Older, wiser, better: ageing workforce and fast-track societies

by Julie Harris,
Consultant, Directorate for Education

Simple fact: older workers are leaving the labour force earlier than they did in the 60s and 70s. The retirement age declined steadily across OECD countries from the 1970s to the early 2000s. Over the past decade this drop has levelled off, with some countries experiencing a slight upturn. Despite this, apart from Japan and Korea, it is still significantly lower than in the 1960s and 1970s.

At the same time retirement age has been declining, life expectancy has been increasing. In many OECD countries, workers who retire can expect to live another two decades.

If this situation does not change, there will be twice the number of retirees per worker in OECD countries by 2050. You don't need to be an economist to understand that such an eventuality would pose a serious threat to living standards and tear deeply into the fabric of the social safety net.

So, what to do? How can governments move to remedy this situation? And what can companies do to better take advantage of senior employees' skills?

The OECD Skills Strategy states that both governments and companies should work to discourage early retirement. To keep older workers in the labour market, many countries have eliminated early retirement schemes, increased the official pensionable age and corrected distorted financial incentives to retire early. To tackle demand-side barriers to employing older workers, some countries have tried to balance labour costs with productivity by reducing employers’ social security contributions or providing wage subsidies for older workers. Lifelong learning and targeted training, especially in mid-career, can improve employability in later life as well and discourage early withdrawal from the labour market. A rise in the pensionable age also lengthens the period of time over which employers could recover training costs; hence, an attractive incentive to motivate more employers and older employees to invest in training.

Anne-Sophie Parent, Secretary General of AGE Platform Europe, an NGO that promotes the interests of people over 50 across Europe, is convinced that scrapping the mandatory retirement age is key to increasing the employability of older workers. This fixed age, she explains, is like the expiry date on a pot of yoghurt: the closer it gets, the more you're inclined to think of it as no good.

According to the OECD, employees between 25 and 54 are twice as likely to take part in job training as those over 55, confirming employers’ unwillingness to invest in senior staff. Removing the mandatory age would help make employers see older employees as valuable, she argues, giving them an incentive to invest in their skills through training.

Participation in job-related training over the last month, by age group, 2009
(As a percentage of the employed in the age group)

If doing away with the mandatory age is crucial, governments must also address certain significant workplace problems to help older workers get a foothold in the job market. Rodolphe Delacroix, Senior Consultant at consulting firm Towers Watson, cites the case of Finland, which pushed back the average retirement age three years by tackling work-related stress, strenuousness of work and work-life balance.

Delacroix adds that governments can use social and fiscal incentives to entice companies to hire people over 50 and set up progressive retirement plans that allow older employees to reduce their working hours over a number of years. These could replace early retirement plans, which have been the norm in countries such as France.

Companies, for their part, must make career planning an integral part of their human resources policy early on, he maintains. They need to manage the end of employees' careers well to ensure that knowledge and skills are passed on to younger employees.

Older workers are perfectly positioned to help countries maximise the use of skills, as outlined in the OECD Skills Strategy. They can develop relevant skills of younger workers, supply their skills to the labour market and put them to effective use. Indeed, it is hard to imagine how they can't be a boon to our crisis-ridden economies.

Links:
OECD Employment Outlook
Ageing and Employment Policies
Ageing and Skills: A Review and Analysis of Skill Gain and Skill Loss Over the Lifespan and Over Time
Data visualisation: Labour force participation by gender and age, 2010
Live Longer, Work Longer: Statistics on average effective age of retirement
Learn more about ageing societies on: http://www.skills.oecd.org
Photo credit: Young and old businessman / Shutterstock
Chart source:  Calculations based on the EU-LFS.

“Creativity” is spelled with a “why”

by Marilyn Achiron
Editor, Directorate for Education

Here’s a science experiment for you: Take a standard-issue van. Equip it with household items – coat hangers, balls of string, maybe even a few potatoes – with which you could demonstrate certain basic scientific principles. Find someone who knows how to drive the van and teach that person some of those basic principles of science (or find someone who knows those basic principles and teach that person how to drive the van…). Send driver and van out into remote, disadvantaged villages. Observe how children react.

