ; et ii) quels mécanismes peut-on utiliser pour
            garantir une recherche active d’emploi. Par contre, les jeunes qui sont
            soumis à une obligation de formation à temps plein peuvent avoir du mal
            à trouver une formation de qualité qui commence peu de temps après leur
            cessation d’emploi, même s’il faut reconnaître que les offres de formation
            présentent une plus grande souplesse depuis quelques temps.
                Pour améliorer le taux de poursuite des études dans le secondaire
            et s’assurer que les jeunes sont dotés des compétences de base
            nécessaires pour accéder au marché du travail et y progresser, les
            mesures suivantes pourraient être envisagées :
               •      Accroître la participation de la petite enfance à des activités
                      d’accueil et d’éducation de qualité et veiller à des
                      interventions soutenues. Les 20 heures d’éducation
                      préscolaire, financées par l’État, auxquelles ont droit les
                      enfants de 3 à 4 ans pourraient être encore augmentées, en
                      particulier en faveur des familles défavorisées, afin d’aligner
                      la pratique en Angleterre sur celle de nombreux pays de
                      l’OCDE. Le passage à l’enseignement primaire devrait
                      également faire l’objet d’une attention particulière. Les enfants
                      et leurs parents devraient bénéficier d’un soutien durant cette
                      phase afin d’assurer la pérennité des avantages retirés des
                      interventions préscolaires. En outre, les services d’accueil
                      proposés aux enfants de 0 à 3 ans par les Sure Start Children’s
                      Centres devraient cibler les familles défavorisées.
               •      Envisager une participation à temps plein à des activités de
                      formation pour les jeunes chômeurs qui n’ont pas trouvé
                      d’emploi au bout de trois mois de recherche active et
                      s’assurer que des formations de qualité peuvent être entamées
                      au moins une fois par trimestre. On atténuerait ainsi les
                      problèmes de mise en œuvre relatifs à l’association possible
                      du chômage et d’une participation à temps partiel à des
                      activités de formation, en établissant clairement que les jeunes
                      de 16 à 17 ans n’ont plus la possibilité de rester au chômage
                      ou inactifs pendant longtemps en cas de cessation d’emploi, et
                      qu’ils disposent dans un délai assez court d’une offre adéquate
                      de formations de qualité, à temps plein.


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         Veiller à l’efficacité de la 14-19 Strategy
             Pour accroître la poursuite d’études post-obligatoires, l’Angleterre a
         entrepris d’élargir les possibilités de formation proposées aux jeunes
         dans le cadre de la 14-19 Strategy. Cette multiplication des filières
         possibles facilitera la mise en place de l’allongement de la durée de
         l’obligation de formation. En parallèle avec les certificats existants de
         l’enseignement secondaire (GCSEs and A-levels), la 14-19 Strategy
         prévoit des Diplomas et des certificats d’apprentissage. Par ailleurs, ces
         possibilités de formation des jeunes de 14 à 19 ans s’appuieront sur le
         Foundation Learning Tier (niveau des apprentissages fondamentaux)
         qui sera mis en place à partir de 2010 ; ce dispositif rationalisera et
         simplifiera l’ensemble des diplômes accessibles à l’entrée et au
         niveau 1, et prévoira une progression nette permettant d’accéder aux
         diplômes de niveau 2.
              Dix-sept 14-19 Diplomas seront mis en place entre 2008 et 2013
         et ils seront délivrés à partir de 2013. Ces diplômes pourront être
         obtenus à trois niveaux allant des apprentissages fondamentaux au
         niveau supérieur. Des diplômes avancés ont aussi été récemment
         annoncés et donneront aux jeunes la possibilité d’élargir leurs études à
         chaque niveau, l’accent étant mis plus particulièrement sur le
         renforcement des apprentissages de l’anglais, des mathématiques et
         des sciences. Ces diplômes valideront un enseignement général et
         professionnel, y compris une formation professionnelle pratique d’au
         moins dix jours, ce qui sera l’une de leurs caractéristiques essentielles.
         À moyen terme, le gouvernement pense que ces diplômes permettront
         de simplifier le système des qualifications en se fondant sur les
         meilleures certifications professionnelles existantes. En outre, le
         gouvernement prévoit de passer en revue les A-levels à la lumière des
         résultats obtenus par les 14-19 Diplomas en 2013.
             À compter de 2013, tous les jeunes de 16 à 19 ans ayant les
         diplômes requis, qui souhaitent accéder à une formation par
         apprentissage pourront prétendre à un stage. Début 2008, le
         gouvernement a également lancé une phase de consultation de deux
         mois sur une nouvelle législation visant à élargir le recours à la
         formation par apprentissage au Royaume-Uni. Les propositions
         prévoient : i) la création d’un service national de formation par
         apprentissage afin de développer cette pratique ; ii) la fixation
         d’objectifs en vue d’accroître la formation par apprentissage dans le
         secteur public ; et iii) un programme expérimental de subventions
         salariales pour que les petites entreprises trouvent plus intéressant de
         proposer des formations par apprentissage.


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                 Dans la mesure où le rôle de la formation par apprentissage va
            gagner en importance au stade de la transition, il va falloir résoudre les
            problèmes que pose actuellement le système de certification avant que
            l’admission au droit à une formation n’entre en vigueur.
            Premièrement, la formation par apprentissage pose un problème de
            ségrégation hommes-femmes et, en dépit d’améliorations récentes, les
            minorités     ethniques     continuent      d’être     sous-représentées.
            Deuxièmement, les places de formation par apprentissage ne suffisent
            pas pour répondre à la demande et la situation va vraisemblablement
            s’aggraver lorsque la participation à des activités d’enseignement et de
            formation sera obligatoire jusqu’à l’âge de 18 ans. Troisièmement, des
            variations considérables existent entre les secteurs d’activité du point
            de vue de la qualité des formations par apprentissage. Dans les métiers
            traditionnels – en particulier dans le secteur manufacturier – ces
            formations sont plus nombreuses et de meilleure qualité, affichent des
            taux de réussite plus élevés et garantissent un meilleur rendement une
            fois la formation terminée. Dans le secteur manufacturier, elles
            enregistrent également la part la plus importante d’apprentis recrutés à
            l’extérieur – par opposition aux salariés de l’entreprise qui entament
            une formation – ce qui tend à favoriser l’accès de nouveaux arrivants
            sur le marché du travail. En revanche, les formations par apprentissage
            dans le secteur des services posent des problèmes à tous ces égards.
                 Globalement, la participation active des employeurs à la mise en
            œuvre de la 14-19 Strategy, en particulier grâce à l’offre suffisante de
            stages professionnels pour les formations par apprentissage, sera
            essentielle pour assurer la réussite de toutes les dispositions prises. Le
            coût de l’embauche d’un apprenti peut poser un problème dans
            certains secteurs d’activité de même qu’aux petites et moyennes
            entreprises. En revanche, les 10 % d’employeurs qui proposent
            actuellement des places de formation par apprentissage versent
            souvent des salaires bien supérieurs au minimum recommandé, ce qui
            tend à montrer que le nombre insuffisant de stages ne tient peut-être
            pas uniquement qu’au niveau trop élevé des salaires versés aux
            apprentis. Certaines études donnent à penser que d’autres aspects des
            formations par apprentissage peuvent entraîner un coût d’opportunité
            élevé pour les employeurs. Dans la mesure par exemple où la
            formation par apprentissage ne rapporte à l’employeur que lorsqu’elle
            est presque terminée alors que son coût doit être supporté au stade
            initial, les taux élevés d’abandons se révèlent extrêmement coûteux.
            Par ailleurs, les petites entreprises peuvent avoir du mal à assurer une
            formation en interne ou, dans les localités excentrées, à repérer les
            prestataires adéquats ce qui les empêche de proposer des stages.


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             Pour que soit mis en place les dispositifs prévus dans la
         14-19 Strategy et qu’ils soient de grande qualité, les mesures suivantes
         devraient être envisagées :

           •    Envisager d’utiliser les 14-19 Diplomas pour simplifier le
                système de certification dans le secteur de l’enseignement
                général et professionnel. Les 14-19 Diplomas devraient être
                considérés comme une première étape vers la mise en œuvre, à
                moyen terme, de l’ensemble des propositions présentées dans
                le rapport Tomlinson. Ce rapport recommandait la création
                d’un système unifié de Diplomas en vertu duquel les jeunes
                acquerraient les compétences de base en littératie, calcul et
                d’autres disciplines essentielles, et seraient en mesure de
                choisir un certain nombre d’options parmi lesquelles des
                filières professionnelles. Cette recommandation sera
                particulièrement pertinente lorsque l’administration passera en
                revue les A-levels au regard des 14-19 Diplomas en 2013.
           •    Lutter contre la ségrégation hommes-femmes dans les
                formations par apprentissage et améliorer la participation des
                jeunes issus des minorités ethniques. Dans le recrutement des
                nouveaux apprentis, il faudrait s’employer à améliorer
                l’équilibre hommes-femmes et ethnique en recourant à des
                études de cas et en informant les étudiants des taux de
                rémunération et des conditions de travail dans les différents
                secteurs d’activité. Les projets expérimentaux dits « de masse
                critique », étayés par des règles de discrimination positive dans
                des zones ciblées, tels que le gouvernement les propose
                actuellement, pourraient aussi avoir l’effet souhaité, à savoir
                fournir de solides études de cas et modifier les attentes parmi les
                groupes sous-représentés.
           •    Établir des lignes directrices concernant le nombre d’heures
                minimum de formation pratique à assurer dans le cadre d’un
                apprentissage. Il est essentiel dans la formation par
                apprentissage de prévoir un volet-formation important – qu’il
                soit sur poste ou hors poste. Malheureusement, le nombre total
                d’heures de formation pratique dispensé actuellement par
                semaine – à la fois sur poste et hors poste – varie
                considérablement selon le secteur d’activité, allant de 5 heures
                dans le service à la clientèle à 29 heures dans
                l’électrotechnique.



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                                                              RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS – 33



               •      Favoriser la formation hors poste assurée par l’employeur et
                      la participation d’associations de groupe aux dispositifs de
                      formation par apprentissage. Il est établi que la meilleure
                      formation est assurée par les employeurs eux-mêmes. Les
                      formations au sein de l’entreprise tendent aussi à avoir pour
                      effet de favoriser l’instauration d’une culture de la formation
                      au sein des entreprises ayant peu d’expérience de cette
                      pratique. Toutefois, cette option ne s’offre souvent qu’aux
                      grandes entreprises. Pour les petites entreprises installées dans
                      des localités excentrées, les Group Training Associations –
                       organismes rassemblant un certain nombre de petites
                      entreprises dans le but d’assurer des formations – se sont
                      révélés être un moyen efficace de proposer des places de
                      formation par apprentissage de qualité ; aussi convient-il de
                      développer ces associations. L’une des tâches du service
                      national de formation par apprentissage envisagé devrait être
                      d’aider expressément à créer des associations de ce genre.
               •      Fixer des objectifs de recrutement d’apprentis, qui favorisent les
                      candidats sans emploi. A l’heure actuelle, 55 % en moyenne
                      seulement des apprentis sont inconnus de leurs employeurs,
                      allant de 70 % dans les industries manufacturières à 21 % à peine
                      dans les services de l’accueil et du tourisme. Les autres étaient
                      déjà salariés de l’entreprise avant le début de la formation. Cette
                      situation tient en partie au fait que les responsables du
                      recrutement des apprentis pour atteindre leurs objectifs se
                      polarisent en général sur les candidats qui ont déjà un emploi ne
                      faisant guère d’efforts pour en attirer ou en placer de nouveaux.
                      Les dispositifs de rémunération pourraient viser à compenser
                      cette distorsion de recrutement en prévoyant des objectifs pour le
                      placement de nouveaux candidats, en particulier dans les
                      secteurs d’activité où ces derniers sont sous-représentés.
               •      Prendre des mesures pour accroître le taux de réussite des
                      formations par apprentissage. Plusieurs actions pourraient
                      aider à accroître ce taux de réussite : i) améliorer la sélection
                      des apprentis ; ii) relever le niveau de qualité de la formation
                      hors poste ; iii) renforcer le suivi pendant l’apprentissage afin
                      de repérer les stagiaires en difficulté ; et iv) accroître les
                      efforts pour réorienter les décrocheurs vers une autre
                      formation par apprentissage plus adaptée, comme cela est fait
                      en Allemagne et au Danemark où les taux de réussite sont plus
                      élevés. La mise en place d’une période d’essai pourrait


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                également aider à écarter rapidement ceux qui ont fait un
                mauvais choix. Enfin, le mentorat des apprentis de même que
                leur supervision pourraient contribuer à accroître le taux de
                réussite, et c’est là un domaine dans lequel les Union Learning
                Representatives pourraient se révéler utiles.
           •    S’assurer d’une plus grande participation des syndicats dans
                la conception des nouvelles formations qualifiantes
                comprenant un volet pratique. Dans les pays où la formation
                par apprentissage existe depuis longtemps, les syndicats jouent
                un rôle essentiel aux côtés des employeurs et des acteurs
                institutionnels. En Allemagne, les syndicats ont contribué à
                obtenir des mesures de la part des employeurs lorsque les
                places de formation par apprentissage se sont révélées
                insuffisantes pour répondre à la demande. En Angleterre, les
                syndicats devraient être impliqués dans la conception des
                formations par apprentissage et d’autres actions de formation
                en entreprise aux côtés des Sector Skills Councils –
                 organismes de branches d’industrie qui s’occupent activement
                avec les pouvoirs publics de développer les compétences dont
                les entreprises ont besoin. S’il est vrai que certains de ces
                conseils comptent parmi leurs membres des représentants
                syndicaux, la présence de ces derniers n’est pas obligatoire et
                il faudrait sérieusement envisager qu’elle le devienne.
         Améliorer la conception et la cohérence de la nouvelle
         stratégie d’activation en faveur des jeunes défavorisés
             Le Royaume-Uni est passé il y a une dizaine d’années d’une
         gestion passive à une gestion active du système d’indemnisation du
         chômage, et depuis lors, les services publics de l’emploi s’inspirent du
         principe des obligations mutuelles en ce qui concerne les chômeurs.
              S’agissant des actions menées en faveur des jeunes chômeurs, le
         New Deal for Young People (NDYP) a été adopté en 1998 dans le but
         d’améliorer l’employabilité des jeunes chômeurs de longue durée et de
         les aider à trouver un travail. Les premières évaluations du NDYP
         étaient plutôt positives même si elles révélaient déjà la durée limitée
         des résultats – certains jeunes se sont retrouvés au chômage peu de
         temps après être sortis du dispositif. Toutefois, les résultats du NDYP
         se sont dégradés au fil du temps. Immédiatement après l’adoption du
         programme, le pourcentage des jeunes qui l’ont quitté pour un emploi
         était très élevé – 64 % en 1998 – mais il a ensuite rapidement fléchi de
         55 % en 1999 à 47 % en 2006. Cette dégradation tient en partie au fait


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            que faute de places de stage, les jeunes pouvant bénéficier d’un
            emploi subventionné – qui, selon les évaluations, est le plus efficace –
            sont beaucoup moins nombreux qu’ils ne l’étaient lorsque le
            programme a été lancé. La stabilité des emplois résultants demeure un
            problème majeur puisque parmi les jeunes qui sortent du programme,
            un sur cinq occupe un emploi pendant moins de 13 semaines.
                Compte tenu de ces développements, le gouvernement procède
            actuellement à la réforme des divers dispositifs relevant du New Deal
            – y compris le NDYP – en vue de créer un seul nouveau programme.
            Le nouveau dispositif prévoit une stratégie plus souple et plus
            personnalisée en faveur des clients les plus défavorisés. En ce qui
            concerne les jeunes, deux caractéristiques seront essentielles.
            Premièrement, les jeunes pourront comptabiliser le temps pendant
            lequel ils ne se trouvent ni en emploi ni en formation avant 18 ans
            dans les six mois requis pour accéder au nouveau programme.
            Deuxièmement, le nouveau système permettra d’orienter rapidement
            les personnes dont l’insertion professionnelle se heurte à des obstacles
            particulièrement graves. C’est pourquoi les jeunes qui n’ont pas les
            compétences requises pour trouver un emploi auront plus rapidement
            accès à la formation adéquate.
                 Le Flexible New Deal aura davantage recours à des partenariats
            avec des prestataires des secteurs privé, public et associatif et limitera
            les restrictions applicables à leurs activités. Le gouvernement adoptera
            également un système de notation, le Star Rating, qui éclairera la
            gestion des performances et aidera à prendre les décisions concernant
            l’octroi de contrats futurs aux fournisseurs. De cette façon, les pouvoirs
            publics espèrent améliorer les performances, accroître la concurrence et
            obtenir une meilleure rentabilité. Les leçons tirées des projets
            expérimentaux réalisés dans les Employment Zones montrent qu’en
            donnant plus de liberté pour concevoir des interventions sur mesure et
            avec des incitations financières qui récompensent une insertion
            professionnelle précoce et durable, on obtient des résultats
            sensiblement meilleurs en matière d’emploi que par le New Deal
            actuel. Malheureusement, ces projets expérimentaux n’ont pas fait
            l’objet d’appels d’offres à la concurrence de sorte qu’il est difficile de
            dégager des conclusions concernant la stratégie de passation de
            marchés que les autorités prévoient pour le Flexible New Deal.
            Toutefois, depuis 2007, les Employment Zones permettent aux
            demandeurs d’emploi de choisir leurs prestataires de formations, ce qui
            pourrait améliorer la rentabilité si ces demandeurs étaient informés des
            performances de ces prestataires et faisaient leur choix en conséquence.


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              À quelques exceptions près, les programmes mentionnés ci-dessus
         sont accessibles à partir de l’âge de 18 ans, laissant de côté un noyau
         dur de jeunes dont les risques d’exclusion sociale et du marché du
         travail sont élevés. Il s’agit, entre autres, de nombreux jeunes qui sont
         sortis du système éducatif en fin de scolarité obligatoire et se sont
         retrouvés plusieurs mois ni en emploi ni en formation avant de pouvoir
         prétendre à des indemnités de chômage et à un soutien au titre du
         réemploi. Dans le cas de ces jeunes, il est capital d’intervenir plus tôt. À
         l’heure actuelle, au Royaume-Uni, ces jeunes de 16 à 17 ans en grande
         difficulté sont orientés vers Connexions qui a pour double mandat
         d’assurer à tous les jeunes âgés de 13 à 19 ans des conseils et une
         orientation sur les possibilités de formation et d’emploi, et de fournir un
         soutien plus intense et personnalisé à ceux parmi eux qui sont à risque.
         S’il est vrai que les utilisateurs de Connexions se sont dits dans
         l’ensemble satisfaits de ce service, les diverses parties prenantes ont
         recensé des lacunes, en particulier en ce qui concerne l’aide proposée
         aux jeunes dont le risque de marginalisation est élevé, et ont signalé
         qu’il fallait plus de ressources financières et de disponibilité de la part
         du personnel. Grâce au projet expérimental entrepris au titre de
         l’Activity Agreement, Connexions pourrait plus facilement atteindre et
         aider les jeunes à risque. Ce dispositif prévoit le versement d’une
         indemnité de faible montant à ces jeunes si en contrepartie ils acceptent
         de mener une série d’actions pour reprendre des études, suivre une
         formation ou trouver un emploi associé à une formation. De fait, en
         l’absence de prestations/de services en échange desquels il est possible
         d’exiger un engagement de la part des jeunes, Connexions a du mal à
         apporter un soutien durable.
             En 2008, la responsabilité et le financement de Connexions seront
         délégués aux autorités locales qui disposeront ainsi d’une souplesse
         considérable pour configurer les services d’aide aux jeunes. Cette
         mesure donnera l’occasion de mieux adapter les services aux besoins
         locaux et de renforcer le soutien en faveur des jeunes à risque.
         L’Education and Skills Bill, actuellement soumis au Parlement, prévoit,
         entre autres propositions, d’ordonner aux autorités locales de maintenir
         certaines fonctions opérationnelles et normes jugées essentielles pour
         assurer le succès de Connexions. Ces autorités devront notamment
         permettre l’accès à des conseillers personnels ayant les compétences
         minima requises, retenir la marque Connexions et maintenir le système
         d’information existant et indispensable au suivi des clients.
            Pour aider les jeunes les plus défavorisés, le Royaume-Uni
         pourrait aussi envisager de mettre en place à leur intention un


                                       JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
                                                              RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS – 37



            programme de formation en internat, qui serait fortement axé sur la
            remise à niveau et l’aide à la recherche d’un emploi. Le programme
            Job Corps adopté depuis longtemps aux États-Unis pourrait être un
            bon modèle à cet égard. Un projet de ce genre serait toutefois
            coûteux : dans Job Corps, le coût de chaque place dépasse largement
            22 000 USD. Cela dit, les avantages pour la société peuvent être
            considérables : certaines évaluations rigoureuses (mais pas toutes) de
            ce dispositif ont mis en évidence un rapport coûts-avantages positif
            pour les jeunes très défavorisés.
                   Les actions suivantes sont recommandées :
               •      Inciter davantage les employeurs à prendre de jeunes
                      chômeurs de longue durée en stage professionnel. Dans le
                      flexible New Deal, les chômeurs de longue durée qui ne
                      trouvent pas d’emploi pendant leur prise en charge par un
                      prestataire seront tenus de participer à temps plein et pendant
                      quatre semaines au moins à une activité centrée sur l’emploi.
                      Pour que les employeurs offrent un nombre suffisant de places
                      pour ces activités, il est important d’accroître les incitations
                      qui leur sont proposées par : i) la création d’un poste de
                      conseiller New Deal dédié aux employeurs afin de s’assurer
                      que l’on répond à leurs besoins ; ii) un suivi plus systématique
                      pour veiller à l’employabilité des clients avant de les orienter
                      vers un emploi ; et iii) des subventions de formation et des
                      durées de stage plus adéquates pour que le stage professionnel
                      débouche, comme il se doit, sur une certification reconnue à
                      l’échelle nationale.
               •      Modifier la définition d’un emploi durable. Une modification
                      de la définition d’un emploi durable, de 13 semaines dans le
                      NDYP à 26 semaines dans le Flexible New Deal – à l’instar de
                      ce que propose actuellement le gouvernement britannique –
                      correspond aux recommandations de l’OCDE dans ce domaine
                      et aiderait à réduire l’alternance d’emplois de courte durée et
                      d’indemnisations. Toutefois, les pouvoirs publics devraient
                      aller plus loin et subordonner une partie de la rémunération
                      des prestataires à une durée d’emploi de deux ans au moins,
                      voire davantage, conformément aux recommandations de
                      l’OCDE en la matière.
               •      Ménager une plus grande concurrence entre les prestataires
                      dans le Flexible New Deal. On pourrait à cette fin modifier la
                      part de marché des prestataires en fonction des performances


JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
38 – RÉSUMÉ ET PRINCIPALES RECOMMANDATIONS

                de chacun – telles qu’elles sont mesurées par le système de
                notation Star Rating. On pourrait également envisager de
                laisser les demandeurs d’emploi choisir leurs prestataires si les
                évaluations des Employment Zones révèlent que cette solution
                améliore la rentabilité.
           •    S’assurer que les services essentiels de Connexions continuent
                d’être fournis alors que les pouvoirs décisionnels et financiers
                sont transférés aux autorités locales. Cette délégation de
                pouvoirs donnera une occasion d’adapter les services aux
                besoins locaux. Parallèlement, il est important d’intensifier les
                efforts actuellement déployés pour améliorer les services en
                faveur des jeunes à risque, d’accroître l’effectif de conseillers
                personnels diplômés dans les centres Connexions, où on a
                constaté que la pénurie de personnel est un obstacle à la
                fourniture de services, et de préserver le système
                d’information existant pour garantir le suivi des clients.
           •    Envisager la mise en place d’un programme d’accueil en
                internat afin d’apporter un accompagnement intensif aux
                jeunes les plus difficiles à insérer. Ce noyau dur compte
                vraisemblablement des jeunes dont les besoins sont
                complexes, qui sont très difficilement mobilisables et qui
                cumulent un certain nombre de problèmes aussi divers que les
                troubles du comportement, l’alcoolisme ou la toxicomanie.
                Pour cette population, l’accueil en internat, fortement axé sur
                la remise à niveau, l’expérience professionnelle pratique et le
                mentorat par des adultes, pourrait bien représenter un nouveau
                départ dans un environnement constructif.




                                      JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
                                                                          INTRODUCTION – 39




                                        INTRODUCTION


            Improving the performance of youth in the labour market is a crucial
        challenge in OECD countries. Population ageing is looming but this is
        not a magic pill to solve young people’s problems. While smaller youth
        cohorts are likely to create more opportunities for youth, it is crucial that
        young people possess the skills required in today’s and tomorrow’s
        labour market.

            In the United Kingdom, the government is particularly concerned
        about the share of youth who leave education and training too early and
        find it difficult to enter stable employment and progress on the labour
        market. In addition, youth employment and unemployment rates have
        recently worsened.

            To address these challenges, the United Kingdom government has
        recently launched a number of ambitious reforms ranging from key
        changes to secondary education to an overhaul of existing active labour
        market programmes. The former aim to reduce early leaving of education
        and training, the latter to improve the sustainability of activation outcomes
        and to raise programmes’ cost-effectiveness.

            The purpose of this report is to point to areas where improvement is
        necessary and possible and to suggest additional actions needed to make
        sure that the current ambitious reform strategy attains its objectives.
        Chapter 1 presents basic facts on the situation of youth in the
        United Kingdom labour market. The role of education and training in
        shaping the transition from initial learning to the labour market is analysed
        in Chapter 2. The demand-side barriers to youth employment are explored
        in Chapter 3. Finally, Chapter 4 analyses the role of welfare benefits and
        activation services in helping non-employed youth get a job.




JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
                                                                       CHAPTER 1. THE CHALLENGE AHEAD – 41




                                               CHAPTER 1

                               THE CHALLENGE AHEAD


            Over much of the past decade, sustained economic growth in the
        United Kingdom has contributed to falling unemployment and increased
        labour market participation. Youth benefited considerably from this
        improved labour market performance until the mid-2000s but their labour
        market position has deteriorated thereafter. In addition, average
        performance often hides considerable variation in the early labour market
        experience of youth.
            The purpose of this chapter is to describe the labour market performance
        of youth over the past decade (Sections 1 and 2). The chapter also examines
        the process of transition from education to employment (Section 3) and
        documents the nature of entry jobs for youth, focusing on whether
        entry-level jobs represent stepping stones into the labour market or dead
        ends (Section 4).

1. Demographics and labour market outcomes

        A.        The share of youth in the working-age population is likely
        to decline to just 18% in 2025
            Similarly to most other OECD countries, the United Kingdom
        experienced a decline in the share of youth in the working age population
        between the mid-1970s and 2005. The decline was more modest than in
        most OECD countries, thus while the share of youth in the working-age
        population in the United Kingdom was among the smallest in the OECD in
        1975 – at about 22% – the country ranked much better according to this
        indicator in 2005. However, the size of younger cohorts relative to that of
        their older counterparts is projected to decline further to reach about 18% in
        2025 (Figure 1.1).




JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
42 – CHAPTER 1. THE CHALLENGE AHEAD

  Figure 1.1.        Share of youth in the working-age population in OECD countries,
                                        1975-2025a
                                             Percentages
         40
                        Mexico


                         Korea
         35




         30                                                  Mexico
                United States


                        OECD


         25
                        EU-19
                United Kingdom
                     Germany
                         Italy                                             Mexico
                       Sweden                                United States
                                                             OECD          United States
         20                             United Kingdom       Korea
                                              Sweden
                                                EU-19                           OECD
                                                                                Sweden
                                             Germany                          United Kingdom
                                                                                EU-19
                                                   Italy                        Italy
         15                                                                     Germany

                                                                              Korea




         10
           1950                  1975              2000
                                                      2005               2025



a) Ratio of the population aged 15-24 to the population aged 15-64.
Source: National Projections and United Nations projections for 2006 for Australia, Denmark,
New Zealand and Spain; 2004 for Luxembourg; 2005 for all the other countries.




                                           JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
                                                                               CHAPTER 1. THE CHALLENGE AHEAD – 43


          B.       The labour market prospects of youth have worsened
          recently
              Between the mid-1990s and 2004, the youth unemployment rate
          declined from over 17% to just 11%, almost 5 percentage points below the
          OECD average. However, the following three years partly reversed the gain
          of the previous decade and, in 2007, the youth unemployment rate in the
          United Kingdom was slightly higher than the OECD average at 13%
          (Figure 1.2, Panel A).

          Figure 1.2.          Youtha unemployment and employment indicators, OECD,
                                United Kingdom and Europe, 1984-2007
                                          b
                                     OECD            United Kingdom                EU-19 b
                                                      Percentages
     23                                       c             75
                        A. Unemployment rate                                                         d
                                                                                    B. Employment rate
     21                                                     70

     19                                                     65
                                                            60
     17
                                                            55
     15
                                                            50
     13                                                     45
     11                                                     40
      9                                                     35


                               4.0
                                                                           e
                                          C. Relative unemployment ratio
                               3.5

                               3.0

                               2.5

                               2.0

                               1.5




a)  Youth aged 16-24 for Iceland, Norway, Spain, Sweden, the United Kingdom and the
    United States; youth aged 15-24 for all other countries in the OECD average.
b) Unweighted averages; values for 2007 are preliminary.
c) Unemployed as a percentage of the labour force in the age group.
d) Employed as a percentage of the population in the age group.
e) Unemployment rate of youth (15/16-24)/unemployment rate of adults (25-54).
Source: National labour force surveys.

              Youth unemployment rates being strongly affected by the business
          cycle, the ratio of youth to prime-age adult unemployment rates is perhaps a
          more relevant indicator of how youth unemployment has evolved over the
          past decade. This measure shows that, in the United Kingdom, the
          improvement in youth unemployment has been considerably smaller than

JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
44 – CHAPTER 1. THE CHALLENGE AHEAD

      that of adults. While the youth unemployment rate was less than twice that
      of adults in the early 1990s, the ratio had risen to 3.9 in 2007 (Figure 1.2,
      Panel C). This rising trend is not unique to the United Kingdom. In fact,
      over the past decade, the relative position of youth has worsened in more
      than two thirds of OECD countries (see Quintini and Martin, 2006).
          The youth employment rate, another indicator of youth labour market
      performance – at 56% in 2007 – stood significantly above the OECD and
      EU-19 averages (Figure 1.2, Panel B). Its reduction, since the peak level of
      70% in the late 1980s, should not be interpreted as an indication of poor
      performance since it partly reflects the longer time spent in education on
      average by youth over the past two decades which, in turn, contributes
      positively to future human capital.
          In many OECD countries, young women are more likely to be
      unemployed than young men. This is not the case in the United Kingdom
      where the unemployment rate of young women is 4 percentage points
      lower than that of their male counterparts. However, at very similar
      employment rates across gender, a lower female unemployment to
      population ratio suggests that young women spend more time in education
      or out of the labour force more generally (Figure 1.3). For the
      United Kingdom, the difference in ranking across OECD countries
      between the unemployment rate and the unemployment to population ratio
      is also noteworthy. It suggests that more young people are in the labour
      force than in other OECD countries.
          Major differences in unemployment rates occur across skill levels and
      they have only slightly decreased over time. Low-skilled youth in the
      United Kingdom are five times more likely to be unemployed than
      high-skilled youth. This is more than twice the ratio in the OECD on
      average, and is the second highest ratio observed in the OECD after Finland
      (Figure 1.4).
           Youth aged 16-24 are also an heterogeneous group as far as age is
      concerned. A large share of the youngest in this group – 16-17-year olds –
      are still enrolled in school, very few combine work and study and very few
      can count on welfare benefits if they become unemployed. When trends in
      key labour market indicators are examined separately for 16-17- and
      18-24-year olds (Table 1.1), they show that over the past decade the
      position of the very young has changed significantly while that of youth
      aged 18-24 has remained stable. It should be noted that while the labour
      market position of 16-17-year olds has deteriorated since 1997, this has
      been accompanied by a significant rise in full-time educational enrolment.
      This is reflected in a much flatter unemployment to population ratio for
      this group over the past decade.


