Phillip McKenzie

Monash University – ACER

Centre for the Economics of Education and Training (CEET)

and

Australian Council for Educational Research (ACER)

Paper presented to the

organised by the

Centre for Learning and Work Research

Griffith University

Gold Coast, Queensland

2 December 1998

Contact: CEET

Faculty of Education

Monash University

Clayton Vic 3168

Phone 03 9905 2865

Fax 03 9905 9184

Email: mckenzie@acer.edu.au

INTRODUCTION

This paper attempts to provide an international perspective on young people’s transition from education to work in Australia. It draws on the Organisation for Economic Co-operation and Development (OECD) review of the education-to-work transition process in Member countries, on which the author worked from 1996 to mid-1998. The first part of the paper provides some background on the OECD review. In the second part, transition structures, processes and outcomes are described in comparative terms, and strengths and weaknesses of the Australian approach are discussed.

A common experience in Australia and in each of the countries visited for the OECD review was that people inside the country tended to be highly critical of how their particular nation approached the task of preparing young people for work, and getting them established in the labour market. One of the advantages of international comparative projects is they can help to balance introspective self-criticism by an external recognition of strengths and innovative approaches. In this process the analysis of similarities among countries may be just as important as the identification of differences. For example, national debate may attribute problems in the transition to work to particular features of a country’s education system when, in fact, problems such as high youth unemployment are also present in countries with markedly different education systems.

Nevertheless, one of the major challenges in comparing the experience of various countries is to determine the extent to which institutions or programs that appear to work well in one country can be readily transferred to other, quite different settings. Education and training arrangements are often deeply embedded in specific national contexts. Therefore, it is important to understand the economic, political and social circumstances that shape the operation of education and training systems, and which may limit their transferability to other countries.

The OECD review is attempting to identify the broad principles underlying apparently successful approaches to young people’s transition from education to work, since these are more likely to be transferable to youth policy across a wide range of countries, rather than specific structures or programs distinctive to each country’s traditions and institutions.

THE OECD REVIEW OF TRANSITION

Conceptual Framework

OECD Member countries have been concerned with transition issues for at least 20 years since youth unemployment started to rise in the 1970s. Much of that concern has focused on the particular problems faced by early school leavers and young people who lack skills, and on vocational and technical education. But it is now recognised that the transition can pose problems for young people across an even broader span of educational backgrounds, including tertiary education, and the current transition review reflects this broader scope.

Increasing numbers of young people are staying longer in formal education, partly because of problems in the youth labour market, with the consequence that transition issues arise over a wider age span than ever before. In Australia, around 20 per cent of young people are still enrolled in formal education at the age of 24 years (although a high proportion of these are part-time enrolments). Among the countries in the present review, only Norway (25 per cent) has a higher proportion of young people enrolled in education at that age. The OECD transition review has adopted a broad perspective that comprises the whole span of school-leavers including those who enter the labour market directly from secondary school or apprenticeship-type schemes, those who go on to further education and training before seeking work, and those who combine education and work in various ways.

OECD countries are increasingly developing education and training policy from a lifelong learning perspective. The pace of economic and social change is so rapid that individuals need to acquire new skills and knowledge throughout their adult lives to maintain their employability. This implies that a successful transition to work depends on having a sound foundation for further learning, as well as having skills that the labour market requires now. Improving the transition to work means more than finding ways of helping young people to find work and teaching them specific skills, important though these are -- it also requires helping them to become effective learners throughout their adult lives. Therefore, in considering whether particular approaches to improving transition are effective or not, there needs to be a broader set of indicators, and a longer time horizon, than are commonly used.

The OECD transition review, which started in 1996, is designed to improve understanding of why certain education and training policies provide effective transition frameworks in some countries and not in others, or why they facilitate transition for some groups of young people or in some sectors of activity while they fail to do so for other groups or sectors. The review is intended to improve understanding of the increasingly complex routes that young people take as they move from education into the workforce, and to identify what seem to be the key elements of a comprehensive policy framework.