While waiting to amass the funds he needed to realise his dream of building a school in the Himalayas to develop creative leaders, Ramji Raghavan performed that little experiment – and discovered a way to ignite creativity. Thirteen years after the first van was sent out into rural India in 1999, the Agastya International Foundation, chaired by Raghavan, now dispatches 62 vans, most focusing on general science, but two specialising in ecology and one in the arts, across nine states in India, runs a Creativity Lab in the state of Andhra Pradesh, and reaches more than a million children – and their parents – each year.

“Creative people tend to be very good observers,” Raghavan noted during a recent visit to the OECD’s Centre for Educational Research and Innovation. “They are aware; they are able to associate different pieces of information, integrate them and apply them. These skills are all predicated on curiosity. But how do you spark curiosity?”

Raghavan, who was a banker in his early career (“when it was still a somewhat honourable profession”), found the answer to his question in hands-on, experiential learning. “People tend to remember things when they are personally engaged,” he says. That’s why the Agastya project also selects students with particular aptitude and interest and has them teach other children. Not only do these young teachers retain more of what they learn – some have even won special awards in national science competitions – but, through teaching, they also begin to develop other positive attitudes and behaviour – including, for example, empathy. “They begin to realise,” says Raghavan, “how difficult it is to teach.”

These unintended outcomes “can be more important than the original goal,” says Raghavan. “These children learn different ways of thinking and looking at the world.” For Raghavan, those different ways of thinking also need to be adopted by traditional teachers and schools. “We need a shift from ‘yes’ to ‘why?’ in school systems,” he says, “from looking to observing; from being passive to exploring; from textbook-bound to hands-on; from fear to confidence.”

Although the school in the Himalayas is still a dream, Raghavan has managed to change the reality for millions of young Indians who live a little closer to sea level. “There are magical moments in all our lives,” he says. “We may have found a way to deliver these kinds of transformational moments on a mass scale.”
Links:
Visit the OECD Centre for Educational Research and Innovation (CERI)
See related blog posts:
The “extra” in extracurricular activities
Skills revolution will come from the grassroots
Photo credit: Mobile Lab / © Stephan Vincent-Lancrin

The “extra” in extracurricular activities

by Marilyn Achiron
Editor, Directorate for Education

It may be tempting for school systems that are trying to reduce expenses to trim the “extras” from their budgets, including school-sponsored extracurricular activities. But are these activities just a luxury that schools can no longer afford? The latest issue of PISA in Focus makes the case that the availability of extracurricular activities at school is positively related both to student performance and to students’ attitudes towards learning.

As part of the PISA 2006 survey, which focused on student performance in science, school principals were asked about the kinds of extracurricular activities they offered their students. On average across OECD countries, 89% of students attend schools whose principals reported that science-related field trips were commonly offered, 56% of students attend schools that hold science competitions, 48% of students are in schools that encourage involvement in extracurricular science projects, 42% are in schools that organise science fairs, and 41% are in schools that have science clubs.

While the types of science-related extracurricular activities vary across countries, their relationship with better student performance is consistent throughout. In 22 of 31 OECD countries and 14 of 17 partner countries and economies, students in schools that offer more science-related extracurricular activities tend to perform better in science than do students in schools that offer fewer such activities. And in 21 OECD countries and 12 partner countries and economies, this positive relationship holds even after accounting for students’ socio-economic background. However, in two countries, the relationship is very different:  in the United States, students in schools that offer fewer of these kinds of science-related activities tend to perform better in science, after accounting for students’ socio-economic backgrounds; while in Montenegro, the relationship is negative both before and after accounting for students’ backgrounds.

And there’s more at play than test scores: PISA also found a link between the availability of school-sponsored extracurricular activities and students’ belief in their ability to handle science-related tasks, known as self-efficacy, and their enjoyment of learning science. In 22 OECD countries, 7 partner countries and 1 partner economy, students in schools that offer more of these kinds of activities tend to have higher levels of self-efficacy in science; and in 20 OECD countries, 2 partner countries and 1 partner economy, they also enjoy learning science more. In no country or economy is there a negative relationship between science-related extracurricular activities and positive attitudes towards learning science.

These findings from PISA can’t determine conclusively whether being exposed to science-related extracurricular activities enhances students’ attitudes towards science or whether students with more positive attitudes towards science are attracted to schools that offer more of such activities; both could be true. But what these results do show is that these kinds of activities are positively related not only to student performance, but also to students’ attitudes towards learning and their belief in their own abilities. With that in mind, school leaders should carefully weigh the benefits of these “extras” against their cost when making tough budgetary decisions.

