Mutual Learning Programme

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1 Mutual Learning Programme DG Employment, Social Affairs and Inclusion Peer Country Comments Paper- Italy Lost in (school-to-work) transition? The risk of a wasted generation Peer Review on Targeting NEETs Key ingredients for successful partnerships in improving labour market participation Oslo (Norway), September 2015 Written by Alessandro Rosina September 2015

2 EUROPEAN COMMISSION Directorate-General for Employment, Social Affairs and Inclusion Unit C1 Contact: Emilio Castrillejo Web site: European Commission B-1049 Brussels

3 EUROPEAN COMMISSION Mutual Learning Programme DG Employment, Social Affairs and Inclusion Directorate-General for Employment, Social Affairs and Inclusion Peer Review on Targeting NEETs key ingredients for successful partnerships in improving labour market participation September, 2015 Oslo (Norway), September, 2015

4 Europe Direct is a service to help you find answers to your questions about the European Union. Freephone number (*): (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). LEGAL NOTICE The information contained in this publication does not necessarily reflect the official position of the European Commission This document has received financial support from the European Union Programme for Employment and Social Innovation "EaSI" ( ). For further information please consult: European Union, 2015 Reproduction is authorised provided the source is acknowledged.

5 Table of Contents 1 National approach to tackling NEETs Assessment of the policy measure Assessment of the success factors and transferability Questions Annex 1: Summary table References... 9

6 1 National approach to tackling NEETs This paper has been prepared for a Peer Review within the framework of the Mutual Learning Programme. It provides information on Italy s comments on the policy example of the Host Country for the Peer Review 1. For information on the policy example, please refer to the Host Country Discussion Paper. Young people in Italy experience particularly adverse labour market conditions both in comparison to previous generations in the same phase of life and to their European counterparts. In Italy, the youth unemployment rate exceeded 40% in 2013 (reaching 42.7% in 2014). More than one in four (26% in 2013) year olds is NEET ( not in education, employment or training ). In absolute terms it corresponds to nearly 2.5 million young people. Around one in five year olds were NEET in the period Thus, not only was the rate relatively high before the global crisis, but it also rose considerably during the economic downturn. This suggests that beyond the macroeconomic problems, there are also specific factors of weakness for young people. This weakness presents a marked social and territorial heterogeneity. As one can expect, the incidence of NEETs is higher in the geographical areas and in the social groups known as more vulnerable (Alfieri et al. 2015). More specifically, as for several other social and economic indicators, there is a noticeable difference between the Northern and Southern part of the country. In the North, the NEET rate is around 19% (it was below 11% in 2007), while it is above 35% in many southern regions (29% in 2007). Whilst there still is a strong regional heterogeneity (from 13% in Trentino-Alto Adige to near 40% in Sicily), the increase during the crisis has been relatively more accentuated in the northern regions. The rate for women is more than 3 percentage points higher than men (27.7 against 24.4), this even though women in younger generations have reached higher levels of education. This gender gap is to a large extent connected with the difficulties in reconciling work and family in the Italian context, with the consequence that the fertility rate and the female participation rates are both very low. According to some analyses on the data from the 2011 census and the Labour Force Survey, 17% of women of years and more than 40% of year olds indicated family reasons as the cause of being out of work. For men, the corresponding figure does not go beyond 5%. A significant proportion of NEETs have an immigration background. Among the year old NEETs, 15.8% are foreign citizens ( people in absolute terms (Ministero del lavoro e delle politiche sociali, 2014; Istat, 2014, 2015). This corresponds to 33% of foreign people of the same age group, with a strong difference by gender: the figure is 21% for men and 43% for women (a large part of them are in couples with children). The NEET growth has affected young people from all levels of education but with a stronger impact on young people with an upper secondary level of education, whose rate has increased to over 28% (4 points above those with a degree). Out of 10 young persons who are not studying and out of work, approximately one has a degree, five have an upper secondary education and 4 have a lower secondary education. During the last few years the share of NEETs actively searching for a job ( unemployed ) has increased from less than one in three to 42% (in 2013). This means that the majority are still composed of inactive young people, but only a minor part (albeit relevant) are those not interested or available for a job offer (26%), the others (32%) are discouraged persons who have given up searching for a job (Istat 2014). Proactive schemes are, therefore, expected, in some way, to potentially benefit up to 74% of Italian NEETs. 1 The Author would like to thank Francesco Pastore for his input to the paper. September