Analytical Framework

Figure 1 summarises the broad analytical framework for the OECD review. The focus is on understanding how the interfaces between education and training and the labour market affect transition processes and transition outcomes. The framework recognises that such interfaces do not exist within a vacuum but result from interactions with broad developments in labour markets, education and training systems, and attitudes and expectations, and that these are mediated by contextual factors within each country. The framework also recognises the role that information (or a lack thereof) plays in shaping understanding about the factors affecting transition, and judgements about the success or failure of transition policies and programmes.

The ways in which the different countries, including Australia, vary in regard to the elements in the middle of Figure 1 (interfaces between education and work; transition processes; and transition outcomes) are discussed later in the paper.

Methodology

Because of the large number of countries interested in taking part in the study it was decided to conduct the review in two rounds. Six countries were selected to take part in Round 1: Australia; Austria; Canada (the Provinces of Quebec and Nova Scotia); the Czech Republic; Norway; and Portugal. These countries were reviewed during 1997 and a synthesising report drafted in mid-1998. The present paper is based largely on these six countries, which between them provide a diverse range of economic and social conditions, and different policy frameworks.

The OECD review encompasses a wider range of country types than most previous comparative analyses of education-to-work transition, which have generally focused on large, industrialised countries, notably Germany, France, the United Kingdom, Japan and the USA. Up to now, there has been little comparative research on transition in countries with quite different institutional frameworks such as those in Scandinavia, southern Europe, the Pacific region, or countries in a rapid state of social and economic change such as those in eastern Europe.

During 1997 each of the six countries prepared a 40 page Country Background Report in response to a common analytical framework and set of questions developed by the OECD Secretariat. In the case of Australia, DEETYA commissioned ACER (Ainley, Lamb & Malley, 1997) to prepare the national background report.

After the Background Report had been received, a four-person review team spent two weeks visiting the country concerned. The country review visits included meetings with senior policy makers in education and employment, education and training institutions, programme administrators, employers’ and employees’ representatives, researchers, and young people. Following each visit the review team prepared a 30-page Country Note that provided the country authorities with the reviewers’ perspectives on issues and policy approaches to transition, and which also supplied material for the synthesising comparative report.

Australia was the first country to be reviewed, in March 1997, and the Country Note on Australia was completed in August 1997 (Schwartz, McKenzie, Hasan & Nexelmann, 1997). The present paper is based on that paper, the report drafted in mid-1998 which drew together the experiences of the six countries into a comparative framework (OECD, 1998a), and an overview of some of the main themes (OECD, 1998b).

In late 1997 a further eight countries were selected to take part in Round 2 of the OECD transition review: Denmark; Finland; Hungary; Japan; Sweden; Switzerland; the United Kingdom; and the United States. This set of country reviews commenced in May 1998 and will run until February 1999. The findings from the Round 2 country experiences will be progressively incorporated into the comparative report developed for Round 1. By the time the whole exercise is completed in late 1999, 14 countries --half the OECD membership – will have been reviewed. Improving young people’s transition from education to work is clearly a high priority for OECD countries.

INTERFACES BETWEEN EDUCATION AND WORK

By definition, young people’s transition from education to work is concerned with how the education and training system interfaces with the labour market. Broadly speaking, the interface may be characterised as either tightly connected or loosely coupled (Hannan, Raffe & Smyth, 1996).

In countries characterised by a tight connection between the education system and the labour market, there is extensive involvement by employers (and generally trade unions as well) in developing curricula, assessing students, and providing training places for young people. In such countries the education and training system is generally segmented into vocational and general education pathways, and the vocational pathways are closely tied to preparation for particular occupations. Government plays a key role in regulating the operation of education and training system and the labour market in such societies. Labour markets in these countries are generally organised around occupations that can only be entered by those holding the relevant occupational-specific qualification.

The pathways between education and work in such countries tend to be institutionally-based. There is commonly a variety of education and training institutions in such systems, and they tend to be quite rigidly separated from one another in that they provide quite different pathways to work, and there is little student movement between them. Generally, there is little modularisation of course offerings: students enrol for relatively long and structured whole programs. The segmentation in such education and training systems tends to along vertical lines.

