There has been a substantial debate of youth issues on SEJ [Youth Unemployment Debate]. This is a further contribution seen from the perspective of a so-called ‘success’ country.
In principle, there are two ways to answer the question raised in the title:
I. To be frank: nobody really knows!
Whenever you take a closer look at any argument put forward to answer this question, you will soon realize its limitations and drawbacks, whether the argument refers to the famous dual system, to the social partnership, or to active labour market programmes, etc.
II. Measurement issues
Youth unemployment rates are NOT an accurate measure to grasp the situation of young people in the labour market because these data basically are blurred by decisions to further attend schools or universities and by allocation issues such as counting apprentices as being full-time employed [Watt 25/07/21012]. This is valid for more or less every country. Taking a broader picture into account, i.e. NEET rates, employment rates, unemployment ratios and unemployment rates, it would be fair to say: the labour market situation for young people is particularly favourable in the Netherlands, Austria, Denmark and Germany, according to an unweighted average of these indicators.
But if labour market conditions for young people are defined relative to the overall labour market situation in a country to highlight the situation of 15-24 years old persons – as is done by the green line in the figure above – Austria moves somewhat closer to the EU27 average. Seen from this perspective, the situation for young people is particularly bad in Sweden, Luxemburg, and Italy; this comes somewhat as a surprise.
And there are more measurement issues involved in the Austrian case: if we counted young people who are looking for apprenticeship places as unemployed, something which is not done at the moment, and assumed that apprentices are half of the time in work and half of the time in education or on-the-job training, then the unemployment rates for 15-24 age bracket would rise from 7.3% (national figure) to 9.3%. In addition to that, if young unemployed people participating in active labour market programmes were counted as unemployed (which is not done anywhere in the EU), Austria would face a further increase in the youth unemployment rate up to a level of 14%. This is almost twice the figure which is regularly published.
III. Tentative answers, many caveats
Outcomes of compulsory schooling
The PISA results of young people at the age of 15-16 are far from satisfactory: Austria is way behind the PISA champions such as Finland, but also Switzerland and Germany. In the reading domain, Austria lags behind Finland by 66 points (470 to 536), by 45 points in mathematics, and by 60 points in science. But even worse is the performance of the so-called low achievers, some of whom only lack adequate support and encouragement from their teachers, for example in reading: some 10% of all pupils have a score of less than 334 points, 28% stay below 407 points, which is the cut-off point for the first out of six proficiency levels; the OECD averages are 6% and 19%, for Finland 2% and 8%, respectively. These shocking figures are not much better in maths and science and a result of early selection of different educational routes after primary schools and strong inheritance effects along social hierarchies. The table below (taken from Hoeckel 2010) shows the distribution of reading competences by types of school. It reveals that young people at the age of 15-16 with low proficiency levels end up in compulsory schools and as apprentices – this is an important fact as far as the whole transition system from school to work is concerned (see below). So all in all, school results constitute a disadvantage for Austria.
The role of the famous apprenticeship system
What are the key success factors of the apprenticeship training system? There are several of them (ILO 2012): firstly, one should mention the 3-4 years training on the job, using the workplace as a crucial learning resource 4 days a week, and one day in a vocational school. This training is tailored very closely to enterprises’ needs, by its very nature – therefore, there is no need to ask “Are these qualifications relevant for further careers?” Secondly, and to counter the interests of employers, there is a strong and longstanding legal basis (“Berufsausbildungsgesetz 1969”) which makes sure that the acquired skills follow standardized curricula (on ISCED 3B level) that lead to a diploma and recognized certificates for full professional qualifications in a trade. Everybody knows, for example, what a cook or a welder is supposed to be able to do, at least as far as minimum standards are concerned. Thirdly, to strike a fair balance between the interests of those employers in favour of company-specific qualifications and the interests of apprentices in favour of transferable skills, social partnership institutions are at hand. Fourthly, one has to mention the low entry wage of some 12-46% of average wages of qualified personnel in the same profession as the apprentice (first year of training € 300-800, third year € 550-1600). These are similar rates to those in Switzerland and Germany (Steedman 2010, Ryan et. al. 2010). Last, but not least: the apprenticeship system offers careers for young people with weak school results and from disadvantaged backgrounds, who are often just fed up with school. And indeed, 26% of all apprentices at the age of 15-16 have only a proficiency level of 1 out of 5 in PISA reading, compared to 2% of students in academic secondary schools and 3% in higher technical and vocational colleges (see table above). This is a key result of early segregation.
But what about the drawbacks of the apprenticeship system? Again, there are several of them: firstly, over the years employers have become more and more reluctant to provide a sufficient number of apprenticeship places. In the last thirty years, these places have been reduced from 194,000 to 128,000. Several thousand young people are not able to find a regular place in a firm or have to look for a state-financed alternative. Secondly, Austria supports the whole system with € 320 million per year (or € 650 million when costs for vocational schools are included), i.e. some 0.1-0.2% of GDP. Otherwise the system would have come to a standstill already. Thirdly, there are high drop-out rates of some 17% (“vorzeitige Auflösung”) and some 20% fail their final exams. These disappointing outcomes might point to the problem of a lack of quality assurance in apprenticeship training, particularly in SMEs and in vocational schools (Hoeckel 2010). Fourthly, as far as access to the system is concerned, migrants are under-represented, a clear signal of discrimination. And finally, many apprentices change their professions during their careers, a fact that is partly reflected in higher than average unemployment rates when they are in their fifties (see graph below). As evaluations show (Hofer/Lietz 2004), people with apprenticeship diplomas perform better than unskilled labour as far as unemployment and earnings are concerned, after partly correcting selection. High school graduates do better than apprentices in their employment career but not with respect to earnings.