7 The incidence of multiple NEET spells is particularly high in Italy (Carcillo et al. 2015). This country has also one of the highest long-term unemployment rates and over half of people aged under 25 accepts a part-time contract because they have no other choice. The limited opportunities in the world of work tend to increase the diffusion of undeclared work in the underground economy, in particular in the South of Italy. Moreover, the economic crisis has exacerbated the situation of overqualified graduates, amplifying the mismatch between the skills acquired in tertiary education and those needed for available jobs (European Commission 2012). The current situation for young Italians in the labour market is such that, compared to their European peers, the lowskilled face the highest risk of unemployment, while the highly skilled have difficulty accessing a job in line with their qualifications. This statistical information shows how problematic the labour market conditions are for the Italian young people and how urgent it is to act with proper and effective measures. September

8 2 Assessment of the policy measure Norway and Italy are at the polar ends in Europe in relation to labour market indicators, particularly where the young generations are concerned. Norway is characterized by a high youth employment rate, low economic participation gender gap, high level of education, and low incidence of NEETs, compared to the EU-28 average; the opposite is true for Italy. Consistent with these negative records, Italy presents a low investment in several key measures that can improve youth education and promote better opportunities in the economic system. It is also important to note that unfavourable labour market conditions, combined with a public welfare system not so generous towards the young generations, tend to hinder the individual autonomy and the individual fulfilment of life plans (Micheli, Rosina 2009). Italy is one of the few countries in Europe without a scheme of national minimum wage and minimum income. This doesn t help to limit the increase of the material deprivation rate (which went from 7 to 14% from 2010 to 2012, with a particular impact on children), the condition of working poor and the protracted dependence of young Italian people on their family of origin. An interesting experimental programme (very selective and using limited resources in the first phase) in the spirit of active welfare is the SIA (Italian Support for Active Inclusion), that aims to achieve a consistent combination of objectives: adequate income support, inclusion of people who are out of the labour market (and reduction of undeclared work), access to quality services. The target beneficiaries are households with children, gaining a very low income. An additional criterion is a previous participation (of any household member in the past three years) in the labour market. The average monthly benefit paid equals 334 euro. The experimental programme has been currently implemented in 12 big cities (the distribution of resources is based on the absolute poverty indicator developed by Istat). The key agencies responsible for NEETs in Italy are the Public Employment Services (PES), regions and education authorities. Expenditure in education as a share of GDP is among the lowest in the EU, especially at the level of tertiary education. In recent years Italy has made some progress in improving the outcomes of its education system. However several aspects remain problematic, including the school-to-work transition. In particular, Italy suffers from high dropout rates (Istat 2015) and skills shortages, besides low economic returns to tertiary education. Educational attainment and cognitive skills influence the likelihood of becoming a NEET. In Italy a large proportion of young people leave school with poor skills in literacy and numeracy. The relationship between low skills and school dropout is mutually reinforcing: those who struggle to acquire and develop skills are more likely to drop out of school; while those who drop out will have fewer opportunities to develop their skills later on. (OECD 2015, p.38). The Italian education system is traditionally sequential and therefore has as its own mission only to yield general education, not practical applications. Too many young people complete their school education with limited (or no) work experience and hence lack solid competencies and abilities which local enterprises require; this is also partly a consequence of an under-developed vocational training system and the limited number of work-based learning programmes. The recent school reform (so-called 'Buona scuola', Law N. 107/2015) aims to address these aspects, to some extent. Among others, the reform calls for: mandatory vocational on-the-job training (so-called alternanza scuola-lavoro ) during the last 3 years of technical and professional curricula; extending pilots of didactic enterprise; and strengthening experimental training experiences. This is consistent with previous initiatives (in particular Law N. 128/2013) aimed at: simplifying the measures for apprenticeship; strengthening work- September

