The NEET phenomenon. A comparative analysis.

Transcription

1 The NEET phenomenon. A comparative analysis. Giulia Assirelli Abstract The NEET category, first adopted in England in the mid 90s, has generated a great interest in the last years' Italian and supranational research. It has been one focus not only of ISTAT and CNEL, but also of EC and OECD reports, attracting public, political and journalistic attention. The NEET group includes those young people (aged or 15 29, depending on the definition adopted) Not in education, employment or training, i.e. unemployed and inactive (for reasons other than study) individuals. The aim of using this category is outlining youth disease by a unique measure, in order to facilitate the quantitative comprehension of their exclusion from different labour markets. The purpose of this research is to deepen the NEET argument, mainly in two directions. On one side, I will try to exacerbate the cross country differences searching the determinants not only socio demographic, but also concerning institutional, economical and political settings of the NEET phenomenon. For this part of the research I'm going to adopt cross sectional methods and use LFS data provided by EUROSTAT. On the other side, using EURO SILC longitudinal data and making an event history analysis, I will try to identify the consequences of a NEET period over the future career pathways of individuals, again trying to focus on differences among the European countries. Who are NEETs? Evidence from UK and Europe The category of NEET appeared for the first time in England, in the mid 90s, as a contribute to identifying new assessment criteria of young people's vulnerability in the labour market, greatly increased by the fact that youth unemployment had quietly disappeared by the public debate and political practice. In late '80s the British welfare system had been drastically shrunk at the expense of young people, cutting unemployment benefits for the majority of individuals under the age of 18 and reducing the availability of subsidies for the under 25. This change in benefit's policies not only implied that young people missing a paid job were deprived of any kind of State's support, but also that their unemployment state was no longer acknowledged (Furlong, 2006). 1

2 It was in this context that studies on the subject began to proliferate, seeking alternative definitions allowing to recognize the condition of weakness in which many young people found themselves. The term obtaining greater consensus in the scientific community was the acronym NEET, staying for "Not in Education, Employment or Training". Used in an official document for the first time in 1999, in the report "Bridging the Gap" (Social Exclusion Unit, 1999), it tried to identify those individuals most at risk of not participating in the school system, nor in the labour market. The report's aim was to estimate the economic and social costs induced by young people living in the NEET status, and possible interventions to support them in the challenging transition from school to work. The NEET category included people between 16 and 18 not holding a job, not involved in the educational system, nor in any other form of training. These criteria matched 9% of the youth in this age range, according to the Social Exclusion Unit's report. The decision of defining NEET this way reflected British school system's peculiarities: in England, in fact, compulsory education ends at 16, then young people have to opt between further education or entering the labour market. The period from 16 to 18 years is, clearly, the most critical and problematic for what concerns the ability to effectively face this choice. The report highlighted that factors most frequently associated with non participation referred either to individual experience in education (bad experiences at school, learning difficulties, lack of motivation), or to familiar status (NEETs come more frequently from poor, needy families, holding low human and social capital.). The report also observed that women, individuals from ethnic minorities, people suffering from physical or mental disabilities were more at risk of non participating. It also showed the connection between non participation and the structural weakness of British educational system. Bridging the Gap also stressed the negative consequences, not only economic, that being NEET can entail for the individual, his family and the whole social system: the hasty conclusion of individual education, followed by a period of exclusion from labour market, adversely affects subsequent job performance and salary. Moreover, it highlighted the sense of estrangement and alienation frequently experienced by young NEET, not participating to peer group's typical activities. Again, reference was made to the economic costs burdening on NEET's families, forced to prolonged maintenance of children, with no possibility of relying on other sources of income. In conclusion, talking of social costs in the broadest sense, the report remarked the loss of 2