Links:
For more information:
on PISA: www.pisa.oecd.org
PISA in Focus: Link latest issue "Are students more engaged when schools offer extracurricular activities?"
Photo credit: Teen science experiment / Shutterstock

Higher education: a good long-term investment?

by J.D. LaRock

Senior Analyst, Innovation and Measuring Progress Division, Directorate for Education

As any student can attest, pursuing a higher education requires an investment in time, effort – and in a number of OECD countries, significant financial resources.  But the economic costs of higher education go beyond tuition fees.  Because people with higher education tend to have higher earnings, they’re likely to pay more in income taxes and social welfare contributions.  There’s also the “opportunity cost” of foregone earnings when people enter university instead of the labour market.

Given these long-term economic costs, do the long-term economic benefits of having a higher education make it worthwhile?  As the latest issue of the OECD’s brief series Education Indicators in Focus details, analyses based on the most recent year of available data – 2007 for most countries – suggest that the return on investment is very good.

For example, the long-term economic advantage of having a tertiary degree instead of an upper secondary degree, minus the associated costs, is over USD 175 000 for a man and just over USD 110 000 for a woman, on average across OECD countries. The payoff is particularly strong for men in Italy, Korea, Portugal and the United States, where obtaining a higher education degree generates a long-term benefit of more than  USD 300 000 for the average man, compared to a man with an upper secondary education only.

Meanwhile, the advantage for women is strongest in Ireland, Korea, Portugal, Slovenia, the United Kingdom, and the United States, where having a tertiary education yields an average long-term benefit of USD 150 000 or more, compared to a woman with an upper secondary education.

As the chart above shows, OECD analyses also find that the long-term payoff on the amount of taxpayer funds used to support people in higher education generates a strong return.  Taxpayer costs include funds used to lower the direct costs of higher education to individuals, as well as support for grant and loan programs.  They also include indirect costs, such as foregone tax revenues and social contributions to the government while people are in university.

On average, OECD countries directly invest more than USD 30 000 in public sector funds to support an individual pursuing higher education.  However, they’ll recoup this investment – and then some – through greater tax revenues from these higher-educated people, as well as savings from the lower level of social transfers these people typically receive.

On average, OECD countries will receive a net return of USD 91 000 on the public costs to support a man in tertiary education – more than three times the amount of the public investment. In Belgium, Germany, Hungary, Slovenia and the United States, this return is especially high, topping USD 150 000.  The net return on the public costs to support a woman in higher education is somewhat lower – USD 55 000, on average – but are still positive in almost every OECD country.

Of course, the fallout from the global economic crisis will likely change this cost-benefit equation – but whether it will make it better or worse overall is unclear. For example, the higher unemployment rates spurred by the crisis are likely to have reduced the opportunity cost of foregoing work in order to attend university.  However, they also may have reduced some of the benefits of having a higher education, because unemployment rates rose among tertiary-educated people during the crisis.

Likewise, the continued global expansion of higher education could have different effects.  As the supply of highly-educated individuals grows, the relative economic benefits of having a tertiary education may go down over time.  However, if economies continue to become more knowledge-based – increasing the demand for highly-educated people even more – the economic benefits of higher education could continue to expand.

For more information

On the OECD’s education indicators, visit:
Education at a Glance 2011: OECD Indicators www.oecd.org/edu/eag2011
On the OECD’s Indicators of Education Systems (INES) programme, visit:
INES Programme overview brochure
See also: IMHE General Conference 2012 "Attaining and Sustaining Mass Higher Education", Paris, 17-19 September 2012


Chart Source: Education at a Glance 2011: OECD Indicators, Indicator A9 (www.oecd.org/edu/eag2011).
Note: Data for Australia, Belgium and Turkey refer to 2005. Data for Italy, the Netherlands, Poland,
Portugal and the United Kingdom refer to 2006. All other data refer to 2007.
Countries are ranked in descending order of the net present value.

