TRANSITION FROM EDUCATION TO WORK an ETF Innovation and Learning Project. Stimulating Youth Employment in the MENA Region WB Seminar December 5, 2007

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1 TRANSITION FROM EDUCATION TO WORK an ETF Innovation and Learning Project Stimulating Youth Employment in the MENA Region WB Seminar December 5,

2 Why should policy makers care about youth labour market problems? Signals problems related to differential access (to labour market and social positions) and exclusion (from main domains of social life) => equality of opportunity => social integration and social cohesion Signals problems related to (inadequate) skill formation and use of investments in skills in the labour market => efficiency Problems with education-to-work transition as a signal of problems in youth labour market and future economic performance Growing awareness of central importance of skill formation system (and role of educational system as part of it) 2

3 Project objectives The objective of the project was to develop tools to analyse the transition from education to work in ETF partner countries in order to better understand the links between education, training and labour market integration of young people. Develop the conceptual and analytical framework called CATEWE (Comparative Analysis of Transitions from Education to Work in Europe) for ETF partner countries A major conclusion of CATEWE is that the same policy intervention is unlikely to be equally effective in different national systems A methodology for school-leaver surveys To pilot and refine these methodological tools to make them useful in partner country contexts 3

4 Key features of labour markets in EU neighbouring countries The role of regular formal jobs much lower than in the European Union. Instead, different forms of informal employment and other activities aiming at generating income are playing an important and even increasing role; In Eastern Europe and South-Eastern Europe, new labour market entrants are competing for a decreasing number of regular jobs and are in the absence of jobs often forced to retract to other kind of labour market survival strategies; In the MEDA region and in some other less developed neighbouring countries, the formal regular labour market is very small and labour market segmentation pronounced. Many people are struggling to find a way through different often insecure and low-productive forms of employment. We can define the typical type of labour market in EU neighbouring countries as non-inclusive. 4

5 The functioning of informal labour markets The traditional view is in the context of labour market segmentation where good regulated jobs are scarce and workers outside the formal labour market are queuing for them while working involuntary in lowproductive informal jobs. Following Maloney (1999, 2004), many informal workers may choose voluntarily informal jobs, because they have a higher return to informal jobs than formal ones. The third school of thought sees the informal labour market as a twotier labour market with an upper tier of voluntary informal employment and a lower tier of involuntary low-productive informal employment (Fields, 1990, 2006). 5

6 The functioning of informal labour markets in EU neighbouring countries In the context of EU neighbouring countries, the traditional informal labour market model may suit well some of least developed countries in the MEDA region and Central Asia, the two-tier informal labour market model may be more important for transition countries in Eastern and South-Eastern Europe. Emigration most also be added as an additional important phenomenon in EU neighbouring countries in the functioning of the (informal) labour markets. 6

7 School-leaver surveys in Serbia and Ukraine To capture the dynamics of the transition process, a need for longitudinal or retrospective data. Sampling young people (15-34 years old) 5 years after leaving education and asking retrospective questions on their educational background and employment since leaving education. Leaving education First significant for the first time employment Significant employment First ever employment Situation at the moment prior to leaving education of survey 7

8 Sample size and frames Sample size: 1500 (Serbia), 2015 (Ukraine) Representative sample: a probability sample, i.e. all population members have a known chance of being selected in the sample A random stratified sample: (1) large regions are selected, (2) sampling points are randomly selected, (3) individuals/households are randomly selected Labour market outcomes: labour market status, occupation, earnings, economic branch, size of enterprise, working hours, type of contract, job search, informal sector, reasons for part-time or not permanent employment, methods of job search 8

9 Calendar format of central data 1, 2, 3, 4, 5, 6 and so on = coding for labour market status X

10 Inactivity Unemployment Informal employment Formal employment Education month after leaving edu for the first time Serbia - calendar data indicate large shares of unemployment and informal employment early after leaving education 10

11 What are the main features of the transition from education to work in Serbia and Ukraine? In Ukraine, relatively fast transition process, while in Serbia much more gradual. In Serbia, 35 percent of all young people leaving the education system is a finding a significant job within six months. In Ukraine, almost 60 percent of the school-leaver have found a significant job within six months. 11

12 What are the characteristics of the first jobs after leaving education? Large proportion of school-leavers in informal employment, in particular in Serbia. First significant job is of higher quality than first ever job. Low share of formal temporary jobs. Some mobility, but mostly lateral, in particular in Ukraine. Upwards mobility almost twice as common as downwards Downwards mobility more pronounced in Serbia than in Ukraine. 12

13 Job characteristics of first ever and first significant employment Serbian youth are more likely to be employed in the private sector First ever jobs are more found in the private sector Fewer women in the private sector in Serbia, no gender differences in the Ukraine Ukrainians are more likely to be employed in middle-size or bigger firms. Serbia: 50% in firms up to 10 persons, 70% in firms up to 50 people. Ukraine: the respective figures are 22% and 50% Serbians tend to work an hour per week longer than Ukrainians (43.3 vs in 1st ever and 44.3 vs in 1st significant) No gender difference in hours worked in Serbia, in Ukraine women work 3-4 hours less The average number of hours per week tends to decrease with increasing educational level in both countries 13

