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Youth Labor in TransitionInequalities, Mobility, and Policies in Europe$

Jacqueline O'Reilly, Janine Leschke, Renate Ortlieb, Martin Seeleib-Kaiser, and Paola Villa

Print publication date: 2018

Print ISBN-13: 9780190864798

Published to Oxford Scholarship Online: January 2019

DOI: 10.1093/oso/9780190864798.001.0001

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How Does the Performance of School-to-Work Transition Regimes Vary in the European Union?

How Does the Performance of School-to-Work Transition Regimes Vary in the European Union?

Chapter:
(p.71) 3 How Does the Performance of School-to-Work Transition Regimes Vary in the European Union?
Source:
Youth Labor in Transition
Author(s):

Kari P. Hadjivassiliou

Arianna Tassinari

Werner Eichhorst

Florian Wozny

Publisher:
Oxford University Press
DOI:10.1093/oso/9780190864798.003.0003

Abstract and Keywords

This chapter presents a cross-country comparative analysis of the variation in European youth-related school-to-work (STW) transition regimes. The chapter assesses youth labor market performance during the Great Recession in eight countries belonging to five different institutional clusters, as well as the effect of recent policy innovations on each STW transition regime’s structure and logic. The analysis shows that the institutional configurations of STW regimes in Europe are currently in flux as a result of ongoing dynamics of regime hybridization. Despite some emerging trends of convergence across regimes in the design of youth-transition policy instruments, institutional change remains limited at the level of policy implementation. Although positive policy intentions improve the efficacy of STW transition policies, performance differences across regimes persist. This is due to a combination of institutional and macroeconomic factors, together with a common trend of progressive deterioration in the quality of youth transitions across the board.

Keywords:   school-to-work, youth unemployment, vocational education and training, apprenticeship, Youth Guarantee, employment protection legislation, Great Recession

3.1. Introduction

The Great Recession has had a profound impact on the process of young people’s school-to-work (STW) transitions, exacerbating the challenges already arising from the long-term structural transformations affecting youth labor markets across the European Union (EU). These challenges have been a catalyst for policy change. Following European Commission recommendations, many countries have embarked upon ambitious reform programs, including the introduction of the Youth Guarantee (YG), structural reforms of vocational education and training (VET), and activation policies.

This chapter tackles two central questions pertaining to the performance and evolution of STW transition regimes in Europe during the Great Recession. First, what role have institutional characteristics played in mediating and structuring the impact of the crisis on young people’s labor market situation? Second, in what ways have policy changes introduced during the recession changed the structure and logic of European STW transition regimes?

Following an institutionalist approach, this chapter tackles these two analytical puzzles by means of a comparative case study design. We draw on the typology of “youth transition regimes” advanced by Pohl and Walther (2007) as a heuristic framework for comparison. First, we investigate how country-specific (p.72) institutional configurations mediated the impact of the crisis on young people’s labor market situation between 2007 and 2015 in a sample of eight member states belonging to different clusters. Our findings show that institutional legacies mattered considerably in determining the type and severity of the challenges that the different countries faced. However, institutional factors also interacted in complex ways with the broader macroeconomic conditions and the availability of fiscal resources.

Second, we analyze the main changes in STW transition regimes across five country clusters between 2007 and 2015. We review three policy domains: active labor market policies (ALMPs) and not in employment, education, or training (NEET) policies;1 VET; and employment protection legislation (EPL). We assess the extent to which reforms have brought about substantial change in the underlying logic and design of STW transition regimes and whether these will lead to future improvements in performance. We focus on youth-specific employment policy areas in order to identify conflicting trends of convergence and persisting divergence in institutional design. We find that institutional configurations appear to be in a state of flux, blurring the distinctive characteristics and internal coherence of the STW transition regimes captured by Pohl and Walther’s (2007) original typology and calling into question its continued heuristic validity. Considerable challenges persist despite intense reform activity, and the postcrisis quality of STW transitions appears to have deteriorated across all country clusters.

The chapter proceeds as follows. Section 3.2 outlines the theoretical and case study selection framework. Section 3.3 presents the institutional features and performance of each of the five STW transition regimes represented by the eight case study countries. Section 3.4 discusses the main trends and implications of institutional and policy change across clusters during the crisis, and section 3.5 concludes.