                                      JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
                                                                                                       CHAPTER 1. THE CHALLENGE AHEAD – 45


        Figure 1.3.                 Youtha unemployment and employment indicators, by gender,
                                              OECD countries, 2007b
                                                                          Percentages
            A. Unemployed to populationc                            B. Unemployment rated                                  C. Employment ratee
     United Kingdom                        10.9          Slovak Republic                                                 Korea
                Turkey                                             Poland                                             Hungary
              Sweden                                               Turkey                                         Luxembourg
               Finland                     Men                   Sweden                          Men                   Greece                         Men
                  Spain                                               Italy                                             Poland
              Canada                                               France                                                  Italy
      Slovak Republic                                            Hungary
                                                                 Belgium
                                                                                                                      Belgium                   OECDf = 46.2
               France                                                                                         Slovak Republic
               Poland                                             Finland                                     Czech Republic
         New Zealand                                    United Kingdom                  16.0                            France
        United States                                             Greece                                              Portugal
             Germany                                                 Spain                                               Japan
             Australia                                       Luxembourg                                               Sweden
                   Italy                                         Portugal                                               Turkey
               Iceland                                          Germany                                              Germany
              Belgium                                             Canada                                               Finland
             Portugal                                       United States                                                 Spain
             Denmark                                                Korea                                               Ireland
               Greece                                       New Zealand                                                Norway
               Austria             OECDf = 6.4           Czech Republic
                                                                                        OECDf = 13.0
                                                                                                                 United States
                Ireland                                          Australia                                   United Kingdom                            57.3
             Hungary                                               Ireland                                             Mexico
           Switzerland                                              Japan                                              Canada
          Luxembourg                                               Austria                                              Austria
               Norway                                           Denmark                                          New Zealand
          Netherlands                                             Iceland                                             Australia
      Czech Republic                                              Norway                                           Switzerland
               Mexico                                         Switzerland                                            Denmark
                 Japan                                       Netherlands                                          Netherlands
                 Korea                                            Mexico                                               Iceland

                           0   5      10          15                          0   10      20    30      40                         0   10 20 30 40 50 60 70 80

                  Spain                                           Greece                                              Hungary
              Sweden                                               Poland                                         Luxembourg
               Finland                     Women                      Italy                     Women                  Greece                      Women
               Greece                                                Spain                                                 Italy
     United Kingdom                 7.9                          Belgium                                                Turkey
              Portugal                                           Portugal                                               Poland
         New Zealand                                               Turkey                                     Czech Republic
                Poland                                   Slovak Republic                                      Slovak Republic
                France                                           Sweden                                               Belgium                    OECDf = 40.7
               Canada                                              France                                               France
              Belgium                                            Hungary                                                 Korea
              Australia                                           Finland                                             Portugal
      Slovak Republic                                   United Kingdom                 12.7                            Mexico
                   Italy                                    New Zealand                                                   Spain
          Netherlands                                           Germany                                                  Japan
             Germany                                     Czech Republic                                               Sweden
         United States                                       Luxembourg                                              Germany
             Denmark                                              Canada                OECDf = 13.9                   Finland
                Austria                                     United States                                               Ireland
               Iceland                                           Australia                                              Austria
                Turkey                                             Austria                                       United States
           Switzerland                                       Netherlands                                         New Zealand
              Hungary                                              Ireland                                   United Kingdom                          54.6
               Norway                                              Mexico                                              Norway
                Ireland            OECDf = 5.8                  Denmark                                            Switzerland
                 Japan                                        Switzerland                                              Canada
      Czech Republic                                                Korea                                             Australia
                Mexico                                              Japan                                            Denmark
                 Korea                                            Norway                                          Netherlands
          Luxembourg                                              Iceland                                              Iceland

                           0   5      10           15                         0   10      20    30      40                         0   10 20 30 40 50 60 70 80




a)  Youth aged 16-24 for Iceland, Norway, Spain, Sweden, the United Kingdom and the
    United States; youth aged 15-24 for all other countries.
b) Data for Belgium, Denmark, France, Germany and Luxembourg are preliminary 2007 estimates
    based on Eurostat, European Union Labour Force Survey.
c) Unemployed as a percentage of the population in the age group
d) Unemployed as a percentage of the labour force in the age group.
e) Employed as a percentage of the population in the age group.
f) Unweighted average; values for 2007 are preliminary.
Source: National labour force surveys.




JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
46 – CHAPTER 1. THE CHALLENGE AHEAD

     Figure 1.4.            Low- to high-skilled youtha unemployment ratio,b OECD countries,
                                              1997 and 2005c
                             Ratio of low- to high-skilled youth unemployment rates
       12
                               2005
       10                      1997

        8

        6
                                                    OECDd 1997 = 2.7
                        d
        4     OECD 2005 = 2.2

        2

        0




a)  Youth aged 16-24 for Iceland, Norway, Spain, Sweden, the United Kingdom and the
    United States; youth aged 15-24 for all other countries in the OECD average.
b) Data refer to the ratio of unemployment rates of low-skilled youth (15/16-24, ISCED<3) over
    high-skilled youth (ISCED>4); ISCED: International standard classification of education.
c) Data for Japan refer to 2003 instead of 2005.
d) Unweighted average.
Source: OECD Education database.


         Table 1.1.         Youth labour market indicators by age group, United Kingdom,
                                         1987, 1997 and 2007a
                                                  Percentages

                                              16-17-year olds                        18-24-year olds
                                       1987       1997          2007        1987         1997          2007
      Em ployment rate                 50.0       45.9          31.7         69.8         65.3         63.0
      Unemployment rate                19.3       17.7          23.4         15.0         12.5         12.4
      Em ployment rate for youth
       not in full-tim e education     75.6       64.3          48.6         75.2         75.5         73.8
      Unemployment rate for youth
       not in full-tim e education     18.6       21.2          31.1         15.0         12.8         12.5
      Unemployment to population
      ratio                            12.0        9.8           9.7         12.3          9.3          8.9
      Workless rate b                  10.7        9.7          10.9         22.2         18.1         18.3
      Enrolm ent rate                  56.3       72.9          78.8         10.4         26.0         30.1
a)   Data refer to the March-May quarter of the reference year.
b)   Data refer to young people not enrolled in full-time education and not employed as a percentage
     of the reference population.
Source: Office for National Statistics (ONS), Labour Force Survey (LFS).


                                                JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
                                                                        CHAPTER 1. THE CHALLENGE AHEAD – 47


               Figure 1.5 explores differences between age groups further and presents
          three main labour market indicators for teenagers (15/16-19-year olds) and
          young adults (18-24-year olds). For these two age groups, it is possible to
          compare the United Kingdom with the OECD average. This disaggregation
          shows how the decline in the youth employment rate between 1997 and
          2007 was entirely driven by the worsening employment prospects of
          teenagers while the position of young adults improved slightly up until
          2004. The fall in the unemployment rate between the mid-1990s and 2004
          was also mostly driven by the fall in this indicator for young adults.
          However, both age groups have been affected by the recent rise in
          unemployment rates. This recent rise in youth unemployment – also
          reflected in higher unemployment to population ratios – was at odds with the
          improvement observed in the OECD on average over the same period.

 Figure 1.5.           Youtha unemployment and employment indicators for teenagers and
                      young adults, United Kingdom and OECD, 1984-2007
                                                                                          b                b
                   United Kingdom 16-19          United Kingdom 20-24        OECD 16-19       OECD 20-24
                                                       Percentages
     25                                      c
                                                             80                                d
     23               A. Unemployment rate                                    B. Employment rate
     21                                                      70
     19                                                      60
     17
     15                                                      50
     13
     11                                                      40
      9                                                      30
      7
      5                                                      20


                              16
                                                                         e
                                             Unemployment/population ratio
                              14

                              12

                              10

                               8

                               6

                               4




a)  Youth aged 16-24 for Iceland, Norway, Spain, Sweden, the United Kingdom and the
    United States; youth aged 15-24 for all other countries in the OECD average.
b) Unweighted averages; values for 2007 are preliminary.
c) Unemployed as a percentage of the labour force in the age group.
d) Employed as a percentage of the population in the age group.
e) Unemployed as a percentage of the population in the age group.
Source: National labour force surveys.


JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
48 – CHAPTER 1. THE CHALLENGE AHEAD

          C.       The incidence of long-term unemployment has fallen
          considerably
              According to the ILO definition of unemployment, the incidence of
          long-term unemployment among youth in the United Kingdom has
          decreased significantly over the past decade. In 1997, one in four
          unemployed youth were unemployed for over a year compared with only
          one in six in 2007 (Figure 1.6). Among unemployment benefit claimants,
          the incidence of long-term unemployed has fallen considerably by design
          (6% in 2006) with the introduction of the New Deal for Young People
          (NDYP), a compulsory active labour market programme which allocates
          youth to employment or training options after 10 months into the
          unemployment spell.

            Figure 1.6.          Incidence of long-term unemploymenta among youth,b
                                   OECD countries, 1997 and 2007c
                                      Percentage of unemployed youth
     70
                          2007             1997
     60

     50

     40

     30                   d
                   OECD 1997 = 24.9

     20        d
          OECD 2007 = 19.6
     10

     0




a)  Twelve months and over.
b)  Youth aged 16-24 for Norway, Spain, Sweden, the United Kingdom and the United States; youth
    aged 15-24 for all other countries.
c) Data for France refer to 2006.
d) Data for Iceland and Luxembourg are not statistically reliable; for Switzerland, they are not
    available. Unweighted average of countries shown.
Source: National labour force surveys.




                                              JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
                                                                       CHAPTER 1. THE CHALLENGE AHEAD – 49


2. Incidence and dynamics of youth non-employment

        A.        One in eight young people were neither in employment
        nor in education or training in 2005
            The proportion of young people neither in employment nor in education
        or training (NEET) provides another key indicator of labour market
        performance for youth. Indeed, this is a group at high risk of labour market
        marginalisation and social exclusion. In the United Kingdom, in 2005, 9.3%
        of teenagers were NEET, the fifth highest rate in the OECD after Turkey,
        Mexico, Italy and Greece. The share of youth in NEET was larger among
        young adults – 17% – although the United Kingdom was doing better in
        terms of this age group relative to its OECD counterparts and to the OECD
        average (Figure 1.7). The average NEET rate for youth aged 16-24 in the
        United Kingdom stood at 13% in 2005.

            In 2004, the UK government set the target of reducing the share of
        16-18-year-old youth who are NEET by 2 percentage points by 2010.
        However, since then, the share of 16-18 NEET has actually increased
        slightly – from 9.7% in 2004 to 10.9% in 2005 and back down slightly to
        10.3% in 2006 – making it more difficult to attain this target.

        B.       Exiting NEET has become easier but repeated spells are
        more frequent
             Figure 1.8 explores NEET dynamics using longitudinal data from the
        British Household Panel Survey (BHPS). Youth who were NEET at some
        point during 1991 spent over two of the following five years in this status,
        about six months longer than those who were NEET at some point in 2000.
        The total time spent in NEET is not necessarily the result of a single long
        NEET spell. Between 2000 and 2005, about one third of youth who were
        NEET in 2000 returned to employment or learning but became NEET again
        later on. This compared with just over one in four between 1991 and 1996.
            Low-skilled youth find it more difficult to exit NEET than
        16-24-year olds on average, although according to some indicators their
        position has improved over time. Just about half of low-skilled youth who
        were NEET in 2000 had exited in 2001 – 25 percentage points less than
        16-24-year-old youth on average. This resulted in longer time spent in
        NEET between 2001 and 2005 – 2.7 years versus 1.7 years on average for
        all 16-24-year olds who were NEET in 2000. Research conducted in the
        United Kingdom on 16-18-year olds confirms that low-skilled youth find it
        more difficult to exit non-employment. Rennison et al. (2005) find that,


JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
50 – CHAPTER 1. THE CHALLENGE AHEAD

          among young people who were NEET at age 16, 65% of those without
          qualifications remained NEET at age 17 compared with 29% of their more
          educated counterparts.

      Figure 1.7.       Share of NEET teenagers and young adults,a OECD countries,
                                     1996 and 2005b
                            Percentage of the population in the age group
                                        2005                        1996
     50
     45                                 Teenagers (15/16-19)
     40
     35
     30
     25
     20
     15
                                                                                         c
     10                                                                            OECD 2005 = 7.5
      5
      0




     50
     45                                Young adults (20-24)
     40
     35
     30
     25
                                                                                         c
     20                                                                            OECD 2005 = 16.4
     15
     10
      5
      0




a)  Youth aged 16-24 for Iceland, Norway, Spain, Sweden, the United Kingdom and the
    United States; youth aged 15-24 for all other countries.
b) For Mexico, data refer to 2004 instead of 2005; for Korea and New Zealand, to 1995 instead of
    1996; for Germany, Finland and the Netherlands, to 1997 instead of 1996; and for Italy, they refer
    to 1998 instead of 1996.
c) Data for Japan are not available. Unweighted average of countries shown.
Source: OECD Education database.




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                                                                         CHAPTER 1. THE CHALLENGE AHEAD – 51


           Figure 1.8.          NEET dynamics, United Kingdom, 1991-96 and 2000-05
           Percentage of the population in the indicated age group who was NEET in the first year
                      NEET years a                       Exit rate b               Recurrence rate c
                     (left-hand scale)
                     (left-hand scale)             (right-hand scale)
                                                    (right-hand scale)             (right-hand scale)
                                                                                 (right-hand scale)
     4.0                                                                                                  0.8

     3.5                                                                                                  0.7

     3.0                                                                                                  0.6

     2.5                                                                                                  0.5

     2.0                                                                                                  0.4

     1.5                                                                                                  0.3

     1.0                                                                                                  0.2

     0.5                                                                                                  0.1

     0.0                                                                                                  0.0
               1991-96         2000-05         1991-96         2000-05       1991-96         2000-05
                                                                                              d
                  16-24 ever NEET                 25-54 ever NEET            16-24 low-skilled ever
                  16-24 ever NEET                 25-54 ever NEET           16-24 low-skilled ever NEET
                                                                                      NEET

a)  Situation between 1992 and 1996 (between 2001 and 2005) of youth/adults who experienced at
    least one spell of NEET in 1991 (2000).
b) Share of youth/adults who were NEET in 1991 (2000) and exited in 1992 (2001).
c) Share of youth/adults who were NEET in 1991 (2000), exited in 1992 (2001) and experienced a
    repeated spell of NEET at some point between 1992 and 1996 (2001 and 2005).
d) Less than ISCED 3; ISCED: International standard classification of education.
Source: OECD Secretariat calculations based on the British Household Panel Survey, waves from 1 to 15.

        C.        Persistence of non-employment among youth who have
        left education has increased for the least skilled
             Using BHPS, it is possible to obtain a measure of persistence of
        non-employment for youth aged 16-24 who have left education4 and study
        its changes over time.5 About 6% of 16-24-year olds not in education were

4.            For some young people who have exited education non-employment may be a
              choice – notably, this is the case for youth who take gap years. Therefore, for
              some young people, a protracted period in non-employment may reflect a choice
              rather than an at-risk situation.
5.            Note that this persistence measure is obtained by diving the number of 16-24-year olds
              who are NEET throughout a given five-year period (using monthly data from the
              BHPS calendar section) by the number of 16-24-year olds who are not in education
              over the same period of time. Excluding youth who are still in education makes it
              possible to isolate the low-skilled – an interesting group given findings presented in
              Figure 1.8. The share of 16-24-year olds who were NEET throughout the
              five-year period – i.e. persistence calculated using the whole 16-24-year-old cohort at

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52 – CHAPTER 1. THE CHALLENGE AHEAD

       always non-employed between 2001 and 2005, about the same share as
       between 1991 and 1995 (Figure 1.9). Between 2001 and 2005, low-skilled
       youth not in education were twice more likely to experience persistence in
       non-employment status than 16-24-year-old youth not in education on
       average and the extent of persistence in non-employment had risen for this
       group relative to the early 1990s.

     Figure 1.9.        Persistence of non-employment status in the United Kingdom,
                                    1991-95 and 2001-05
                   Percentage of individuals not in education who are non-employed
                                   throughout each five-year period
       15
                                          1991-95            2001-05
       12

        9

        6

        3

        0
                                                                                                 a
                      16-24                         25-54                    16-24 low-skilled

a) Less than ISCED 3; ISCED: International standard classification of education.
Source: OECD Secretariat calculations based on the British Household Panel Survey, waves from 1 to 15.

3. The transition from education to employment

       A.          Youth leave education at a relatively young age
           Figure 1.10 shows the activity status of youth per single year of age
       in 2005 for the United Kingdom and in the most recent year available for
       other selected OECD countries. In 2005, in the United Kingdom, the share
       of youth in education decreased steeply with age and, by the age of 18,
       about half of youth had left education, quite early compared with other
       OECD countries for which this statistic is available with the exception of


            the denominator – was 4% in both 1991-95 and 2001-05. Using another longitudinal
            study – the Youth Cohort Study – the Department for Education and Skills found that
            only 1% of 16-18-year olds were NEET for three years in a row. The difference
            between this figure and the corresponding 4% obtained from BHPS using the same
            definition could be explained by differences in the age group. It is plausible that
            persistence of NEET may be more of an issue among 18-24-year olds than among 16-
            18 – the former group is more likely to receive benefits and less likely to return to
            education and training.

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                                                                                                  CHAPTER 1. THE CHALLENGE AHEAD – 53


           Australia and New Zealand. The figure also highlights labour market
           inactivity among youth who have left education. The share of youth in this
           category in 2005 tended to increase with age until it settled at around 16% in
           the early twenties.

                             Figure 1.10.  Activity status of youth aged 15-27,
                          United Kingdom and selected OECD countries, 2002/2005a
                                                                  Percentages
                                                   Not in education and                            Age at which 50% of youth aged 15-27
                In education
                                                   unemployed                                      are out-of-school
                Not in education and               Not in education and                            Age at which 50% of youth aged 15-27
                employed                           not in the labour force                         are in employment

                               United Kingdom                                                                  Spain
     100                                                                     100
     90                                                                       90
     80                                                                       80
     70                                                                       70
     60                                                                       60
     50                                                                       50
     40                                                                       40
     30                                                                       30
     20                                                                       20
     10                                                                       10
       0                                                                       0
           15   16   17   18   19   20   21   22   23   24   25   26   27          15   16   17    18    19   20    21   22    23   24   25   26   27

    100
                                    France                                   100                          New Zealand
     90                                                                       90
     80                                                                       80
     70                                                                       70
     60                                                                       60
     50                                                                       50
     40                                                                       40
     30                                                                       30
     20                                                                       20
     10                                                                       10
      0                                                                        0
           15   16   17   18   19   20   21   22   23   24   25   26   27          15   16   17    18    19   20    21    22   23   24   25   26   27
                                United States                                                                 Australia
    100                                                                      100
     90                                                                       90
     80                                                                       80
     70                                                                       70
     60                                                                       60
     50                                                                       50
     40                                                                       40
     30                                                                       30
     20                                                                       20
     10                                                                       10
      0                                                                        0
           15   16   17   18   19   20   21   22   23   24   25   26   27          15   16   17     18   19    20   21    22   23   24


a) Data for France and Spain refer to 2002.
Source: Office for National Statistics, Labour Force Survey, 2005 winter quarter for the
United Kingdom; Australian Bureau of Statistics, Labour Force Survey for Australia; Eurostat,
European Union Labour Force Survey for France and Spain; Statistics New Zealand, Household
Labour Force Survey for New Zealand; and US Department of Labor, Bureau of Labor Statistics,
October Supplement of the Current Population Survey for the United States.

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54 – CHAPTER 1. THE CHALLENGE AHEAD

      B.      Transitions from education to employment have become
      more complex

          Over the past decade, two different pathways from education to
      employment have emerged in the United Kingdom. Longitudinal data
      suggest a median transition length of roughly six months in the
      United Kingdom in the early 2000s coexisting with a significant and
      increasing number of youth who take over two years to enter the labour
      market after leaving education (Box 1.1). It is not possible to explore the
      reasons why this latter group takes so long to enter work but its composition
      suggests that there may be more than one explanation: some may spend a
      long time looking for work because they lack the skills required by
      employers; early family formation is a reason for some to postpone entry;
      and some may just decide to take time off to travel before starting tertiary
      education or after finishing it.
           The average time needed to find a first job after leaving education
      compares relatively well with other European countries for which data are
      available. Quintini et al. (2007) estimate the average transition lengths for
      youth leaving education in 1994 in selected European countries. These
      estimates suggest transitions of up to two years in France, Greece, Italy and
      Portugal and longer than two years for Spain. Only in countries with a
      strong vocational education system – Austria, Denmark, Germany and
      Ireland – is the time needed to find a first job comparable to the estimates
      presented here for the United Kingdom.
          Unfortunately, it is not possible to derive the average length of
      transitions from school to work by socio-demographic characteristics.
      However, using the BHPS, it is possible to look at a snapshot of what youth
      aged 16-24 are doing twelve months after leaving education and training by
      qualification and gender. On average, about 62.5% of youth aged 16-24
      were employed one year after leaving education in 2005, down from 65% in
      1995. There was little difference between young men and young women but
      the data showed significant variation by educational attainment. Only 45%
      of low-skilled youth were employed one year after leaving education
      compared with 67% of higher-skilled youth.




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                                                                       CHAPTER 1. THE CHALLENGE AHEAD – 55




       Box 1.1. Measuring the time needed to find a first job after leaving education

        Several methods can be employed to obtain an estimate of the time needed to find a
    first job after leaving education. The difference between the age at which 50% of youth
    are employed and the age at which 50% have left education gives an estimate of around
    24 months in 2006 in the United Kingdom. This is the distance between the two vertical
    bars presented in Figure 1.10. However, this cross-sectional measure tends to bias
    results for countries where there have been considerable changes in labour market and
    education participation over time. The estimate for the United Kingdom – quite long
    given the relatively good labour market performance of youth on average – may suffer
    from such bias.
       Improving on this rough statistical measure requires a sufficiently long longitudinal
    database with information on the labour force status of young people over time. For the
    United Kingdom, the BHPS includes retrospective information on all spells of
    employment during a given survey year, hence it allows a relatively precise calculation
    of the length of time it took each young person in the survey to find a job after leaving
    education. For the cohort of youth leaving education in 2000, this measure produces an
    average transition time of approximately 13 months while for the 1991 cohort it gives an
    estimate of 9 months. The median length of transition, on the other hand, has hardly
    changed over the past decade – it was 6 months in the early 2000s up from 5 months in
    the early 1990s.* This suggests changes in the distribution of transition lengths, thus
    more varied transition pathways.
       The figure below shows the distribution of the length of transition for the two cohorts
    of youth. The share of youth who find a job directly after leaving education has remained
    stable at about 36% and the median has also increased only slightly over time. On the
    other hand, among youth leaving education in 2000, a much larger share took over two
    years to enter employment for the first time after finishing education. This may reflect
    difficulties in integrating the labour market or other complex pathways between school
    and work. Although the sample size is rather small, only 20% of youth taking longer
    than 30 months to find their first job are low-skilled, about 60% have an upper secondary
    education qualification and the remaining 20% have a tertiary qualification. The gender
    composition of this group – 53% are male – rules out that the 30-months spike is made
    up mostly of young women delaying labour market entry for family formation. This
    suggests that long transition times for some youth may reflect both difficulties in finding
    work and life choices.

        * Note that the measures derived from individual data use information on employment spells throughout
    the year and are thus considerably more precise than the measure derived from annual data used to calculate
    the difference between the median age of leaving education and the median age of entering employment.




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56 – CHAPTER 1. THE CHALLENGE AHEAD

               Distribution of the time needed to find a first job after leaving education
                                        in the United Kingdom
                                          Percentage in each duration interval
                       40
                                                               2000-2006
                       35

                       30

                       25

                       20

                       15

                       10

                        5

                        0
                            Less than    1-6     7-12 months    13-18      19-24    25-30    More than
                            1 month     months                  months     months   months   30 months

                       40
                                                               1991-1997
                       35

                       30

                       25

                       20

                       15

                       10

                        5

                        0
                            Less than    1-6     7-12 months    13-18      19-24    25-30    More than
                            1 month     months                  months     months   months   30 months


     Source: OECD Secretariat calculations based on the British Household Panel Survey, waves from 1 to 15.



        C.       The first few years in the labour market are characterised
        by considerable voluntary mobility
            In many OECD countries, high job mobility is a defining feature of
        youth’s initial steps in the labour market. While frequent job changes among
        young people – the so-called job-shopping phenomenon – serve the purpose
        of looking for a job that more accurately matches qualifications, aspirations
        and preferences of young people with those of potential employers, too-
        frequent changes may compromise participation in job-related training,
        hence leading to less human capital accumulation.
            In the United Kingdom, youth aged 16-24 held on average 3.3 jobs
        between 2000 and 2005, up from 2.9 between 1991 and 1996. On the other
        hand, 25-54-year-old adults held just over 2 jobs in both time periods. In
        2005, average uncompleted job tenure6 stood at one year and two months for
        youth compared with four years and two months for adults.


6.           These data are the result of OECD Secretariat calculations based on the BHPS.
             Tenure is defined here as the time the employee has spent in the current job as

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                                                                       CHAPTER 1. THE CHALLENGE AHEAD – 57


4. Characteristics of jobs performed by youth: stepping stones or traps?
             In most OECD countries, youth tend to enter the labour market
        via low-quality jobs, notably jobs that afford little job security – such as some
        fixed-term jobs – jobs that do not provide training opportunities, low-paid jobs
        or jobs that do not match their skill level. This need not be a problem if these
        entry jobs serve as stepping stones towards more stable employment with
        opportunities for career advancement. On the other hand, it is important to
        avoid that they become traps that young people find difficult to exit.
        A.        Temporary work is not common among labour market
        entrants and is mostly a choice
            Temporary and fixed-term employment is less of a problem in the
        United Kingdom than in other OECD countries. In 2005, only about 15% of
        16-24-year-old youth entered the labour market on a temporary job,
        compared with 40% in OECD Europe on average (Figure 1.11).

      Figure 1.11.          Incidence of temporary work one year after leaving education,
                                 selected European countries, 2005a
                                         Percentage of employed youth

 90
                                            b                      c                         d
 80                           Involuntary              Voluntary           Other temporary
 70
 60
 50
 40
 30
 20
 10
  0




a)  Data refer to 2003 for Austria, and 2004 for Spain.
b)  Involuntary temporary work refers to the share of youth who say they have a temporary contract of
    limited duration because they “could not find a permanent job”.
c) Voluntary temporary work refers to the share of youth who say they have a temporary contract of
    limited duration because they “did not want a permanent job”.
d) Other temporary refers to the share of youth who: i) are on a training contract (apprenticeships,
    trainees, research assistants, etc.); ii) are on a probationary period; or iii) do not give a reason for
    their temporary contract.
Source: OECD Secretariat calculations based on Eurostat, European Union Labour Force Survey.


             opposed to the total time spent with the current employer. Unfortunately, the latter
             cannot be calculated using BHPS.

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58 – CHAPTER 1. THE CHALLENGE AHEAD

              Besides, about a third of youth who enter the labour market on a
          temporary contract do so voluntarily. The United Kingdom also compares
          well with Canada, Japan and Mexico in terms of the incidence of temporary
          work among all 16-24-year olds (see Quintini et al., 2007). Only the
          United States and Australia had a lower incidence of temporary work among
          youth in 2005.7
              For those youth who are hired on temporary jobs, transitions to
          permanent work are relatively smooth. Among youth on temporary contracts
          in 2004, 40% had a permanent contract in 2005. This transition rate has been
          rather stable over the past decade and compares well with the European
          countries for which this information is available, albeit for earlier years
          (Figure 1.12).

      Figure 1.12.         Transitiona rates from temporary to permanent employment
                                    in Europe, 1996 and 2001
                                          Percentages
     45
     40             1996       2001
     35
     30
     25
     20
     15
     10
     5
     0




a)  Share of 15/16-28-year olds with a temporary contract in 1995 (2000) who had a permanent
    contract in 1996 (2001).
Source: OECD Secretariat calculations based on Eurostat, European Community Household Panel
(ECHP), waves 2 to 8 (1995-2001).




7.            Outside OECD Europe, the incidence of temporary work among school leavers
              cannot be calculated so comparisons are based on the incidence among all
              16-24-year olds.

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                                                                         CHAPTER 1. THE CHALLENGE AHEAD – 59


        B.       Jobs for youth tend to provide limited opportunities for
        employer-provided training
             In 2005, 60% of employed youth were in jobs without employer-funded
        training,8 about the same share as in 1998 (Figure 1.13). Also, low-skilled
        youth – the group that would benefit most from receiving on-the-job training
        – were more likely to be in jobs without training than their more skilled
        counterparts, although the gap was not very high.

Figure 1.13.           Incidence of work-based training among employees, United Kingdom,
                                         1998 and 2005
                                             Percentage of employees
                                          Employed without training
                                          Employed with employer-funded training
                                          Employed with government-funded training
 100
  90
  80
  70
  60
  50
  40
  30
  20
  10
   0
           16-24          25-54        16-24          25-54        Men       Women       Low- a   Higher-
                                                                                                          b
                                                                                        skilled   skilled
                   1998                        2005                            2005 (16-24)

a) Less than ISCED 3; ISCED: International standard classification of education.
b) Greater than or equal to ISCED 3.
Source: OECD Secretariat calculations based on the British Household Panel Survey, waves from 1 to 15.

            Among youth in jobs without training in 2004, only about 25% had
        moved to some form of training – government-funded or
        employer-funded – the following year, slightly fewer than in 1998-1999
        (Figure 1.14). Persistence in jobs without training was less frequent
        among youth than adults and young men were about 10 percentage points
        more likely than young women to persist in a job without training in
        2005. On the other hand, only small differences in persistence were found
        across educational attainment.



8.           Jobs without training are those that offered no employer-funded training and no
             government-funded training over the year preceding the survey date.