Understanding youth, unemployment and skills in Africa

by Denielle Sachs
McKinsey Social Sector Office

For those working on employment issues, one thing is clear: the tense imbalance between the demands of the labor market and the supply of appropriately skilled workers is reaching its breaking point. Last week, the McKinsey Global Institute launched, The world at work: jobs and skills for 3.5 billion people. The report found that by 2020 there could be as many as 40 million too few high-skill workers and up to 95 million too many low-skill workers out in the job market.
Avoiding such massive imbalances will require a radical approach to accelerate education and skills building, and to boost job creation for less-skilled workers. Anything less and we will see a growing shortage of high-skill workers, persistent joblessness for many low- and middle-skill workers, rising income inequality, and distressingly high rates of youth unemployment. The numbers are clear: by 2030, the world will have as many as 1 billion workers without even secondary education, and most of them will be living in India, South Asia and Africa.

A lot of institutions are looking at these issues , including OECD and their recently launched Skills Strategy. As part of our ongoing research on youth unemployment and the skills-jobs mismatch, we asked a few experts what a solution might look like for young people in Africa where the under 25 represent three-fifths of sub-Saharan Africa’s unemployed population, and 72 percent of the youth population lives on less than $2 a day.

First, we have to understand who we mean when we talk about the young and out-of-work in Africa. Fred Swaniker, Founder and CEO of the African Leadership Academy, tells us that, on average, she is an 18-year-old girl, living in a rural area, literate but not attending school. To his mind, entrepreneurship – both the technical skills and the mindset — is the answer. It should be an integral part of every child’s education whether that schooling be formal or informal.

 For the Chief Economist for the World Bank’s Africa Region Shantayanan Devarajan, the answer lies in productivity. “The challenge of youth employment in Africa is not just to create more wage and salary jobs but to increase the productivity, and hence earnings, of the majority of young people.” This can only happen by “first, increasing their basic skills, which they can take with them when they move to new enterprises; and second, creating jobs in the formal sector by improving the economy’s competitiveness, so that this sector can absorb more qualified workers into a productive workforce.”

In South Africa, a very specific socio-political context post-apartheid, Thero Setiloane, CEO of the Business Leadership South Africa, explains that access to education and the quality of that education (“Only 35 percent of the children in third grade are able to pass the literacy and numeracy tests.”) are major stumbling blocks. His preference is for a joint government-business solution. “Business must work with government to adapt the school curriculum… so that young people leave school ready for work. Training programs must be tailored to demand…We also need to build in incentives for businesses to address the social-capital deficit in poor communities.”

Moataz Al Alfi, CEO of the Egypt Kuwait Holding Company could not agree more. Coming from the Middle East where the “paradox of the labour markets”, as he calls it, is perhaps at its worst, he calls for “a solution that requires a strong partnership between business, with its urgent need for skilled workers, and government, which is charged with educating young people.” The region currently has the highest youth unemployment rate in the world, at 25 percent. And, on the heels of the Arab Spring, and in the midst of the lingering economic crisis, it is only expected to rise.  He too returns to the issue of a failing education system that does not prepare young people for the jobs that the market desperately needs to fill.

Links:
Join the debate and register for our online panel event on June 26th at 8am EDT //2pm CEST , featuring experts from the OECD and IFC
See also: OECD Skills Strategy

Visit our interactive portal on skills: http://skills.oecd.org
OECD Development Centre

Photo credit: African youth / Shutterstock

The role of unions in developing a skilled workforce

by Randi Weingarten
President, American Federation of Teachers

As we slowly recover from the worst economic recession since the 1920s, labour markets around the world remain turbulent. We are facing more social and economic inequality with wages stagnating and many people dropping out of the workforce entirely.

How can the American Federation of Teachers and other trade unions around the world help?

First, unions should be viewed as part of the solution, not as something to overcome. Labour-management collaboration is essential to developing skilled workers and, in turn, to creating better jobs and higher salaries. Workers need to be represented at the bargaining table and—regardless of the trade or profession—unions can be an important partner. That is the key to developing a flexible, smart workforce ready and equipped to be full partners with management.

If our workforce is going to thrive in the 21st century, we need to begin by changing much about our approach to education—from inside the classroom and larger school environment, to how we care for children, to how labour and management work together across the world.

In every country, a flourishing economy requires a strong education foundation as well as the ability to innovate and to communicate. It also requires teachers who are prepared and supported on every level and who are invested in helping students succeed in school and in life.