9 based learning in secondary schools; promoting alternative pathways between university/equivalent tertiary education (higher technical colleges - ITS) and work. Italy is a country persistently characterized by low expenditure in Active Labour Market Programmes (ALMPs) (0.41% of the GDP in 2013, whereas the average of the OECD countries is 0.53%), this is particularly true for what concerns PES, public training, and employment subsides (EUROSTAT 2012). ALMPs are generally considered crucial to increase employment opportunities, encourage people to actively seek work, keep unemployment spells low and improve the balance between the jobs available and qualified employees. PES have a central role in the implementation of ALMP. They are considered the main institutions able to facilitate labour market integration of jobseekers and therefore to reduce the high levels of youth unemployment and skill shortages. One of the main problems in delivering successful activation policies in Italy is the low coverage and effectiveness of the PES. Many young unemployed are discouraged from registering due to a negative perception of the PES's capacity to provide them with useful support. As a consequence, young people seek jobs mainly through informal channels. According to Istat, in the first trimester of 2015, 87% of unemployed people turned to friends, family and relatives for help in finding a job (6 percentage points above the first trimester of 2008), whereas less than 30% registered at a PES. According to Eurostat, in 2012 the PES were involved in the placement of less than 3% of recent recruits (while the share exceeds 15% in Hungary, Finland, Luxembourg and Croatia). The weakness of the PES system is a shortcoming that can jeopardise also the successful implementation in Italy of the Youth Guarantee (YG) Plan (which started in May 2014 and targets NEETs aged years). According to the YG, which was enforced under the impulse of the EU Parliament, the state has a (moral, if not legal) obligation to provide every young person aged 15 through 24 years an opportunity of employment, training or further education. However, with inefficient PESs, the chance of such a programme reaching all possible beneficiaries (and in particular the core group of marginalized young people) is largely compromised (see, among others, Pastore 2015a). Yet, the YG can be considered an opportunity and a challenge because, if adequately implemented, it might be able to develop the capability of the state to provide support to the young unemployed. It is, in fact, not only stimulating a process of improvement and reorganisation of the PES, but also inspiring non-governmental social agencies to trial practices of outreach and activation targeting NEETs at the local scale. The reorganisation of the governance and functioning of ALMPs is outlined in the Jobs Act, a law reforming the labour market adopted in December In particular it establishes the creation of a dedicated National Agency (ANPAL) with the mission of coordinating the national network of local employment agencies. In order to encourage the competition between public and private, for-profit or non-profit, employment agencies, the reform allows the person in need to request the services that he/she finds more effective and convenient. Other important points of the law are: the institution of open-ended labour contracts with increasing protection to replace a plethora of fixed-term contracts; the introduction of a universal unemployment benefit scheme (limited to the private sector); and the reinforcement of work-life balance measures (in particular the parental leave). Italian Regions have an important role in the interventions in support of integrated policies for training and employment. The YG program has been specifically defined at the Regional level. Furthermore, Regions have the responsibility to implement the strategies at the local level. September

10 Finally, the spirit of initiative of the Italian new generations and the suitable use of their human capital in the labour market are also limited by the low (public and private) investment in R&D. September

11 3 Assessment of the success factors and transferability The reforms and initiatives mentioned above show that the Italian Government is aware of the crucial importance of improving the skills and employability of the new generations. They also show a new impetus in addressing the historical limits of the education system and the labour market. In the last two decades or so, the Italian government first tried to copy the Anglo-Saxon model of labour market flexibility; it then started the Scandinavian school-to-work transition system, with its mix of sequential educational system and pro-active schemes; and is now winking at the German apprenticeship system, which is the model behind the Buona scuola reform and its school and work training. The risk, though, is that the actual implementation of all these interventions could only marginally reduce the very high NEET rate, at least in the short term. There still is a cultural resistance in Italy in considering the young generations as a public good in which to wisely invest, in opposition to the generous private help provided from Italian parents to their own children. The perspective of a "lost (or wasted) generation", however, is so serious that this should be considered a national priority, adopting every effort in planning and implementing successful measures in order to strongly reduce, in the shortest possible time, the abnormal amount of NEETs accumulated in recent years. Overall, the reforms implemented seem to go in the right direction. However, it is likely that only with a different macro-economic context of sustained economic growth it will be actually possible for all these microeconomic policy interventions to be effective. This will require, in turn, expansionary fiscal and monetary policy at the EU level, if not at the country level, to stimulate growth in the long run (Pastore 2015 b). The difficulties of adopting in Italy the Norwegian key measures targeting NEETs are, above all, due to the inadequate coverage and low quality of the PES. The requalification and reorganization of PESs is, in fact, a prerequisite for any successful measure of identification, mapping and follow-up of the NEETs. For the hard-to-reach, several strategies can be trialed in line with the Norwegian experience, with particular attention to the use of social media and to the cooperation between key stakeholders, such as NGOs and youth organisations. FUS (Follow-up services) and the experience of special PES advisors with responsibility of FUS working closely with upper secondary schools, are interesting measures that can be considered also for the Italian case. In general, better strategies have to be adopted in Italy to reduce the risk of early drop out, including providing personalized FUSs based on individual needs. September