14 Typical patterns of labour market entry: illustration UKRAINE 1 Registered employed 2 Unregistered 3 Self-employed and family helpers 4 Unemployed 5 Education or training SERBIA 6 Out of labour 14 7 Unemployed, discouraged

15 Typical patterns of labour market entry: summary Ukraine Serbia Registered employment predominantly Unemployment, unregistered employment, other statuses registered employment Registered employment other statuses (mostly employment exit) 9.05 Registered employment other statuses (mostly unemployment) 5.91 Self-employment Unemployment Unemployment unregistered employment 5.45 Unregistered employment Return to education Out of labour market Out of labour registered employment 8.54 Note: Career sequences of minimum 51 months duration; 9-cluster solution for both countries 15

16 Cluster membership in Serbia and Ukraine by gender and locality characteristics (rural-urban) Men dominate in continuous registered employment Women dominate in inactivity (23.4% of women in the Ukraine) More men return to education in the Ukraine, no gender difference in Serbia Women dominate in the cluster with exit from registered employment Large cluster of registered employment in urban areas Large cluster of unemployment and inactivity in rural areas Larger self-employment in rural areas is Serbia, but in urban areas in the Ukraine Stronger return to education in urban areas of the Ukraine, no differences in Serbia 16

17 Time to first significant jobs in Serbia by educational attainment (in percent of total) Primary Secondary Trade Secondary Vocational Secondary General College University No search months months months years > 2 years Total

18 Time to first significant job in Ukraine by educational attainment (in percent of total) Less than Secondary Secondary Vocational Secondary General Junior Specialists University No search months months months years > 2 years Total

19 What are the main features of the transition from education to work in Egypt? Young school graduates, esp. men, tend to find a job more rapidly in 2006 compared to In 2006, 50% of males have found a job within 2 years after leaving school (compared to 3 years) Less than 25% of females have found a job 8 years after leaving school The duration in obtaining a job has decreased compared to 1998, esp. for the unmarried ones Education not longer playing a role among young men in the duration to get their first job Education attainment plays a role among females, but less in 2006 compared to

20 What are the characteristics of the first jobs after leaving education in Egypt? The share of the public sector has sharply declined from the mid-70s to the first half of millennium decade Total public employment used to include public enterprises The decline in public sector employment thus more dramatic for technical secondary school and university graduates, who were main beneficiaries of PS employment The share of private sector employment in first jobs substantially increased between Both formal and informal employment have increased, but formal jobs do represent a small share Informal private employment represents half of first jobs: 56% males, 42% females 20

21 In-transition youth in Egypt In-transition youth in 2006: Employed young people who did not obtain a regular, or career job (32%); Unemployed (39%); or out of the labour force but intending to search for a job in future (29%) Gender differences overall non significant: 40% males, 36% females, but greater proportion on males in employment (42% versus 14%) In-transition is not a temporary status: in-transition status is longer than 1 year in 89% of the cases 21

22 Employers perspective in Egypt (347 employers surveyed) Their perspective on youth recruitment process: Usually rely on informal recruitment practice 82% declared not having problems in recruiting suitable workers Most (71%) demand low skilled workers Lack of practical knowledge considered the main problem Difficulties to recruit qualified workers, as the E&T system does not prepare for the right skills to perform a job Assessment of youth skills: Ability of young candidates to apply their knowledge is weak for 41%, and fair for 37% of the interviewed Practical training at school considered poor by 48% and fair by 42% of the interviewed employers On-the-job training is rare: reported in only 14% of the cases 22

23 In summary: In Egypt in 2006: 57% of the youth aged has not started the transition yet Transition is not a smooth process and takes time The educational attainment is a not a guarantee for a smooth transition or better access to a decent job 23

24 Main conclusions Major improvements : Youth unemployment decreased over time, esp. between Unemployment sharply decreased among the less educated Young males tend to obtain their first job after school more rapidly Deteriorations: Decrease in female labour force participation Substantial increase in unemployment rates among the postsecondary and university graduates Increased informalisation of the first job 24

25 Main challenges Improving access Increasing education equality Improving the quality of education Improving the quality of training, and coordination between education and training Transition for education to work: career/vocational guidance Local needs, as well as youth needs and aspirations Awareness that training is important for the whole life Vision for the VET system (incl. strategic use and integration of donors initiatives) Connect research and policy making 25

26 Main challenges (cont.) Reformulating active labour market policies Taking the gender dimension into account Inability of formal private sector to absorb employment: how to improve the business environment for private sector development? 26

27 Policy considerations in countries with noninclusive labour markets Two major questions to be answered by policymakers How to make the labour markets more inclusive to facilitate a larger share of transitions from education into regular, formal jobs? How all different transitions in the youth labour market can become more efficient and leading to more productive jobs? Policy measures in several different fields: Improving the business environment and the overall functioning of the economy; Measures to prevent individuals from being pushed into lowproductive subsistence jobs; Improving the productivity of informal jobs. 27

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