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60 – CHAPTER 1. THE CHALLENGE AHEAD

        Figure 1.14.             Destination of youth and adultsa in jobs without training,
                                    United Kingdom, 1999 and 2005
                   Percentage of employees in jobs without training the previous year
           Employed without training                             Employed with employer-funded training
           Employed with government-funded training              NEET
 100
  90
  80
  70
  60
  50
  40
  30
  20
  10
   0
          16-24          25-54        16-24      25-54        Men         Women          Low- b      Higher-c
                                                                                        skilled      skilled
                  1999                    2005                              2005 (16-24)


a) Youth refers to persons aged 16-24, and adults to those aged 25-64.
b) Less than ISCED 3; ISCED: International standard classification of education.
c) Greater than or equal to ISCED 3.
Source: OECD Secretariat calculations based on the British Household Panel Survey, waves from 1 to 15.

       C.        One in three youth work in a low-paid job but upward
       mobility has improved
           Over 35% of youth were working in a low-paid job – defined as paying
       a gross hourly wage lower than two thirds of median adult wages – in 2005,
       about the same proportion as in 1995 (Figure 1.15).9 The incidence of low
       pay measured this way is about 15 percentage points higher for youth than
       for adults.
            For many youth not in education, low pay is an alternative to no pay at
       all – NEET status. For instance, the incidence of low pay among low-skilled
       youth is about the same as for better educated youth but this is the result of
       twice as many drop-outs being unemployed or inactive.

9.         Although data for 2005 are not available for other OECD countries, Quintini and
           Martin (2006) calculate the overall incidence of low pay among youth in 2001 for
           some European countries. They show that the share of 16-24-year olds in low pay
           in the United Kingdom was smaller than in Germany and the Netherlands – where
           the incidence of low pay was the highest in Europe and exceeded 40%. The
           United Kingdom stood close to the EU average and to countries such as France
           and Denmark in terms of this indicator. The incidence of low pay among
           United Kingdom youth was also lower than in Australia where 42% of
           15-24-year olds were affected in 2006 (Australian Bureau of Statistics, 2007).

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                                                                       CHAPTER 1. THE CHALLENGE AHEAD – 61


     Figure 1.15.            Incidence of low paya and no pay, United Kingdom, 1995 and 2005
                                     Percentage of the population not in education
      80
      70               Low pay          No pay
      60
      50
      40
      30
      20
      10
       0
              16-24          25-54        16-24          25-54   Men       Women       Low-       Higher-
                                                                                              b           c
                                                                                      skilled     skilled

                      1995                        2005                        2005 (16-24)


a)  Workers are considered to be in low-paid employment if they work at least 15 hours per week and
    receive an hourly wage of less than two-thirds the median adult value. There is hardly any
    variation in the share of workers employed for less than 15 hours across groups – approximately
    15%.
b) Less than ISCED 3; ISCED: International standard classification of education.
c) Greater than or equal to ISCED 3.
Source: OECD Secretariat calculations based on the British Household Panel Survey, waves from 1 to 15.


                Upward wage mobility has increased over time although some youth
           still find it hard to exit low pay for better paid employment. Figure 1.16
           shows that the share of youth experiencing persistent low pay over a
           five-year period halved between the early 1990s and the early 2000s. Low
           pay is more persistent among low-skilled youth, but the position of this
           group relative to this indicator has improved greatly over time. Figure 1.16
           also shows that it was easier to exit low pay for those youth who had spent
           two years (1991-1992 and 2001-2002, respectively) in a job that provided
           training. This suggests that jobs with employer-provided training are a good
           stepping stone to better paid employment.
               International comparisons are not available for the same time period, but
           Quintini and Martin (2007) calculate the share of youth always in low pay
           over the period 1997-2001 in a number of European countries and in the
           United States. The share of youth always in low-paid employment over the
           five-year period in the United Kingdom was the third highest after Greece
           and the United States.




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62 – CHAPTER 1. THE CHALLENGE AHEAD

     Figure 1.16.       Persistence of low pay,a United Kingdom, 1991-95 and 2001-05
     Percentage of employees in each age group who are low-paid throughout each five-year period
     40
     35           1991-95      2001-05

     30
     25

     20
     15
     10
     5
     0
                16-24           25-54        16-24 low-skilled b   16-24 in jobs        16-24 in jobs
                                                                   with training       without training
                                                                    for the first        for the first
                                                                     two years            two years


a)  Workers are considered to be in low-paid employment if they work at least 15 hours per week and
    receive an hourly wage of less than two-thirds the median adult value.
b) Less than ISCED 3; ISCED: International standard classification of education.
Source: OECD Secretariat calculations based on the British Household Panel Survey, waves from 1 to 15.


5. Key points

              In the United Kingdom, indicators of youth performance on the labour
          market paint a mixed picture (Table 1.2). On the one hand, the youth
          employment rate is 12 percentage points higher than in the OECD on
          average and long-term unemployment has decreased by over 7 percentage
          points over the past decade. Low-paid employment is still common among
          youth but its persistence has halved since the early 1990s.
               On the other hand, a number of issues related to the labour market
          performance of youth have emerged recently. First, the youth
          unemployment rate has risen over the past three years. The gains over the
          previous decade had brought the youth unemployment rate 5 percentage
          points below the OECD average but this recent worsening, affecting both
          teenagers and young adults, partly reversed those gains and in 2007 the
          youth unemployment rate was slightly higher than the OECD average. Also,
          the incidence of NEET has increased over the past five years and there is
          evidence that NEET youth find it more difficult to exit this status
          permanently. About one in three youth who were NEET in 2000 returned to
          be NEET after exiting between 2001 and 2005 versus just over one in four
          in the early 1990s.



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                                                                          CHAPTER 1. THE CHALLENGE AHEAD – 63


               Table 1.2.        Scoreboard for youth aged 16-24,a United Kingdom,
                                         1997, 2002 and 2007
                                                               1997            2002            2007
                                                          United       b  United       b  United
                                                                   OECD            OECD            OECDb
                                                         Kingdom         Kingdom         Kingdom
Employment rate (% of the age group)                      60.8         43.7   60.9     43.6   55.9     43.5
Unemployment rate – UR (% of the labour force)            13.4         15.7   11.0     14.6   14.4     13.4
Relative UR youth/adult (25-54)                            2.3          2.5    2.7      2.5    3.9      2.9
Ratio unemployed to population (% of the age group)        9.4          7.5    7.5      6.8    9.4      6.1
Incidence of LTU (% of unemployment)                      23.3         24.9   11.1     19.4   16.0     19.6
Incidence of temporary work (% of employment)c            14.0         28.8   12.0     31.6   11.1     34.7
Incidence of part-time work (% of employment)             30.7         19.5   32.4     22.1   34.9     24.5
NEET rate (% of the age group)d                           11.6         12.9   11.9     12.1   13.0     12.0
School drop-outs (% of the age group)e                     5.3         15.5    5.9     14.6    6.0     12.9
Relative UR low skills/high skills(<ISCED3)/(>ISCED3)f     5.2          2.5    4.3      2.2    4.7      2.2

ISCED: International standard classification of education; UR: unemployment rate; LTU: long-term
(more than one year) unemployment; NEET: neither in education nor in employment or training.
a)    Youth aged 16-24 for Iceland, Norway, Spain, Sweden, the United Kingdom, and the
      United States; and 15-24 for all other countries.
b)    Unweighted averages for the 30 OECD countries; values for 2007 are preliminary.
c)    1997, 2002 and 2006.
d)    2000, 2002 and 2005.
e)    Share of youth not in education and without an upper secondary qualification; 2000, 2002 and
      2005.
f)    1997, 2002 and 2005.
Source: Office for National Statistics (ONS), Labour Force Survey (LFS); and OECD Education
database.


             Second, the analysis identifies a group of youth at risk of making poor
        labour market transitions. Low-skilled youth are more than five times more
        likely to be unemployed than their more skilled counterparts, a situation that
        has worsened over the past decade. Low-skilled youth who become NEET
        also find it more difficult to re-engage in employment and learning than
        16-24-year olds on average and there is evidence that they may become
        trapped in NEET. On the other hand, among low-skilled youth who manage
        to get a job, wage progression has increased – the likelihood of persistence
        in a low-paid job over a five-year period has halved since the early 1990s.
            Third, between 1998 and 2005, no improvement was observed in the
        share of jobs offering no training opportunities, a phenomenon which affects
        about 60% of employed 16-24-year olds. Improvement on this front is
        important as jobs with training are found to be a good stepping stone to
        better-paid employment. Youth starting in low-paid jobs offering no training
        find it more difficult to exit low pay than youth who obtain training from
        their employer. The latter are half as likely as the average to remain in low
        pay for five years in a row.

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                                                CHAPTER 2. INITIAL EDUCATION AND LEARNING ON THE JOB – 65




                                               CHAPTER 2

      INITIAL EDUCATION AND LEARNING ON THE JOB


             The quality of initial education is a key factor in facilitating the
        transition from education to employment and putting youth on a
        promising career track. Also, training on the job at the beginning of active
        life allows youth to fill the gaps of initial education and acquire the skills
        required by firms.
            The education system in the United Kingdom is currently undergoing
        considerable change with major new reforms being planned to ensure that
        youth stay in education and training longer. In England, a recently issued
        Green Paper proposes to make participation in education and training
        compulsory to age 18 and the so-called “14-19 Strategy” aims at ensuring
        that youth are faced with more learning options during their prolonged
        time in education and training. As a result of these new initiatives, in five
        years time English secondary education is likely to look radically different
        from today.
            The purpose of this chapter is to assess whether the current education
        system gives youth a good start in the labour market. Because education in
        the United Kingdom is devolved, as far as policy issues are concerned, the
        focus is put on England.10 Section 1 enumerates the challenges facing the
        system; Sections 2 to 4 focus on strategies to combat failure in education;
        Section 5 assesses current plans to raise the age of compulsory participation
        in education and training to 18; Section 6 addresses the main problems faced
        by tertiary education; and the final section reviews young people’s
        participation in on-the-job training.



10.          Unfortunately, it is not possible to provide internationally comparable data for
             England thus where international comparisons are made, data refer to the
             United Kingdom. In most cases, UK-based comparisons are indicative of the
             position of England because of its numerical predominance.

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66 – CHAPTER 2. INITIAL EDUCATION AND LEARNING ON THE JOB

1. Performance of the education system

      A.       Expected length of education in the United Kingdom is
      the highest in the OECD

          In 2006, the United Kingdom topped the OECD ranking in terms of
      expected years spent in education. In OECD countries, a 5-year old can
      expect on average to spend 17.4 years in education, while the
      United Kingdom has an educational expectancy of almost 21 years (see
      OECD, 2006a).11 This is the result of a rapid increase in educational
      expectancy since 1995 both at the secondary level (20%) and at the tertiary
      level (25%). It compares with a rise of just 13% on average in the OECD
      resulting mostly from increased expectancy in tertiary education.

      B.     The performance of 15-year olds in school is close to the
      OECD average and dispersion is very high

          According to the 2006 survey of the OECD Programme for International
      Student Assessment (PISA), 15-year olds in the United Kingdom perform
      close to the OECD average in reading and mathematics and do better than
      average in science (Figure 2.1). Under all three areas of knowledge, the
      United Kingdom is far behind the best performing countries in the OECD
      according to PISA.
          Dispersion in performance is more marked than in other OECD countries
      (Figure 2.2). The United Kingdom does rather badly at the bottom of the
      competency scale – i.e. among the worst students – while it stands close to the
      best-performing countries in the OECD when the best students are
      compared.12 The United Kingdom is also the country with the largest
      difference in scores between public and private education establishments.




11.       School expectancy is estimated by taking the sum of enrolment rates for each
          single year of age, starting at age five. The numerator and denominator for each
          year’s enrolment rates are as follows. Numerator: total number of people enrolled
          in education at age X in a given year. Denominator: estimated population aged X
          in a given year.
12.       According to the PISA 2006 science scale, students in the top decile in the
          United Kingdom are third best after Finnish and New Zealand students. However,
          for bottom-decile students, the United Kingdom ranks only 18th across
          OECD countries.

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          Figure 2.1.            United Kingdom students’ performance, based on PISA 2006
                                                           Total
     570                                  570                                           570
     560            Reading scale         560          Mathematics scale                560       Science scale
     550                                  550                                           550
     540                                  540                                           540
     530                                  530                                           530
     520                                  520                                           520
     510                                  510                                           510
     500                                  500                                           500
     490                                  490                                           490
     480                                  480                                           480
     470                                  470                                           470




                                                               a
                                    Low levels of competence       (percentage of all students)
     25                                    25                                             25
                 Reading scale                         Mathematics scale                          Science scale
     20                                    20                                             20

     15                                    15                                             15

     10                                    10                                             10

      5                                     5                                              5

      0                                     0                                              0




a)  Data refer to the percentage of students scoring up to Level 1 in the proficiency scales. For the
    reading, mathematics and science scales they refer to students scoring below 407, 420 and
    410 points respectively.
Source: OECD PISA 2006 database.



     Figure 2.2.             Score dispersion on the PISA 2006 science scale, OECD countries
                     Ratio of the 90th percentile to the 10th percentile PISA science scores
     1.85
     1.80
     1.75
     1.70               a
                OECD = 1.66
     1.65
     1.60
     1.55
     1.50
     1.45
     1.40




a) Unweighted average.
Source: OECD PISA 2006 database.

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68 – CHAPTER 2. INITIAL EDUCATION AND LEARNING ON THE JOB

      C.       Many 16-24-year olds not in education do not hold an
      upper secondary qualification

           On average across OECD countries in 2005, the school drop-out rate –
      defined as the share of 16-24-year olds not in education who do not hold an
      upper secondary qualification or just hold a basic school-leaving certificate
      – stood at 14%.13 In the same year, in the United Kingdom, this rate was
      over 16% (Figure 2.3). Of these youth, 10% had a basic school-leaving
      certificate and 6% had no certificate at all.14 Besides, upper secondary
      attainment rates have worsened slightly over the past five years in the
      United Kingdom, while they have improved in several OECD countries.

      D.       Less qualified youth face significant penalties in the
      labour market, more so than in the OECD on average

          Less qualified youth face a much higher probability of being NEET than
      their more educated counterparts. In the United Kingdom, the difference in
      NEET rates between youth holding an upper secondary qualification and
      youth without one is more marked than in the OECD on average
      (Figure 2.4).




13.       “School” does not refer strictly to secondary education but more largely to
          education and training. “Upper secondary education” identifies a level of
          attainment, not necessarily reached while the individual was actually
          participating in secondary education. An upper secondary education
          qualification is equivalent to Level 3 of the International Standard Classification
          of Education (ISCED) – for the United Kingdom this is either a minimum of
          five GCSEs/SCSEs at grades A*-C, or an equivalent vocational qualification
          such as NVQ2/SVQ2. In addition, the international “upper secondary” band also
          includes A-levels or NVQ3/SVQ3. A basic school-leaving certificate is
          equivalent to ISCED Level 3C – for the United Kingdom, this is either fewer
          than 5 GCSEs at grades A*-C, or GCSEs at grades D-G, or a vocational
          qualification at Level 1.
14.       Note that only the 6% are included in the statistic reported in Table 1.2. The
          United Kingdom is not the only country where the inclusion of short
          upper-secondary courses makes a significant difference to the drop-out rate.
          Switzerland and Poland are also affected. However, the OECD average calculated
          excluding these courses – at 14% – is only slightly higher than the one shown in
          Table 1.2.

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                  Figure 2.3.           School drop-outsa in OECD countries, 2005b
                                                    Percentages
     60
                                                            2005
                                                            2000
     50

     40

     30                                                        c
                                                         OECD 2000 = 17.3                  c
                                                                                      OECD 2005 = 13.9
     20

     10

      0




a)  This definition of school drop-outs differs from that presented in Table 1.2 because youth holding
    a basic school-leaving certificate are counted as drop-outs. Youth are those aged 16-24 for Iceland,
    Norway, Spain, Sweden, the United Kingdom and the United States; and those aged 15-24 for all
    other countries.
b) Data refer to 2003 for Japan; and 2004 for Mexico and Norway.
c) Unweighted average.
Source: OECD Education database.

Figure 2.4.            Share of youth neither in employment nor in education or training by
                         educational attainment,a OECD countries, 2005b
                                                    Percentages
          55
          50                                                           Less than upper secondary
          45                                                           Upper secondary
          40                                                           OECD Less than upper secondary
          35
          30
          25
          20
          15
          10
           5
           0




a)  Youth are those aged 16-24 for Iceland, Norway, Spain, Sweden, the United Kingdom and the
    United States; and those aged 15-24 for all other countries.
b) Data refer to 2003 for Belgium and Italy; and to 2004 for Mexico. Data for Korea and
    New Zealand are not available.
Source: OECD Education database.

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70 – CHAPTER 2. INITIAL EDUCATION AND LEARNING ON THE JOB

          As adults, those who leave education without an upper secondary
      qualification are significantly less likely to be employed than their better
      educated counterparts. In 2005, while employment rates of upper secondary
      graduates in the United Kingdom were above the OECD average for this
      education level, employment rates of those without an upper secondary
      qualification were, at 52%, below the corresponding OECD average of 57%
      (Figure 2.5). In addition, differences in employment probabilities by
      educational attainment grew over the past decade. For individuals without
      upper secondary education, the employment rate decreased from 61% in
      1991 to 52% in 2005 while it increased for upper secondary graduates over
      the same period (OECD, 2007a).

   Figure 2.5.        Employment rates by educational attainment in OECD countries,
                                         2005a
                                           Percentages

                     Less than upper secondary                  Upper secondary or higher
                     OECD Less than upper secondary             OECD Upper secondary or higher
        90
        80
        70
        60
        50
        40
        30
        20
        10
          0




a) Data for Japan are not available.
Source: OECD (2007a).


          The penalties from not completing upper secondary education are also
      visible in the distribution of earnings of adults. For the United Kingdom, the
      share of 25-64-year olds without an upper secondary qualification with low
      incomes (defined here as half of the country median or less) is the third
      highest behind Canada and the United States and is significantly higher than
      the OECD average (Figure 2.6).



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                                                CHAPTER 2. INITIAL EDUCATION AND LEARNING ON THE JOB – 71


                        Figure 2.6.    Earnings distribution of adults
               without an upper secondary qualification, OECD countries,a 2005b
                                                    Percentages
                                     At or below half the median
                                     From half the median up to two times the median
                                     More than two times the median
     100
     90
     80
     70
     60
     50
     40
     30
     20
     10
      0




a)  Earnings data for the Czech Republic, Hungary, Luxembourg, Poland and Portugal exclude
    part-time work. Moreover earnings data for Hungary, Luxembourg, Poland and Portugal exclude
    part-year or seasonal employment.
b) Data refer to 2002 for Luxembourg and the Netherlands; to 2003 for Korea; and they refer to 2004
    for Belgium, Canada, Denmark, Finland, Ireland, Italy, Norway, Poland, Portugal, Spain, Sweden
    and Turkey.
Source: OECD (2007a).


               Overall, this confirms that difficulties on the labour market experienced
           by the many youth who leave education without an upper secondary
           qualification – as documented in Chapter 1 – are hard to compensate later
           with labour market experience. As adults, these young people, still face
           considerable employment and earnings penalties vis-à-vis their more
           educated counterparts.

           E.        Vocational education attendance in the United Kingdom
           is well above the OECD average
               In 2005, over 70% of all upper secondary enrolments in the
           United Kingdom were in vocational programmes, about 20 percentage
           points more than the OECD average (see Figure 2.7). This is the fourth
           highest enrolment rate in vocational education in the OECD, after the
           Czech Republic, Austria and the Slovak Republic.

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            Figure 2.7.      Enrolment in vocational versus general education
                 in upper secondary education in OECD countries,a 2005
                                          Percentages
                            Vocational                             General
      100
       90
       80
       70
       60
       50
       40
       30
       20
       10
        0




a) Data for New Zealand are not available. Unweighted averages for EU-19 and OECD.
Source: OECD (2007a).


          In 2005, the United Kingdom also had one of the highest entry rates in
      vocational tertiary education. Nearly 30% of young people entered tertiary
      vocational education in 2005 compared with just 15% in the OECD on
      average (OECD, 2007a).

      F.        The share of youth holding tertiary qualifications is high
      but is now growing less rapidly than the OECD average.
          In most OECD countries, the share of young people holding a tertiary
      education qualification is significantly higher than among their older
      counterparts (see Figure 2.8). The United Kingdom, too, has seen impressive
      growth in tertiary qualifications over past generations but the country has
      not caught up as fast as others in the OECD – the difference in graduation
      rates between 25-34- and 55-64-year olds, of about 11 percentage points, is
      more modest than in the OECD on average. As a result, while the
      United Kingdom is quite well placed in international comparisons for the
      older generation, it ranks lower as far as youth are concerned. In addition,
      rates of current participation suggest that more countries are likely to
      surpass UK graduation rates. The increase in tertiary enrolment between
      1995 and 2004, which will influence future graduation rates, was, at 30%,
      considerably below the OECD average level of 41% (OECD, 2007a).


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                 Figure 2.8.          Population that has attained tertiary education
                                        in OECD countries, 2005
                                                    Percentages
      55
      50                                            25-34
      45                                            55-64
      40
                                                                                        a
      35                                                                         OECD 25-34 = 32.2
      30
      25                                                                                    a
      20                                                                           OECD 55-64 = 18.7
      15
      10
       5
       0




a) Unweighted average.
Source: OECD (2007a).


           G.        Returns to university education are high by international
           standards
               In the United Kingdom, returns to university education are among the
           highest in the OECD irrespective of the methodology used to measure them
           (Figure 2.9; Oliveira Martins et al., 2007; Blundell et al., 2004; and
           DfES, 1999).

           Figure 2.9.         Returns to vocational and academic tertiary qualifications,
                                   selected OECD countries, 2004a
     Percentage of graduates earning more than one-and-a-half times the median wage in each country
       70
                                                Tertiary vocational       Tertiary academic
       60
       50
       40
       30
       20
       10
           0




a)  Data refer to 2001 for Australia; to 2002 for Ireland and Luxembourg; and they refer to 2003 for
    Belgium, Canada, Denmark, Finland, Korea, Norway and Sweden.
Source: OECD (2006a).


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74 – CHAPTER 2. INITIAL EDUCATION AND LEARNING ON THE JOB

2. Improving education outcomes through quality early childhood
education and care

          Several studies have shown that high-quality early childhood education
      and care (ECEC) programmes have positive effects on participants’ school
      achievement and grade repetition, particularly for children from immigrant
      or disadvantaged backgrounds (see Box 2.1).

    Box 2.1.The role of early childhood and pre-school programmes in reducing
             school difficulties of children from disadvantaged families
      There is growing recognition that quality ECEC services provide young children,
   particularly from low-income and immigrant-background groups, with a good start in life. In
   particular, there is evidence that ECEC programmes can help reduce school failure and improve
   school performance (see OECD, 2001 and 2006b).
      In the United States, the Federal Head Start and Early Head Start projects, introduced in 1965 and
   1995 respectively, provide centre-based childcare and other counselling/guidance services to
   families. Head Start focuses on children aged three or older while Early Head Start focuses on
   0-3-year olds. Rigorous evaluations of both Head Start and Early Start (see Melhuish, 2004, for a
   review of available evidence) have produced a consistent pattern of results: the programmes had a
   clear benefit for disadvantaged children. However, the smaller, closely targeted interventions within
   Head Start showed larger effects, while less-targeted large-scale interventions such as Early Head
   Start had little impact on the very highest risk families.
      Inspired by the good outcomes of Head Start, state-run pre-school programmes have
   proliferated over the past two decades in the United States giving rise to a large literature
   evaluating the performance of these programmes. Barnett (1995) and Gilliam and Zigler (2001)
   review evaluation studies of the long-term effects of pre-school programmes on children from
   low-income families. Both studies find evidence of sizeable long-term effects on school
   achievement and grade repetition, particularly when efforts are sustained beyond the pre-school
   period. The High/Scope Perry Preschool Study (Schweinhart et al., 2004) in the United States
   evaluated the effect of high-quality early care and education on low-income 3- and 4-year olds.
   The study followed the individuals until age 40 and compared their socio-economic outcomes to
   those of a group who was randomly denied treatment. The major conclusion of the study was that
   the high-quality pre-school programme significantly improved the likelihood of graduating from
   high-school (65% versus 45% in the control group), as well as the likelihood of being employed at
   age 40 (76% versus 62%) and having higher median earnings (USD 20 800 versus USD 15 300).
   The study also highlighted a number of positive social outcomes in the treatment group such as
   lower crime involvement.
      For Europe, positive effects of pre-school education on school failure and grade repetition have
   been found in France, where pre-school is almost universal among 3- to 5-year olds (see Caille
   and Rosenwald, 2006). Finally, Boocock (1995) reviews childcare in Sweden and concludes that
   participation in pre-school has benefits in terms of cognitive development and school success, and
   that these are more significant for children of low-income families.
      However, disappointing results in some other countries (see Lapointe et al., 2005 for Canada; and
   Boocok, 1995, for a survey of several international programmes) point to the importance of
   programme quality. The most effective programmes require considerable financing, well-trained
   ECEC personnel and diversified intervention actions (see OECD, 2006b on design issues).


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            The United Kingdom is lagging behind other OECD countries in terms of
        public provision of ECEC services. A universal entitlement to free ECEC
        exists for children aged 3 and 4 but only on a part-time basis. Provision covers
        a two-and-a-half-hour session per day in England and four-and-a-half hours in
        Scotland, for 38 weeks per year. In contrast, the norm in most
        European countries is of full-time, year-round, publicly-funded ECEC services
        prior to beginning of compulsory education (OECD, 2006b). Even the planned
        increase in ECEC entitlement to 20 hours per week by 2010 will fall short of
        current international practice.
            Part-time provision has serious implications for children and their
        families. First, it is seen as practical and cost-effective to fulfil the nursery
        entitlement through provision in primary schools. As a result, all
        four-year olds are in schools in England, raising concerns about the quality
        of children’s early learning environments. Second, the part-time entitlement
        does little to support working parents, even those in part-time work.
            Insufficient public provision of ECEC places is also an issue in the
        United Kingdom. The government has recently committed to ensuring that,
        by 2010, there will be a childcare place for all children aged 3-14, between
        8 am and 6 pm each weekday.
            For children aged 0-3, there is no entitlement to ECEC services at all,
        which results in few children attending licensed childcare arrangements. In
        2004, only one in four children in the United Kingdom used licensed
        childcare facilities versus over 80% in Denmark and almost 70% in Sweden
        (see Figure 2.10).

        Figure 2.10.           Access to licensed ECEC services for children under three,
                                    selected OECD countries, 2004
                                         Percentage of children aged 0-3
     90
     80
     70
     60
     50
     40
     30
     20
     10
      0




Source: OECD (2006b).


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           To extend participation in licensed ECEC of children aged 0-3, so-called
      Sure Start Children’s Centres (SSCCs) were launched in England in 2006.
      SSCCs are due to open in each local community in England by 2010,
      starting with the 30% most disadvantaged areas in the country.15 The
      government is building on its earlier experience with Sure Start Local
      Programmes (SSLPs) opened in 1999 with the aim of enhancing health and
      well-being during the early years and increasing the chances that children
      enter school ready to learn, are academically successful and move on to
      become successful on the labour market as adults. The 500 original SSLPs
      became SSCCs by March 2006 and, together with additional centres in
      disadvantaged areas, continue to provide their original services, including
      full day-care provision for a minimum of 10 hours a day, 5 days a week, and
      48 weeks per year. In less disadvantaged areas, SSCCs will only provide a
      minimum range of services, mostly involving information and advice on
      childcare solutions. Compared with SSLPs, guidelines for SSCCs are more
      specific about the services to be offered, placing a clear focus on child
      outcomes and on adjusting provision in relation to the level of disadvantage
      of the area. However, a large degree of variation remains in the way the new
      children’s centres are implemented.
           Like their SSLPs predecessors, the SSCCs have a duty to improve the
      life chances of all children but are required, in particular, to reduce
      inequalities between the poorest children and the rest. A report published in
      2006 (National Audit Office, 2006) highlighted the importance of outreach
      activities to accomplish the latter objective as most parents living in
      disadvantaged areas and not using the centres’ services claimed to be
      unaware that the services were available. Among outreach activities, the
      report found that the SSCCs that did well in reaching disadvantaged families
      in their area were pro-active in identifying and targeting families, had a
      strategy/action plan in place, and had developed strong links with existing
      community groups and health organisations to maximise outreach potential.
      Unfortunately, the report found that only about a third of the SSCCs visited
      – 30 in total – were pro-actively targeting hard-to-reach groups.
          A recent evaluation comparing children and families living in SSLP
      areas with those living in similar areas not receiving SSLPs (NESS, 2008)
      revealed a variety of beneficial effects for children and families living in


15.       The roll-out across England is planned in three phases. The first phase (to
          March 2006) focused on establishing centres in the 30% most disadvantaged
          areas in the country. For phase two, the target is to establish a minimum of
          2 500 centres by March 2008, including sufficient centres to cover the remaining
          disadvantaged areas. By 2010 (phase three), universal coverage through
          3 500 centres should be guaranteed.

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        SSLP areas when children were 3-years old, including for the most
        disadvantaged. SSLP children showed better social development, exhibiting
        more positive social behaviour and greater independence/self-regulation
        than their non-SSLP counterparts. Families in SSLP areas showed less
        negative parenting while providing their children with a better home
        learning environment. These beneficial parenting effects appeared to be
        responsible for the higher level of positive social behaviour in children in
        SSLP areas. Also, families in SSLP areas reported using more services
        designed to support child and family development than did families not in
        SSLP areas.
             The results of the 2008 evaluation differ markedly from those of an
        early evaluation of the effect of SSLPs on children and parents by the same
        institution (NESS, 2005). The earlier study showed disappointing results.
        Positive effects were only found for relatively less disadvantaged
        families/children. For relatively more disadvantaged families/children
        (i.e. teen parents, lone parents, workless households) in SSLP areas, adverse
        effects emerged. While it is not possible to exclude that methodological
        differences explain the diverging findings, it is also plausible to assume that
        3-year-old children and their families participating in the second phase were
        exposed to more mature and better developed programmes. Also, these latter
        children and families were exposed to programmes that had the opportunity
        to learn from earlier studies, especially with respect to the need for greater
        effort to be made to reach the most vulnerable households.

3. Combating failure in education through financial support, guidance
and remedial programmes

            A number of initiatives targeted on youth at high risk of dropping out
        of education are already in place in the United Kingdom. Together with
        the planned broadening of learning options, they aim to tackle
        disengagement from education. They include: financial support to stay in
        education beyond the current compulsory schooling age (the Education
        Maintenance Allowance); guidance, advice and support at the crucial
        cross-roads between compulsory education and upper secondary
        education (the September Guarantee); and remedial programmes for
        youth who have become disaffected with mainstream education (the Entry
        to Employment programme).




