Denmark’s dynamic youth labour market and well-developed activation strategy have helped young people weather the current recession better than their peers in most OECD countries. But youth unemployment is still rising and Denmark should scale up recent initiatives to help disadvantaged youth and extend activation rules to cover more young Danes, according to a new OECD report
Jobs for youth:Denmark says that the youth unemployment rate in Denmark rose to 12.4% in the fourth quarter of 2009 from 7.2% in 2008. By comparison, the average OECD youth unemployment rate rose to 21% from 13.2% over the same period.
“Denmark has taken quick and decisive action to help unemployed youth during the crisis, and is better prepared than most other countries to help young people find work quickly when economic growth picks up again,” said OECD Secretary-General Angel Gurría. “But further improvements to the education system are needed to give young Danes the skills they need in today’s labour market”.
Denmark has funded 5,000 apprenticeships and training places in 2010 to make up for a sharp fall in private-sector demand: hiring of apprentices by firms fell by 24% in the first eight months of 2009 over the same period in 2008. The Public Employment Service is also offering hiring subsidies to firms taking on youth who had been recipients of welfare benefits for more than 12 months.
These initiatives are a step in the right direction, the report says. But the government also needs to tackle structural issues affecting the school-to-work transition. These include a high drop-out rate in vocational employment and training (VET) programmes and the late age at which many graduates enter full-year employment.
To address these issues, the report recommends that Denmark:
• Tackle the high drop-out rate in VET programmes. Offering a mix of practical and academic subjects in the first months may help. The number of VET places should be increased, together with better individual monitoring in primary and lower secondary education.
• Invest in a fully-fledged activation strategy aimed at reducing the overall time to graduation. As part of this strategy, adjustments should be made to student grants rewarding early entry and on-schedule completion of studies. Public funds financing tertiary education institutions should only be available for those that recruit and graduate on-schedule students.
• Extend to low-educated youth aged 25-29 stronger financial incentives to move off welfare benefits. Some Danish analysts and the Labour Market Commission have recommended the extension of stricter welfare benefits rules up to the age of 30. This reform should be implemented swiftly. However, the OECD considers that young parents should not be considered as a group that could be exempted from the mainstream activation strategy