Countries with a strong focus on apprenticeship and school-based vocational education, and on labour markets structured around occupations, such as Austria, Germany and Denmark, are generally considered to typify a tight connection between the education and labour market systems. Former centrally-planned economies, such as the Czech Republic, also retain substantial features of tightly connected systems although they have moved rapidly to introduce liberal market reforms during the 1990s.

In countries with a more loosely coupled interface between education and work, employers and trade unions play a relatively limited role in the education and training system. Labour markets in such countries tend to be organised around broad employability attributes rather than specific occupational qualifications. The labour markets are relatively open and flexible, and subject to comparatively little government regulation.

Secondary education in loosely coupled systems tends to have a strong emphasis on general education oriented to university study, modularisation of curriculum provision and courses, and individually-constructed pathways connecting education and work. At each level of education, there is little differentiation of institutional type or program. The segmentation in the system tends to be along horizontal lines between each successive level of education, and there is an educational hierarchy based on the difficulty of gaining access to each level. Under such systems, most vocationally-specific skills are acquired on-the-job, although it is also common for a wide range of post-school institutions to provide vocational programs for adults. In terms of selection for entry-level employment, it is often the level of education, rather than its specific content, that counts most highly.

In loosely coupled systems, the connections between education and employment tend to be indirect, and provided largely by movements in relative wages in different occupations, and relative prices in education and training. Extensive information about the labour market and education and training options needs to be widely accessible for such systems to work well. The main English-speaking countries (the USA, UK, Canada, Australia and New Zealand) are generally considered to provide the clearest examples of loosely coupled systems of education and the labour market. The USA is normally considered to be the "purest" illustration of a loosely coupled system. Countries such as Portugal, which have opened up their economy and society more generally in recent years, are now also taking on many of the characteristics of loosely coupled systems.

Table 1 summarises the main structural features of systems that typify tight and loose connections between education and the labour market. The Table represents "ideal types" in the sense that no one country embodies all of the features listed in each column – it is more a matter of emphasis and degree.

In terms of the range of system types, Australia is closer in character to being a loosely coupled system than it is to having a tight connection between the education and labour market domains. However, the interface in Australia is not as loose as that in the United States (labour markets are relatively more regulated in Australia than in the USA, school curricula are more standardised, and qualifications produced by the education system are more closely linked to labour market requirements). The interface in Australia is probably even tighter than it is in Canada (the Round 1 country with the most in common with Australia), because the apprenticeship and traineeship system provides for more young people in Australia than in Canada, and the role of the Australian federal government has been much more significant than its Canadian counterpart in developing a national qualifications framework, and in generally providing coherence across the education and employment policy areas.

TRANSITION PROCESSES AND OUTCOMES

There are advantages and disadvantages in both the tightly connected systems of education and the labour market, and in those which are more loosely coupled.

As indicated above, where there is a tight connection between the education and employment systems, the process of moving between education and work tends to be characterised by institutionally-structured pathways. Under such approaches, young people enter different types of education and training programs at a relatively early age (sometimes in lower secondary school, as in Austria or the Netherlands), and these programs provide well-defined credentials that lead directly to occupationally-based employment. By contrast, in loosely-coupled systems the pathways connecting education and work tend to be individually-constructed. Under such approaches students do not specialise in particular curriculum areas until a relatively late age (sometimes not until reaching tertiary studies), and the credentials they obtain at different points in the education system often do not give them direct access to particular types of jobs or occupations. Rather, the emphasis is on signalling young people’s employability and trainability to employers via the level of education completed, and (in Australia, but less so in the USA) by the standard of marks obtained.

Tightly connected systems tend to provide certainty for the young, and are highly inclusive in their coverage. In the main, young people know that if they successfully complete a particular education or training program, they have a high probability of obtaining employment in the occupation linked to that program. The relative certainty of employment outcomes in such systems is a key reason why young people – and trade unions – are prepared to accept comparatively low wages where the training is employment-based, as in apprenticeships. A trade-off is made between low wages in the training phase and largely guaranteed access to the relevant occupation.