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      A.        The Education Maintenance Allowance has improved
      participation, retention and achievement
          Financial difficulties partly explain the high school drop-out rate in the
      United Kingdom (Newburn, 1999). To help overcome financial barriers to
      staying in education longer, in 1999 the United Kingdom started piloting an
      Education Maintenance Allowance (EMA) for young people aged 16-19 in
      both England and Scotland. Following positive evaluations of the pilots (see
      Box 2.2), the EMA was rolled out across the United Kingdom from
      September 2004 and is available to youth aged 16-19 who have completed
      their GCSEs and engage in education for any academic or
      vocational course.16
          EMA depends on the student’s household income. In England, it can
      reach a maximum of GBP 30 per week provided the student meets weekly
      attendance requirements and, since 2008, progress and behaviour
      requirements. EMA payments are subject to fulfilling the so-called learning
      agreement – in effect a contract between the young person and the
      school/college – in which payment is made in return for improvements in
      attendance, and in which targets for attainment should be agreed. Bonus
      payments for retention and achievement – worth up to GBP 500 in 2007/08
      for learning programmes lasting more than two years – are also available.
      To get these, the student needs to meet specific goals agreed between them
      and their institution, demonstrating real progress and commitment to their
      learning programme. Slightly different conditions and/or amounts apply to
      EMA in Northern Ireland, Scotland and Wales.17
          While pilots differed in terms of payment methods – notably whether
      the allowance was paid to students or their parents – all regions opted for a
      direct payment into the student’s account. EMA does not affect the
      entitlement to other benefits received in the household. It is also noteworthy
      that earnings from the student’s part-time work while in education do not
      affect EMA entitlement.




16.       EMA is paid for all types of learning programmes (including remedial education).
          Only learning programmes giving right to the payment of a wage or a training
          allowance are excluded.
17.       While the basic allowance amount is the same across regions, attendance and
          retention bonuses are smaller in Northern Ireland, Scotland and Wales – around
          GBP 100 per year. The number of learning hours needed to qualify also varies
          across regions. In Wales, entitlement requires 12 learning hours per week while in
          Northern Ireland and Scotland 15 and 21 hours, respectively, are needed.

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           In the school year 2006/07, approximately 525 000 young people
        aged 16-18 enrolled in education in the United Kingdom benefited from
        EMA,18 compared with approximately 300 000 in 2004/05.
            Several rigorous evaluations of the effect of EMA on participation,
        retention and achievement have been carried out since its introduction in 1999
        covering both the pilots and the roll-out periods. All studies have found
        positive effects on participation and retention in education after compulsory
        schooling, and recent research (Chowdry et al., 2008 and LSC, 2008),
        exploiting more complete information on educational attainment, suggests
        more positive effects on achievement than originally found (see Box 2.2.).
        Although the programme is expensive – the retention bonus component alone
        costs approximately GBP 20 million per year in England – Dearden et al.
        (2005) find that it is cost-effective.

          Box 2.2. Evaluations of EMA pilots and national roll-out in England
      Positive outcomes of the EMA pilots in terms of improved post-16 participation and
   retention in education informed the decision to roll EMA out nationally in 2004.
      A rigorous evaluation of the English EMA pilots (Middleton et al., 2004) indicated they
   had a significant positive effect on the participation and retention of young people in
   secondary education. The programme raised the participation rate in full-time education by
   4.3 percentage points in the first year after compulsory education and by 6.3 percentage
   points in the second year. For men, the report also found an increase in retention –
   participation in education for two years after compulsory schooling – by 4.9 percentage
   points, mostly drawn from the group who otherwise would not have participated in any
   education in either the first or second year, i.e. young people coming from workless
   households. The report also found that EMA had its largest impact on the participation and
   retention decisions of low and middle achievers in terms of GCSE results. For those falling
   into the lowest achieving group, EMA increased the proportion staying in full-time
   education in the first and the second year after compulsory schooling by 8.8 percentage
   points. The effect was even larger for middle achievers.
      At the time of the pilots evaluation, rigorous assessment of the effect of EMA on
   achievement was hampered by incomplete data for the latest cohort. Middleton et al. provided
   some qualitative evidence that young women in the English EMA pilots were slightly more
   likely to achieve upper secondary level qualifications but no effect was observed for young
   men. The evaluation of the Scottish EMA pilots (Lannelli et al., 2002) was even less
   encouraging on this front. The authors found no effect of EMA payments on attainment, which
   they attributed only partly to incomplete data. According to the paper, learning agreements
   focused too much on attendance rather than being used to drive up efforts and youth were often
   unaware of the bonus payment they could qualify for if they met their achievement targets.


18.          This is the number of young people who have received one or more EMA
             payments during a year. In 2006/07, 30% of youth aged 16-18 enrolled in
             education in the United Kingdom in 2006/07 benefited from at least one EMA
             payment, twice the share in 2004/05.

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     More recent evaluations confirmed the positive effects of EMA on participation and
  retention estimated during the pilots and found encouraging evidence of strong and positive
  effects on achievement. Chowdry et al. (2008) used administrative rather than survey data
  and exploit the longer follow-up period to estimate the effect on achievement more
  precisely. Because of the larger sample size, the study also estimated the effects by socio-
  demographic characteristics. Young women were found to be 2.5 percentage points more
  likely to reach Level 2 and Level 3 qualifications – corresponding to lower and upper
  secondary qualifications respectively – while young men were about 2 percentage points
  more likely to do so. Also, both males and females experienced improvements in average
  A-level scores of about 4.5% on the base level. In addition, ethnic minorities experienced the
  strongest increases in attainment – on every indicator used in the study – and these increases
  were statistically significant. Another recent study (LSC, 2008) focused on the outcomes of
  the national roll-out in England. Although the evidence is only qualitative, the study
  confirmed the pilots finding that EMA improved participation and retention and provided
  evidence of positive effects on attainment.

      B.       The September Guarantee will help identify learning
      opportunities for youth at risk
          In September 2007, the government introduced, throughout England, the
      so-called September Guarantee. Under the Guarantee, all youth finishing
      compulsory education are guaranteed an offer of learning by the end
      of September.
           The Guarantee has three key elements: i) every young person in their
      last year of compulsory schooling is identified and receives the information,
      advice and guidance needed to apply for appropriate post-16 provision;
      ii) offers made to young people are recorded so that those who have not
      received an offer can be identified and given additional support to file
      applications; and iii) by the end of September, each young person must
      receive a suitable offer of a place in learning (offers must meet the young
      person’s needs in terms of the level of provision, their learning method,
      occupational sector and geographical location).
           In each local authority, schools, Connexions Services – a guidance and
      support service established in England in 2003 – and the Learning and Skills
      Council (LSC) – the body responsible for post-16 education and training in
      England, outside universities – must work together. Their cooperation is
      aimed at ensuring that the appropriate processes are in place – notably,
      referrals and recording of offers – and that each has a clear understanding of
      its responsibilities. Schools need to let their Connexions advisor know of
      young people who have received an offer to stay on with them while the
      LSC must ensure that Further Education (FE) colleges and training
      providers inform Connexions as soon as offers are made to young people.
      Offers are recorded until the end of August after which Connexions takes
      responsibility for those youth who have not received an offer yet.

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            This policy initiative is likely to have several benefits, some of which
        may go beyond its immediate objective. First, support through the
        application process and help with identifying local learning opportunities
        may encourage more youth to stay on in learning beyond compulsory
        education. Second, it will help setup a system of tracking youth who
        complete the current compulsory education requirement and it will make it
        possible to follow their destination. Third, the Guarantee will create close
        cooperation between several bodies at the local level – Connexions, LSC
        and schools – with a focus on youth, their needs and experiences. Fourth, the
        Guarantee may also improve the match between learning opportunities
        available locally and the demand from youth in the area.
            However, some challenges may arise in the implementation of the
        Guarantee. First, key to the success of the initiative is that the processes of
        referral and recording of offers as well as the cooperation between local
        actors work well. Second, where an initial mismatch has occurred between
        available learning options and young people’s demand, Connexions advisors
        may have to redirect youth whose demand cannot be satisfied to
        qualifications that come only close to their preference.
             A rigorous assessment of the impact of the Guarantee on numbers in
        learning is not available yet but data on the incidence of NEET at the end of
        2007 painted a mixed picture: the share of 16-year olds in NEET had fallen
        by 1.6 percentage points relative to a year earlier but the share of
        17-year olds in NEET had risen over the same period. As a result, starting
        2008, 17-year olds will also be covered by the Guarantee to ensure that
        youth who enrol on one year or short courses, or who leave the activity they
        chose after compulsory schooling, are given further opportunities to engage
        in learning.

        C.       Remedial education moving towards individualised
        pathways
            Remedial education programmes are key for youth who are at high risk
        of disengaging from learning or have already done so. In England, two
        remedial programmes currently exist, one focusing on 16-18-year olds – the
        Entry to Employment (E2E) programme – and the other for 14-16 youth –
        the Key Stage 4 Engagement.
            E2E is a work-based learning programme for youth (aged 16-18) who
        lack the basic skills needed to enter an apprenticeship, employment or
        structured learning at the post-compulsory level. The programme attracts
        young people with significant learning difficulties and/or disabilities, as well
        as young people who are neither in employment nor in education or training.


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      It is managed and funded by the LSC and is implemented keeping local
      needs into consideration.19
           After a pilot phase in 2002/2003, the scheme was launched nationwide
      in August 2003. Students must undertake learning in three core strands of
      the national curriculum: basic skills, vocational skills and development (with
      work placements in some cases), and personal and social development. A
      distinctive feature of the programme is its flexibility in meeting the needs of
      individual learners. The programme is not time bound20 or specified in terms
      of learning hours or attendance, other than meeting the minimum
      requirements of 16 hours per week. Besides, E2E is not qualification driven,
      although the programmes must provide learners with an entitlement to work
      towards external qualifications and awards, appropriate to their ability.
          Learning programmes are developed from a range of options to suit the
      needs of the individual learner. Initial assessment feeds into Individualised
      Learning Plans which are then reviewed on a regular basis and against
      which progress towards individual targets is measured. Appropriate awards
      and qualifications are selected according to how they might benefit
      individual learners.
          Learners are recruited through referral from Connexions Services or
      directly from the provider or support agencies, notably social services and
      youth offending teams. During the programme, youth receive a training
      allowance of GBP 40 per week. Most take between one and two years to
      complete the programme.
          A rigorous evaluation has not been carried out yet and qualitative
      studies provide inconclusive evidence on the effectiveness of E2E.
      E2E performance data for 2003/2004 indicate that at the end of the
      programme 21% of learners entered employment, 5% returned to full-time
      education, 13% became unemployed but over half pursued unidentified
      destinations (GHK, 2004). Interviews with providers also suggest that in


19.       The LSC works in partnership with the Learning and Skills Network – a not-for-
          profit organisation in charge of managing and providing E2E among other
          vocational education programmes – and Sector Skills Councils (SSC) – industry-
          specific bodies that bring together employers, professional bodies and
          occasionally trade unions working with government to develop the skills that
          business needs. The LSC also works in close cooperation with local providers
          including voluntary organisations and awarding bodies on this programme in the
          context of local needs.
20.       In 2003/2004, learners spent on average 41 weeks on the programme
          (GHK, 2004).

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        about 5% of the cases the referral system does not work, i.e. youth referred
        to E2E do not belong to the target group.
             The currently piloted Key Stage 4 Engagement programme is designed
        to offer a comparable experience to E2E at the 14-16 level. The programme
        was launched in 2005 and is aimed at young people who find it difficult to
        achieve progress within the mainstream curriculum. It is intended to have a
        significant work focus of up to two days per week, offer intensive advice
        and support for participants, encourage learners to develop general skills,
        attitudes and behaviours, and is tailored to the needs of the individual
        participant. An evaluation report will be available in July 2008.
             Both programmes may soon be replaced or incorporated into a new
        programme – the so-called Foundation Learning Tier (FLT) – being
        developed by the government in cooperation with the LSC and the
        Qualification and Curriculum Authority (QCA). FLT is going to be a
        framework for provision of personalised learning pathways for
        14-19-year olds unlikely to achieve their potential via GCSEs, adults with
        basic skills gaps and adults or young people with learning difficulties. The
        key idea behind FLT is that of individualised pathways for learners. Some
        trials were run between August 2006 and July 2007 where personalised
        learning pathways were developed in a similar way as within the E2E
        framework, starting with the development of an Individualised learning
        Plan. When implementation of FLT is complete in 2010, this will
        encompass all LSC provision at the low-end of the skill spectrum, including
        E2E (Stott and Lillis, 2006).
             However, qualitative evaluation (GHK, 2007) highlighted a number of
        difficulties such as: identifying true needs and personalising work
        placements within individual pathways; confusion about how FLT relates to
        other forthcoming key developments in the vocational education area and to
        existing programmes such as E2E.
             The introduction of a new programme – Entry to Learning – designed to
        re-engage those who are not engaged in learning post-16 has recently been
        announced (DCSF, 2007a). The programme is inspired by a number of
        innovative voluntary sector and local authority funded schemes that have
        succeeded in restoring young people’s confidence and self-esteem. The new
        Entry to Learning programme is designed to bridge the gap between these
        kind of initiatives and more formal learning by ensuring that re-engagement
        is accompanied by clear and personalised progression routes which will take
        youth step by step back into formal learning. Young people will be
        supported through mentoring to move from good quality re-engagement
        activities – such as semi-formal personal development – back into more
        formal learning, in steps they can manage.


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4. Engaging 14-19-year olds in England through a broader spectrum
of learning options

          To increase retention in education and training, England has undertaken
      to broaden the learning options available to youth aged 14-19. Several
      programmes have been launched over the past five years and the 14-19
      Education and Skills White Paper and Implementation Plan (DfES, 2005a
      and 2005b) lay out several new options that will become available shortly.
      For the time being, these initiatives concern England only. However, Wales
      has launched its own 14-19 strategy (National Assembly for Wales, 2004).21

      A.        Diversification and flexibility for 14-16-year olds have
      resulted in a complex system of learning provision
           To ensure participation beyond compulsory education, it is important to
      strengthen engagement of 14-16-year old youth. For this age group, the
      main recent policy initiatives to strengthen vocational education include:
      i) the introduction of vocational GCSEs in 2002; ii) the Young
      Apprenticeships initiative launched in 2004; and iii) the Increased
      Flexibility programme.
          GCSEs in vocational subjects were introduced in England and Wales
      2002 to promote the parity of esteem between vocational and more
      traditional academic subjects. Vocational GCSEs are currently available in
      eight subjects and give young people the opportunity to explore a particular
      vocational area as part of a balanced learning programme. A vocational
      GCSE is equivalent to two academic (general) GCSEs and enables



21.       The action plan for 14-19 learning in Wales involves two major changes to the
          secondary education system. First, the government has introduced the Welsh
          Baccalaureate Qualification (WBQ) – piloted in several schools since 2003 and
          now starting to be rolled out nationally for completion by 2010. The WBQ is an
          overarching diploma at intermediate and advanced levels for 16-19-year olds,
          which incorporates existing qualifications together with a common core
          curriculum. In practical terms, the WBQ does not replace A-Levels or GCSEs or
          other vocational qualifications but includes them within the learning options.
          Second, the Welsh administration has introduced so-called flexible Learning
          Pathways. The idea behind Learning Pathways is to allow each 14-19-year old to
          design his/her personal learning experience thanks to a wider choice of learning
          options – vocational and academic – and greater flexibility to vary the speed and
          direction of their pathway. The two main strengths of the reform are the
          individualisation of learning routes and the accent put on support and guidance.

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        progression to further education, training or employment. Entries22 for
        vocational GCSEs have grown over time but in 2006 they accounted for
        only 6% of the total. The programme has not been the object of a rigorous
        evaluation but a qualitative report by the Office for Standards in Education,
        Children’s Services and Skills (Ofsted, 2004) showed disappointing
        outcomes. Vocational GCSEs were found to provide only a second-class
        route compared with academic learning and were mostly attended by lower-
        attaining pupils.23
            Young Apprenticeships (YAs) – launched as a pilot scheme in England
        in 2004 and not yet rolled out – are intended for 14-year-old motivated
        youth of average and above-average ability who wish to start an
        apprenticeship at the age of 16.24 Pupils are based in school and follow the
        core national curriculum subjects. In addition, for two days a week (or
        equivalent) they work towards nationally recognised vocational
        qualifications at a FE college or with a training provider. The learning
        experience includes 50 days’ experience of work over the two years of the
        programme. The programme is delivered by partnerships – including local
        schools, the local LSC, local education authorities – and is supported by the
        relevant SSC.
            Ferguson and Mattick (2006) studied outcomes of cohort one of the
        programme (2004-2005 cohort). The authors found that 92% of cohort one
        students completed the programme and, of these, 74% gained a Level 2
        vocational qualification. Evidence on achievement was less satisfactory as
        cohort one students performed close to the national average when GCSE
        scores were considered25 but significantly below the national average if
        English and Maths were included. It is also noteworthy that among those who

22.          Entries are the number of exams sat and not the number of pupils sitting GCSEs
             exams in the corresponding year. In addition, because vocational GCSEs are
             worth two awards each, each entry is counted as two to determine the proportion
             of vocational GCSEs entries over the total.
23.          In 2004, pupil’s achievement in vocational GCSEs was rated as unsatisfactory for
             over 25% of students – comparing unfavourably with the average for all GCSE
             subjects where it was just 3%.
24.          The pilot involved 1 000 14-year olds in 2004 who completed the programme in
             2006. Another 2 000 started in 2005, 3 500 in 2006 and 9 000 in 2007. The
             programme is currently offered in the following areas: automotive industries,
             business administration, construction, creative industries and arts, energy,
             engineering, food manufacturing, hairdressing, health and social care, hospitality,
             retail, sports management and science.
25.          The measure used was the share achieving more than five A*-C GCSEs.

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      completed the programme only 27% entered full-time apprenticeships.26 A
      qualitative report by Ofsted (2007) found improvements on several grounds
      when comparing the first three cohorts of YAs. Most notably, a greater
      proportion of the partnerships inspected provided good work experience in
      2006-2007 than in previous years. Of the 14 partnerships inspected, only three
      had not put in place the arrangements for 50 days’ work experience. In
      addition, the employers interviewed identified benefits in the programme for
      their own organisation because it attracted young people to trades that they
      would not have otherwise considered and because it allowed them to assess
      and recruit potential employees.
          The Increased Flexibility Programme (IFP) for 14-16-year olds was
      introduced in England in 2002 as a different route through which students
      can access a number of existing vocational options. IFP provides schools
      with funding needed to give youth more learning options – i.e. to enhance
      vocational and work-related learning opportunities for 14-16-year olds
      including vocational GCSEs and other vocational qualifications available in
      partnership with FE colleges. The last IFP for which funding was available
      separately started in 2006 and will finish in 2008. Since 2008, schools may
      receive grants to continue provision of IFP courses but this will no longer be
      under the IFP heading.
          Golden et al., (2005 and 2006) studied outcomes achieved by the first
      and second cohort participants of IFP and painted a mixed picture of the
      success of the programme. IFP exceeded its target in so far as the majority
      of participants (87% in the second cohort and 80% in the first cohort)
      progressed to further education or training. IFP was also positively
      associated with the attainment of participants – particularly female and
      students whose educational attainment was lowest prior to engagement in
      IFP – although this was not consistent across all types of qualifications
      studied. However, the educational attainment of students pursuing
      vocational GCSEs and National Vocational Qualifications outside IFP was
      higher than those who did so through the IFP framework.

      B.       Simplification proposals by the Tomlinson report have
      only been partially implemented
         Some of the changes that the English education system is currently
      undergoing are the result of partial implementation of the so-called
      Tomlinson report, a government-commissioned review of the curriculum for

26.       However, this does not translate into negative outcomes for the remaining
          completers. In total, 92% of students completing the programme progressed into
          post-compulsory education, training or employment

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        14-19-year olds led by Mike Tomlinson which was completed towards the
        end of 2004. Its central recommendation was to replace A-levels, GCSEs
        and the plethora of existing vocational qualifications with a single diploma,
        leading to a considerable simplification of the English qualification system
        (see Table 2.1).

                     Table 2.1.        Tomlinson’s Diploma Framework proposal

   Diplomas                                                            Current qualifications

                                                            Advanced Extension Award; GCE and VCE AS and
   Advanced        Core       Main learning       Level 3
                                                            A level; level 3 NVQ; equivalent qualifications

                                                            GCSE grades at A-C; intermediate GNVQ;
   Intermediate    Core       Main learning       Level 2
                                                            level 2 NVQ; equivalent qualifications

                                                            GCSE grades at D-G; foundation GNVQ; level 1 NVQ;
   Foundation      Core       Main learning       Level 1
                                                            equivalent qualifications

   Entry           Core       Main learning       Entry     Entry-level certificates and other work below level 1


Source: Department for Education and Skills – DfES (2004).

            The Tomlinson report also called for improved vocational programmes
        and took the view that parity of esteem between academic and vocational
        qualifications would be achieved thanks to the single diploma framework.27
        The Diplomas proposed by Tomlinson would be made up of modules
        adapted from the existing A-level and GCSE modules. Students would be
        able to pick their own combination (open diploma) or opt for one of the
        20 pre-designed combinations (specialised diploma), giving stronger and
        more respected vocational qualifications. A single diploma framework
        would also avoid the risks of tracking young people too early into
        qualifications with a significant vocational content. There is some evidence
        that early tracking of pupils – before age 16 – may increase educational
        inequality and reduce average performance (Hanushek and Wößmann 2006
        and OECD 2007b), thus needs to be justified on the basis of proven benefits.




27.          Note that this radical overhaul of the qualification system had the backing of
             teacher and head teacher associations, most university leaders and many
             employers. These stakeholders agreed that a radical change was needed – as both
             GCSEs and A-levels were considered dated and not sufficiently challenging for
             bright students – and that the only way to achieve parity of esteem between
             academic and vocational learning was for both routes to be part of a single
             qualification framework.

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          While the idea of a joint diploma framework for academic and
      vocational learning put forward by Tomlinson was rejected,28 the English
      administration is about to introduce 17 new Diplomas that for the time
      being will add to, rather than replace, A-levels and the current framework
      of over 3 500 vocational qualifications. In the longer run, however, the
      government envisages that Diplomas will simplify the qualification
      framework by building on the best of existing vocational qualifications.
      Besides, in 2013, the success of the Diplomas will be assessed and the
      future of A-levels reconsidered.

      C.          A total of 17 new Diplomas will be available in 2013
           Diplomas are new qualifications designed to help 14-19-year olds in
      England develop practical skills as well as basic knowledge. They are
      currently being designed in cooperation with employers through SSCs. The
      first five will be available in 2008 and another five will be added in 2009
      with the aim of having the full set of 17 Diplomas available at the national
      level by 2013.29
          Diplomas will be available at three levels: foundation level, higher
      level (lower secondary education) and advanced (upper secondary
      education level). To achieve a diploma, young people will have to achieve
      appropriate standards in English and Maths (the core) and the specialised
      content relevant to the Diploma, to pass relevant GCSEs and A-levels, and
      to fulfil work experience requirements (main vocational learning). In
      March 2008, the English administration announced the introduction of
      Extended Diplomas, available from 2011. Extended Diplomas will offer
      young people opportunities to broaden their studies at each level with
      particular attention paid to additional English, maths and science learning.
      Students completing an Advanced Diploma will be eligible to apply to
      universities. However, acceptance will depend on the admission policies
      for each university.



28.        The proposal was rejected because of strong political support for keeping the
           A-level route unchanged.
29.        The first five Diplomas will be available in: Construction and the Built
           Environment, Creative and Media, Engineering, Information Technology and
           Society, Health and Development. The remaining 11 Diplomas include:
           Environmental and Land-based Studies; Business, Administration and Finance;
           Manufacturing and Product Design; Hospitality; Hair and Beauty Studies; Travel
           and Tourism; Public Services; Sport and Leisure; Retail; Science; Languages; and
           Humanities.

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            Although it has been announced that there will be clear progression
        routes from Diplomas into Apprenticeships and vice versa, Apprenticeships
        will remain distinct and will not be required to fit within the Diploma
        framework.
             Considerable stress has been put on the involvement of employers in the
        design of Diplomas and in the implementation phase. The design of each
        Diploma is led by a consortium of employers30 and employers are involved
        in each of the 144 consortia delivering the first five Diplomas in
        September 2008. However, the extent of employers’ engagement in the
        delivery and teaching of Diplomas and in the provision of work placement is
        difficult to anticipate and there is likely to be considerable variation. A
        minimum of 10 days work experience has been set as part of the delivery
        requirements for Diplomas (DCSF, 2007b). The government has also
        announced that it may not be feasible initially for work experience to be
        specific to the Diploma being studied, although this should be encouraged.
            Unions are only marginally involved in the design of Diplomas. In fact, it
        is not compulsory for a SSC – the main counterpart of government in the
        design of Diplomas – to have a union representative in their governing board.
        More involvement of unions has proved beneficial in countries with
        long-standing systems of vocational education – such as Austria, Denmark
        and Germany – to ensure employers’ engagement and sufficient work
        placements. In this respect, the Trade Union Council (TUC, 2006) has called
        for more reciprocal obligations of employers. TUC has argued that, in
        exchange for a bigger say in the design of Diplomas, the government should
        press all employer bodies to make a clear commitment that they will be urging
        their constituents to give Diplomas due recognition in the recruitment
        processes and provide a sufficient number of work-experience placements.
            Finally, a number of funding concerns have been expressed in relation to
        the Diplomas and other initiatives increasing cooperation between schools
        and FE colleges. At present, schools receive more funding than FE colleges
        although the government has committed to reducing this disparity.31




30.          In total, 5 000 employers were involved in the design of the first five Diplomas.
             They helped with the design of personal learning and thinking and employability
             skills. In addition, the Confederation of British Industries – the largest employers’
             organisation in the United Kingdom – helped with the design of function skills in
             English, Maths and ICT.
31.          Despite some extra funding allocated to FE colleges, this disparity will still
             amount to 5% in 2008 (UCU, 2006).

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      D.       In 2013 all 16-19-year olds will be entitled to an
      apprenticeship placement

           One of the key measures included in the 14-19 Education and Skills
      Implementation Plan to broaden learning options in secondary education is the
      so-called “apprenticeship entitlement”. By 2013, every suitably qualified
      young person in England aged 16-19 wishing to pursue apprenticeship
      training should be guaranteed a work placement to do so.
           In early 2008, the government also launched a two-month consultation
      phase on new legislation to expand the use of apprenticeships in the
      United Kingdom. Proposals include the creation of a national apprenticeship
      service to lead the expansion, targets for increasing apprenticeships in the
      public sector, and a pilot wage subsidy programme to make it more
      attractive for small business to offer apprenticeships.

      About 7% of 16-18-year olds were apprentices in 2007
           In the academic year 2006/2007, 6.5% of 16-18-year olds participated in
      an apprenticeship. At present, a total of 200 apprenticeships (leading to
      qualifications at the lower secondary education level) and advanced
      apprenticeships (leading to upper secondary education qualifications) are
      available in over 80 different industries.32 In 2007, Business Administration,
      Electro Technology and Hospitality and Catering were the main sectors for
      starting an apprenticeship (Figure 2.11). Employers have been involved in
      designing each apprenticeship through the relevant SSC. However, while
      many large employers have participated in this process, it has proved
      difficult to involve SMEs.
           Off-the-job training and assessment are fully funded by LSC that
      contract with “learning providers” who organise and/or deliver training and
      assessment services to employers. Providers are usually private training
      companies but might also be FE colleges, voluntary sector organisations,
      Chambers of Commerce, individual employers or “Group Training
      Associations” – groups of employers joining forces to organise off-the-job
      training. Only about 5% of apprenticeships are directly contracted with



32.       In their current format, apprenticeships were introduced in 1994. The programme
          was initially called Modern Apprenticeships and was designed to provide work-
          based training in a broad range of sectors of industry to youth aged 16-25 who
          would gain a recognised qualification while working. The name was changed to
          Apprenticeships in 2004 and, in the same year, the upper age limit was abolished
          and the minimum age to be an apprentice was lowered to 14.

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                                                CHAPTER 2. INITIAL EDUCATION AND LEARNING ON THE JOB – 91


        single employers participating in the scheme. LSCs also provide support to
        employers for the management of apprenticeships.33

              Figure 2.11.            Distribution of apprentices across industry,a 2007
                                                    Percentages
           Health and Social Care
                                                                                   16-18
                       Early Years
                                                                                   19 and over
                             Retail

               Automotive Industry

                 Customer Service

                      Construction

                       Engineering

                      Hairdressing

          Hospitality and Catering

                   Electrotechnical

          Business Administration

                                      0        2           4           6    8        10          12

a)  The selected industries correspond to the 11 largest apprenticeship sectors covering 70% of all
    apprenticeships in 2007.
Source: Learning and Skills Council – LSC (2007).

            Local learning providers help businesses recruit a suitable apprentice,
        write individual learning plans that apprentices sign when training starts and
        handle assessment and quality control. Selection takes account of school
        qualifications – especially for more technical occupations – and of motivation.
        Youth who want to enter can apply directly but all young people should be
        given appropriate advice from the schools.34 Youth who would like to start an
        apprenticeship but do not qualify for one can attend a so-called Programme-
        led Apprenticeship – a classroom-based preparation course.


33.          Relationships between LSC and employers are managed differently depending on
             size. Larger business, particularly those with branches all over England, can take
             advantage of the LSC National Employer Service. This service provides a
             dedicated account manager acting as a single point of contact to take care of all
             needs, including queries about qualifications and funding. On the other hand,
             SMEs are directed to local LSC for support.
34.          Unfortunately, schools have incentives in keeping the best students, often resulting
             in biased advice.

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              There is no set time to complete an apprenticeship. In 2006, apprentices
         who successfully completed the programme took on average 13 months for
         apprenticeships and 22 months for advanced apprenticeships (LSC, 2006a).
         If completed successfully, apprenticeships allow entry to higher education.
         Gender segregation is an issue in the current apprenticeship
         framework
              As Figure 2.12 shows, there is considerable gender segregation in many
         of the sectors, with men dominating the traditional manufacturing sectors
         and women over-represented in service sector apprenticeships. On the other
         hand, participation of ethnic minorities in all apprenticeships has improved
         considerably over time, from a share of just 4.5% in 2002/03 to 8% in
         2005/06 – compared with a share in the 15-24-year-old population of about
         9%. However, ethnic minorities continue to be under-represented in
         advanced apprenticeships where they account for only 6% of entrants.35 In
         its 2008 reform proposals, the government is suggesting the introduction in
         targeted areas of so-called “critical mass” pilots informed by positive
         discrimination rules. The pilots are intended to provide strong case studies
         and to help change expectations among underrepresented groups.

     Figure 2.12.         Gender distribution of apprenticeships in selected industries,a 2007
                                              Percentages

                                              Women                Men
                    100
                     90
                     80
                     70
                     60
                     50
                     40
                     30
                     20
                     10
                      0




a)  The selected industries correspond to the 11 largest apprenticeship sectors covering 70% of all
    apprenticeships in 2007.
Source: Learning and Skills Council – LSC (2007).


35.          Perez-del-Aguila et al. (2006) also show that in 2003 participants from ethnic
             minorities had lower completion rates than those in the White-British group.