12 4 Questions The Youth guarantee programme is the main Italian measure specifically targeting NEETs. What can be learned from the mixed results of the Norwegian experience? In Italy a stronger vocational education offer is considered the best measure against early school leaving. Is it always true or only under certain conditions? What are the best strategies to reduce the risk of dropping out of VET? To what extent can Facebook be used to reach the NEETs not registered in the PES? Is it likely that the hardest-to-reach among the NEETs may be underrepresented in the social media? In Italy many NEETs are in their late 20s. What specific measures may be suitable for them? What instruments and methods can effectively stimulate the spirit of entrepreneurship during the secondary school? September

13 5 Annex 1: Summary table National approach to tackling NEETs In Italy more than one in four years olds is NEET (nearly 2.5 million people in absolute terms). There is a noticeable difference between the Northern and Southern part of the Country. During the crisis the share of NEETs actively searching for a job has increased from less than one in three to 42% (2013). The crisis has also exacerbated the situation of overqualified graduates. Assessment of the policy measure Italy presents a low investment in several key measures that can improve youth education and promote better opportunities in the economic system. The Italian educational system is traditionally more based on theoretical rather than practical applications, a recent school reform is trying to strengthen the work based learning. Italy is a country persistently characterised by low expenditure in Active Labour market Programmes (ALMPs). The Youth guarantee programme (activated in May 2014) presents some shortcomings, in particular the ability to reach all potential target groups. Assessment of success factors and transferability There is still a cultural resistance in considering young generations a public good in which to wisely invest. One of the main difficulties of adopting key measures targeting NEETs in Italy is the inadequate coverage and low quality of PESs For the hard to reach, several strategies can be trailed in line with the Norwegian experience, promoting the cooperation between key stakeholders. Better preventive strategies have to be adopted and adapted to reduce the risk of early drop out, in the direction of providing personalised follow-up based on individual needs Questions The Youth guarantee programme is the main Italian measure specifically targeting NEETs. What can be learned from the mixed results of the Norwegian experience? In Italy a stronger vocational education offer is considered the best measure against early school leaving. Is it always true or only under certain conditions? What are the best strategies to reduce the risk of dropping out of VET? To what extent can Facebook be used to reach the NEETs not registered in the PES? Is it likely that the hardest-to-reach among the NEETs may be underrepresented in the social media? In Italy many NEETs are in their late 20s. What specific measures may be suitable for them? What instruments and methods can effectively stimulate the spirit of entrepreneurship during the secondary school? September

14 6 References Alfieri A., E. Sironi, E. Marta, A. Rosina, D. Marzana (2015), Young Italian Neets and the influence of their Family Background, Europe's Journal of Psychology (EJOP), 11(2). Carcillo A., R. Fernández, S. Königs, A. Minea (2015), NEET Youth in the Aftermath of the Crisis. Challenges and Policies, OECD Social, Employment and Migration Working Papers, No. 164, OECD Publishing, Paris. European Commission (2012), EU Youth Report 2012, Luxembourg: Publications Office of the European Union, Luxembourg. EUROSTAT (2012) Labour Market Policies Expenditure and Participants, Publications Office of the European Union, Luxembourg Istat (2014), BES. Il Benessere Equo e Sostenibile in Italia, Roma. Istat (2014), Rapporto annuale 2014 (Annual report The state of the Nation), Roma. Istat (2015), Rapporto annuale 2015 (Annual report The state of the Nation), Roma. Istat (2015), Noi Italia 2015, Roma (noi-italia.istat.it)) Micheli G.A., A. Rosina (2009), The Vulnerability of Young Adults on Leaving the Parental Home, in Ranci C. (ed), Vulnerability in Europe, Palgrave, London. Ministero del lavoro e delle politiche sociali (2014), IV Rapporto sul mercato del lavoro degli stranieri, Roma OECD (2015), OECD Skills Outlook 2015: Youth, Skills and Employability, OECD Publishing, Paris. Pastore, F. (2015a), The European Youth Guarantee: Labor Market Context, Conditions and Opportunities in Italy, IZA Journal of European Labor Studies, 4:11. Pastore, F. (2015b), The Youth Experience Gap. Explaining National Differences in the School-to-work Transition, Springer Briefs in Economics, Heidelberg. September

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