3.2. Theoretical and case study selection framework

The notion of “transition regimes” developed by Pohl and Walther (2007) encompasses institutional and policy domains, including the structure of education and training systems, employment regulation and social security systems, and the focus of youth transition policies (whether their model of activation is “supportive” or “workfare”). The original conceptualization also includes cultural norms relating to interpretative frames of youth and the causes of labor market “disadvantage” dominating different clusters; we do not include these in our analysis here. Pohl and Walther distinguish between five main types of youth transition regimes: universalistic, liberal, employment-centered, subprotective, (p.73) and post-socialist. The distinctive features of each ideal-typical regime are summarized in Table 3.1.

Table 3.1 Comparative framework

STW transition regime typology

Education system and VET

Focus of STW transition policies and ALMP

EPL and labor market regulation

Speed and quality of STW transitions

Universalistic (SE)

Inclusive education system

High investment and high transitions in tertiary education

Secondary role of VET

Supportive activation (Youth Guarantee)

Human capital investment

“Flexicurity model”: moderate/low EPL, inclusive social protection system;

Corporatist tradition with collectively agreed minimum wages (including youth-related) that vary by sector

Fast and stable

Employment-centered (DE, FR, NL)

Selective and standardized education and training

Prominence of VET (company- or school-based), including prevocational training and apprenticeships

High levels of employer involvement

“Train-first” approach: focus on VET and apprenticeships as main labor market integration route

Targeted ALMPs for vulnerable youth

Occasional use of wage incentives and demand-side measures

EPL dualism between permanent and temporary employment

Segmented social protection

Corporatist tradition, but minimum wages set by legislation

Variable, but fast and stable for countries with large apprenticeship systems or VET take-up

High levels of temporary employment

Cyclical problems of low labor demand

Liberal (UK)

Comprehensive education system, predominance of general education

Fragmented post-compulsory training

Low status and standardization of VET

Limited employer involvement

Supply-side, workfare activation model

Focus on acquisition of employability skills and rapid labor market entry (“work-first” approach)

Targeted remedial interventions for NEETs and vulnerable young people

Low levels of EPL

Universalistic but minimal social protection

Minimum wages set by legislation (differentiated for young people)

Fast but unstable; high incidence of low-quality employment

Skills mismatch

Subprotective (ES)

Comprehensive education system

Low status and take-up of VET

High levels of early school leaving

Weak linkages between education system and labor market

Underdeveloped ALMP and low PES capacity

Focus on acquisition of first work experience

Wage subsidies

High EPL dualism between temporary and permanent employment

Segmented social protection with high protection gaps; high familialism

No age-related minimum wage

Lengthy and uncertain

High levels of temporary employment

Skills mismatch

Low labor demand

Post-socialist/transitional (EE, PL)

Comprehensive education systems, predominance of general education

Low prominence of VET (school- or company-based)

Weak linkages between education system and labor market

High levels of educational attainment

Combination of liberal and employment-centered policies

ALMP relatively underdeveloped

Focus on acquisition of employability skills (supply side) and stimulus of labor demand through wage subsidies

High EPL dualism, but considerable differences within cluster

Minimum wages set with social partners’ involvement, not differentiated by age

Variable length and stability

High incidence of temporary/low-quality employment

Skills mismatch

Source: Adapted from Pohl and Walther (2007).

Although these clusters display considerable internal variation with regard to the institutional configurations of different countries, the typology can be a useful heuristic device for analyzing and conceptualizing broad patterns of convergence and variation in terms of policy design and institutional change across countries. Each regime type is characterized by specific challenges regarding the STW transition process, as well as by a distinctive logic in the design of STW transition policies.

On the basis of this typology, we conducted eight case studies in countries belonging to distinct regime types so as to compare the performance of differing institutional arrangements and the trajectory of institutional change between and within clusters between 2007 and 2015. The country case studies were chosen not only to exemplify the characteristics and challenges of each cluster but also to illustrate internal variation within clusters. The universalistic model is represented here by Sweden. Within the employment-centered regime, we analyzed the cases of Germany, the Netherlands, and France, which—despite broad similarities—differ in the focus of their STW transition models, especially in their VET systems. The United Kingdom typifies the liberal regime. The subprotective regime, typical of the Mediterranean countries, is exemplified by Spain. Finally, the Estonian and Polish case studies illustrate the post-socialist regime, which has adopted a mix of liberal and employment-centered approaches.

The case study methodology involved primary data collection through interviews with policymakers, employer organizations, trade unions, and academic experts in each country.2 This work was complemented by an extensive review of policy documents and academic literature at the EU and national levels, as well as secondary data analysis of key statistical and evaluation data relating to youth labor market performance in the selected countries.