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                                                CHAPTER 2. INITIAL EDUCATION AND LEARNING ON THE JOB – 93


        Apprenticeship pay varies considerably by sector
            Apprentices have the status of employees and receive pay. Pay rates
        vary and depend on age and on experience. Minimum wages do not apply to
        all stages of an apprenticeship and their relevance varies with age and
        experience in the programme: 16-18-year-old apprentices and apprentices
        aged 19 or older who are in their first 12 months of apprenticeship are not
        entitled to the minimum wage. Aside from these rules, the LSC has provided
        guidance to encourage employers to pay apprentices a minimum of GBP 80
        per week for a 35-hour week (about two thirds of the minimum wage rate
        for 16-17-year olds).
            A study conducted by Ullman and Deakin (2005) based on an ad-hoc
        survey on apprenticeship pay conducted in 2004 found that apprentices were
        paid an average net pay per week of GBP 137 (15% more than the minimum
        wage for 16-17-year olds). However, this varied greatly by sector. The
        average weekly pay of apprentices in Hairdressing and Early Years was
        GBP 90 and their median weekly pay was just GBP 80.36 At the other end of
        the scale, apprentices in the Electro Technical sector received an average net
        pay of GBP 183 (see Figure 2.13). The authors also found considerable
        differences across apprenticeship levels and gender (see Figure 2.14).
            Employers are entitled to claim some on-the-job training expenses
        back from their local LSC. Two levels of funding are available through the
        LSC for young people on work-based learning in England. Apprentices
        older than 19 attract a lower level of funding than 16-18-year olds on the
        assumption that they learn more quickly and complete the programme
        more quickly than those coming straight from school at 16.37 Funding is
        allocated based on a national formula which distinguishes between a core
        component and an assigned weight as follows: i) core funding, related to
        the length of the programme, training costs and overheads; ii) weighting,
        calculated on factors such as the need for costly equipment.




36.          In its 2008 reform proposals, the government is suggesting to intensify controls to
             ensure enforcement of the GBP 80 minimum.
37.          In its 2008 reform proposals, the government suggests the introduction of a pilot
             to test the relaxation of the current age rules in sectors where it is difficult or
             impossible to achieve an apprenticeship before the age of 19 and study its effect
             on employer’s willingness to offer Apprenticeship places.

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     Figure 2.13.       Average net weekly pay of apprentices in selected industries,a
                                  United Kingdom, 2004
                                          Pounds (GBP)

       200
       180
       160
       140
       120
       100
        80
        60
        40
        20
         0




a)  The selected industries correspond to the 11 largest apprenticeship sectors covering 75% of all
    apprenticeships in 2004. Figures are an average of apprenticeships and advanced apprenticeships.
Source: Ullman and Deakin (2005).



       Figure 2.14.       Average net pay by gender, age and apprenticeship level,a
                                  United Kingdom, 2004
                                          Pounds (GBP)
        200
        180
        160
        140
        120
        100
         80
         60
         40
         20
          0




a)  Average of the following industries: Business Administration, Early Years, Electro Technical,
    Engineering Manufacturing, Retailing, Construction, Hairdressing, Hospitality, Motor Industry,
    Health and Social Care and Costumer Service.
Source: Ullman and Deakin (2005).




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        Apprenticeships completion rates have improved but remain
        disappointing
             Completion rates of apprenticeships were, until very recently, extremely
        low, standing at less than one in three in the academic year 2003/04 (West,
        2004).38 This completion rate compared rather badly internationally. West
        (2004) estimated completion rates of 70% in Denmark, 75-80% in France,
        75% in Germany and 65-70% in the Netherlands. The author ruled out
        labour market situation, industry-specific factors and competition with
        full-time education as sole factors behind low completion rates in England
        and suggested that broader management actions may play a role. He
        identified the following management actions to improve completion rates:
        better selection of apprentices, better quality of off-the-job training, more
        monitoring and follow-up during the apprenticeship to identify trainees at
        risk, and greater efforts to re-direct drop-outs into other apprenticeships as is
        done in Denmark and Germany.39 The author also suggested the
        introduction of a probation period before the apprenticeship contract starts.
        This would help eliminate, within a short time frame, those who have made
        the wrong choice of occupation or of individual employer.40
            To boost completion rates, the LSC introduced in 2004 changes to
        providers’ remuneration. Providers are now only paid 75% of apprenticeship
        funding upfront while the remaining 25% is paid only if the apprentice
        completes the course. Thanks to this measure, completion rates have improved
        significantly since 2004 although they are still low by international standards
        and vary by type of apprenticeship and industry. In 2006, completion rates
        stood at 50% for apprenticeships compared with just 44% for advanced
        apprenticeships and tended to be higher in more traditional sectors than in
        services (Figure 2.15).

38.          Note that non-completion does not always lead to disappointing labour market
             outcomes. Thornhill (2001) shows that 44% of drop-outs were in another job after
             leaving training.
39.          In Denmark, providers must inform the counselling service – the equivalent of
             Connexions in England – of anyone who has dropped out of an apprenticeship and
             the counselling service must conduct an interview with that person. In Germany, a
             similar counselling service is in place and the lastest figures (Bundesinstitut für
             Berufsbildung, 2007) show that 50% of those who drop-out of an apprenticeship
             contract are “re-inserted” into another one (another 13% moved on to
             school-based study and 17% went into jobs outside apprenticeship). It is not
             known whether re-inserted leavers complete their “replacement” apprenticeships
             but high overall completion rates suggest that many do.
40.          About 30% of drop-outs give a “wrong choice of occupation or employer” as the
             main reason for not completing their apprenticeship.

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           Hogarth and Hasluck (2003)41 showed that non-completion has a cost
       for employers. This is because net costs tend to become net benefits only as
       apprentices progress towards completion – mostly because the apprentices’
       marginal productivity rises faster than their wages.

           Figure 2.15.     Apprenticeship completion rates in selected industries,a
                                  United Kingdom, 2006
                                             Percentages
                           Apprenticeship                   Advanced Apprenticeship
      70
      60
      50
      40
      30
      20
      10
      0




a)  The selected industries correspond to the 11 largest apprenticeship sectors covering 74% of all
    apprenticeships in 2006.
Source: Learning and Skills Council – LSC (2006a).


           While completion is important, gaining a qualification has been shown
       to improve returns to apprenticeship training. Unfortunately, completion is
       rarely accompanied by a qualification. Of the 50% of apprentices who
       successfully completed the programme in 2006, only 6% gained a National
       Vocational Qualification (NVQ). McIntosh (2004) showed that holding an
       apprenticeship certificate as well as an NVQ yielded twice the wage returns
       as holding just the former.

41.          The study covers advanced apprenticeships in Engineering, Construction and
             Business Administration and apprenticeships in Retail, Business Administration
             and Hospitality. The net costs/benefits estimates accounted for wages paid, the
             value of apprentices’ product while working, supervisory costs and funding
             received from LSC where applicable. Overall, the study suggested that there were
             net costs of running apprenticeships in some manufacturing industries. The
             authors also found that net costs were higher in advanced apprenticeships where
             placements were more difficult to find.

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        Manufacturing apprenticeships yield the highest returns
            Wage returns are a good proxy indicator of quality or, more specifically, of
        the value attached to apprenticeships by the labour market. While there is
        considerable disagreement on the rates of return to apprenticeship training,42
        there is general agreement that, when returns are positive, they vary
        considerably by industry. Apprenticeships are more likely to increase the
        earnings of trainees in manufacturing industries than in the service sector. This
        may partly be due to the much longer apprenticeship tradition in manufacturing
        industries vis-à-vis the service sector. It may also be due to the limited on-the-
        job and off-the-job training components in service sector apprenticeships.
            Ullman and Deakin (2005) found that apprentices worked on average
        33 hours per week for their employers including on-the-job training but
        excluding off-the-job training. This level was fairly consistent across sectors
        although the proportion of work and on-the-job training varied a lot by
        sector (Figure 2.16). Off-the-job training took typically one day per week in
        the manufacturing sector but as little as one to three hours in some service
        sector apprenticeship schemes.
      Figure 2.16.          Hours of training and working per week in selected industries,a
                                        United Kingdom, 2004
                          Working               On-the-job training        Off-the-job training
      45
      40
      35
      30
      25
      20
      15
      10
       5
       0




a)  The selected industries correspond to the 11 largest apprenticeship sectors covering 75% of all
    apprenticeships in 2004.
Source: Ullman and Deakin (2005).


42.          McIntosh (2004) estimated returns of 5-7% for men and no returns for women.
             McIntosh (2007) estimated returns of 18-20% for men and of 13% for women in
             advanced apprenticeships only (high returns are mostly driven by large and significant
             returns for Construction and Machinery Manufacturing). Dickerson and Vignoles
             (2007) found no returns to vocational qualifications including apprenticeships.

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      Quality of off-the-job training is highest in manufacturing
          The quality of off-the-job training provision is a key aspect of
      apprenticeship training. A study by Hughes and Monteiro (2005), based on
      inspections of providers conducted yearly by the Adult Learning
      Inspectorate, found that the quality of off-the-job training was considerably
      higher in the traditional manufacturing apprenticeships than in the service
      sector. Also, among external providers, the best were specialists, i.e. they
      offered a single area of learning.
          The study found that the best providers were individual employers or
      Group Training Associations because of better coordination between
      on-the-job and off-the-job learning. Unfortunately, this provision setup is
      rare.43 Most off-the-job training is provided externally with limited input of
      employers. In addition, the current structure means employers do not
      develop an internal training culture and small employers’ opportunities to
      participate – particularly in rural areas – are limited by the availability of
      learning providers in their area. Group Training Associations have proved
      quite successful in involving employers and, in some instances, in
      organising group provisions for small employers and employers in rural or
      isolated areas.

      In 2005, the demand for apprenticeship places was five times the supply
          In April 2005, five times as many young people as employers envisaged
      entering an apprenticeship contract (Apprenticeship Task Force, 2005).44
           To make things more difficult for young people wanting to enter an
      apprenticeship, Ullman and Deakin (2005) show that only 55% of
      apprentices are new to their employer – ranging from over 70% in some
      manufacturing industries to as low as 21% in Hospitality and Catering.
      This is partly due to the way incentives for learning providers are set.
      Currently, each has a target of apprenticeships to organise to be filled
      either by allocating a new applicant to an employer or by setting up an
      apprenticeship for someone who is already an employee of the firm. As the
      latter is easier to do, most providers privilege employees. While it can be
      argued that life-long learning of employees is very important, there are
      ways through which this can be carried out and financed other than

43.       The Modern Apprenticeship Advisory Committee (2001) found that most
          employers played a passive role in training provision and this was a key weakness
          requiring action.
44.       The report provides evidence that this is not because employers do not know of the
          existence of apprenticeships. Over 90% of employers are aware of the programme.

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        apprenticeships. For instance, the Train to Gain programme – launched
        nationwide in 2006 – provides employers with free skill brokerage
        services to identify the skill gaps of their workforce and the best provision
        and funding available to fill them.
            In many OECD countries, the cost of taking an apprentice is often
        another deterrent for employers. Evidence that this is the case in England is
        mixed. On the one hand, the recommended GBP 80 weekly pay may be an
        issue for non-participating employers, particularly in SMEs, and for
        employers in some service sectors. On the other hand, the 10% of employers
        currently offering apprenticeship placements to 16-18-year olds pay them on
        average over GBP 100 per week (Figure 2.14).

            The lack of sufficient apprenticeship places is a key issue in light of the
        introduction of the apprenticeship entitlement in 2013 and of the
        recommendation emerging from the Leitch Review on Skills (2006) that
        there should be 500 000 apprentices in England by 2020 (there were fewer
        than 300 000 in 2007).
             To fill this significant gap, in its 2008 reform proposals, the government
        is suggesting a pilot wage subsidy programme for SMEs to make it more
        attractive for them to offer apprenticeship places. There are also plans to
        strengthen the existing Programme-led Apprenticeship scheme (LSC,
        2006b). The programme is scheduled to change from providing preparation
        for young people who are not ready for an immediate apprenticeship
        placement to providing the off-the-job training component of an
        apprenticeship all in one module when an apprenticeship place is not
        available. This risks being inefficient as it is precisely the alternating nature
        of on-the-job experience and off-the-job training that makes apprenticeship
        training valuable.

             Finally, it is noteworthy that, in England, the involvement of unions in
        the design and delivery of apprenticeships has been rather limited contrary
        to the experience in countries with a long tradition of apprenticeship
        training. For instance, more support of Union Learning Representatives –
        union members working with management and employees in their
        organisation to encourage participation in learning – to apprentices may help
        improve completion rates.




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5. Raising compulsory education requirements

      A.        In 2015, youth will have to participate in education and
      training until age 18
          The Education and Skills Bill, currently being discussed in Parliament,
      introduces a requirement to remain in education or training beyond the
      current statutory leaving age. If it is successful, in 2013 every young person
      in England who has not already obtained an upper secondary qualification
      will be required to participate in education and training until age 17 and in
      2015 this requirement will be extended until age 18 (DfES, 2007a).
           There is a rich economic literature, starting with Angrist and
      Krueger (1991), studying the effect of compulsory schooling on education
      attainment. Most papers have exploited month of birth differences to show
      that students compelled to stay in education a few months longer were likely
      to achieve better education and labour market outcomes, after controlling for
      a number of external factors. A recent paper by Del Bono and
      Galindo-Rueda (2006) is interesting in this respect as it exploits a unique
      feature of the English education system by which students who turn 16 are
      only allowed to leave education at two dates during the year: Easter and the
      end of the school year. The authors find that students compelled to stay in
      school as little as three months longer than their classmates tend to achieve
      significantly higher qualifications and experience better labour
      market outcomes.
           Despite evidence of positive returns to raising the participation age,
      keeping young people who would have otherwise left education engaged in
      learning for an additional two years is not simple. By 2015, when the reform
      if fully operational, the government judges that learning provision – with the
      full implementation of Young Apprenticeships, Diplomas, the
      Apprenticeships Entitlement and FLT – will be sufficiently broad that, for
      every young person, there will be an appropriate type of course available,
      whether theoretical, applied or work-based. Although this broader provision
      is intended to benefit all students, it is going to be crucial to engage those
      youth who would have dropped out of education at 16.
         The reform is also designed to allow more flexible participation than
      keeping young people in full-time education until they are 18:
     •    participation will be at school, in a college, with a private training
          provider, in work-based learning or in accredited training provided by
          an employer;



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        •    participation will be full-time for young people not in employment a
             significant part of the week, and part-time for those working more than
             20 hours per week;
        •    in order to count as participating, young people who are in full-time
             employment will be required to work towards accredited qualifications.
            The provision of more choice in learning is expected to boost voluntary
        participation in education for 16-17-year olds to 90%. As a result, the
        compulsory nature of the measure, with the enforcement problems that may
        arise, is only expected to affect the remaining 10%. Modelling conducted by
        the Department for Education and Skills (DfES, 2007a) suggests that the
        majority of the additional learners would be based in Further Education
        colleges – mostly dealing with classroom-based vocational education –
        although some would be in schools. The government also expects a steady
        increase in work-based learning over the coming several years, from just 7%
        in 2007 to 12% in 2016 (Figure 2.17).

 Figure 2.17.           Projected participation in education and training of 16-17-year olds,
                                   United Kingdom, 2007-2017
                                                    Percentages
                   Work-based learning                                 Part-time education
                   Further education and higher education              Schools
  100
   90
   80
   70
   60
   50
   40
   30
   20
   10
    0




Source: Department for Education and Skills – DfES (2007a).


            While the new system will require considerable funding, the
        government’s view is that the returns will outweigh the costs, particularly
        because of lower NEET rates and thus reduced benefit dependency (DfES,
        2007b). Hunt and McIntosh (2007) model the economic benefits of raising
        the education and training participation age by: i) estimating the number of


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      additional young people participating in learning due to the reform;
      ii) modelling the attainment among the additional participants; and
      iii) valuing the economic benefits of the additional attainment. The authors
      estimate that the main expected benefit from the reform will arise from
      higher educational attainment,45 hence improved labour market prospects for
      young people over their lifetime both in terms of earnings and
      employability. Many assumptions are involved in the modelling but, under
      the central scenario, economic returns to the reform are found to
      be substantial.46

      B.        Ensuring sufficient and high-quality learning provision
      will be key
          Young people and union representatives (NYA, 2007 and TUC, 2007)
      highlighted the lack of apprenticeships places available at present, which
      they felt already causes difficulties for those unable to find a placement in
      their chosen field. There was doubt as to whether the provision would
      increase sufficiently to meet demand after the introduction of the
      apprenticeship entitlement and the raising of compulsory participation in
      education and training to age 18.47
          Other learning provision may also be difficult to expand. The
      participation of those who are currently disengaged will require providers
      who are willing and have the capacity to make appropriate provision for
      them. There is currently no way of forcing schools or colleges to make

45.       In the central scenario, about 17% of additional participants would attain
          qualifications at level 2 or level 3 by age 18.
46.       Under the central scenario, the additional benefit to the economy from raising the
          participation age is estimated to be around GBP 2.4 billions for each cohort of
          young people. However, this estimate is subject to a large degree of uncertainty as
          a reflection of the uncertainty surrounding many of the assumptions, including:
          i) attainment patterns of the group of people who do not currently participate;
          ii) the precise range of qualifications that will be available in 2015 (given current
          reforms) and the proportion of students taking each of the qualifications; and
          iii) the economic returns of the new qualifications currently being developed. On
          the other hand, the economic benefits model developed by the authors does not
          capture any wider benefits to society which may accrue from more young people
          participating in post-16 learning such as improved health, reduced anti-social
          behaviour or reduced likelihood of crime.
47.       About 39% of respondents to the policy consultation phase thought that planned
          learning provision would be insufficient to meet demand from students and to
          provide a good degree of diversification versus just 29% who thought it would
          (DfES, 2007c).

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        provision and, since the participation of reluctant learners is likely to depress
        success rates, much provision may end up being supplied by low-status
        “providers of last resort”.
            In June 2007 plans were announced to transfer the responsibility for
        funding 16-19 provision from the LSC to local authorities. If this proposal is
        successful in Parliament, the changes could be in place from 2010/11. Local
        authorities would then be under a duty to ensure that there is sufficient
        provision for all young people in their area (accounting for full participation
        up to age 17 by 2013 and up to 18 by 2015) and to ensure that youth have
        access to the new curriculum and qualifications entitlements. They would
        also be under a duty, when commissioning provision, to promote high
        standards and ensure that the best quality provision is purchased.48
            The option of combining full-time employment with part-time
        participation in education and training will also require the availability of
        more flexible provision particularly regarding starting dates.49 In this
        respect, it has to be acknowledged that learning provision has become more
        flexible recently.

        C.       Part-time learning participation may raise enforcement
        issues when job separation occurs
             The government is putting the primary responsibility of engagement in
        education or training with the young person. However, for youth combining
        full-time employment and part-time participation in learning outside the
        workplace employers will be responsible for verifying, at the time of hiring,
        that the young person is enrolled in the required training.
             Some enforcement problems may arise when youth who combine
        full-time employment and part-time participation in learning are dismissed by
        their employers or quit voluntarily. These unemployed young people would
        not necessarily be required to engage in full-time participation in education
        or training. Connexion services would support them into meeting the

48.          Note that the proposal does not require that local authorities should work to ensure
             that all young people attend provision in their area. It requires that the young
             people in their area have access to the best available provision within reasonable
             travelling distance, whether situated within or outside their own local area
             boundaries.
49.          For instance, working 16-17-year olds engaged in part-time participation in
             education or training who are fired by their employers or who quit may be
             required by Connexions to attend full-time education/training thereafter. Providers
             will have to account for young people to join courses in the middle of the school
             year, which may pose some planning problems

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      requirement to participate – be it full-time or part-time alongside
      employment. Full-time learning would be privileged for youth whose
      part-time training was provided by the employer – i.e. those who are left
      without any training when separation occurs. On the other hand, those who
      were attending training outside the workplace may be allowed to combine
      part-time learning and job search. This risks jeopardising the policy’s
      objectives unless there are clear job-search requirements and a time limit
      after which youth who have found work are required to re-engage in full-time
      participation in learning.

      D.          Effective enforcement routes are key
          Many stakeholders have been supportive of the reform proposals50 but
      some commentators51 have expressed reservations regarding the compulsory
      nature of the initiative.52 The government is counting on measures that
      broaden learning provision to raise voluntary participation of
      16-17-year olds from 77.5% in 2006 to 90% by the end of 2015. Even in this
      framework, enforcing participation for 10% of youth aged 16-17 who do not
      wish to continue studying would be challenging. In addition, Fletcher et al.
      (2007) considered that achieving voluntary participation of 90% of the
      targeted age group may be overly-optimistic, especially in light of the
      experience from other countries that have introduced similar measures.
          International evidence suggests that, if there are no mechanisms in place
      to enforce the participation requirement, as it has been the case in some
      US states and in New Brunswick in Canada, the policy only has a small effect
      (Oreopoulos, 2005). However, finding appropriate sanctions is not easy as
      many youth would not have the means to pay fines.
           In England, the government has set out proposals for an enforcement
      strategy based, in the early phase of disengagement, on advice and guidance.
      The system used to track participation post-2013 will be based on the
      database currently used locally by Connexions to track young people, for
      which funding is being transferred to local authorities. There will be a duty
      on providers – schools, FE colleges and other providers – to notify the
      system as soon as a young person drops out so that Connexions can get in
      touch with him/her immediately to help find an alternative place and resolve

50.        Among others, the Association of Colleges and the Association of Teachers and
           Lecturers have endorsed the reform.
51.        See TUC, 2007; National Youth Agency (NYA, 2007); and Fletcher et al., 2007.
52.        Reservations are based on these commentators’ belief that compulsion may further
           alienate disaffected young people by causing them to associate education with
           punishment.

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        any issues there may be. If the young person still does not engage, he/she
        will be given a final chance to fulfil the duty voluntarily. After this stage, the
        government proposes that the local authority will have the power to issue,
        where appropriate, an Attendance Order specifying the provision they must
        attend, where and when.53 Penalty for breach of the Attendance Notice will
        be a fixed penalty notice and if a young person was still not participating,
        the local authority could ultimately take them to the Youth Court, where the
        penalty would be a fine. There would be appeal mechanisms built into this
        to make sure that the local authority’s action was justified.

6. The tertiary education system and its main challenges

        A.            Graduates continue to do very well on the labour market
             The tertiary education system in the United Kingdom has undergone two
        major changes over the past 15 years: the distinction between vocational and
        academic institutions was abolished in 199254 and a number of changes to
        tertiary education funding were introduced starting in 1998.55 In its current
        setting, the system performs rather well by international standards
        (OECD, 2006c).



53.          The reform proposal envisages enforcement to be used as a last resort. If there is a
             good reason why a young person is not participating, and they are taking the right
             steps to re-engage with learning they would not enter any enforcement system.
             Local authorities would have the discretion to ensure this does not
             happen inappropriately.
54.          The 1992 Further and Higher Education Act abolished the distinction between
             Universities – involved with academic learning – and Polytechnics – focused on
             vocational learning. Thus, the act enabled polytechnics in England and Wales to
             acquire the title of university and award their own degrees. Former polytechnics
             have retained a vocational emphasis in their academic programmes because of
             their expertise in such programmes and the demand from students.
55.          In 1998, following the National Committee Inquiry into Higher Education (NCIHE,
             1997), tuition fees were introduced at a rate of GBP 1 000 per year indexed to
             inflation. In 2006, universities were allowed to charge a top-up fee for full-time
             home undergraduates up to a maximum of GBP 3 000 per year. Over the same
             period, income-contingent students’ loans covering both living costs and tuition fees
             were progressively introduced. Recent research has shown that the new funding
             system is fair to students at current tertiary rates of returns (Dearden et al., 2004)
             and that the top-up fees will provide universities with considerable funding to spend
             on increased teaching resources.

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           Despite the rapid increase in tertiary education participation over the past
      few decades, there is no evidence that the experience of graduates in the
      labour market has worsened over time. A study conducted by Purcell
      et al. (2005) compares the early experience in the labour market –
      approximately four years – of two cohorts of graduates (1995 and 1999). The
      authors find that the early career profiles of 1999 graduates are almost
      identical to those exhibited by the earlier cohort. The experience of
      unemployment among the 1999 graduates during the two years after
      graduation was slightly lower than for the 1995 graduates. The distribution of
      the duration of unemployment among the 1995 and 1999 cohorts was similar,
      with short spells of unemployment immediately after graduation dominating.
          The study also showed that working in non-graduate jobs – a proxy for
      so-called overqualification – was a common experience following labour
      market entry for both cohorts of graduates. Almost half of the class of 1999
      who were employed immediately after graduation worked in such
      occupations, but the incidence of “non-graduate” employment fell rapidly
      and by four years after graduation, only 15% of employed respondents
      remained in non-graduate occupations. During early careers, participation in
      such employment was generally lower for the 1999 than the 1995 cohort.56
           Participation in tertiary education of some socio-economic groups –
      particularly youth from low-income families – remains an issue. However,
      fears that the introduction of student loans would reduce participation of
      disadvantaged youth even further57 have not materialised. Galindo-Rueda
      et al. (2004) found no evidence that funding changes are behind the less
      rapid growth in tertiary participation among students from low
      socio-economic backgrounds relative to those from high socio-economic
      backgrounds. Since the loans introduction, participation of under-
      represented groups has increased.58


56.       Graduates in scientific disciplines, such as medicine, education, engineering, and
          mathematics and computing, were less likely to have obtained employment in
          non-graduate occupations following graduation, while graduates in humanities had
          relatively high levels of employment in these jobs. Female graduates were more
          likely than males to work in non-graduate jobs in their early careers, as were those
          of both sexes who had achieved relatively low degree results.
57.       Aversion to take up of debt is considerably higher among youth from a low socio-
          economic background than among their richer counterparts, even when it makes
          economic sense (CHERI, 2005). More guidance and advice at tertiary institutions
          may help in this regard.
58.       Between 2002 and 2006, the share of Black and Ethnic Minorities students rose
          from 20.3 to 22.2, that of students with disabilities rose from 6.3% to 7.6% and

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        B.         The government is hoping that 50% of 18-30-year olds
        will participate in tertiary education in 2010
            Based on estimates that 80% of future job creation will be in
        occupations which normally recruit those with tertiary qualifications
        (Wilson and Green, 2001), the government has set a target of increasing
        participation of 18-30-year olds to 50% by 2010.
             According to government plans, the bulk of the expansion should come
        through new types of two-year work-based qualifications – so-called
        Foundation Degrees (FDs) – introduced in 2000 and tailored to the needs of
        students and of the economy. FDs are currently delivered by universities and
        colleges and sometimes by other training providers. They cover a diverse
        range of subject areas and include a work-based component. FDs are a
        tertiary qualification in their own right but, after completing a degree,
        graduates can go on to study for an honours degree which usually takes one
        extra year of study.
            Many courses have flexible teaching arrangements involving part-time
        or evening attendance at college, distance learning or learning via the
        internet. While this flexibility is welcome, there is a danger that it may
        depress survival rates in FDs.59 For instance, there is evidence that about
        80% students dropping out of tertiary education each year are part-time
        students (National Audit Office, 2007).
             Considerable efforts have been devoted to involving employers in the
        design of FDs in order to ensure that they focus on the skills required in the
        labour market. When a new course is created, the provider can use a
        FD framework prepared by the relevant SSC to ensure that the course
        responds to employers needs. Providers are also supposed to secure the
        involvement of local employers in the mentoring of students, the provision of
        work placements and the final assessment. Unfortunately, the engagement of
        individual employers has not been easy to secure, particularly for SMEs and
        this is likely to become more difficult if the programme expands further, as
        planned by the government.

             that of students from the four lowest socio-economic groups rose from 29.5 to
             30.7 (National Audit Office, 2007).
59.          Tertiary vocational survival rates in the United Kingdom are already rather low by
             international standards. Only about half of new entrants in tertiary vocational
             education complete their courses (OECD, 2006a). This survival rate compares
             poorly with the OECD average of over 60% and with survival rates in university
             courses in the United Kingdom – among the highest in the OECD. Across OECD
             countries, the United Kingdom is one of the worst performers in terms of tertiary
             vocational survival rates – only Greece, Hungary and New Zealand have lower rates.

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      C.        In the United Kingdom, students’ work is common and is
      often in areas related to the field of study
          In many OECD countries, the main barrier faced by young people
      looking for their first job is their lack of labour market experience. This is
      not the case in the United Kingdom where over 80% of tertiary full-time
      students work60 at some point during the academic year for an average of
      12 hours per week. This experience of the labour market before leaving
      education has been found to improve post-education labour market
      outcomes (CHERI, 2002a).
          A study conducted by the Centre for Higher Education Research and
      Information (CHERI, 2002b) shed some light on the relationship between
      students’ jobs and field of study in the United Kingdom.61 The study found that
      about half of students carrying out paid work did so in jobs related to what they
      were studying. Work placements related to field of study were shorter than one
      month in 60% of cases but 30% of them lasted more than six months.
          Some of the work-related placements reported in the CHERI (2002b)
      study were part of a programme of study. At the time of the survey,
      approximately 18% of students were studying on programmes which
      included organised work experience planned as part of their programme of
      study, although not always compulsory. Work placements of this kind were
      more likely in health studies where 75% of students’ working were doing
      work related to their field of study.
          More recent work by Little and Harvey (2006) supports the earlier
      findings that work placements organised as part of coursework are common
      and increasingly part of tertiary learning programmes in the
      United Kingdom. The study found that placements varied considerably in
      their characteristics but 80% were paid – particularly those compulsory and
      longer than six months –, over two-thirds were in private companies and
      90% had a training component.

7. Training on the job
      A.         The incidence of on-the-job training among youth is
      relatively high but low-skilled youth benefit less
           Youth in the United Kingdom benefit less than adults from on-the-job
      training. However, they tend to receive more job-related training than their
      European counterparts (Figure 2.18). This is an encouraging achievement,

60.       Among 16-17-year olds, work and study is less common (27% were concerned
          in 2007).
61.       Note that data for this study refer to 1998, thus are relatively out of date.

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         especially since continuous improvements in employability through
         on-the-job training have been shown to avoid unemployment or make it
         shorter (see OECD, 2003 and 2004a). In this respect, analysis conducted in
         Chapter 1 on the persistence of low pay suggests that jobs with training are a
         better stepping stone than those without. However, as in other countries,
         training is not well distributed across the workforce and seldom reaches
         those who need it most – low-skilled workers. In addition, the difference
         between the United Kingdom and other EU-19 countries is largely
         accounted for by courses of short duration.

         B.           Train to Gain may help raise skills of employed youth
             The Train to Gain programme, rolled-out in England starting from
         April 2006, is aimed at improving training rates further, particularly for
         low-skilled employees. The programme consists of a new service to help
         businesses get the training their employees need through impartial advice
         and referrals to suitable training providers.

