Add to the list of worrisome economic trends what economists call “NEETs” — young people who are Not in Education, Employment or Training.
Their numbers are growing, now 40 million in the 35 member countries of the OECD — the Organization for Economic Co-operation and Development. And two-thirds of them are not actively looking for work.
The figures come from the biennial OECD report, Society at a Glance 2016.
In the United States, 14.4 percent of young people age 15-29 are NEETs, according to the OECD.
This report follows others that illustrate how the Great Recession disproportionately affected young people. It says one in 10 jobs held by workers under 30 have disappeared. And the OECD says the trend could affect economic mobility, as well as national and economic security for years to come.
In particular, the report highlights the dismal prospects of “early school leavers,” young people who do not complete secondary school.
Imara Jones, an economist who looks at race and gender, says for as many as one in seven young people, “that means that they’re totally outside of the economic lifestyle of the country, any kind of life of the country.”
The high number of NEETs also represents a major economic cost, estimated at between USD 360 billion and USD 605 billion, equivalent to between 0.9% and 1.5% of OECD GDP.
Young people who finished school at 16, without completing upper secondary education, make up over 30% of NEETs. Foreign-born youth are on average 1.5 times more likely to be NEET than native youth and 2-2.25 times more likely in Germany, Austria, the Netherlands and Norway.
“It is getting harder and harder for young people with low skills to find a job, let alone a steady job in today’s workplace,” said Stefano Scarpetta, OECD Director of Employment, Labour and Social Affairs. “Unless more is done to improve opportunities in education and training for everyone, there is a growing risk of an increasingly divided society.”
Fighting early school leaving is essential, says the OECD. Governments must ensure that young people obtain at least an upper-secondary qualification so they can continue in education or gain vocational skills. Despite progress, one in six 25-34 year olds in OECD countries left school before upper secondary.
Women are 1.4 times more likely to become NEET than men on average. For many of them, this is because they are looking after small children and the high cost of childcare is a major barrier to employment: in the US, Ireland, United Kingdom and New Zealand, childcare costs for a lone parent can account for between one-third and a half of net income.
Jacob Kirkegaard, a senior fellow with the Peterson Institute for International Economics, says, “Obviously this is not just an economics number, it actually has real implications on other things as well,” such as national security.
“All these young people, they have got nothing else to do and they are sitting in the basement surfing on the Internet,” Kirkegaard says. “And all of a sudden they get sucked into some radical ideology of some kind.”
“There is no doubt,” Kirkegaard adds, regardless of the country, “these numbers are materially worse for minority youth.”
Both economists worry that in many ways the problem is greater here in the U.S.
“The problem in Europe is more of a cyclical nature,” says Kirkegaard. “That’s because workers there are more likely to have training and be looking for work.”
In the U.S. he regards the problem as structural, because so many young people in the U.S. have given up on the economy. He warns that without gaining an economic foothold early on, the risk that this group “basically remains high school drop-outs for their life is much higher. And that basically is a structural problem.”
Economist Jones sees in this report an explanation for many of today’s social problems. Jones says countries that are key to global economic growth “have a structural problem of future growth where they have millions and millions of young people who are not consuming, nor are they investing in themselves through education.” It’s one of the reasons Jones postulates why economic growth remains slow.