AUSTRALIA should follow up on the reform of its vocational education system by improving quality control in the VET sector and step up career guidance for young people to boost young people’s job prospects and reduce the share of under-30-year-olds who are not in employment, education or training (NEETs), according to a new OECD report.

Investing in Youth - Australia shows that 580 000 young people – 11.8% of all 15 to 29 year-olds – were NEETs in 2015, over 100 000 more than in 2008, and nearly two-thirds of them were not even looking for work. One in five Australian youth spend at least 12 months out of employment, education or training between the age of 16 and 24. The associated total earnings lost to society amount to 1% of GDP or over AUD 16 billion each year.

Young people with low educational attainment face a particularly high risk of becoming NEET. Those with no more than a Year 10 Certificate or equivalent are three times more likely to be NEET than young people with tertiary education. Quality vocational education and training (VET) that combines classroom-based learning with practical training can be an attractive option for young people, especially those who struggle in more academic schools, and equip them with the skills demanded by employers.

Recent reforms of the VET system have increased flexibility and dramatically boosted participation in apprenticeships, but there are concerns about the quality of the training – such as the length of the training and the alignment of student-chosen qualifications with employer needs -- and completion rates remain low. To further establish VET as an appealing educational pathway, Australia should improve career guidance to help young people navigate the complex system and control more tightly the quality of training providers.

Australia should also invest in affordable childcare to tackle the gender gap in NEET rates. Young women are 50% more likely to be NEET than young men, and this difference is entirely driven by mothers with young children. 48% of NEET women report that they would like to work, and the lack of childcare solutions and insufficiently flexible working arrangements prevent them from seeking a job. Indeed, enrolment rates in pre-primary education for 3- and 4-year-olds in Australia are among the lowest across the OECD.

One challenge is to effectively reach out to unregistered NEETs. While most NEETs in Australia receive income support, 40% are not registered with DHS/Centrelink but might require assistance. The OECD recommends that Australia step up its efforts in connecting NEETs with employment and social services, including by fostering a closer collaboration of DHS/Centrelink with schools before young people at-risk of disconnecting are lost from view. The recent Youth Employment Strategy and its Transition to Work package is an important step for improving outreach to disadvantaged NEETs.

To help more young people into work, the OECD recommends that Australia:

++ Improve further the identification of youth at risk of dropping out of school through a timelier and more systematic sharing of school attendance data.

++ Secure a continued close co-operation between schools and social services to address social or health problems that may cause early school leaving.

++ Ensure availability and affordability of childcare, particularly for lone parents. Target childcare benefits more efficiently towards parents at the lower end of the income distribution.
++ Promote the development of after-school activities for at-risk youth, including sports programmes and mentoring, that can help overcome barriers to school attendance and strengthen non-cognitive skills.

++ Improve career guidance and quality control of VET providers, including for Australian Apprenticeships.

++ Follow up on the recent tightening of benefit eligibility and activity requirements for young jobseekers to avoid increases in inactivity and youth poverty, notably for the most disengaged youth.

++ Maintain a strong focus on training for young jobseekers as an effective way of helping them move into stable employment, and guarantee a sufficient offer of training to help them acquire foundation skills in numeracy and literacy.

++ Ensure a more systematic and rigorous evaluation of Commonwealth-funded social, educational and employment programmes, including headspace and Work for the Dole.