The labour markets in tightly-connected systems tend to be favourable to the young, in that young people with recognised qualifications generally find work in the occupation concerned. In countries such as Austria and Germany, for example, the ratio of youth to adult unemployment rates is about 1:1, whereas in Australia and Canada the ratio is typically about 2:1 (although it has been falling slowly over time), and in some southern European countries the ratio is up to 3:1 or even 4:1. However, the duration of youth unemployment in loosely-coupled systems is often relatively short, whereas it can be lengthy for those who lack qualifications in tightly-connected systems.

Another positive feature of tightly-connected systems is that they tend to have extensive systems of social and labour support designed to re-integrate young people who are at-risk in the labour market back into the education and training system. In Austria, for example, only about 3 per cent of 16 year-olds were not in some form of education and training in 1994, whereas in Australia and Canada around 12 per cent of 16 year-olds were not in education or training. Given that early school leavers are likely to be at particular risk in the labour market, tightly-connected systems seemed to have performed better at keeping their numbers relatively low.

Figure 2 uses longitudinal data to show the average amount of time that early school leavers (those who did not complete upper secondary school or its vocational equivalent) spent working in their first five years after leaving school in the 1980s in Australia, France, Germany, Ireland and the United States. In Australia, male early school leavers spent only an average of 3.4 years employed in their first five years after leaving school, compared to 4.4 years in Germany. The differential for young women who left school early was even worse between the two countries: from only 2.2 years of the first five spent employed in Australia, on average, to 3.9 years in Germany. Indeed, among the five countries in Figure 2, only in the USA did early school leavers perform worse in the labour market than in Australia.

Source: OECD (1998c).

Social class inequalities are evident in all systems of education and training, but the stages at which those inequalities become most evident differ, as do the their scale and implications. As noted, tightly-connected systems tend to retain a high proportion of young people in education and training, with relatively few drop-outs, and provide direct access to entry-level jobs. However, the early tracking of students into separate streams that is common in such systems is highly socially selective (the social elites are concentrated in the general education pathway, which enrols the minority of students), and rigid in that it is difficult to cross between the vocational and general pathways once the early specialisation has started.

The often rigid separation of general and vocational pathways is seen as a factor explaining why the proportion of young people enrolling in vocational programs in German-speaking countries have been falling for the last 10 years or more. Only limited bridges have been established between vocational training and higher education, and such systems are increasingly viewed as unable to satisfy young people’s desire for more extended qualifications. Indeed, the highest growth in upper secondary education in Austria is in programs that qualify young people both for entry to employment and to higher education – even though such programs commonly take up to a year longer than programs designed to enter either higher education or employment direct from school.

In relatively loosely coupled systems, students’ social background and perceived academic ability play a less critical role in shaping life chances than they do in systems where selection into the general education pathway, and into different vocational pathways, is made at an early age. However, in countries with a strong emphasis on general education programs up to the end of secondary school (such as Australia) early school-leaving tends to be associated with social background and difficulty in coping with school. Unless follow-up measures are in place, early school leavers can face substantial problems in the labour market and earlier disadvantages can be intensified.

One of the strengths of countries such as Australia, Canada and the United States is that they provide many more opportunities for re-entry into the education and training system at later stages in life when interests change or circumstances require. By contrast, the tightly connected systems are oriented more towards the young, and place more emphasis on providing vocational skills before entering full-time employment. Such an orientation is problematic when economic and social circumstances change rapidly, and adults need to adapt and adjust. The German-speaking countries, for example, provide much less accessibility and coverage for mature age students that TAFE and university programs do in Australia.

The fact that labour markets in loosely-coupled systems are more open and less dependent on occupationally-linked qualifications means that young people are able to try a variety of jobs as part of the career maturation process. It also means that many students are able to work part-time. Longitudinal data indicate that, in Australia at least, combining study and work in this way can have later educational and employment benefits (Robinson, in press). In tightly-connected systems, the opportunities for combining learning and work come mainly in the form of apprenticeships and internships where the study and work is closely integrated. Such systems typically provide little part-time work for full-time students because entry to work requires occupational qualifications. The main problems in terms of young people’s transition to work over the longer term seem to arise in those systems (such as in southern Europe) that provide little opportunity for the young to combine learning and working in any way at all.