3 productivity for the entire economic system, resulting from the non occupation of these individuals and, what is more, the more frequent involvement of these individuals, excluded by definition, in deviant or criminal activities, with the consequent impact on State budget. Following the publication of Bridging the Gap, a flourishing multidisciplinary research field began to develop in England, whose goals and results fitted essentially to those of government. The main theme of this researches, about which authors haven't found great consensus, is interpreting the consequences of having been NEET on future job and salary performance. If, generally speaking, researchers do agree that individuals that have been NEET will have more difficulties in fitting well in labour market, and probably will achieve lower economic results, no research appears to give an unequivocal answer to the following question: having been NEET and achieving lower job and salary results than people not having been NEET, are correlated because the two facts are in some way dependent on other problematic factors? Or does experimenting a period as NEET create an additional source of disadvantage? In the first years of the new millennium the NEET theme began to be systematically tackled at European level, thanks to statistics elaborated by supranational institutions, such as OECD and European Commission, which allow us to study this issue in a comparative perspective. In recent years both the institutions have collected, in several countries, a certain amount of data on the phenomenon of young people Not in Education, Employment or Training; adopting a uniform definition of the category. This innovative category, in conjunction with the traditional ones of unemployment and inactivity, gives an answer to the need of having some metric of joblessness, which best fits the current situation of young people (not) in the labour market. In this regard, Quintini and Martin (2006) point out that, although unemployment rate continues to be an important and useful indicator, more and more young people who face difficulties entering employment take refuge in inactivity (considered here, of course, for reasons other than study). In these international studies the category of NEET is considered much wider than it was in the first UK researches: OECD refers to the age group 15 24, while the European Commission extends the definition of NEET phenomenon (and, more generally, the integration of youth into the labour market) to individuals of 29 years. The adoption of such a broad age ranges allows, of course, the analysis of the phenomenon regardless of the specificity of the educational system and labour market structure in each country. Furthermore, compared to British researches, this definition broadens the horizon of analysis: the focus is no longer only on the period immediately following the end of compulsory education, 3

4 also considered a peculiarly critical moment in a young person's life; rather, it seeks to provide a measure of the overall level of discomfort suffered by today's youth in the hard transition from school to work. Especially interesting is the study sponsored by OECD in 2006, led by Quintini and Martin; they show that, averaging the considered countries, the NEET group counts for about 17% of young adults (20 24 years) and 8% of teenagers (15 19 years), obviously related to the compulsory education legislation. Italy, with Greece and some eastern European countries, ranks above the average of OECD countries for both age groups (about 10% of NEET teenagers and nearly 25% among older people); on the other side, northern European countries (Denmark, Norway and Sweden) show the lowest NEET rates. Finally, statistics presented by the European Commission (2007), show a percentage of 18% NEET among young people between 25 and 29 years, as an average for the whole EU. The observation of such a high portion of individuals, even among older people, who are excluded from both the educational and labour arenas, furtherly supports the assertion that the NEET category is at risk of social exclusion as the difficulty of finding a job can even induce some individuals to abandon the labour market and therefore should be a focus point of policymaking. Quintini and Martin also analyze the persistence in the NEET status: considering the age range, they compare the number of individuals who have been NEET at least once from 1997 to 2001 to that of those who have been continually NEET in the same period. The ratio of these two percentages provides a measure of turnover in the NEET group. The two authors emphasize the importance of supplementing the cross sectional analysis with a study of longitudinal data: it can be argued that if a period of exclusion from the labour market at the end of studies is a normal experience for many young people, the real problem core is in the duration of the exclusion (Quintini, Martin and Martin, 2007). Their analysis shows that this condition is mostly transitory, although young Mediterranean people suffer a degree of disadvantage (for example, the share of "always NEET" rises to 30% in Italy and 20% in Greece). Both the mentioned reports and the analysis conducted by OECD and European Commission over the years, highlight some of the factors most easily related to the condition of NEET in all the considered countries. In particular, they point out the major disadvantage suffered by young women, individuals who have abandoned studies early, or who have lower education levels, and by foreign citizens. Clearly, the averages often hide significant differences between the considered countries: in Southern and Eastern Europe, in fact, all reports dealing with this issue not only show higher percentages of NEET, but also greater gaps between men and women, natives and foreigners, 4