In Singapore, for example, where I spent time with teachers and students earlier this year, schools are focused on growth and achievement. However, as I observed numerous diverse groups of children deeply engaged in learning, I saw nothing that could be construed as “teaching to the test”—something that educators in the United States continue to contend with. In Singapore and in other countries with high-performing education systems, schools have listened to their teachers and collaborated with them to ensure the best education practices are implemented.

Additionally, the OECD can work with education unions to collaborate on important skills-developing issues, including:

• Global teaching standards—These include guidelines to ensure high-functioning, well-prepared, continuously improving teachers in every classroom. However, teachers cannot do this alone. They should be given the continuous support and respect they deserve –which, in large part, means treating education as a shared responsibility.
• Educational  equality—We can address issues of educational inequality worldwide through expanding and enhancing the successful efforts of countries in which every child receives a good education regardless of economic status. We also need to level the playing field for poor children by ensuring the availability of early childhood education and wrap-around services. We can address these issues before they become significant obstacles to learning.
• Curriculum—Ensuring a well-rounded, robust curriculum that prepares students for the future is essential to advancing workforce preparation. A child’s studies should focus on accessing and sorting information to solve complex problems and develop higher-level thinking skills, as opposed to finding answers to simple questions learned by rote. Businesses can help prepare students through mentoring and internships, while at school we can offer more project-based learning to ensure the mastery of skills sets.
• Models of collaboration—The OECD and unions can disseminate examples of labour and management working together to solve problems. Sharing best practices and successful partnerships can help lead to greater and more effective co-operation.

Education by itself will not address the jobs crisis, nor can education by itself address inequality. But without education, the fight for jobs and fair societies cannot be won. We’re excited to take part in the process.

Links:
Trade Union Advisory Committee to the OECD (TUAC)
American Federation of Teachers
See also: OECD Skills Strategy

Visit our interactive portal on skills: http://skills.oecd.org

More blogs with Randi Weingarten:
‘An obligation to systematise success’
‘Internationalist, not isolationist’
Photo credit: Child hands on top of each other / Shutterstock

Urban studies

by Marilyn Achiron
Editor, Directorate for Education

To many people, the phrase “inner-city schools” is synonymous with crumbling buildings, frustrated teachers, disengaged students, truancy and violence. In some urban areas, though, city schools and the students who attend them flourish. In fact, three of the top five performers in reading in the PISA 2009 survey—Shanghai, Hong Kong and Singapore—are large cities. So are big cities a boon or a bane for education?

The latest edition of PISA in Focus presents new analyses suggesting that, in some countries, students in large cities—defined as those with over one million inhabitants—score on a par with their top-performing peers in PISA. For instance, students in urban areas in countries like Portugal and Israel, countries that tend to perform around the OECD average in PISA, compare favourably with students in Singapore; and the performance of students in Poland’s urban areas compares easily with that of students in Hong Kong.

But in Belgium, the United Kingdom and the United States, the performance of students in large urban areas drags down overall country scores in PISA. This might be because, in these countries, not all students can enjoy the advantages—including a rich cultural environment, more school choice and good job prospects after leaving school—that large urban centres offer. Some of these students may come from socio-economically disadvantaged backgrounds, speak a different language at home than the one spoken at school, or have only one parent to turn to for support and assistance.

However, these new analyses of PISA data also show that an urban environment’s impact on learning is not just related to socio-economic advantage or disadvantage. Even when comparing students of similar backgrounds in OECD countries, those attending schools in urban areas in Chile, the Czech Republic, Germany, Italy, Mexico and Turkey scored more than 45 points higher—the equivalent of more than one year of formal schooling—than their peers in rural schools. In Hungary, the performance gap between the two groups of students was more than 70 score points wide.

What these analyses tell us is that in order to join the ranks of PISA best-performers, countries may have to provide targeted support to isolated rural communities to ensure that students attending schools in these areas reach their full potential, while those countries whose city-based students underperform will have to figure out how to both embrace a heterogeneous student population and enable these students to tap into the cultural and social advantages that large urban areas offer.

Links:
For more information:
on PISA: www.pisa.oecd.org
PISA in Focus: Are large cities educational assets or liabilities?
Photo credit: City student / Shutterstock