The extensive consultative and negotiating processes between employers, trade unions and government that are built into tightly-connected systems means that the pace of change is often very slow. By contrast, in more loosely-coupled systems like Australia, the pace of policy reform affecting young people’s transition to work is very rapid – but the limited necessity to consult and negotiate with a range of interested parties means that it is hard to build widespread commitment to policy implementation and follow-through.

The severe economic recession experienced in much of Europe since the early 1990s has exposed another difficulty with the tightly-connected systems. The strong reliance on enterprise involvement and provision of training places for the young is weakened in economic downturns, especially for programs that take several years to complete. By contrast, the relative separation of education and the labour market in loosely-coupled systems means that, in principle at least, provision for the young is less affected by the business cycle.

Table 2 summarises the main ways that tightly-connected and loosely-coupled systems differ in terms of transition processes and outcomes. The performance indicators are expressed in stylised terms. No one country performs in the way indicated on all indicators, but constitutes a mixture of strengths and weaknesses. In general, though, Australia -- as a system that is closer to the loosely-coupled end of the range than to the tightly-connected end -- performs more like the right-hand column than the left.

CONCLUSION

The 1997 OECD review team found much to praise when looking at the education-to-work transition process in Australia (Schwartz et al, 1997). They drew positive attention to the development of a national framework for education and employment policy making; the education reforms that had helped to lift education participation rates in the 1980s and early 1990s; the attempts to strengthen linkages between the education sector and enterprises; the emphasis on providing young people with multiple pathways and flexible delivery of education and training; and the widespread commitment to improving equity of access.

However, the OECD review team also identified a number of concerns and tensions, most of which would be familiar to people working inside the Australian education and training system:

• how to continue reforming upper secondary education so that it is relevant and inclusive for the whole age group, and not just those oriented to higher education;
• how to strengthen education-industry partnerships where there is limited tradition of this type of relationship;
• how to better meet the needs of the 15-20 per cent or so of young people who are at greatest risk of not finding stable employment;
• the need to clarify the respective responsibilities of the Commonwealth, the States and individual institutions for policy development and program delivery; and
• how to generate employment growth – arguing that answers to transition problems have to be also found on the demand side of the youth labour market, and not just on the supply side where most of the attention seems to have been directed.

In terms of the previous section of this paper, the key challenge facing Australia would seem to be how to obtain the benefits of inclusiveness and shared commitment to improving young people’s transition to work that are inherent in more tightly-connected systems of education and employment without losing the benefits of flexibility and individualisation provided by a more loosely-coupled system such as we essentially have in place.

It may be that it is not possible to have the best of both worlds. For example, the success of tightly-connected systems in keeping unemployment among teenagers low, and in ensuring that these benefits persist for young adults has led to many efforts at developing similar arrangements in other countries. However, a whole range of social, economic and political conditions need to be fulfilled for apprenticeship-type systems to function successfully (OECD, 1998b). In countries such as Australia, with relatively deregulated labour markets and comparatively little organised involvement by employers or trade unions in education and training, these conditions are hard to create quickly.

Nevertheless there are things that can, and are being done to ensure that an essentially loosely coupled system such as Australia’s works more effectively and equitably. The gradual spread of general employment-linked competencies into education and training provision is a way of better signalling young people’s employability without tying education too closely to short-term labour market demands. The emphasis on improving literacy and numeracy in schools will lead to better foundations for lifelong learning. It is true that there is a growing variety of programmes, courses and exit points from education and training pathways, which are attempting to respond to individual needs and rapidly changing circumstances. Yet the existing levels of information and counselling support do not seem to be adequate to the task of making individually-constructed pathways work effectively – especially for those with limited resources. And finally, the key challenge of assisting early school leavers in a difficult labour market will be more readily met if resources are freed up by preventative measures to keep their numbers low in the first place.

References