PwC Young Workers Index rates success of countries in developing younger people

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The FINANCIAL — Latest report from PwC economists compares participation in employment, education and training of younger people across 34 OECD countries and finds that:

Switzerland and Germany top the table of most successful countries in 2014, followed by Austria, Iceland, Norway and Canada

Most countries saw a decline in their index scores between 2006 and 2011, reflecting the adverse impact of the global financial crisis on young workers; many countries have seen a marked improvement since 2011, but others have not, so average index scores in 2014 across the OECD remain well below pre-crisis levels in 2006

If countries could reduce the proportion of their 20-24 year olds not in employment, education or training to German levels, most OECD nations could achieve substantial long term boosts to their GDP levels ranging from around 1% in Sweden and Denmark to around 3% in the US and the UK and up to around 7-9% of GDP in Spain, Greece, Italy and Turkey.

At 2015 GDP values, the potential long term boost to total OECD GDP could be around $1.2 trillion.

The core European countries of Switzerland, Germany and Austria take the top three places in the newly-launched PwC Young Workers Index, which charts the success – or otherwise – of countries in developing the potential of their under-25 year olds.

And countries further down the rankings can add billions of dollars to their economies in the long run if they follow best practice in harnessing this potential, according to the report. The message is similar to that contained in the Golden Age Index launched by PwC in June 2015 in relation to older workers.

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The PwC Young Workers Index is a weighted average of 8 indicators that reflect the labour market activity and participation in education and training of people aged under 25 in 34 Organisation for Economic Co-operation and Development (OECD) countries.

John Hawksworth, PwC Chief Economist and co-author of the report, comments:

“In contrast to our earlier research on older workers and female workers, where Scandinavian countries consistently topped our indices, it seems that the core European countries like Germany, Switzerland and Austria offer the best role models in developing the potential of younger people. These countries suffered smaller rises in youth unemployment after the global recession because their systems of education, vocational training and apprenticeships minimise the number of young people falling through the labour market net.”

The report also estimates the potential long-term boost to OECD economies if they can match the relatively low share of young people (aged 20-24) who are not in employment, education or training (NEETs). The potential gains could range from around 1% of GDP in Sweden and Denmark, up to around 3% of GDP in the US, UK and France, with the highest potential gains being in Turkey, Italy, Greece and Spain of around 7-9% of GDP. Across all OECD countries the potential long term boost to total GDP could be of the order of $1.2 trillion (at 2015 GDP values).

John Hawksworth, PwC Chief Economist and co-author of the report, comments:

“Our analysis shows there are large potential long-term economic benefits to be gained by reducing the number of 20-24-year-olds who are not in employment, education or training – known as NEETs. Across the OECD, the potential long term gain could be over $1.2 trillion if all countries could match German levels of performance. Governments and business need to work together to ensure that all young people have the skills and opportunities needed to realise these gains in a modern, globalised economy.”

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Other government policy measures to boost scores could include raising the proportion of apprenticeships and vocational courses for young people, and more emphasis on social inclusion to reintegrate those in danger of dropping out of school and employment. The PwC report highlights, for example, several German government initiatives relating to this younger age-group, concluding that other countries could benefit substantially from adopting international best practices.

The PwC report also looks at the opportunities and challenges for business that the index highlights and links this to earlier PwC research on skill shortages and the different working characteristics of the millennials.

Jon Andrews, PwC’s Global People and Organisation leader, concludes:

“Businesses can face short-term challenges in the form of skill shortages due to high youth unemployment, but this can also have a long-term impact in the form of lower productivity and less innovation. It is vital for businesses that they adapt their organisations to attract and retain new, young talent – by, for example, investing more in apprenticeships and professional training of younger workers.”


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