5 more or less educated people. A lower grade of youth exclusion is found instead in northern Europe. Research questions, data and methods But which are the characteristics shared by NEETs? Are they similar in different European countries, or should the exclusion of young people in different countries be imputed to local problems? The analysis on Italy, carried on by ISTAT in recent years 1 show that the features mostly associated with the NEET state which counts about two million young people in 2009 and 2010 are the same outlined by OECD: the individuals most disadvantaged are women, have low educational qualifications, have foreign nationality and come from families with low economic and cultural capital. The same duality seen between north and south Europe is present in the Italian context, where territorial dualism adds up to national disease, so that southern young people suffers major disadvantages compared to their peers of central and northern districts. ISTAT, as OECD, stresses the negative impact of remaining in the NEET status, over future employment chances: long term NEET representing in Italy a wider fraction compared to other European countries are more at risks of social exclusion, as long as their ability to (re)enter the labour market is adversely affected by the duration of their NEET status. A self conducted cross sectional analysis, preliminary carried out on ISTAT 2009 Labour Force Survey data, and on ISFOL PLUS data from , shows that although the aforementioned features are common to all Italian NEETs, the impact that these factors have over young people's employment conditions has not the same depth for all the population. To better outline this phenomenon, we need to make two distinctions at least. First. Conducting separate analysis by age, a clear distinction appears among young people from the three typical youth age groups, i.e , and years. Summarizing the results, it could be argued that, in the age 15 19, gender differences, the North South divide, the gaps between Italian and foreign citizens and more or less educated individuals are still present, but with substantially reduced relevance: in the teenagers' group the NEET condition appears to be a temporary one, frictional, somehow "physiological", due to school work transition, which usually resolves in a medium period for those who choose not to prolong their studies. Among the ages, the aforementioned differences start taking a greater importance: that of 1 See Istat (2010) e Istat (2011). 2 The impact of variables related to family origin and individual educational path has been evaluated using ISFOL- PLUS data, in substitution of information missing in ISTAT data sets (not published for privacy reasons). 5

6 NEET still is configured as a temporary condition, with possibly multiple episodes, mostly due to the unemployed fraction. Most NEET of this age, in fact, are young people caught in a precarious labour market, who experience several episodes of unemployment due to instability of the jobs they hold. Especially among young people from 25 to 29 the above mentioned factors have a major impact. In this age are emerging, especially, the sex differences (particularly important is the female inactivity opposed to male unemployment), only partially contained by a rise in educational qualifications. Second. If you lead separate analysis on the unemployed and inactive NEET groups, further differences emerge: while the unemployment correlated features remain nearly constant in all the three age groups, inactivity seems to be statistically related to essentially different factors. In younger people, disheartenment seems to be a frequent attitude. Older people act some kind of "decision making": the taking over of family commitments is a main contributor to statistical female inactivity. So, it's clear that the ample category of NEET, in Italy, encloses many nuances, different life paths and various problems. The first question to put, then, is whether these differentiations have the same relevance in other European countries. We believe that adopting the NEET category allows a unique measure to estimate youth exclusion in general, but we can assume that the ways in which it shows up vary from country to country, depending on institutional and socio economical factors, typical of each country. To answer these questions we could conduct a cross sectional analysis, comparing European Labour Force Survey data, collected by EUROSTAT. We could choose, for example to analyze data between 2005 and This could help, on the one hand, pinpointing the common characteristics of NEET young people throughout Europe and those which are typical of certain (groups of) countries. On the other hand, it could permit to outline the consequences of the economical cycle on youth employment condition. In addition to assessing the impact, on youth employment status, of the usual socio demographic factors, of those relating to the personal and familiar experiences, we might also ask how the frequency of NEET status is correlated to context and institutional factors. Breen (2005) gives some advice, stating that the performance of young people in the labor market may be influenced, on the one hand, by the level of regulation of the labor market itself and, on the other hand, by the degree to which the countries' educational institutions are able to signal to potential employers the skills and competencies of young people seeking (first) employment. 6