Section 3.3 considers how regimes’ institutional features affect their performance regarding the effectiveness of young people’s STW transitions, conceptualized in terms of the speed, ease, and quality of youth transitions (see Flek, Hála, and Mysíková, this volume; Berloffa et al., this volume; Filandri, Nazio, and O’Reilly, this volume). Although the quality of youth transitions encompasses a range of dimensions (incidence of informal, temporary, and/or precarious employment, and transition rates to permanent employment), here we focus on the type of employment contract (permanent vs. temporary) as an indicator of quality.

We measure country performance using a range of empirical indicators: total and long-term youth unemployment rate, youth unemployment ratio, employment rate within 3 years of completing education, NEET rate, educational attainment, and incidence of fixed-term employment.3 A comparison of indicators between 2007 and 2015 captures how different regimes have mediated the impact of the Great Recession on young people’s labor market situation. Our discussion (p.74) (p.75) (p.76) of performance determinants mainly focuses on the interaction between three institutional dimensions: the structure of the education and training system (particularly VET); employment regulation; and labor market policy models, with a focus on the characteristics of ALMP. Although our emphasis here is more on supply-side policies, the issue of sufficient labor demand (and demand-side policies) is also of crucial importance for STW transitions. The Great Recession has affected member states differently in terms of both job destruction during the recession and job creation in the recovery years (Grotti, Russell, and O’Reilly, this volume). For instance, among the countries studied here, job separation rates increased sharply in Estonia and Spain, but to a lesser extent in the Netherlands, whereas Germany proved much more resilient throughout the crisis (European Central Bank 2014). This variation must be kept in mind when assessing differences in performance.

Section 3.4 analyzes how the regimes’ institutional features have changed due to intense policy innovation activity during the crisis, focusing on policy changes introduced since 2015. In particular, we assess the effects that recent policy changes may have on both the quality of future STW transitions and the heuristic and conceptual validity of Pohl and Walther’s (2007) typology in the current historical phase. Our analysis also draws upon Rubery’s (2011) concept of “hybridization” of social models to capture the nature of ongoing institutional changes affecting youth transition policy regimes in Europe. This refers to the process whereby developments in new policy areas cross traditional boundaries and paths of development usually associated with distinct welfare regime typologies. This is useful for conceptualizing ongoing changes in youth employment policy, where processes of gradual institutional change (Streeck and Thelen 2005) and multifaceted policy innovations appear to be slowly transforming the logic and objectives of existing policy regimes toward increased liberalization (Streeck 2009), while attempting to address existing protection gaps. The hybridization concept captures the contradictory nature of existing policy innovations, emphasizing the need to reconsider the validity of existing typologies of youth transition regimes in light of recent developments.

3.3. Institutional features and performance in different youth transition regimes

The ideal-typical institutional characteristics of each regime prior to the crisis, as captured in Pohl and Walther’s (2007) heuristic typology, are summarized in Table 3.1, whereas our discussion focuses on our country case studies, whose features may deviate from those generalized in Pohl and Walther’s typology.

(p.77) 3.3.1. Universalistic Cluster

The universalistic youth transition model—represented here by Sweden—is characterized by an inclusive education system, with diversified post-compulsory routes into general and vocational education and high levels of investment in tertiary education. The linkage between education and the labor market is collinear, with employers increasingly playing a role in specifying and delivering training. Nonetheless, VET plays a secondary role in post-compulsory education compared to higher education (Wadensjö 2015). The education and training system’s comprehensive and inclusive nature is considered an important factor in facilitating human capital acquisition and smooth STW transitions. The fact that a high share of students—well above the EU average—combines work and study also helps such transitions (Eurofound 2014).

Sweden’s strong corporatist tradition of close cooperation between the social partners and the state contributes to the effectiveness of STW transition mechanisms such as traineeships/internships (Eurofound 2014). The institutionalized nature of corporatist arrangements in universalistic countries means that collective agreements constitute important driving forces for labor market regulation and wage setting (see Table 3.1).

The unemployment rate for 15- to 24-year-olds in Sweden was equal to the EU average in 2015 but was far below the EU average for 25- to 29-year-olds (Table 3.2). In general, STW transitions are comparatively fast and stable. In 2015, approximately 83% of 15- to 34-year-olds were employed 3 years after completing education (Table 3.3). This explains why the long-term unemployment rate (see Table 3.2) and the NEET rate are among the lowest across the eight countries considered here and also far below the EU average (see Table 3.3). Indeed, unemployment spells for young people tend to be rather short and refer to transitions between education paths. However, subgroups such as the less educated, the disabled, or migrants face considerable barriers to entering the labor market (Wadensjö 2015).