 Figure 2.18.           Incidence of job-related traininga by duration of the training course,
                          United Kingdom and European countries, 2003
                                                    Percentages
  50
  45                          Less than 15 hours       15 to 29 hours       More than 29 hours

  40
  35
  30
  25
  20
  15
  10
     5
     0
         20-29      30-49       20-29     30-49

              EU-19                  United         EU-19      United    EU-19     United      EU-19     United
                                    Kingdom                   Kingdom             Kingdom               Kingdom
                                                                     b                     c                d
                            Total
                            Total                     Low-skilled
                                                       Low-skilled       Medium-skilled
                                                                          Medium-skilled        High-skilled
                                                                                                 High-skilled
                                                         20-29
                                                         20-29               20-29
                                                                              20-29                20-29
                                                                                                    20-29

a)   Data refer to the share of employees not enrolled in education who have participated in one
     training course for job-related reasons over the year previous to the survey date.
b) Less than ISCED 3; ISCED: International standard classification of education.
c) ISCED 3 and ISCED 4.
d) ISCED greater than or equal to 5.
Source: Secretariat estimations based on Eurostat, European Union Labour Force Survey, Life-long
learning module, 2003.

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          Train to Gain works through a free skills brokerage service which
      provides advice and guidance on what each employer needs and the best
      way to get it. Brokers play an essential role in convincing employers of the
      benefits of investing in training and making more use of the best colleges
      and providers. They target “hard-to-reach” employers,62 most likely to be
      SMEs.
          The broker can recommend the best way to fund training, explaining all
      the funding options available. Train to Gain provides some funding itself,
      including:
      •   Free training for employees aged 16 and over who have not attained
          Level 2 qualifications and free literacy and numeracy qualifications
          under the Skills for Life banner;
      •   Wage compensation for companies with less than 50 employees;
      •   Free-funded programmes such as apprenticeships, advanced
          apprenticeships and vocational qualifications at Level 3 and above.
          One year after the start of the roll-out in England, figures showed that
      the programme had attained set targets. In September 2007, about
      52 000 employers and 230 000 employees had signed up and 96 000 had
      already acquired Level 2 qualifications thanks to the programme. Youth
      aged 16-24 accounted for 13% of Train to Gain participants.

8. Key points
           The education system in the United Kingdom tops OECD rankings in a
      number of areas. In 2006, educational expectancy was the highest in the
      OECD thanks to the rapid increase in enrollments at both the secondary and
      tertiary level since 1995. Returns to tertiary education are among the highest
      in the OECD and the recent funding reform provides university with
      additional resources to invest in research and improve quality further.
          However, other indicators paint a less rosy picture. According to
      PISA 2006, the performance of 15-year olds in the United Kingdom was just
      average by OECD standards. In addition, dispersion in performance is more
      marked than in other countries. In fact, the United Kingdom does rather
      badly at the bottom of the competency scale while it stands close to the
      best-performing OECD countries when the best students are compared.

62.       The service is aimed at employers that are not already engaged with training
          providers for their employees to achieve vocational qualifications. When the
          programme was launched, the government estimated that there were over three
          million employers in the United Kingdom in this category.

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            These disappointing outcomes at the low end of the school performance
        scale may partly explain the large share of school drop-outs63 in the
        United Kingdom and their poor labour market performance. About 16% of
        youth leave education without an upper secondary qualification or with just
        a basic school-leaving certificate, above the OECD average of 14%. One in
        five youth belonging to this group were neither in employment nor in
        education or training in 2005.
            In England, a number of measures are already in place to encourage
        young people to stay in education longer including financial support through
        the Education Maintenance Allowance (EMA) and the so-called
        September Guarantee of a place with an educational institution after 16.
        EMA has improved participation, retention and achievement of beneficiaries
        in secondary education since its introduction in 1999. The September
        Guarantee has only just started but is likely to help keep youth in school
        longer by ensuring that every 16-year old receives an offer from an
        educational institution to continue studying. It is currently being extended to
        cover 17-year olds in 2008.
             The English administration has also launched an ambitious programme
        – the so-called 14-19 Strategy – aimed at broadening learning options in
        secondary education in view of raising the age of compulsory participation
        in education and training to 18 in 2015. In addition to existing qualifications,
        the strategy introduces an apprenticeship entitlement for 16-19-year olds and
        17 new Diplomas – composite qualifications combining theoretical and
        practical learning. Participation of employers in the planning and delivering
        of these programmes, particularly through the offer of sufficient
        apprenticeship placements, will be essential to their success. Given current
        shortages of apprenticeship places, this component cannot be taken for
        granted. In addition, as far as raising the age of compulsory education and
        training is concerned, enforcement issues may arise when young people
        combining part-time participation in education and training and full-time
        employment are fired or quit their job.




63.          See footnote 13 for a definition of school drop-outs.

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                                                          CHAPTER 3. REMOVING DEMAND-SIDE BARRIERS – 113




                                               CHAPTER 3

                  REMOVING DEMAND-SIDE BARRIERS


             Labour demand conditions are an important determinant of youth
        labour market performance. Hiring of young workers could be hampered
        by the limited labour market experience they possess. High legal and/or
        collectively bargained minimum wages or high non-wage labour costs
        could also make it too costly for employers to hire and train low-skilled
        young people. Finally, some aspects of labour legislation may also
        represent a disincentive for firms to hire inexperienced workers on
        full-time permanent jobs.
             This chapter will look at these potential demand-side barriers in the
        United Kingdom. Section 1 examines the responsiveness of youth
        employment rates to demand conditions. Section 2 presents the views of
        United Kingdom employers on school leavers’ and graduates’ preparedness
        for labour market entry. Sections 3 and 4 discuss whether minimum wages,
        labour costs and employment protection legislation represent barriers to
        youth labour market entry.


1. Economic growth and youth employment

            The overall positive labour market performance of youth in the
        United Kingdom has certainly been helped by favourable demand conditions
        over the past decade – GDP growth averaged 3% per year between 1996 and
        2006. Indeed, there is evidence that youth employment tends to be more
        sensitive to changes in the cycle than adult employment (Figure 3.1).64




64.          However, there is some indication that youth employment has tended to become less
             cyclical over the past decade. The difference between the coefficients for the
             1985-1995 and 1996-2006 periods for youth is statistically significant. On the other
             hand, the different between the adult coefficients is not statistically significant.

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                           Figure 3.1.               Youth employment rates and GDP,a 1985-1995 and 1996-2006
                                 Percentage deviationb of employment rates and GDP from their respective trendsc
                                                   1985-1995                                                                                1996-2006
                                                                                                                   d
                                                                             A. Youth (15/16-24)
                                                               6                                                                                        6




                                                                                          Employment rate
    Employmetn rate




                              Y= 0.960X + 0.005                                                                        Y = 0.632X + 0.012
                                  R² = 0.445                                                                               R² = 0.356
                                                               4                                                                                        4



                                                               2                                                                                        2



                                                               0                                                                                        0
                      -8         -6         -4        -2           0     2            4                       -8          -6         -4        -2           0   2         4

                                                           -2                                                                                       -2


                                                           -4                                                                                       -4


                                                           -6                                                                                       -6
                                                                                GDP                                                                                 GDP

                                                                       B. Prime-age adults (25-54)
                                                               6                                                                                        6
                                                                                            Employment rate
 Employment rate




                              Y = 0.469X - 0.018                                                                   Y = 0.395X + 0.009
                                  R² = 0.415                                                                            R² = 0.551
                                                               4                                                                                        4


                                                               2                                                                                        2


                                                               0                                                                                        0
                   -8            -6         -4        -2           0    2             4                       -8          -6         -4        -2           0   2         4

                                                           -2                                                                                       -2


                                                           -4                                                                                       -4


                                                           -6                                                                                       -6
                                                                                GDP                                                                                 GDP


a)  The sample includes the following countries: Australia, Belgium, Canada, Denmark, Finland,
    France, Germany, Greece, Ireland, Italy, Japan, Korea, the Netherlands, New Zealand, Norway,
    Portugal, Spain, Sweden, the United Kingdom and the United States.
b) Each point in the chart represents a country-year observation of the percentage deviation of
    employment and GDP from their respective trends.
c) The trends have been established by the Hodrick-Prescott filter imposing identical smoothing
    factors for total employment and GDP in all countries.
d) Youth aged 16-24 for Iceland, Norway, Spain, Sweden, the United Kingdom and the
    United States, and 15-24 for all other countries.
Source: OECD, National Accounts database for GDP, and Labour Force Statistics database for
employment rates.

                                Figure 3.2 shows deviations of employment rates from their long-term
                            trend in relation to recession episodes in the United Kingdom. The position
                            of youth deteriorates much more than that of adults when adverse economic




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                                                          CHAPTER 3. REMOVING DEMAND-SIDE BARRIERS – 115


          conditions unfold.65 Besides, among youth, it is the low-skilled that see their
          position most affected by the cycle. The most recent worsening of youth
          employment rates, between 2004 and 2005, was entirely due to a fall in the
          employment rates of low-skilled youth – from 58.2 in winter 2004 to 55.5 in
          winter 2005 – while the position of youth with an upper secondary
          qualification remained unchanged and the employment rate of graduates
          rose by 1 percentage point.
              These findings suggest that the position of youth on the labour market
          could continue to deteriorate over the coming quarters as projected GDP
          growth for 2008 and 2009 is revised downwards in the wake of the current
          uncertain economic climate.

           Figure 3.2.          Youth and adult employment rates and economic cycles,
                                     United Kingdom, 1985-2006
                  Percentage deviation of employment rates from their respective trendsa

                                 Recession period                      16-24      25-54
      4

      3

      2

      1

      0

     -1

     -2

     -3




a)   The trends have been established by the Hodrick-Prescott filter imposing identical smoothing
     factors for total employment.
Source: OECD, National Accounts database for recession periods, and Labour Force Statistics database
for employment rates.



65.           Although not well captured by the Hodrick-Prescott methodology and thus not
              highlighted in Figure 3.2, the United Kingdom economy grew at 1.8% in 2005, the
              slowest pace since 1992. This partly explains worsening labour market conditions
              for youth in 2005 and 2006.

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2. Employers’ views of youth labour market readiness

        A.       Employers are dissatisfied with some of the skills of young
        recruits
             In a 2006 Survey conducted by the Confederation of British Industry (CBI)
        almost two thirds of employers reported dissatisfaction with literacy, numeracy
        skills of school-leavers and with their attitude to work (Figure 3.3).

        Figure 3.3.           Employers dissatisfied with the key skills of young recruits,
                                      United Kingdom, 2006
                                                     Percentages

                   School-leavers                                                       Graduates
                                                  Business awereness

                                                   Self-management

                                                    Foreign language
                                                           skills
                                                       General
                                                  employability skills
                                                    Knowledge about
                                                   chosen job/career
                                                   Positive attitude to
                                                           work
                                                   Basic literacy and
                                                     use of English
                                                    Basic numeracy
                                                          skills
   80    70   60    50   40   30    20   10   0                           0   10   20   30   40   50   60   70   80


Source: Confederation of British Industry, Employment Trends Survey (2006).

            Literacy and numeracy were a source of employers’ dissatisfaction with
        graduate recruits as well, albeit to a lesser extent than for school-leavers.
        Besides, the survey provided evidence that employers’ dissatisfaction with
        the skills of graduate recruits rose between 2005 and 2006. On average,
        across the “employability” skills shown in Figure 3.3, 30% of employers
        expressed dissatisfaction in 2006 compared with just 20% in 2005.
            The National Employer Skills Survey for 2005 (LSC, 2006c) showed a
        more positive picture of employers’ attitudes towards young people’s skills.
        Among employers’ recruiting 16-year olds, 60% reported they were well or
        very well prepared for work. This share rose to 69% among employers’
        recruiting 17-year olds and to 81% among employers’ recruiting
        18-year olds. Dissatisfaction appeared to be driven mostly by the lack of
        experience or of employability skills.


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                                                                  CHAPTER 3. REMOVING DEMAND-SIDE BARRIERS – 117


        B.       Employers think better numeracy and literacy and more
        vocational education should be prioritised
            The CBI survey also asked employers which areas should be given
        priority by government in order to ensure that youth leave education with
        the skills required to enter and progress on the labour market.
             Unsurprisingly, given the data shown in Figure 3.3, a large majority of
        respondents felt that ensuring that more young people leave school literate and
        numerate should be the government’s top priority (Figure 3.4). Over two
        thirds ranked improving vocational education as a major object. Employers
        would also like the government to put more emphasis on the quality of
        graduates (32%), while few thought that increasing their number should be a
        policy concern (2%). Finally, over a third of employers thought more help
        should be available to access government funding to train their workforce.66

      Figure 3.4.             Employers’ views of government priorities in improving skills
                                and education, United Kingdom, 2006
                                                          Percentages

                              Raise the number of graduates
                                 Raise the number of graduates
              Improve quality of external training providers
                  Improve quality of external training providers
              Help fims identify their skills needs and gaps
                  Help f irms identif y their skills needs and gaps
                   Raise the quality of university graduates
                       Raise the quality of university graduates
                Help in accessing free government funding
                    Help in accessing f ree government f unding

                         Raise intermediate technical skills
                     Raise intermediate andand technical skills
                    Improve vocational education so young
                 Improve vocational education so young people
                               people are f or work
                             are equippedequipped for work
                   Ensure more young people school literate
                Ensure more young people leaveleave school
                                 and numerate and numerate
                                       literate
                                                                      0   20    40    60     80    100


Source: Confederation of British Industry, Employment Trends Survey (2006).


3. Wages and labour costs

        A.             Age-earning profiles have changed little over the past
        decade
            On average, in 2006, young people aged 16-24 earned 63% of mean
        gross hourly wages in the United Kingdom, the same as in 1997. This is
        confirmed by Figure 3.5 which shows that the age-earning curves for young
        men and young women relative to 30-34-year olds have remained almost
        unchanged between 1997 and 2006 (Figure 3.5, Panel A).

66.          Note that the Train to Gain programme is designed to do just this.

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118 – CHAPTER 3. REMOVING DEMAND-SIDE BARRIERS

 Figure 3.5.         Wage profiles of full-time workers by gender in the United Kingdom
                         and selected OECD countries, 1997-2006
                        Average hourly earnings of workers aged 30-34 = 100
                                             A. Time profile
                                      2006                             1997
   160                                                160
                          Men
   140                                                140                       Women
   120                                                120
   100                                                100
    80                                                 80
    60                                                 60
    40                                                 40
    20                                                 20
     0                                                  0




                                 B. International comparison, 2006a
                   United Kingdom             United States             Japan              Denmark
   160                                                160
                           Men                                                  Women
   140                                                140
   120                                                120
   100                                                100
    80                                                 80
    60                                                 60
    40                                                 40
    20                                                 20
     0                                                  0




                                    C. Educational attainment, 2006
                    Less than upper secondary               Upper secondary                Tertiary
   160                                                160
   140
                           Men                                                 Women
                                                      140
   120                                                120
   100                                                100
    80                                                 80
    60                                                 60
    40                                                 40
    20                                                 20
     0                                                  0




a) Data refer to 2005 for the United States.
Source: Office for National Statistics (ONS), Labour Force Survey (LFS), 2005 winter quarter for the
United Kingdom’s data by educational attainment, and Labour Force Survey 2006 for all other data;
Statistics Denmark, quarterly survey from business enterprises in the private sector, 2006 for Denmark;
Ministry of Health, Basic Survey on Wage Structure, 2006 for Japan; and US Department of Labor,
Bureau of Labor Statistics, Current Population Survey, 2005 for the United States.



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                                                          CHAPTER 3. REMOVING DEMAND-SIDE BARRIERS – 119


            In 2006, the wage profile for full-time workers was lower in the
        United Kingdom vis-à-vis other countries (Figure 3.5, Panel B). The average
        wages of teenagers and young adults relative to 30-34-year olds were lower
        than in Denmark and close to the United States. Women younger than 29
        tended to earn as much as young men relative to the respective 30-34 age
        groups. However, female relative earnings grew much less with experience.
            In 2006, tertiary education graduates earned a considerable premium
        over youth holding an upper secondary qualification – about 40%. However,
        Figure 3.5 (Panel C) shows that experience plays a smaller role for
        graduates than for their less educated counterparts. Relative to individuals
        aged 30-34 with the same respective level of education, graduates earn less
        than those holding upper secondary qualifications.

        B.            The youth sub-minimum wage is closely monitored
            In 1999, the United Kingdom government introduced a minimum wage
        rate for adults aged 22 or older, as well as a sub-minimum wage for youth
        aged 18-21, the so-called “development rate”. In 2004, an additional lower
        rate for 16-17-year olds was added. In October 2007, the adult rate stood at
        GBP 5.52 per hour, the development rate at GBP 4.60 (83% of the adult
        rate) and the 16-17-year olds rate at GBP 3.40 (62% of the adult wage).
        Apprentices under 19 are exempted from the minimum wage and
        apprentices aged 19 or older are exempted for the first 12 months in the
        apprenticeship.
            Table 3.1 presents minimum wage rates relative to country-specific
        median wages for OECD countries where a minimum wage exists.
        According to this standardized measure, the United Kingdom adult
        minimum wage rate stood just above the OECD average in 2006. On the
        other hand, compared with countries where a sub-minimum wage rate for
        youth exists, the United Kingdom youth rates were relatively low in 2006.
        This was particularly the case for youth aged 18-20 who, in many other
        countries, are entitled to the adult rate.
             The fact that youth sub-minimum wage rates are low relative to median
        wages has contributed to the fact that their introduction has not had any
        adverse effect on youth employment (Box 3.1). Dickerson (2007) also found
        no evidence of negative effects on employer-provided training. On the
        contrary, several studies – mostly focusing on adults – found that the
        introduction of the minimum wage has had positive effects on wages and
        has helped reduce wage inequality (Dickens and Manning, 2006, Fitzner,
        2006, Lam et al., 2006, and Metcalf, 2007).



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120 – CHAPTER 3. REMOVING DEMAND-SIDE BARRIERS

        Table 3.1.       Minimum wages for adults and youth in OECD countries, 2006a
                                                 Percentages

             Numerator    Adult MW b     Average youth MW c      MW at 17          MW at 18        MW at 20
           Denominator   Median wage         Adult MW b         Median wage      Median wage     Median wage
     Austaliad               0.57                 -                   -                -                -
     Belgiume                0.53               0.82                0.40             0.43             0.49
     Canada                  0.40                 -                   -                -                -
     Czech Republic f        0.39               0.85                0.31             0.31             0.35
     Spain                   0.39                 -                   -                -                -
     Franceg                 0.63               0.85                0.57             0.57             0.63
     Greece                  0.39                 -                   -                -                -
     Hungary                 0.48                 -                   -                -                -
     Irelandh                0.48               0.70                0.34             0.48             0.48
     Japan                   0.34                 -                   -                -                -
     Luxembourgi             0.53               0.78                0.42             0.53             0.53
     Mexico                  0.19                 -                   -                -                -
     Netherlands j           0.44               0.53                0.19             0.20             0.27
     New Zealandk            0.57               0.73                0.42             0.57             0.57
     Polandl                 0.41                 -                   -                -                -
     Portugalm               0.44               0.75                0.33             0.44             0.44
     Slovak Republic n       0.43               0.75                0.33             0.43             0.43
     Turkey                  0.36                 -                   -                -                -
     United Kingdomo         0.48               0.72                0.29             0.40             0.40
     United States           0.31                 -                   -                -                -
     OECDp                0.44 (0.49)           0.75                0.36             0.44             0.46

-    Not applicable.
a)    For Greece, Mexico, the Netherlands, Poland and Portugal, data refers to 2005.
b)    Full minimum wage rate.
c)    Unweighted average across sub-MW rates for youth.
d)    Youth are entitled to a reduced MW to be set in collective agreements.
e)    Youth get an amount ranging from 75% of the adult MW at 16 to 94% at 20 and 21.
f)    A reduced MW applies for workers under the age of 19 (80%) and for workers aged 19-21 with less than six
      months job tenure (90%).
g)    Youth aged 17 and 18 with less than six months experience receive 90% of the adult MW and youth 16 or
      younger receive 80% of the adult MW.
h)    Sub-MW applies to youth younger than 18.
i)    Youth aged 15 and 16 are entitled to 75% of adult MW and youth aged 17 are entitled to 80% of the adult
      rate.
j)    Youth are entitled to a reduced MW, varying from 30% for 15-year olds and 85% for 22-year olds.
k)    Sub-MW applies to youth between 16 and 18 years of age. Starting 1st April 2008, the youth sub-MW will be
      abolished and the adult rate will apply to all workers older than 16.
l)    There is no sub-MW for youth but school leavers are entitled to 80% of the adult MW for the first 12 months
      in their first job held and 90% over the second year. But no age-limit is set by law.
m)    Sub-MW applies to youth up to 17.
n)    Youth between 16 and 18 are entitled to 75% of the adult MW and youth under 16 to 50% (the latter is not
      used in practice as the minimum school leaving age has been raised to 16, as a result 75% is used in the
      calculations).
o)    Sub-MW applies to youth under 22. Two different rates apply: a development rate for youth aged 18-21 and
      an additional sub-minimum for youth aged 16-17.
p)    Unweighted average. Average adult/median rate for countries with a sub-minimum for youth in parenthesis.
Source: OECD database on minimum wages.

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                                                          CHAPTER 3. REMOVING DEMAND-SIDE BARRIERS – 121




                Box 3.1.The minimum wage impact on youth employment,
             school enrolment and on-the-job training: international evidence

       The impact of minimum-wage legislation on youth employment is theoretically
    ambiguous. While a high minimum wage may increase the share of youth who drop out of
    education and therefore labour force participation, it can also drive a wedge between youth
    labour costs and their expected productivity, thereby raising unemployment and
    discouraging some youth from entering the labour market. Target-efficiency considerations
    reinforce these theoretical arguments for establishing a youth sub-minimum (Neumark and
    Wascher, 2004, Pabilonia, 2002), because the association between holding a
    minimum-wage job and poverty – the main argument for a minimum wage is to minimise
    working poverty – is especially weak for the very young (who often live with their
    parents). On the other hand, Manning (2005) shows that, in a situation where employers
    have significant market (or monopsony) power over their workers, a well-chosen minimum
    wage can actually raise youth employment.

       The balance of international empirical evidence suggests that too-high minimum wages
    have a negative impact on youth employment, especially if combined with high non-wage
    labour costs (e.g. Abowd et al., 1997; OECD, 1998; Neumark and Wascher, 1998 and
    1999; Kramarz and Philippon, 2001; Pabilonia, 2002).* The “appropriate” level cannot be
    determined on a priori grounds since it depends on the profile of the earnings/labour costs
    distribution which, in turn, differs from country to country.

        Too-high minimum wages may also have an effect on education enrollment.
    Theoretically, this effect could go either way. For example, if a higher minimum wage
    reduces the number of jobs available, more teenagers may remain in school because they
    cannot find jobs. A minimum wage increase may also raise the minimum level of
    productivity required for employment and some youth may return to education to acquire
    the necessary skills. On the other hand, higher minimum wages increase the opportunity
    costs of staying in education, particularly for very low-skilled youth. Furthermore, by
    increasing the income of drop-outs relative to graduates, higher minimum wages may
    reduce the relative return to higher levels of education. Empirically, the balance of
    international evidence suggests that increasing minimum wages has a negative impact on
    the enrollment of teenagers in education but not of young adults and that the negative effect
    is particularly strong for youth with very low skills (Neumark and Wascher, 1995; Landon,
    1997; Chaplin et al., 2003; Pacheco and Cruickshank, 2007).

       Empirical evidence on the effect of higher minimum wages on on-the-job training
    provision is more mixed, with some authors finding statistically significant negative effects
    (Neumark and Wascher, 1998) and others finding that minimum wages increase training
    provision (Arulampalam et al., 2002).




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122 – CHAPTER 3. REMOVING DEMAND-SIDE BARRIERS

         Finally, arguments in favour of a sub-minimum wage for youth and other disadvantaged
      groups also emerge when minimum-wage policy is seen in the context of other labour
      market measures. In fact, the introduction of employment-conditional benefits combined
      with an appropriately-set wage floor would ensure that work is attractive to unemployed
      youth while avoiding downward pressure on wages. This is in fact the option chosen by the
      United Kingdom, which introduced a statutory minimum wage just as its tax-credit policy
      was being extended (European Commission, 2000). Various evaluations consider this to be
      a sound option, stressing its beneficial impact on low wages with no apparent negative
      repercussions on employment (Low Pay Commission, 2001). An alternative to avoid a
      sub-minimum wage would be to offer employers a reduction in non-wage labour costs for
      those youth employed at or around the minimum wage.

         * However, it should be added that analysts are not unanimous on this issue and some studies
      have failed to find significant negative employment effects (e.g. Card and Krueger, 1995;
      Stewart, 2003; Hyslop and Stillman, 2007).


             However, the recent worsening of the labour market position of
         youth prompted the Low Pay Commission (LPC), a body charged with
         formulating recommendations on minimum wage changes based on
         rigorous research findings (see Box 3.2), to recommend a more moderate
         increase in the sub-minimum wage for 16-17-year olds and the
         development rate in 2007 (Low Pay Commission, 2007). In its
         motivations, the LPC noted that the labour market for young people had
         been weakening over the previous two years, most noticeably for those not
         in full-time education (see also Chapter 1). Evidence showed that, in 2006,
         16-17-year olds not in full-time education had continued to experience a
         worsening of their labour market prospects and at a somewhat faster rate
         than over the previous year. The LPC expressed specific concerns about the
         number of 16-17-year olds who were NEET in 2006.
             Aside from the contribution of weak economic growth in 2005, the
         factors behind the worsening of youth labour market performance in 2005
         and 2006 have proved difficult to pin down.67 The LPC report suggested that
         the sub-minimum wage for this age group may be more binding now than it
         used to be. While many employers choose to pay young people above the
         minimum wage applicable for their age, the use of age-related pay below the
         adult rate of the minimum wage has increased slightly since 2004.
            In 2007, the LPC also recommended that youth aged 21 should be entitled
         to the adult minimum wage rate, based on their past employment

67.           Some have argued that fairly skilled young immigrant workers may have displaced
              some low-skilled UK youth in the labour market but the most recent analysis does
              not support this (Gilpin et al. 2006). Further analysis in this area is warranted.

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                                                          CHAPTER 3. REMOVING DEMAND-SIDE BARRIERS – 123


        performance, but this recommendation was not retained. The evidence
        presented by the LPC report showed that 21-year olds fare better in the labour
        market than 18- and 19-year olds and that the overwhelming majority of them
        (nine in every ten) were paid at least the adult minimum wage in 2006.

              Box 3.2. The role of the United Kingdom Low Pay Commission

       The Low Pay Commission (LPC) is an independent statutory public body set up under
    the National Minimum Wage Act of 1998 to advise the Government about the National
    Minimum Wage. Its role is to advise the government on a minimum wage rate that “helps
    as many low-paid workers as possible without any significant adverse impacts on inflation
    and employment”. To advise and make recommendations to Government, the LPC
    undertakes the following activities:
                •     Carry out extensive research and consultation;
                •     Commission research projects;
                •     Analyse relevant data and actively encourage the Office of National
                      Statistics to establish better estimates of the incidence of low pay;
                •     Carry out surveys of firms in low-paying sectors;
                •     Consult with employers, workers and their representatives;
                •     Take written and oral evidence from a wide range of organisations; and
                •     Engage in fact-finding visits throughout the UK to meet employers,
                      employees and representative organisations.
       Since 1999, the LPC has commissioned over 80 research projects to academics and
    consultants, including rigorous analysis based on statistical survey data. This has proved
    essential for LPC decision-making and for its credibility with experts and the media.
       In its 2008 apprenticeship reform plans, the government proposed that the LPC be
    charged with conducting research on the current wage floor for apprentices.


        C.       The tax-wedge on low-wage earners is relatively low but
        has increased recently
            Although figures by age group are not available, Table 3.2 presents the
        tax wedge for a worker earning 67% of the average wage in the production
        sector, an acceptable approximation of the relative wage earned by a young
        worker. In 2006, the tax wedge on low-wage earners in the United Kingdom
        – at 30% – was 3 percentage points below the OECD average and
        8 percentage points lower than the European average.




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124 – CHAPTER 3. REMOVING DEMAND-SIDE BARRIERS

       Table 3.2.     Tax wedge including employers’ social security contributions
                           in OECD countries, 2000 and 2006
                                            Percentages
                                  Tax w edge on low -w age              Tax w edge on
                                          earner a                     average earner b
                                    2000            2006                     2006
          Mexico                     11.0                 10.6                  15.0
          Korea                      14.9                 16.0                  18.1
          New Zealand                18.5                 19.0                  20.9
          Ireland                    18.1                 16.3                  23.1
          Australia                  25.4                 24.4                  28.1
          Iceland                    19.7                 23.6                  28.6
          Japan                      23.4                 27.5                  28.8
          United States              27.2                 26.4                  28.9
          Sw itzerland               27.3                 26.9                  29.7
          Canada                     27.8                 27.6                  32.1
          United Kingdom             28.3                 30.4                  33.9
          Portugal                   33.2                 31.7                  36.3
          Luxembourg                 32.5                 30.6                  36.5
          Norw ay                    35.1                 34.3                  37.3
          Slovak Republic            40.6                 35.6                  38.5
          Spain                      34.7                 35.9                  39.1
          Greece                     35.5                 35.4                  41.2
          Denmark                    41.2                 39.3                  41.3
          Czech Republic             41.4                 40.1                  42.6
          Turkey                     39.1                 42.0                  42.8
          Poland                     42.2                 42.5                  43.7
          Finland                    43.0                 38.9                  44.1
          Netherlands                42.0                 40.6                  44.4
          Italy                      43.1                 41.5                  45.2
          Sw eden                    48.6                 46.0                  47.9
          Austria                    43.2                 43.5                  48.1
          France                     47.4                 44.5                  50.2
          Hungary                    48.5                 42.9                  51.0
          Germany                    48.6                 47.4                  52.5
          Belgium                    51.3                 49.1                  55.4
          EU-19c                     40.2                 38.5                  42.9
          OECDc                      34.4                 33.7                  37.5

Countries are ranked by ascending tax wedge on average earner.
a) Tax wedge including employers’ mandatory social security contributions for a single worker with
    no children earning 67% of the average wage.
b) Tax wedge including employers’ mandatory social security contributions for a single worker with
    no children earning the average wage.
c) Unweighted averages.
Source: OECD Taxing Wages database.




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                                                            CHAPTER 3. REMOVING DEMAND-SIDE BARRIERS – 125


            However, non-wage labour costs increased in 2007 and will increase
        further in 2008 following rises in the statutory annual leave entitlement in
        Great Britain from 4 weeks to 4.8 weeks in October 2007 and to 5.6 weeks
        in October 2008. Because many workers already enjoyed the proposed
        levels of annual leave – particularly those approved for October 2007 – the
        majority of employers are not affected by the legislation. However, in early
        2007 the LPC estimated that around a third of all workers in low-paying
        sectors would be affected by the changes in October 2007, adding
        approximately 0.7% to the wage bill for low-paid employees. This rise was
        also taken into account in the LPC recommendation to raise the minimum
        wage rates only moderately in 2007.