7 About the first factor, Breen stresses that a strong regulation can induce a clear segmentation of the labor market, with insiders already holding a protected employment position, with reduced risk of dismissal, opposed to outsiders, typically young people looking for their first job. Given the high dismissal costs, such rigidity of the labor market is going to discourage job turnover, thus generating a significant gap between youth and adulthood beyond the high youth unemployment rate. The level of labour market regulation may be represented by data provided by OECD, named "Overall Strictness of Protection Against Dismissal", which sums up the dominant system of protection adopted by each country. Following Perugini and Signorelli (2009) we could choose not to consider the average level of labour market regulation, but to distinguish between the strictness of regular employment protection and the one of temporary employment. While a very stringent regular employment protection legislation can negatively affects turnover, the diffusion of temporary contractual options can stimulate flexibility, so to favor the demand supply matching. About the relationship between labour market and educational system, Breen shows that even in particularly rigid labour markets, good "signaling" ability will encourage employers to hire young people looking for (first) job, thus reducing the negative impact of the labour market rigidity. Breen (2005) suggests that the signaling capacity of the school system could be measured by the fraction of those enrolled in Vocational and Technical Programmes, mixing school and workbased training (data supplied by OECD). A third factor may be considered, following a more than ten year old debate, about the suggested eventuality that overgenerous welfare systems would, in fact, discourage job search of people with low income expectations. In other words, the question is whether a fraction of the differences in the NEET populations in various European countries may be due to varying opportunities allowed by the local welfare system. This last factor could be assessed starting, for instance, from data, provided by OECD, concerning the public unemployment spending (as a percentage of GDP). Another factor concerning the policy setting that could be insert in the analysis but the list surely could go on is the public expenditure in active labour market policies, expected to have a positive effect on the youth access to labour market (Perugini and Signorelli, 2009). After having outlined cross country differences related to determinants of NEET status, it could be of significant interest conducting a longitudinal analysis of the NEET phenomenon in a comparative perspective. Such an analysis could be already carried on, limited to young Italians, using transition matrices 7

8 from ISTAT, which, while not making up a real panel on Italian population 3, provide useful information on the occupational mobility. In a comparative perspective, one could instead use EU SILC European Union member's data, which, besides allowing the comparison of different countries, have the fundamental advantage of representing a longer survey (4 years from 2005 to 2008) compared to ISTAT's transition matrices which provide data for only three years (the first year being covered only by retrospective information 4 ). We could analyze the different paths followed by young people who, as an initial matter of fact, are NEET. We can imagine three different locations: Stay in the state of NEET; Repeated episodes of NEET; Final exit from the condition of NEET. About the last path, we assume the existence of two main different output speeds, fast or slow, depending on the time spent in this condition. We therefore ask whether the characteristics that influence the probability of being in the state of NEET or leaving it, and the speed at which this transition occurs, are the same in all European countries, or in some of them the NEET condition takes the form of a "trap" in which young people are likely to remain hooked, excluded from labour market and the production system. We would try to understand whether the NEET condition is only transient or, instead, a permanent social exclusion one. If we observe a prevalence of the transient nature, we might also ask whether there is a correlation, and how much strict it is, between the length of the NEET period and the subsequent employment and earnings chances of individuals. A comparison between the trajectories of young (ex)neet people in labour market in different European countries, taking into account the aforementioned institutional factors, could provide useful evidence of which factors may make it easier, or more difficult, the awkward transition of young Europeans from school to work. 3 Transition matrices do not contain information pertaining those who change their residence after the first interview, Actually, they only contain data about those who resided in the same county for the whole duration of the survey. Therefore, we have evident problems of significance over the whole population, partly relieved by the low level of territorial mobility registered in Italy. 4 Comparing the employment state at time t0 (year preceding the first wave) and at time t1 and t2 (survey years) put some problems over method: while the first datum depends only on the self-definition of the polled individuals, the employment status in the following two years is determined merging subjective (self-declaration) and objective information, the latter being based on the real job search behavior put in place by the individuals. 8

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10 Istat, (2011), Rapporto Annuale La situazione del Paese nel Maguire, S. and Rennison, J., (2005), Two Years On: The Destination of Young People who are Not in Education, Employment or Training at 16, Journal of Youth Studies, 8: 2, OECD (2008), OECD Employment Outlook, OECD Publishing, Paris. Perugini, C., and Signorelli (2010), M., Youth Labour market performance in European Regions, Economic Change and Restructuring, 43: Quintini, G. and Martin, S., (2006), Starting well or losing their way? The position of youth in the labour market of the OECD countries, OECD Social, Employment and Migration Working Papers, No. 39. Quintini, G., Martin, J.P. and Martin, S., (2007), The Changing Nature of the School to work Transition Process in OECD Countries, IZA DP No. 2582, Bonn, January. Social Exclusion Unit, (1999), Bridging the gap: New opportunities for year olds Not in Education, Employment or Training. Yates, S. and Payne, M., (2006), Not so NEET? A Critique of Use of NEET in Setting Targets for Interventions with Young People, Journal of Youth Studies, 9: 3,