Table 3.2 Unemployment rate, long-term unemployment rate, and unemployment ratio: 2007 and 2015 (%)

Country

Unemployment rate

Long-term unemployment rate

Unemployment ratio

15–24 years

25–29 years

15–24 years

25–29 years

15–24 years

25–29 years

2015

2007

2015

2007

2015

2007

2015

2007

2015

2007

2015

2007

Total

Women

Total

Women

Total

Women

Total

Total

Total

Total

Total

Total

Total

Total

Total

Spain

48.3

48.0

18.1

21.7

28.5

28.1

9.0

35.0

10.1

44.1

14.7

16.8

8.7

24.3

7.7

France

24.7

23.4

18.8

19.5

14.0

13.7

10.1

28.8

24.3

35.3

32.3

9.1

7.2

11.9

8.8

Poland

20.8

20.9

21.7

23.8

10.1

9.8

10.6

29.2

34.6

35.9

45.5

6.8

7.1

8.5

8.7

Sweden

20.4

19.6

19.3

19.8

8.7

8.4

7.0

6.3

4.0

15.5

11.0

11.2

10.1

7.5

6.1

United Kingdom

14.6

12.9

14.3

12.5

6.0

5.6

4.9

21.9

15.7

28.7

23.7

8.6

8.8

5.1

4.2

Estonia

13.1

12.2

10.1

7.2

6.0

7.1

4.4

15.5

30.5

34.7

46.8

5.5

3.8

5.1

3.7

Netherlands

11.3

11.2

5.9

6.2

6.5

6.3

2.4

18.7

12.6

31.5

26.2

7.7

4.3

5.7

2.2

Germany

7.2

6.5

11.9

11.1

5.8

4.9

9.9

22.5

32.2

32.2

42.7

3.5

6.1

4.8

8.1

EU

20.4

19.5

15.5

15.9

12.4

12.3

8.7

32.4

26.4

43.0

36.8

8.4

6.8

10.2

7.1

Source: Eurostat (2015).

Table 3.3 Employment rate within 3 years of highest educational attainment (ISCED), NEET rate, and fixed-term employment rate for 15- to 29-year-olds: 2007 and 2015 (%)

Country

Employment rate within 3 years

NEET rate

Fixed-term (15–29 years)

Total

0–2 (ISCED)

3–4 (ISCED)

5–8 (ISCED)

15–24 years

25–29 years

Total

2015

2007

2015

2015

2007

2015

2007

2015

2007

Germany

86.9

77.8

44.1

87.3

92.4

6.2

12.0

12.3

16.9

38.1

41.5

Netherlands

84.8

84.3

67.6

83.9

89.1

4.7

3.5

10.6

7.6

44.2

37.0

Sweden

83.2

82.4

61.6

79.2

90.8

6.7

7.5

8.6

8.8

41.0

43.6

United Kingdom

76.9

79.3

41.2

72.8

85.5

11.1

11.9

15.4

14.9

11.3

10.3

Estonia

74.8

76.0

32.7

71.8

84.8

10.8

8.9

14.8

17.2

8.0

4.2

Poland

73.3

70.5

23.7

64.7

83.7

11.0

10.6

20.5

21.6

54.3

49.5

France

62.8

70.6

21.4

57.0

77.9

11.9

10.7

20.0

17.2

41.0

35.5

Spain

54.2

74.4

29.2

47.5

66.7

15.6

12.0

26.0

13.8

54.3

51.5

EU

69.8

73.5

33.1

66.5

79.7

12.0

11.0

19.7

17.2

32.5

30.9

Source: Eurostat (2015).

ALMPs are particularly well developed and funded, and the overall STW transition model is based on young people’s early activation, implemented through a highly personalized approach. In Sweden, this is realized through a strong job guarantee and social assistance program (Wadensjö 2015). One element of such programs is intensive (and early) job search assistance, combined with personalized action plans that have proved to be effective short-term transition mechanisms. Supported forms of employment also play an important role.

Since the early 2000s, and more markedly since the onset of the Great Recession, the quality and effectiveness of Sweden’s education and training system have deteriorated, despite strong public investment (European Commission 2015a). Sweden is one of the few European countries where VET participation has decreased since 2005 (Gonzalez Carreras, Kirchner, and Speckesser (p.78) (p.79) (p.80) 2015). Despite repeated attempts to increase the take-up of apprenticeships (Wadensjö 2015), their incidence remains low and primarily concentrated in craft occupations, suggesting a persistent prevalence of the “academic” higher education route as the privileged form of post-compulsory training.