VET schools and colleges
Approximately 40% of learners in the tenth year of school are in the apprenticeship system, but another 40% attend either a VET school at ISCED 3B level or colleges at ISCED 4A level. They prepare not only for work in advanced occupations? but in the case of colleges also for university. These career paths are considered particularly successful because of highly relevant curricula and a good reputation of graduates. Two years after exams, most of the graduates are either in further (tertiary) education or employed, very few are unemployed or out of labour force. These schools are considered the real national champions.
Active labour market programmes for youth
In many ways, labour market policies have to make up for failures in an insufficient school system. This is particularly the case in Austria. In 2012, some € 612 million have been allocated for youth measures (€ 322 million for supporting the apprenticeship system), some 110,000 young people took part in active programmes (i.e. 18.6% of the labour supply of people below the age of 25; according to LMP data, in Austria some 10% of the labour supply participated in programmes compared with an EU average of 14.4% in 2007). “Supra-Company-Based”-apprenticeship places (ÜBA), “Integrated Vocational Training Programmes” (IBA), “Productive Schools”, “Youth Coaching” are all measures designed to support vulnerable groups and dropouts in finding their way into regular jobs. According to evaluations, not all of them are effective in a strict sense; for example, active search and training for young women work, wage subsidies do not. But they serve their purpose in a broader sense to convey the crucial message to the young generation – that the state cares about their future.
Overall economic situation in Austria
Although there are differences in the relation between youth and adult unemployment rates (see figure above), there is a strong correlation between both of them (of 0.77) in a cross-country perspective. Overall labour market conditions are a good predictor for the labour market situation of young people. And there are several aspects worth mentioning why the Austrian economy is in good shape [Schweighofer 27/11/2012]: this is a result of different factors like an export-oriented growth strategy, social partnership to balance divergent economic interests, and the right balance of protection, innovation and coordination.
IV. Transferability – lessons to be learned
There are several points to be highlighted: firstly, it is extremely difficult to transfer key institutional features from one country to another, in particular when they are deep-rooted in traditions and cultures. Secondly, it has to be stressed that some countries, like Greece and Spain, are in a situation of severe economic depression. Therefore it is nearly impossible to transfer experience from a country like Austria that has never experienced this kind of disaster. BUT there are, of course, some positive lessons: school outcomes are extremely important. But take care that curricula are relevant for labour market needs. Provide different measures and policies for potential problem groups. Reflect on introducing key aspects of apprenticeship system and VET schools and colleges – but make sure they fit in with national institutions and policy understanding. The involvement of employers and striking the right balance of interests is key.
Firstly, youth unemployment is so low in Austria because the overall labour market is in good condition. Secondly, this is a result of a broad consensus in Austria across all political parties to fight unemployment immediately and forcefully with all means at hand. Thirdly, this is particularly true for youth unemployment: here several policies work hand in hand – active programmes for youth – the apprenticeship system – the VET schools and colleges – and tertiary VET. These are the key factors for success (see Lassnigg 2012, 2013).
Hoeckel, Kathrin (2010), Learning for Jobs, OECD Reviews of Vocational Education and Training – AUSTRIA, June 2010.
Hofer, Helmut, Lietz, Christine (2004), Labour Market Effects of Apprenticeship Training in Austria, in: International Journal of Manpower, 2004, 25, 1, p. 104-122.
ILO (2012), Overview of Apprenticeship Systems and Issues, ILO Contribution to G20 Task Force on Employment, September 2012.
Lassnigg, Lorenz (2012), Die berufliche Erstausbildung zwischen Wettbewerbsfähigkeit, sozialen Ansprüchen und Lifelong Learning – eine Policy-Analyse, in: Nationaler Bildungsbericht 2012, Kapitel 8.
Lassnigg, Lorenz (2013), Austria´s Success on the Youth Labour Market – not Systemic but Voluntaristic, Draft, www.equi.at.
Matsumoto, Makiko, Hengge, Martina, Islam, Iyanatul (2012), Tackling the youth employment crisis: A Macroeconomic Perspective, in: Employment Sector Employment Working Paper No 124, ILO.
Ryan, Paul, Wagner, Karin, Teuber, Silvia, Backes-Gellner, Uschi (2010), Trainee Pay in Britain, Germany and Switzerland: Markets and Institutions, in SKOPE Research Paper No 96, July 2010.
Steedman, Hilary (2010), The State of Apprenticeship in 2010, A Report for the Apprenticeship Ambassadors Network, LSE.
Tritscher-Archan, Sabine, Nowak, Sabine (2011), VET in Europe – Country Report Austria, ReferNet Austria 2011.