4. The strictness of employment protection legislation in the
United Kingdom

            Employment protection legislation in the United Kingdom is among the
        least strict in the OECD (Figure 3.6). As such, it is unlikely to constitute a
        high barrier to the hiring of youth on permanent contracts.

             Figure 3.6.       Overall strictness of employment protection legislation
                      and its three main components, OECD countries, 2003
       2003
    (scale 0-6)
        4.0
                  Regulation on temporary forms of employment
       3.5
                  Specific requirements for collective dismissal
       3.0
                  Protection of regular workers against (individual) dismissal
       2.5
       2.0
       1.5
       1.0
       0.5
       0.0




Source: OECD (2004a), Employment Outlook, Chapter 2, Chart 2.1, Paris.

            Limited regulation on the dismissal of permanent employees is likely to
        have contributed to the low incidence of temporary work by international
        standards and to relatively easy transitions from temporary to permanent
        jobs. In addition, the United Kingdom has the longest trial period across
        OECD countries –12 months – during which claims under unfair dismissal
        legislation are not possible. This feature may play a positive role in
        facilitating the hiring of youth directly on permanent contracts.

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5. Key points

          Overall, demand-side barriers to the hiring of young people appear to be
      limited in the United Kingdom. Healthy economic growth during much of
      the past decade has certainly contributed to positive performance of youth
      on the labour market on average and the slight dip in economic growth in
      2005 partly explains the recent worsening. However, the high sensitivity of
      youth employment rates to economic conditions suggests that the worsening
      in youth labour market performance could continue in the short-term as
      growth forecasts for 2008 and 2009 are revised downwards in the wake of
      the current uncertain economic climate.
          In general, minimum wages and labour costs are moderate and thus do
      not represent an obstacle for the hiring of youth. However, recent
      developments suggest that, for 16-17-year olds, the sub-minimum wage rate
      may be more binding now than when it was first introduced. In addition,
      recent increases in annual leave entitlements are predicted to add 0.7% to
      the wage bill for low-paid workers. To prevent these developments from
      impacting negatively on youth employment rates, the government approved
      only moderate increases in the minimum wage in 2007.
         The strictness of employment protection legislation in the
      United Kingdom is among the lowest in the OECD, thus is unlikely to cause
      temporary-work traps for youth.




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   CHAPTER 4. PASSIVE AND ACTIVE LABOUR MARKET POLICIES TO MOBILISE YOUNG PEOPLE INTO WORK – 127




                                               CHAPTER 4

    PASSIVE AND ACTIVE LABOUR MARKET POLICIES
       TO MOBILISE YOUNG PEOPLE INTO WORK


            In many OECD countries, the first steps on the labour market are
        characterised for youth by the experience, sometimes repeated, of
        unemployment interspersed with spells of inactivity. Thus, it is important
        that young people have sufficient incentives and means to return to work.
        For instance, jobless youth often lack the job-search and interview skills
        needed for a smooth return to work and, for them, good-quality guidance
        and support by the public employment services play a crucial role. The
        provision of these services should ideally follow a “mutual obligations”
        principle by which youth must actively seek work in exchange for targeted
        actions to help them find a job.
            This chapter outlines the passive and active labour market programmes
        (ALMPs) available for unemployed youth in the United Kingdom and
        presents current reform plans. It also reviews the initiatives directed at
        reducing NEET rates among 16-17-year olds who are generally unknown to
        the public employment service.

1. The role of passive labour market measures for youth

        A.       Youth without work experience are entitled to income-
        based Jobseeker’s Allowance
            In the United Kingdom, anybody aged 18 or older who has paid National
        Insurance Contributions over two tax years can claim contribution-based
        Jobseeker’s Allowance (JSA) for 182 days. In addition, the United Kingdom
        is one of only a few OECD countries where unemployment benefits are
        available to individuals without any work experience based on their income
        and savings and those of their family and for an unlimited duration – the
        so-called income-based JSA. This is particularly relevant to youth who often
        lack the necessary contributory history to qualify for contribution-based JSA.

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          To get both types of JSA, a person must be capable of working,
      immediately68 available to work for at least 40 hours per week69 and actively
      looking for work.
          Youth aged 16-17 have no automatic entitlement to income-based
      JSA. However, they may be able to claim it for a short period under
      special circumstances, i.e. if they: i) are in a couple with the responsibility
      of a child; or ii) can prove they would suffer severe hardship if they did
      not get income-based JSA. A condition for getting income-based JSA is
      that the young person in question is registered with the Connexions
      Service (in England) or Careers Service (in Scotland and Wales) for
      employment and training.
           In Scotland and Wales, youth aged 16-17 who have worked more than
      16 hours a week since leaving full-time education and who are between jobs
      or training can apply for the so-called Young Person’s Bridging Allowance70
      by registering with the local Connexions service and their eligibility will be
      considered before their eligibility to an award of income-based JSA based
      on severe hardship.

      B.          Jobseeker’s Allowance is not very generous
          Contribution-based and income-based JSA pay the same amount.
      In 2007, an adult – 25 or over – with no children received GBP 59 per week.
      Youth were entitled to smaller payments that varied by age. A single person
      aged 18-24 with no children received about GBP 47 a week and a single
      person aged 16-17 living with parents or other family members received
      about GBP 36. Both payments were equivalent to about 17% of the average
      weekly income in paid employment of the respective age group. The Young
      Person’s Bridging Allowance was much less generous, at GBP 15 per week
      for a maximum of eight weeks in any 12-month period.


68.        JSA recipients must usually be available to start work immediately, but there are
           some cases when they can have more time, notably: i) if they have caring
           responsibilities, they must be available to start work within 48 hours; ii) if they are
           providing a service, they must be available to start work within 24 hours; and iii) if
           they are involved in voluntary work, they must be available to start work within
           1 week and to go to an interview within 48 hours.
69.        JSA recipients may be able to restrict the number of hours they are available for
           work if they have caring responsibilities or if they have a physical or mental
           condition that affects the work they can do.
70.        The Bridging Allowance was available to young people in England until
           September 2007.

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            While these comparisons between gross benefits and gross average
        weekly earnings are interesting, they do not account for the role that taxation
        can play in comparing out-of-work with in-work earnings. International
        comparisons of adult unemployment assistance net replacement rates71 show
        that the United Kingdom contribution-based JSA is not particularly generous
        (Figure 4.1). As far as income-based JSA is concerned, while it is rare that
        youth without any contribution history are entitled to unemployment assistance
        for an unlimited duration,72 the United Kingdom pays out the least generous
        benefit (OECD, 2007c).

     Figure 4.1.          Net unemployment benefit replacement rates, in OECD countries,
                                             2005a
                                    Percentage of pre-unemployment wage
      100
       90
       80
       70
            OECDb = 60.3
       60
       50
       40
       30
       20
       10
        0




a)  These data are net replacement rates, i.e. they are adjusted for the effects of taxation. They refer to
    the average of net replacement rates faced by single persons without children with
    pre-unemployment earnings of 67% and 100% of the average production wage. They relate to the
    initial phase of unemployment but following any waiting period. No social assistance “top-ups”
    are assumed to be available in either the in-work or out-of-work situation. Any income taxes
    payable on unemployment benefits are determined in relation to annualised benefit values
    (i.e. monthly values multiplied by 12) even if the maximum benefit duration is shorter than
    12 months.
b) Data for Mexico are not available. Unweighted average of countries shown.
Source: OECD, Tax-Benefit Models (www.oecd.org/els/social/workincentives).



71.          The net replacement rate is an indicator that compares income from work to
             benefit income and is adjusted for the effects of taxation.
72.          Only Australia, Belgium, Finland, Ireland and New Zealand have a similar regime.

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      C.        Jobseeker’s Allowance comes with a series of obligations
      designed to deter benefit dependency
          In addition to being relatively small, JSA comes with a series of
      obligations on the jobseeker aimed at reducing the risk of benefit
      dependency. To claim JSA, the unemployed need to enter into a Jobseeker’s
      Agreement with their local Jobcentre Plus office – the United Kingdom
      public employment service. The agreement includes actions that the JSA
      recipient needs to undertake in order to find work. Usually, jobseekers are
      expected to take at least three steps to find work every week while getting
      JSA. This could include drawing up a CV or contacting employers. To
      ensure that jobseekers are fulfilling their Jobseeker’s Agreement, they are
      required to attend a Fortnightly Jobsearch Review and to meet periodically
      with their Jobcentre Plus Personal Adviser. The visits also serve to verify
      how jobseekers are progressing with the actions listed in their Jobseeker’s
      Agreement and whether the agreement needs updating. The availability of
      suitable vacancies, training courses and job-search programmes is also
      discussed, although jobseekers can be contacted by phone between visits to
      discuss these opportunities.
           A jobseeker who fails to attend an interview at Jobcentre Plus when
      asked to do so may lose their benefit. Benefit payments may also be lost if
      the jobseeker fails to take up a reasonable opportunity of training or work,73
      fails to apply for training or work, fails to accept an offer of training or
      work, fails to turn up for training when given a training place, gives up a
      training place or loses his/her training place through misconduct. The
      imposition of a sanction entails a total loss of benefit for 2 weeks or 4 weeks
      if the jobseeker has already had a fixed-period sanction within the previous
      12 months. However, the sanctioned jobseeker has the opportunity to apply
      for hardship payments which can result in payment being reduced by up to
      40% for the period of the sanction.
          The share of 18-24-year olds who are JSA recipients in the population of
      the same age decreased over the past decade (Figure 4.2).

      D.          Income support and incapacity benefits
          Surprisingly, a relatively large share of young people receives income
      support although this share has been falling since the late 1990s (Figure 4.2).
      Everybody with a low income and older than 16 – the sick and disabled
      without contributory history, lone parents, those unable to work because of

73.        Only first-time jobseekers are allowed to turn down or leave training once without
           a good reason. After that, however, any time that the jobseeker either turns down
           or leaves training without a good reason will result in the JSA being reduced.

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        caring responsibilities and the registered blind – can apply for Income
        Support. It is a means-tested benefit and recipients are not obliged to look
        for work. However, they are required to attend work focused interviews at
        Jobcentre Plus at certain points during their claim – depending on the reason
        they are claiming – in order for their claim to be processed and/or retain full
        entitlement. To be entitled to Income Support, the recipient must have been
        exonerated from the obligation of looking for work. The weekly benefit
        amount is equivalent to the one paid under JSA but recipients of income
        support automatically get Housing Benefit and Council Tax Benefit and
        other help, for example, with health costs.

            Figure 4.2.            Trends in benefit recipiency in the United Kingdom,
                                      youth aged 18-24, 1999-2007
                                 Percentage of the population in the age group
                            Income support                   JSA          Incapacity benefit
     2.0
     1.8
     1.6
     1.4
     1.2
     1.0
     0.8
     0.6
     0.4
     0.2
     0.0




Source: Department for Work and Pensions Online Tabulation Tool; and OECD population estimates
using Eurostat, European Union Labour Force Survey.


            Young people who cannot work because of illness or disability may be
        able to get incapacity benefits. Incapacity benefits are subject to weaker
        work tests than JSA. While the participation in the New Deal for Young
        People – the main activation programme for unemployed youth – is
        compulsory after six months of JSA claims, participation in the New Deal
        for Disabled People is on a voluntary basis only. The national roll-out of a
        new programme for incapacity benefit recipients – Pathways to Work – will
        be completed by the end of April 2008. It entails monthly mandatory
        work-focused interviews over six months starting eight weeks after the
        benefit claim but action taken in response of this work-focused interviews
        will still be non-compulsory. In international comparisons, the

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         United Kingdom has a much younger recipiency base for sickness and
         disability benefits than a number of other OECD countries, notably
         Australia, Luxembourg, and Spain (OECD, 2007d). However, the share of
         youth receiving incapacity benefits has remained rather flat over time
         (Figure 4.2).

2. Activation of unemployed youth

              There is increasing recognition across OECD countries of the importance of
         activation strategies based on the so-called “mutual obligations” principle for
         promoting employment prospects of unemployed youth (Box 4.1).
             Over the past decade, the United Kingdom has devoted considerable
         resources to putting in place a comprehensive activation strategy for young
         unemployed people – the New Deal for Young People (NDYP) – relying on
         a mutual obligations approach.

                     Box 4.1. Active Labour Market Policies for youth
      Over the past decade, several countries have come to realise that, for those youth who
   are already out of the education system – particularly youth leaving school without an
   upper secondary qualification – effective active labour market policies, as opposed to
   passive ones, constitute the best option. However, while there is general agreement that
   focusing on activation and mutual obligation policies is the way forward (see OECD,
   2006d), many of the programmes targeted to youth, especially those most at-risk, have
   produced disappointing outcomes. Evaluation of existing programmes is thus fundamental
   in highlighting what works and what does not and in setting guidelines for future action.
      Trying to sum up what works and what does not for disadvantaged youth is an arduous
   task but drawing on the several evaluations of existing programmes, successful
   programmes appear to share some characteristics (see Martin and Grubb, 2001;
   Betcherman et al., 2004; and Betcherman et al., 2007):
     •      Early action is particularly important for young people as those without work
            experience are generally not entitled to unemployment benefits or other welfare
            transfers. A number of OECD countries already have major programmes for youths
            that come into play early, often before or at six months of unemployment,
            e.g. Australia, Belgium, Denmark, New Zealand, Norway and the United Kingdom.
            Sweden uses a shorter period (90 days), and youth activation in Finland, for those
            without a vocational qualification, starts immediately.

     •      In terms of content, job-search assistance programmes are often found to be the
            most cost-effective for youth, providing positive returns to both earnings and
            employment. On the other hand, some wage and employment subsidy programmes
            do yield positive returns, but they generally tend to perform poorly in terms of their
            net impact on the future employment prospects of participants.



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      •      Training programmes should be designed in close connection with local or national
             labour market needs. In this respect, mobilizing and involving the private sector and
             communities to assess local or national demands for skills and community needs is
             most important to project design.

      •      Good targeting of the programmes is also crucial. For instance, there is a need to
             distinguish between teenagers and young adults and to focus on school drop-outs.
             Specifically, the most desirable solution to the employment problems of teenagers
             is to help them to remain in school and acquire educational qualifications, whereas
             for young adults, help to acquire work experience is more important.

      •      Tight work-search requirements, backed by the threat of moderate benefit sanctions
             where applicable, tend to encourage early exit from unemployment, as much for
             youths as for adults. Indeed, in Australia, when “mutual obligation” requirements
             were applied to youths who had been unemployed for six months, an increase in the
             rates of exit from unemployment was observed (see QED, 2003).
      •      Programmes that integrate and combine services and offer a comprehensive
             “package” seem to be more successful.
      •      Greater involvement of the social partners, as well as the public authorities at all
             levels, can help enhance the effectiveness of programmes. A tightly controlled
             system of certification to ensure the quality and relevance of training programmes
             may also contribute to the same goal (OECD, 1996; and O’Higgins, 1997).
      •      Residential programmes may yield positive returns for disadvantaged youth. Job
             Corps in the United States is a well-known example of such a programme. It
             consists in taking disadvantaged youth out of their regular locality, giving them
             mentoring, work experience and remedial education.


          A.       About 15% of activation expenditure in the
          United Kingdom benefits the young unemployed

              In 2005, the United Kingdom devoted about 15% of the total
          expenditure on active labour market policies to youth (Table 4.1). Almost
          two thirds of the total youth activation budget was accounted for by
          Connexions services and the remaining third was spent on unemployed
          youth engaging in New Deal programmes or Employment zones.
              Although statistics for other OECD countries are not available for 2005,
          the average share of total activation expenditure devoted to actions directed
          to youth across OECD countries was 10% in 2002.




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      Table 4.1.     The cost of youth activation schemes in the United Kingdom, 2005

                                                                   Milions pounds           Percentage of
                                                                        (GBP)              total expenses
     Total expenditure on ALMP                                             5 963                 100.0
     New Deal for Young People                                               213                   3.6
        Gateway                                                               79                   1.3
        Education and training option                                         53                   0.9
        Employment option                                                      8                   0.1
        options                                                               58                   1.0
        Follow-through                                                         6                   0.1
                                        a
     New Deal for Lone Parents 18-24                                            6                   0.1
                                            a
     New Deal for Disabled People 18-24                                        4                   0.1
     Employment zones                                                         92                   1.5
     Connexions Service                                                      550                   9.2
     Youth enterprise initiative (YEI)                                         6                   0.1
     Total expenditure on youth ALMP                                         872                  14.6

a)   Expenditure on 18-24 in New Deal for Lone Parents and New Deal for Disabled People is
     estimated based on the share of participants in this age group – i.e. thus assuming that the cost
     per participant does not change with age.
Source: Department for Work and Pensions Online Tabulation Tool; and OECD database on Labour
Market Programmes.


        B.           The NDYP performance has worsened over time
             The NDYP is an activation programme focused exclusively on young
        people. It was introduced in spring 1998 with the declared objective of
        improving employability of long-term unemployed youth and helping them
        find a job. Participation is mandatory after six months of claiming JSA.
        Eligible jobseekers are first put into a four-month programme with a New
        Deal Personal Adviser called “Gateway” (see Box 4.2). The purpose of this
        initial phase is to develop an individually tailored plan for improving the
        jobseeker's employability. At the end of the Gateway period, young
        jobseekers who have not found unsubsidised work can choose one of four
        options: subsidised work, full-time education and training, work in the
        voluntary sector or work with an environmental task-force.
             All these options continue to be subject to JSA rules, such as the
        obligation to actively seek work, irrespective of the financial arrangements
        for the specific option. If a young person completes or leaves an option and
        still has not obtained a job, they can reclaim JSA and enter the
        follow-through period. During this period, youth receive further intensive
        help with job-search in order to find a job.


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                   Box 4.2. New Deal for Young People: how does it work?

       The NDYP was introduced in the United Kingdom in 1998 to provide more intense
    job-search support for young people claiming JSA continuously for 26 weeks. Participation
    is mandatory. Early entry to NDYP is possible and there are 11 groups who are entitled to
    enter NDYP before reaching the standard six months entry point, including: people with
    disabilities, lone parents, ex-offenders, ex-members of the regular armed forces, people
    with literacy or numeracy problems and those meeting a range of other criteria.
       At entry, the Jobseeker Agreement – signed at registration with Jobcentre Plus – is
    reviewed by a Personal Adviser and an individualised action plan is drawn up. To inform
    the whole process, the young unemployed is put through a fast-track skill assessment and
    his/her distance from the labour market is evaluated using a standardised costumer
    assessment tool. In 2007, 11% of participants left NDYP in the pre-Gateway period, the
    same share as in 1999.
       After this initial stage, the first phase of NDYP – called Gateway – involves counseling
    and intensive job-search help and lasts for approximately four months. The Personal
    Adviser meets the young unemployed every two weeks, for at least 30 minutes each time.
    Sometimes youth are also assigned to a mentor, particularly if they need guidance on issues
    beyond their labour maker preparedness. During Gateway, the young person continues to
    receive the JSA and is counted as unemployed. In 2007, 54% of participants left NDYP
    during the Gateway period, the same share as in 1999.
       Young people who have not found a job by the end of the Gateway period are assigned
    to one of four options in agreement with the jobseeker: full-time education or training,
    work in the voluntary sector, work in an environmental taskforce or subsidised
    employment. It is the Adviser who decides which option the young person is more suitable
    for – subject to the young person’s agreement – although the subsidised employment
    option depends largely on demand from employers. During options – lasting between six
    and eight months – youth are not counted as unemployed and receive a wage or a training
    allowance. In 2007, 12% of participants left NDYP after the options period while in 1999
    this share was 19%.
        After the end of the option period youth who have not found work return to see their
    advisor and agree on further action – follow-through period. In 2007, 22% of participants
    left NDYP during the follow-through phase, up from just 17% in 1999.
       Private providers of NDYP services are paid based on outcomes. Most NDYP providers
    are paid 70% upfront and 30% if positive outcomes are observed, i.e. the unemployed
    young person is still in employment after 13 weeks of leaving NDYP.
       The whole NDYP process is mandatory and sanctions apply. A variable sanction of up
    to 26 weeks can be imposed if someone fails to accept a job or fails to apply for a suitable
    job opportunity. A fixed sanction of 2, 4 or 26 weeks can be imposed for behaviour that
    impacts on an individual’s employability prospects, for example, refusal of mandatory
    training. Youth are only allowed to restart claiming benefits if they have not found
    employment after the final follow-through phase. In 2007, over 40% of youth who left the
    NDYP were on some type of benefit two weeks later, up from about 30% in 1999.


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          Several rigorous evaluations of the programme were carried out in the
      early 2000s (see Box 4.3) exploiting comparison with the period
      immediately before the introduction of the NDYP as well as between
      pathfinder areas and areas excluded from the pilot. Slightly older jobseekers
      were also used as a control group in some evaluations. Most of early
      evaluations showed positive effects on the re-employment probabilities of
      youth who attended NDYP. Enhanced job search during the gateway was
      found to have a particularly positive effect and so was subsidised
      employment relative to other options.

                 Box 4.3. The New Deal for Young People: evaluations
       Several rigorous evaluations of the NDYP were carried out in the late 1990s and
   early 2000s to study the effect of NDYP – or its components separately – on re-
   employment probabilities of youth.
       A number of studies (Van Reenen, 2001, Blundell et al., 2001, and De Giorgi 2005)
   looked at the probability of re-employment for Gateway participants. They converged to a
   positive effect of enhanced job-search during Gateway on the probability of getting a job of
   about 5%. In addition, Wilkinson (2003) found high pre-programme effects, with 25 000
   fewer young people remaining unemployed for six months in the year after the introduction
   of the NDYP than in the preceding two years.
       Anderton et al. (1999a) found no evidence that the positive effects on youth came at the
   expense of some other group – substitution effect – mostly because the only option
   susceptible of causing substitution, the subsidised employment option, had been used too
   little to have a marked effect. The authors also estimated deadweight loss – i.e. youth
   getting jobs that they would have got anyway in the absence of the programme – to be
   approximately 50%, thus in line with similar programmes in other countries.
       Dorsett (2005) looked at the four options available to those who have not found
   unsubsidised employment at the end of the Gateway period and at the outcomes for youth
   who spend an extended period of time – longer than six months – on Gateway. He found
   that the subsidised employment option dominated the other three options as well as the
   prolonged Gateway stay. Interestingly, prolonged Gateway – with continued job-search
   support – appeared to be the second-best option, with a larger effect on youth re-
   employment probabilities than education and training, voluntary sector employment
   (performing similarly) and the environmental task force (the least performing option).
       The NDYP was also found to have a small but positive macroeconomic impact and to
   be cost-effective (Anderton et al., 1999b; and Riley and Young, 2000).
      The programme proved less effective when a longer time period for evaluation was
   considered. Wilkinson (2003) estimated the impact of the NDYP on the probability of being
   unemployed six months after reaching the qualifying time for the programme – coinciding
   with movement from the gateway period into the options – as well as 12 months and
   18 months later. The short-term results indicated, for men, a reduction in unemployment of
   around 30 000 and, for women, a reduction of around 9 000. However, the longer follow-up
   periods showed a lower reduction in the probability of being unemployed, mostly due to the
   fact that some NDYP participants had returned to claim unemployment benefits subsequently.



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         A number of qualitative evaluations were carried out in the early years of the
      programme by the National Centre for Social Research (Woodfield et al., 2000; and
      O’Connor et al., 2001) to assess the opinions of participants. The reports showed that
      young people saw the relationship between the Personal Adviser and the jobseeker as key
      to the success of NDYP. The study also noted that the effectiveness of Gateway stemmed
      from ensuring that people were not forced into accepting any job but were matched to the
      one that suited them. Other important aspects of NDYP options reported on favourably by
      young people were: the experience acquired under the subsidised employment option, good
      work-based training opportunities to develop skills and gain qualifications through the
      full-time education and training option and continued support once in a job.
         Views collected among employers (Elam and Snape, 2000) – participating and not in
      NDYP – showed overall support for the aims of NDYP. Among non-participating
      employers, obstacles to participation related to: the need for an employer-centred
      equivalent to the Personal Adviser to ensure that employers’ needs are consistently met;
      more effective partnerships with employers, particularly between Jobcentre Plus and
      employers; greater consistency in ensuring the employability of NDYP clients before they
      are sent to employers; and more flexible implementation of the training requirements.
      Employers generally accepted the value of the requirement to provide training for NDYP
      clients and saw this as helping to improve the longer term employability of young people.
      However, they reported a range of difficulties with the implementation of the requirement,
      including inadequate time and subsidy to complete qualifications.

             However, studies focusing on the longer term have found considerable
         churning between participation in the programme and short employment
         spells. Starters and spells data suggest that between 1998 and 2006, each
         participant has been on the programme 1.43 times on average. In 2007, one
         in five employment outcomes of NDYP leavers lasted less than 13 weeks
         (Figure 4.3) despite providers’ remuneration being linked to job
         sustainability – i.e. a job lasting 13 weeks or longer.
             Data available on the destinations of NDYP participants since 1998
         suggest that the positive effect of the NDYP may have deteriorated since the
         early evaluations. In 1998, 67% of NDYP leavers entered employment
         although some combined it with benefits.74 By 1999, the job entry rate had
         already fallen to 61% and in 2007 it was just 48% (Figure 4.4).75


74.          It has been argued that the programme was particularly successful – including
             with meeting strong employers’ support – in the year of its introduction because it
             was the first major employment programme for youth people in the
             United Kingdom.
75.          These rates are obtained by eliminating unknown destinations from both the
             numerator and the denominator. If leavers to unknown destinations were included
             in the denominator, the job entry rate would be 54% in 1998, 49% in 1999 and
             34% in 2007.

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Figure 4.3.         Sustainability of employment outcomesa for NDYP leavers, 1998-2007
                                             Percentages

                           Sustainable job                       Unsustainable Job
   100
    90
    80
    70
    60
    50
    40
    30
    20
    10
     0
           1998     1999     2000    2001      2002       2003      2004      2005      2006      2007

a) A sustainable job is one from which a participant does not return to JSA within 13 weeks.
Source: Department for Work and Pensions Online Tabulation Tool.



Figure 4.4.         Immediate destination of young people leaving the NDYP,a 1998-2007
                  Employment                                        Employment and benefits
                  Other benefits schemes                            Other destinations
 100
  90
  80
  70
  60
  50
  40
  30
  20
  10
    0
         1998     1999      2000     2001      2002       2003       2004       2005       2006      2007


a) Unknown destinations are excluded from the calculation.
Source: Department for Work and Pensions Online Tabulation Tool.




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            In addition, in 2007, only 7% of youth entering options participated in a
        subsidised employment placement – the option that was found to be most
        effective in evaluation studies – down from 25% in 1999. The use of all
        other three options increased in the face of this decline, with direct job
        creation – voluntary sector employment – increasing the most (Figure 4.5).
            This reduction in the availability of subsidised employment placements
        may reflect the reluctance of employers to take on programme participants
        due to limited financial incentives or a too-high administrative burden.

           Figure 4.5.           Distribution of youth across NDYP options, 1999-2006a
      45
             Full-time education
      40

      35

      30
                                       Voluntary sector
      25

      20                                                                                Environment

      15

      10                                                               Subsidised employment
       5

       0




a) Data refer to 12 months moving averages of monthly figures.
Source: Department for Work and Pensions Online Tabulation Tool.


            Assistance available to employers providing placements for the NDYP
        consists of a subsidy of up to GBP 60 a week for six months and an
        additional lump-sum contribution of up to GBP 750 available for training of
        a young person. There is a strong emphasis on the obligation of employers
        to provide training leading to formal qualifications, with a strict requirement
        for employers to provide a minimum of one-day training a week which must
        lead to the equivalent of a National Vocational Qualification. This training
        can take place in the workplace or at a college. The training provided by
        employers is constantly monitored and reviewed and if an employer is found
        not to be meeting these requirements, the subsidy is withdrawn. Elam and
        Snape (2000) found that employers considered these training requirements
        too stringent and the training subsidy inadequate to meet them (Box 4.3).

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      C.           Other New Deal programmes
          In May 2007, the NDYP counted 90 000 participants all aged 18-24.
      However, many young people participate in other New Deal programmes not
      focused exclusively on youth. In May 2007, 14 000 youth were enrolled in the
      New Deal for Lone Parents (NDLP) and 18 000 in the New Deal for Disabled
      People (NDDP). An additional 9 000 were engaged in Employment Zones – a
      pilot programme launched in view of reforming the New Deal schemes. Both
      NDLP and NDDP have produced positive outcomes (see Box 4.4), but
      participation is voluntary, thus selection bias is high – i.e. participants tend to
      be closer to the labour market than non-participants.

       Box 4.4. New Deal for Lone Parents and New Deal for Disabled People

       The NDLP is a voluntary programme introduced nationally in October 1998 with the aims of
   helping lone parents to improve their prospects and living standards by increasing hours of paid
   work or to increase their employment opportunities by improving their job readiness. The
   design includes a Personal Adviser, help with childcare costs and options such as subsidised
   jobs with childcare providers, voluntary sector employment and full-time education and
   training. The evaluation evidence shows that 51% of all leavers from the programme leave
   income support and enter work of at least 16 hours per week (Evans et al., 2003; and Dolton
   et al., 2006). Current estimates suggest that participation in NDLP increased exits from benefit
   to work by 24 percentage points, twice the exit rate before the programme was introduced.
   Voluntary participation may explain part of this success. Those most likely to participate are: the
   highest qualified claimants; those with the shortest claim history; those who have worked in the
   past year or are currently working; those who want to work in the next six months; and those
   who believe they will be better off in work and are willing to work for the minimum wage.
      The NDDP is also a voluntary programme introduced in 2001. It is focused around a
   network of Job Brokers to help people with health conditions and disabilities move into
   sustained employment. Of those registering between 2001 and 2003, 43% had found jobs
   and of these 57% achieved sustained employment up to the end of 2003 (Stafford, 2007).


      D.           The time is right for reform
           The United Kingdom government is currently planning changes to its
      active labour market policy framework in order to move more people off
      benefits into work (DWP, 2007a): i) the New Deals will be reformed to
      improve their effectiveness in placing participants into sustainable jobs;
      ii) delivery of activation programmes will be centred around partnerships
      with private, public and third-sector providers; and iii) enhanced cooperation
      with employers will be at the heart of the reform. Procurement activity for
      the flexible New Deal will start in Spring 2008 and the first clients will be
      referred to contracted providers in October 2009. The flexible New Deal,
      like JSA, will be a Great-Britain-wide programme.

