Inclusion on a labour market with ever increasing demands

Rune Halvorsen and Bjørn Hvinden at OsloMet are trying to make sense of all this, with the help of a European perspective and new research. They are focusing on the NEET group – young people who are Not in Education, Employment or Training.

There are fewer NEET in the Nordics than in the other 25 EU countries, so someone is doing something right. Statistics show the average number of NEET among 20-24 year-olds was 9.4 % between 2007 and 2016, while in the rest of the EU the figure was 17.4 %. The difference was even greater among those aged 25-29. 10.1 % in the Nordics and 19.3 in the rest of the EU.

25 Nordic and European researchers have contributed to the anthology Youth, Diversity and Employment, published by Elgar. They have also looked at whether there are higher  numbers of youth dropouts among women, immigrants or people with physical handicaps within these age groups.

So what separates the countries?

One thing which separates the Nordic countries – and to an extent separates the Nordics from the rest of Europe – is that the number of youths expected to get a higher education is so high. Looking back at what has happened since 1995, the proportion of people with a university-level education has risen by 65 % in Norway, 67 % in Sweden, 88 % in Denmark and 140 % in Finland. 

An ever-smaller part of the labour market is now available for youths without a university-level education, and more of these jobs will disappear in the future. A Norwegian forecast estimates that people without a completed upper secondary education will only be able to access 15 % of jobs by 2030.  

Despite the fact that education becomes increasingly important, the Nordic education systems fail to get more than 60-80 % of each age cohort to completion of upper secondary education.

Danish students get the most training

Vocational schools combined with workplace training represent an alternative to academic studies. Danish vocational students are the ones who get the most workplace training in  the Nordics. It is, however, difficult to say whether this really is an efficient way of reducing the number of youths who fail to finish their education. Existing research has mainly focused on those who finish their education and their chances of finding jobs, and not on those who leave early. 

If you look at the four largest Nordic countries in terms of how much weight is being put on workplace training, Denmark comes first, followed by Norway and Finland. Sweden comes bottom.

Some researchers working on youth employment have a theory that employers look less at what the youths have learned, and more at the signal that they have finished their education sends. Other researchers claim that educational systems that generate specific skills and in which there are close links with employers are the ones that sends the clearest signals.

What about legislation?

Labour market legislation is also an important factor. Is it easy to fire youths, or are they protected as soon as they have been hired?

“An education system that performs well in terms of labour market outcomes for graduates, but not so well for dropouts, might nonetheless produce a net output that is inferior to that of a system that does much better with regard to dropouts,” points out Olof Bäckman and others.

Denmark, with its flexicurity model, comes out top when it comes to how easy it is to fire youths. The EU has its own index for how strong a country’s protection against redundancy is. The lower the figure, the weaker the protection. The list reads: Denmark (1.4), Finland (2.0), Sweden (2.2) and Norway (2.6).

The researchers have looked at how native youths who drop out of a vocational education fare compared to youths who finish an academic education. The theory was that it would be worse to fail a vocational education, which is strongly linked to a workplace, since this sends out such a strong signal. If it is difficult to fire employees on top of that, employers will be more careful.  

Norway in worst situation 

In Denmark, the signal being sent out is weighed against the reduced risk of hiring youths. Vocational students who drop out in Norway should therefore be in the worst situation, where training also takes place in a workplace to a certain extent, while employees enjoy stronger employment protection.   

Yet the researchers could not find any such signalling effect in Norway. The number of youths who fail to finish their education has been remarkably stable between 1997 and 2006.

“Although signalling and labour market regulation may play some role in the process by which early school leavers in Scandinavia are included or excluded, it might just as easily be a story about the functioning of labour markets in general and about how well different labour markets manage to include young, unskilled an inexperienced workers. ”

A gap between theory and practice

In other words, there is sometimes a gap between theory and practice. When the researchers looked at how immigrant youths managed compared to native youths, the surprise did not lie in the fact that more youths with immigrant backgrounds end up in the NEET category. 

That can partly be explained with the fact that they have poorer language skills, lower levels of education and a different social background. But in many instances there is also an unexplained difference which might be linked to prejudices among employers, for instance. 

The researchers looked at the period from 1997 to 2010 and divided youths aged 18-29 into five groups. Youths born in the country, with parents born there too, were at one end of the spectrum. Youths born in non-Western countries were at the other.

The results divided into three year groups and into gender groups. In Denmark in 2010, 50.8 % of young women aged 24-28 who were born in a non-Western country were in the NEET group – by far the highest figure. This group did badly in the other Nordic countries too. But there were big differences between the countries. In Sweden, the number for this group was only 21.2 %. 

Biggest surprise

The biggest surprise was that the difference between those who were born in a different Western country and those born in a non-Western country was as small as it was. In Denmark, during several of the years spanning 1997 to 2010, youths born in a Western country made up a bigger group of NEET than those born in a non-Western country. 

In Sweden, the surprise consisted in the fact that the worst off group for the entire period was for native born with parents born in a Western country. 

Overall, Sweden had the lowest proportion of NEET and the smallest differences between the five groups. This could be because those born abroad had been living for longer in Sweden because immigration to that country started earlier. Finland, for instance, saw only net emigration until the early 1980s.