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        The New Deals will be reformed to improve their effectiveness in
        placing participants into sustainable jobs

            The government is planning to move away from the rigid distinctions
        between age groups of the current New Deals and introduce a new, flexible,
        personalised approach for more disadvantaged customers, more focused on
        employment retention and progression in work.
            The new approach would include the following elements (see
        Figure 4.6):
       •     After an initial three-month period on benefit, job-search requirements
             would be widened, based on travel to work, wage and working hours
             rather than by preferred employment or occupation;
       •     After a further three months, customers would enter the Gateway stage
             starting with a formal review with a Personal Adviser to revisit the
             needs identified in the earlier Jobseeker’s Agreement and to draw up a
             back-to-work action plan. The plan would select from a menu of
             activities and individuals would be expected to agree to and complete a
             number of actions. Each of the agreed activities would be mandatory
             and failure to comply would result in an appropriate sanction. This
             Gateway stage would also offer a further opportunity to refer the
             customer to a skills health check and, if appropriate, training;
       •     After 12 months customers would be referred to a specialist
             return-to-work provider from the public, private, or voluntary sectors to
             benefit from the most appropriate intensive, outcome-focused service,
             funded on the basis of results;
       •     Customers still on benefits, having failed to find work through a
             specialist provider, would be required to undertake a four-week
             work-focused activity; and
       •     Throughout the whole process the offer of increased help would be
             balanced with the responsibility on individuals to make the best use of
             that support or face a loss of benefit. This is an important part of the
             current mandatory New Deals and would continue to be a feature of the
             flexible New Deal. Jobcentre Plus will remain responsible for applying
             benefit sanctions where necessary.




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                              Figure 4.6.                The reformed New Deal programme

                                                                                      Personalised support from
                                  Jobcentre Plus
                                                                                         specialist providers

                                         Fast-tracked
                                         customers


                            Escalating conditionality



    New
                                                                                                                   Job
    customer
                           Stage 1              Stage 2              Stage 3                  Stage 4

                0 months             3 months             6 months              12 months



    Customer
    diagnosis              "Self-help"    "Directed job search"      "The Gateway"           "Flexible New Deal"




Source: Department for Work and Pensions (DWP, 2007a).


          The new system will allow fast-tracking of individuals facing
      particularly severe barriers to work. For instance, customers for whom a
      lack of skills is a barrier to work will get faster access to the right
      training. In addition, conditionality will be more graduated thus those
      who have a history of long-term reliance on benefits could face tougher
      responsibilities from the start of the claim, where appropriate.
          Starting April 2008, 18-year olds with any history of NEET will be able,
      by agreement with their Personal Adviser, to be fast-tracked to the Gateway
      stage of New Deal on a voluntary basis. From April 2009, fast-tracking to
      Gateway will be mandatory for 18-year olds who have already built up a
      six-month period of NEET. More specifically, this will apply to 18-year olds
      who spent 26 or more weeks in NEET immediately prior to turning 18 or
      who are aged 18 and have reached a combined duration of 26 weeks on JSA
      and NEET. Voluntary participation for 18-year olds with any history of
      NEET will still be possible.

      Delivery of activation programmes will be centred around
      partnerships with private, public and third-sector providers
          The new approach to contracting with the private and voluntary sectors is
      built around high-quality support to all customers, flexibility of provision and
      strong competition to secure ongoing improvements in cost-effectiveness.

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            To deliver the flexible New Deal, the government is looking to set up
        partnerships with public, private and voluntary sector providers. It is also
        aiming to increase competition among providers in order to improve service
        quality. In the United Kingdom, the provision of re-employment services is
        currently a large and growing market and the government has the
        opportunity to obtain significantly better value services through the effective
        exercise of its purchasing power.
             The government also envisages moving towards output-based contracts
        with a low level of prescription for providers. Until now, employment
        programme contracts have often been short-term (typically three years),
        small, and geared towards process and inputs. In this format, they have not
        offered appropriate rewards to high-performing providers. To improve
        performance evaluation – and rewards – the government is planning to set
        up a provider “Star Ratings” system similar to that currently used in
        Australia, where high-performing providers are clearly identified and where
        ratings inform performance management (Australian Department for
        Employment and Workplace Relations, 2007). This system could drive the
        process by which jobseekers are allocated between providers.
             Providers will be given more flexibility in the way that they deliver
        services but will have to ensure sustainable employment outcomes. In this
        respect, the government has put forward plans to change the current definition
        of a sustainable employment outcome – a job lasting at least 13 weeks – to
        include only jobs lasting at least 6 months initially and 12-18 months in the
        longer term (DWP, 2007b). Part of providers’ remuneration will be linked to
        these longer employment outcomes. The government is also trying to design
        remuneration/evaluation schemes that prevent providers from concentrating
        on those people that can be moved into work easily, and/or not paying proper
        attention to individuals who require too much support. These proposals are in
        line with OECD recommendations in this area (OECD, 2005).
             To inform the structure of incentive payments to clients, the government
        has also launched in 2003 a random assignment experiment called
        Employment Retention and Advancement (ERA) scheme (see Hall et al.,
        2005). Under this scheme, the programme group received, for nearly three
        years, individual support from an Advancement Support Adviser. The Adviser
        assisted them: i) to find suitable work; ii) to remain in work and avoid some of
        the early problems that sometimes cause new jobs to be short-lived; and iii) to
        advance in their jobs. A retention bonus (GBP 600) was paid every three
        months to those who had stayed in full-time work of at least 30 hours a week
        for the three months and additional funding for training was also available.
           These characteristics of the flexible New Deal will partly build on the
        experience with Employment Zones pilots. The pilots have shown that more


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      freedom to design tailored interventions and payment schemes aimed at
      incentivising early entry and sustainable outcomes yield significantly better
      employment outcomes than the current New Deal programmes (Box 4.5).
      Unfortunately, the Employment Zones pilots were not tendered for on a
      competitive basis so it is difficult to draw conclusions on the procurement
      strategy that the government is planning for the flexible New Deal.
      However, since 2007, Employment Zones have allowed jobseekers to
      choose their provider, a mechanism that could improve cost-effective if
      jobseekers are informed of providers’ performance and exercise their choice
      on the basis of such performance.

                             Box 4.5. Employment Zones Pilots
      Employment Zones (EZs) in their current form were introduced in April 2000 to test a
   new, market-oriented approach to reducing long-term unemployment through a work-first,
   outcome-related model of delivering employment services. EZs were originally established
   in 15 of the most deprived areas of the United Kingdom where long-term unemployment
   persisted in spite of the general decline in unemployment. The number of zones was later
   reduced to 13 when the 5 London zones merged into 3.
      EZs originally targeted their services on long-term jobseekers aged 25 and over. In
   2003, services were extended to include young people returning to NDYP and lone-parent
   volunteers. For eligible NDYP return customers, EZ participation is mandatory once they
   reach six months unemployment while lone-parent participation is voluntary and customers
   may choose to join or leave the EZ at any time. Since 2000, EZs have recorded 215 000
   starters and in July 2007 18-24-year olds accounted for 27% of them.
       With few restrictions governing their activities, EZs have the freedom to design tailored
   interventions to help their clients secure and sustain employment. The EZ funding model
   combines a system of output-related funding with a benefit transfer payment system. Output
   related funding amounts to GBP 4 700 per participants of which GBP 300 are paid at entry,
   GBP 400 at job start, GBP 400 after 5 weeks in employment and GBP 3 600 after 13 weeks in
   employment or 11 weeks out of 13 in employment in multiple jobs without claiming benefits.
   The payment ratio is therefore 6.5% at entry to the programme, 8.5% at job start and 85% if the
   job is sustained. For the benefit transfer component, the provider receives funding equivalent to
   21 weeks of JSA (GBP 1 200 for youth) but has to pay JSA for a maximum of 26 weeks, based
   on the expectation that most customers will move into work before the maximum length of stay.
   If employment is secured in less than 21 weeks, the provider is allowed to retain the funding
   which remains after JSA payments have been made but he is also required to make up the
   shortfall for any customers who remain unemployed longer than 26 weeks.
      Provider competition was extended in 2004 when six of the larger EZ areas became
   multiple-provider EZs. Mandatory clients in Multiple Provider EZs (MPEZs) originally
   exercised no choice of provider and were randomly assigned by Jobcentre Plus Advisers
   using a Random Allocation Tool on the basis of an agreed market share. Choice of
   provider for mandatory customers was implemented in April 2007. On the other hand,
   voluntary NDLP participants have long been able to choose their provider.*


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       Since their introduction, EZs have been subjected to continuous evaluation, giving rise to a
    substantial body of research and evidence. In 2007, the Department for Work and Pensions
    synthesised available evidence on their performance (DWP, 2007c). The report concluded
    that EZs are more effective than comparative New Deal programmes in terms of their success
    in placing mandatory customers into work and helping them sustain employment for
    13 weeks. EZs significantly outperform comparative New Deals for all mandatory customer
    groups, including those which have multiple employment barriers and there is no evidence
    that EZs achieve better results as a result of investing their resources only in job-ready
    customers to the detriment of those who are harder to help. For NDYP returners, better
    performance of EZs’ versus NDYP is due to the fact that EZs move youth into work more
    quickly, provide continuity of support and incentives, and keep youth employed for longer.
    This reflects EZs’ flexibility, the funding regime and Advisers’ greater discretion to
    determine the frequency, content and timing of interventions and incentives.
        However, EZs’ better results appear to come at a price. Under the current funding
    model, EZs cost significantly more than comparative New Deals, particularly NDYP. This
    is partly because EZs were not tendered on a competitive basis. Until 2007, these aspects of
    market delivery were constrained by limited customer choice, by the contractual features of
    pre-determined market quotas and random allocation in MPEZs, and by the limited scope
    for comparing and rewarding the differential performance of providers.
       Finally, in spite of their considerable flexibilities and scope for innovation, EZs have
    been unable to overcome the barriers of a hardcore of long-term unemployed clients.
    Although EZs achieve better outcomes than comparative New Deals for mandatory
    customers who are similarly disadvantaged, almost half of those who attend an EZ leave
    without securing employment. EZ delivery has thus confirmed the existence of a group of
    customers experiencing employment barriers that cannot be easily overcome within the
    timescale and scope of the current EZ structure.
        * In London EZ areas, NDLP has been withdrawn and lone parents are able to choose from a selection
    of EZ providers. Outside London, lone parents can still choose to participate in NDLP but from their second
    Work-Focused Interview they are offered a choice of EZ providers. Providers are encouraged to compete by
    marketing their services to lone parents and may attract as many lone-parent customers as they want.


        Enhanced cooperation with employers will be at the heart of the reform
            To implement the changes mentioned above, the government is putting
        more emphasis on the role that employers need to play. Local Employment
        Partnerships (LEPs) were announced in the 2007 Budget. Through these
        partnerships major retail employers including Asda, B&Q, Marks and
        Spencer, Sainsbury’s and Tesco demonstrated their commitment to help
        long-term benefit claimants into employment by recognising the wider
        economic advantages of employing a diverse workforce and the gains from
        reducing worklessness in local communities.
            Building on these partnerships, the government has included a target of
        finding work through LEPs for at least 250 000 people at a disadvantage in
        the labour market by the end of 2010 – the so-called “Jobs Pledge” – in the

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      flexible New Deal Green Paper (DWP, 2007a). By the end of March 2008
      over 600 employers, from a variety of sectors, had committed to LEPs
      including both large national and smaller local companies.
          The government is committing, in return, to ensure that job applicants
      will have the right attitude to work as well as the right skills. To fulfil this
      commitment, the cooperation between Jobcentre Plus and the LSC in
      England has been enhanced in order to ensure that people are job-ready.
      Notably, Jobcentre Plus has recently worked with the LSC and
      employers-led Sector Skills Councils in 9 key sectors to develop Sector
      Employability Toolkits which provide a route back to work for Jobcentre
      Plus customers which meet the employability requirements of employers in
      these sectors.

3. Reducing NEET and engaging youth at risk

           The active and passive labour market measures described above are
      directed at young people who are unemployed or in receipt of other type of
      benefit support. As a result, they tend to exclude – with few exceptions –
      youth under 18. Because NEET status is particularly common and persistent
      among low-skilled youth, it is key to act earlier. Connexions is the main
      service currently available to young people disengaging from learning after
      fulfilling the compulsory education requirement at 16. But the government
      is piloting new schemes mimicking the mutual obligations principle for
      unemployed youth in the hope of creating a more effective framework to
      activate youth aged 16-17 who are not in work or learning.76

      A.        The performance of Connexions in terms of helping youth
      at risk needs strengthening
          Connexions is a guidance and support service for all young people
      aged 13-19 in England. It was introduced as a Pilot in 2000 with the aim to
      remove barriers to learning and progression, and ensure young people make a
      smooth transition to adulthood and working life. By 2003, 47 Connexions
      Parnerships were active in England. Services are delivered through a network
      of Connexions Personal Advisers linking with specialist support services.
      Connexions Personal Advisers are normally drawn from a range of existing

76.       In November 2007, the government issued a strategy to reduce NEET (DCFS,
          2007c) based on: i) ensuring that more young people stay in learning post-16,
          including those with barriers to learning; ii) efficient services for getting back into
          learning and work those youth who become NEET but have no specific barriers to
          engagement; and iii) more targeted and intensive support to engage those young
          people with particular barriers to participation or to re-engagement.

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        public, private, voluntary and community sector organizations. These
        organisations come together to form a so-called Connexions Partnership.
            Services are mainly provided using a one-stop shop formula. Within this
        framework, Connexions provides information, advice, guidance and access
        to personal development opportunities for young people, often in
        cooperation with other agencies. Youth are classified internally as belonging
        to four different tiers and services for them are calibrated according to their
        needs (Table 4.2). Close co-operation with schools has been fruitful,
        particularly in terms of building a database of young people in each area and
        their employment/educational outcomes. However, because of the lack of
        benefit provision, it is difficult to engage youth through a mutual obligation
        approach as it is done at Jobcentre Plus.77
             There are no rigorous quantitative evaluations of the service, partly
        because of its voluntary nature and its guidance focus, however a number of
        qualitative studies are available. A customer satisfaction survey carried out
        in 2003 (Brunwin et al., 2004) found that 93% of young people were either
        satisfied or very satisfied with the service and 73% of them reported that
        Connexions had helped them make decisions about their future.
              Similarly satisfactory views were collected among stakeholders78 by
        Dickson et al. (2004). In particular, 56% of stakeholders found that services
        to young people with multiple barriers had improved over time and 40%
        thought that this was the case for youth who were engaged in learning,
        i.e. those who did not have a high level of need. However, stakeholders did
        identify a number of outstanding problems or drawbacks of the Connexions
        Service for young people in their area, relating to a lack of resources in
        terms of money and staff and to gaps in service provision. About 20% of
        respondents thought that a major drawback faced by connexions in their area
        was the “lack of staff, personal advisors and insufficient time spent with


77.          Both Department for Work and Pensions and the Department for Children,
             Schools and Families have committed to work jointly (DWP, 2007d) together with
             Jobcentre Plus, local authorities and Connexions to improve engagement with
             young people and provide them with advice and support to develop the skills they
             need to enter and to thrive in education, training or work with training. The two
             Departments will seek to improve on current joint working between Jobcentre
             Plus, Connexions and local authorities to improve the service offered to youth
             seeking their first steps in the labour market and preparing for work. Data sharing
             will also be improved.
78.          Stakeholders interviewed for the study were involved in the local committees and
             boards managing Connexions at the local level including: headteachers, social
             services, youth offending teams, jobcentre plus, drug action teams and young people.

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         each individual” (see also Watts, 2001). Another 12% mentioned the
         reduction of services to the majority in favour of those in greatest needs and
         an additional 12% raised service awareness issues.79 Some tension among
         stakeholders in terms of priorities emerged from the survey. About 20% of
         stakeholders thought that resources did not go to the right services but, while
         local authorities and youth offending teams thought more should be spent on
         young people at risk, education and career services felt that it was the
         mainstream services such as advice and guidance that needed strengthening.
         Finally, 72% of stakeholders identified gaps in provision, mostly in areas
         related to youth in greatest need.80
                  Table 4.2.      Connexions Services by level of disadvantage
  Tier      Share of
                                     Disadvantage                          Connexions Services
 level       youth
Tier 1        66%       General public with no specific               Career information; local labour
                        disadvantage.                                 market information; direct
                                                                      helpline; electronic tools to
                                                                      apply for post-16 education or
                                                                      training; help with applications
                                                                      for financial support (EMA);
                                                                      access to the website.
Tier 2        20%       Youth: on special education needs             Additional support in partnership
                        register; disabled; with learning             with other agencies.
                        difficulties; supervised by youth
                        offending teams; looked after or living in
                        care; on benefits; in need of funding for
                        work-based learning; involved in
                        truancy/bullying; NEET.
Tier 3        13%       Teenage parents; youth with                   Intensive support/advocacy for
                        health/drugs/sexual health/mental             young people with multiple
                        health difficulties; young offenders;         barriers.
                        youth leaving care; youth in unsuitable
                        accommodation; youth with refugee
                        status.
Tier 4         1%       Young people with crisis issues: child        Crisis support (generally only
                        protection, abuse and homelessness;           temporary during the crisis
                        pregnancy; drugs overdose; self-harm          situation after which the young
                        or at risk of suicide, violent offending      person moves back to other
                        and runaways.                                 tiers - most often Tier 3).
Source: Connexions, Conventry and Warwickshire.


79.          Nevertheless, there is evidence that awareness of the service has grown very rapidly in
             the early years of the pilot, from 35% in 2002 to 71% in 2003 (Connexions, 2003).
80.          The main gaps were identified in the following areas: training for those not in
             education, employment or training (29% of respondents), young people with
             learning difficulties/disabilities (18%), young people from ethnic minority
             groups (18%), teenage pregnancies (12%), drugs and alcohol abuse (11%), and
             housing support/homelessness (11%).

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             Another study conducted by Hoggarth and Smith (2004) found that while
        universal provision services worked well, Connexions did not effectively
        impact young people at risk. In addition, the study underlined other
        weaknesses in Connexions service provision, such as: ineffective assessment
        of risk and priority; failure to identify risk early enough; failure to deal with
        urgent and present needs; too rigid a focus on the NEET targets resulting in
        pressure on young people to take up, sometimes unsuitable, employment,
        education or training options; and a failure to follow up interventions.
            Finally, Connexions is a very costly service. In 2005, Connexions
        accounted for over 9% of the total expenditure on active labour market
        policies, more than the expenditure on youth in various New Deal
        programmes (Table 4.1). In 2008, Connexions funding will be transferred to
        local authorities and it is unclear what components of the service will be
        pursued,81 although the new services will certainly build on the Connexions
        experience (DfES, 2006). Local authorities will have a considerable degree of
        flexibility and this is an opportunity for better tailoring of services to local
        needs and for strengthening support for youth at-risk. However, the Education
        and Skills Bill, includes proposals that local authorities be directed to continue
        to deliver a number of operational processes and standards that are seen as key
        to a successful Connexions service. These include access to personal advisers
        with a minimum level of qualifications, retention of the Connexions brand and
        the maintenance of vital information flows to inform client tracking.

        B.       Activity and Learning Agreements Pilots may help very
        young people to train or work

             In April 2006, the United Kingdom Treasury launched two pilots – the
        Activity Agreement and Learning Agreement schemes – aimed at increasing
        the share of 16-17-year olds who receive some form of training. Activity
        Agreements are meant for 16-17-year olds who have been NEET for
        20 weeks, while Learning Agreements target 16-17-year olds in jobs without
        training. Twelve Connexions partnerships across the country are piloting the
        schemes for two years.82




81.          There has been a call for advice and guidance to be provided directly by schools.
             Note, however, that education experts recommend that independent bodies
             provide career guidance and advice (OECD, 2004b).
82.          Eight partnerships will pilot each scheme with some partnerships piloting both.

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      The Activity Agreement Pilot
           The Activity Agreement pilot includes two components that will be
      tested for their effectiveness at re-engaging “long-term” NEET:
      •   The Activity Agreement: a personally negotiated contract between a
          Connexions Personal Adviser and the young person. The agreement
          identifies specific steps which the youth in question should take to move
          into education, training or employment (preferably with learning) and
          offers access to financial support in return for compliance.
      •   The Activity Allowance: based on extending the mutual obligations
          principle of JSA to hard-to-help 16-17-year olds. Youth have to
          demonstrate progress towards fulfilling their Activity Agreement in
          order to continue to qualify for weekly support.
          The Activity Agreement pilot is designed to test the most effective
      financial-support regime at engaging the target group. The Treasury is also
      aiming to use the findings from the pilot to inform the long-term direction of
      reform for financial support for 16-19-year olds, towards a single, coherent
      system of support.
          There are three variants of the Activity Allowance designed to test
      different combinations of support and incentive payments: in variant 1, the
      young person receives GBP 20 per week presented as an incentive to find
      education, training or employment opportunities; in variant 2, the young
      person receives GBP 30 per week presented as support while looking for
      such opportunities; and variant 3 includes GBP 20 per week paid to the
      young person and GBP 30 per week paid to the family presented as both an
      incentive (the young person’s component) and support (the family’s
      component). Three Connexion partnerships are piloting variant 1, three are
      piloting variant 2 and two are piloting variant 3.
           In April 2008, three new variants were added to the existing ones. The
      first one allows young people to engage in the Activity Agreement from as
      early as 13 weeks of NEET status and receive an allowance of GBP 30
      per week. The second is aimed at reengaging young people who have left
      education and were previously in receipt of EMA by identifying them as
      soon as possible after disengagement and paying an allowance equivalent to
      EMA subject to completion of agreed activities.83 The third one allows
      particularly vulnerable youth to be fast-tracked into Activity Agreements
      and receive GBP 30 per week.

83.       The intention through this model is to learn more about re-engaging young people
          who have previously been motivated to learn in order to inform policy on raising
          the participation age.

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        The Learning Agreement Pilot
             The Learning Agreement Pilot builds on the statutory right to time off
        for 16-17-year olds without a Level 2 qualification and has the core aim of
        raising participation in education and training. The pilot comprises two
        elements that will be tested for their effectiveness in achieving this aim:
       •     The Learning Agreement: a negotiated, personalised agreement
             focusing primarily on the learning and support needs of the young
             person. The agreement also seeks the engagement and support of
             employers to help re-engage their young employees into learning;
       •     Financial Incentives: a range of financial incentives are tested to
             encourage employees84 to take up the Learning Agreement offer,
             including completion bonuses.
            The Learning Agreement model aims to reach all 16-17-year olds in
        jobs without accredited training in the pilot areas but priority is given to
        those who do not hold a lower-secondary qualification and to those who are
        in full-time employment, i.e. 16 hours a week or more. Where the young
        person has already achieved a Level 2 qualification, funds will be made
        available for the next level or for complementary provision if it supports
        career or employment progression.
             All of the eight pilot areas have tried to foster links with employers. To
        improve this, starting April 2008, all the pilots were required to enter into a
        “good referrals only” contract with Train to Gain. This means that Train to
        Gain will refer young people to the Learning Agreement pilot but payment
        for these referrals will be subject to the referrals leading to Learning
        Agreement starts. The pilots will also maintain a multiple engagement
        strategy as well as developing contracts with Train to Gain.

        C.            More targeted programmes for youth with complex needs
            Even the best-performing programmes, when evaluated, often fail to
        help those youth at very high risk of labour market and social exclusion,
        notably youth who cumulate a number of problems ranging from
        behavioural difficulties to alcohol and drug abuse. What has emerged from
        evaluations of several programmes is that the neediest youth must be
        identified as early as possible and provided with specific attention and
        focused – as far as possible, personalised – help. This hard-core group of

84.          Originally, the scheme included wage compensation for employers but this feature
             was dropped based on evidence that large employers were not interested in wage
             compensation and small employers found it complex, time consuming and
             bureaucratic to administer.

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152 – CHAPTER 4. PASSIVE AND ACTIVE LABOUR MARKET POLICIES TO MOBILISE YOUNG PEOPLE INTO WORK

      at-risk youth is likely to include those youth who are very difficult to
      mobilise and for whom ad hoc strategies should be devised. Among
      programmes targeted specifically to very disadvantaged youth, there is some
      experimental evidence that residential programmes with a strong focus on
      remedial learning and employment assistance may yield positive private and
      social returns once allowance is made for impacts on adverse social
      behaviours (crime, drug-taking, poor parenting), as well as labour market
      outcomes. An example of these programmes, the Job Corps in the
      United States, is presented in Box 4.6.

                         Box 4.6. The US Job Corps programme

     Job Corps has been a central part of the Federal government’s efforts in the United States
  for several decades to provide employment assistance to disadvantaged youth and help them
  become “more responsible, employable and productive citizens”. To be eligible, youth must
  be 16-24, meet low-income criteria and face one or more barriers to employment such as
  lacking qualifications or being a runaway, a foster child, a teenage parent or a homeless
  youth. Job Corps services are delivered at 122 centers nationwide in the United States and
  serve about 60 000 new enrollees annually. Most youth participate in a campus-like
  residential living component – approximately 85% of students are residential – while the
  remaining students commute to their centers daily. Participants can start any time during the
  year and spend an average nine months on the programme. However, in the best performing
  centres, students tend to stay even longer – up to 24 months. Participation is entirely on a
  voluntary basis.
     Programme components include a strong focus on academic education and vocational
  training to help participants attain an upper secondary qualification. Thanks to close
  cooperation with unions, some vocational training courses available at Job Corps are
  recognised as pre-apprenticeship programmes, allowing entry to apprenticehip at a
  higher-level and salary. At the end of the programme, placement services help participants to
  secure sustainable employment. Other key services include health education, health care and
  counselling. During the programme, youth receive a stipend twice a month – increasing with
  seniority, up to USD 46 – and a lump-sum of USD 100 every three months to purchase
  necessities. Youth who graduate with a combination of completing vocation training and
  obtaining an upper secondary qualification are eligible for USD 1 200 to help with the
  start-up costs of independent life.
     Outreach activities, centre management, training and placement services are all run by
  private contractors. Contracts are allocated through a competitive tendering process and can
  last up to seven years after a series of renewals. All contractors are evaluated based on
  several criteria each carrying a different weight, with some weights modeled on the
  characteristics of the population in each Job Corps centre. For instance, outreach contractors
  are evaluated based on the number of youth recruited, on the gender balance achieved, and
  on the share of recruited youth who do not drop out within the first three months. On the
  other hand, contractors who run the centres are evaluated based on criteria such as: the
  educational achievement of participants while on the programme, notably literacy and
  numeracy and whether participants obtain an upper secondary qualification and/or complete

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   CHAPTER 4. PASSIVE AND ACTIVE LABOUR MARKET POLICIES TO MOBILISE YOUNG PEOPLE INTO WORK – 153


   vocational training; the initial placement of graduates, their initial wage, and the match
   between their placement and the training received at Job Corps; the initial placement of
   participants who do not acquire an upper secondary qualification while on the programme;
   and the employment status and wage of graduates up to 12 months after completion.
   Performance based on these criteria influences contractors’ payment in the form of extra
   bonus payments – i.e. centre contractors are only allowed to bid for costs and a profit margin
   of 2.8% but can attain profits of up to 6% if they perform well according to the above
   mentioned criteria.
      Job Corps is an expensive programme given its design, costing approximately
   USD 22 000 per slot. As a result, it has been evaluated several times during its history, most
   recently via experimental (i.e. random-assignment) methods (Schochet et al., 2000 and
   2001). The latter found rather positive effects of Job Corps on participants’ employability
   and earnings and high social rates of return. However, a follow-up analysis based on
   administrative data on earnings rather than survey-based data (Schochet et al., 2003) found
   less positive benefits for teenagers but continued to show high social returns for young
   adults (the 20-24 age group). The residential component of the programme appears to work
   better than the non-residential option.


4. Key points

            The United Kingdom moved from passive to active management of
        unemployment benefits a decade ago and the mutual obligations approach
        has informed public employment service activities for the unemployed
        since. In terms of actions for unemployed youth, the United Kingdom New
        Deal for Young People has been an example of a comprehensive activation
        programme across OECD countries since its introduction in the late 1990s.
            However, in 2007, one in five young people who found work through
        NDYP held a job lasting less than 13 weeks. Also, work placements under
        the subsidised employment option – the most effective option of the four
        available – have become much less frequent. In light of these developments,
        the government is now planning to reform New Deal programmes –
        including the one focused on youth – with the aim of improving their
        effectiveness. The new scheme – the so-called flexible New Deal – will put
        the accent on sustainable outcomes and on competition among service
        providers to create a quasi-market for employment services with the aim of
        improving outcomes for participants and yielding greater value for the
        public funds invested in them.
            The Employment Zones pilot is currently what comes closer to the
        flexible New Deal model. The pilots have shown that more freedom to
        design tailored interventions and payment schemes aimed at incentivising
        early entry and sustainable outcomes yield significantly better employment
        outcomes than the current New Deal programmes. Unfortunately, the
        Employment Zones pilots were not tendered for on a competitive basis so it

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154 – CHAPTER 4. PASSIVE AND ACTIVE LABOUR MARKET POLICIES TO MOBILISE YOUNG PEOPLE INTO WORK

      is difficult to draw conclusions on the procurement strategy that the
      government is planning for the flexible New Deal.
           Youth aged 16-17 who are NEET are rarely entitled to financial support
      or re-employment services at Jobcentre Plus. At present, this group of at-risk
      youth is served by Connexions which has a double mandate of providing
      advice and guidance on learning and career options to all youth aged 13-19
      and of providing more intense and personalised support to at-risk youth in
      this age group. While users have expressed overall satisfaction with
      Connexions services, gaps in services remain, particularly in terms of
      helping youth at high risk of marginalisation. As responsibility and funding
      for Connexions move to local authorities in 2008, there will be more
      opportunities to tailor services to local needs and to improve targeting of
      youth at-risk. At the same time, the government is proposing that local
      authorities retain the Connexion brand, ensure access to personal advisers
      with a minimum level of qualifications and maintain vital information flows
      to inform client tracking.
           The Activity Agreement pilot – launched in 2006 by the Treasury –
      could inform the future activation strategy for 16-17-year olds at high risk of
      exclusion. The scheme includes a small allowance paid in exchange for
      compliance with an agreement on a series of actions to move into education,
      training or employment with training.




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                                    JOBS FOR YOUTH – UNITED KINGDOM – ISBN-978-92-64-04646-7 © OECD 2008
OECD PUBLICATIONS, 2, rue André-Pascal, 75775 PARIS CEDEX 16
                      PRINTED IN FRANCE
   (81 2008 10 1 P) ISBN 978-92-64-04646-7 – No. 56257 2008
Jobs for Youth

UNITED KINGDOM
Improving the performance of youth on the labour market is a crucial challenge in OECD
countries facing persistent youth unemployment. As labour markets become more and
more selective, a lack of relevant skills brings a higher risk of unemployment. Whatever
the level of qualification, first experiences on the labour market have a profound influence
on later working life. Getting off to a good start facilitates integration and lays the
foundation for a good career, while a failure can be difficult to make up.
Ensuring a good start will require co-ordinated policies to bring the education system
closer to the labour market, to help disadvantaged young people to find a job or
participate in a training course and to facilitate the hiring of young people by firms.
OECD has launched a series of reports on the school-to-work transition process in
sixteen countries including the United Kingdom. Each report contains a survey of the
main barriers to employment for young people, an assessment of the adequacy and
effectiveness of existing measures to improve the transition from school-to-work, and
a set of policy recommendations for further action by the public authorities and social
partners.
This report is based on the proceedings of a seminar and is published in English only.
However, a French translation of the summary and main recommendations has been
included in this volume.


Already published in the same series:
Belgium
Canada
Korea
Netherlands
New Zealand
Slovak Republic
Spain

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