This cluster’s institutional setup is usually characterized as an example of “flexicurity” with extended welfare provision (Eurofound 2014; Leschke and Finn, this volume). However, over time, activation has become tougher and benefits less generous and more conditional. Unemployment benefits are income based and subject to membership in an unemployment insurance fund. Young school-leavers generally do not qualify for these benefits because they do not meet the income requirements, which discourages them from registering as unemployed (Albæk et al. 2015). However, they can access means-tested social assistance or less generous unemployment benefit through ALMPs.

The universalistic cluster is not internally homogeneous, and different regulatory regimes may apply to distinct groups in the labor market. For example, in contrast to Denmark, Sweden’s EPL is relatively high for permanent employment, but relatively low for temporary employment, leading to labor market segmentation reflected in levels of temporary employment that surpass the EU average (see Table 3.3). However, unlike in France or Spain, fixed-term contracts act as a stepping stone to more stable and regular work.

The limited changes in unemployment rates and ratios, as well as contract types and transition speed, between 2007 and 2015 suggest that youth labor demand was not strongly affected by the recent crisis (Grotti et al., this volume).

3.3.2. Employment-Centered Cluster

Countries in the employment-centered transition cluster (DE, FR, and NL in this study) are characterized by selective and highly standardized education and training systems, with well-developed apprenticeship and national certification systems. The German education system’s selectivity is clearly shown in the educational attainment data. Among the eight countries reviewed, Germany has the highest proportion of young people aged 20–24 years (70.7%) with medium ISCED (International Standard Classification of Education) levels and the lowest proportion (6.4%) with high ISCED levels, whereas France has high shares of youth with high ISCED levels, especially those aged 20–24 years (28.8%; Table 3.4).

Table 3.4 Educational attainment by age and ISCED level (2015)

Country

20–24 years

25–34 years

0–2

3–4

5–8

0–2

3–4

5–8

Spain

31.5

46.9

21.5

34.4

24.6

41.0

Germany

22.9

70.7

6.4

12.7

57.7

29.6

Netherlands

20

61.7

18.3

14.4

40.5

45.1

Estonia

16.7

69.5

13.8

10.8

48.6

40.6

United Kingdom

14.3

56.2

29.5

14.7

38.4

47.0

France

12.8

58.3

28.8

13.5

41.9

44.7

Sweden

12.7

69.8

17.5

12.1

41.4

46.5

Poland

9.2

76.3

14.5

6.1

50.7

43.2

EU

17.3

65.5

17.2

16.6

45.6

37.9

Source: Eurostat (2015).

Dual VET constitutes a core feature of the German education system, with apprenticeships providing the main form of VET at the upper secondary level. In the Netherlands, apprenticeships are slightly less prominent, whereas in France, school-based VET still dominates (Eurofound 2014). Employers are actively involved in defining the design and content of VET in Germany and the Netherlands, closely cooperating with VET providers, but this is not the case in France. STW transitions in Germany and the Netherlands are generally efficient, (p.81) especially for those with medium ISCED levels, indicating well-established VET systems, which also contribute to both countries having the lowest NEET rates (see Table 3.3). High degrees of occupational specificity (Gangl 2001; Brzinsky-Fay 2007) and strong involvement of relevant stakeholders (Gonzalez Carreras et al. 2015) in the German and Dutch training systems are important driving forces for smooth STW transitions.

Youth unemployment rates in Germany and the Netherlands are the lowest among all the countries reviewed. However, Dutch youth unemployment ratios for 15- to 24-year-olds are relatively high. This discrepancy between the two countries in the share of active young people in the labor market is especially strong for those aged 15–24 years and much less important for those aged 25–29 years, who are less affected by differences in the education systems (see Table 3.2). Long-term unemployment rates are rather average in both countries (see Table 3.3). The difference between short- and long-term unemployment rates is due to the fact that short-term unemployed people tend to participate overproportionally during periods of recovery. The situation in France is more difficult because both short- and long-term unemployment rates are high.

Germany and the Netherlands have strict EPL for permanent employment, whereas their EPL for temporary employment is much lower than the Organization for Economic Co-operation and Development (OECD) average. In France, EPL is high for both permanent and temporary employment. Despite these differences, temporary employment for 15- to 29-year-olds was above the EU average in all three countries in 2015. It must be noted that half of all fixed-term contracts relate to apprenticeships in Germany, which has a much better transition probability compared with France (see Table 3.3). Segmentation is also predominant in France, not only for disadvantaged but also for qualified youth (Eurofound 2014).

(p.82) Differences in ALMPs in the three countries are related to their different education systems and general economic performance. The Netherlands has traditionally high ALMP spending (EU’s highest spending in 2014), with a focus on mediation and re-employment or reintegration, especially for the most vulnerable groups (Bekker et al. 2015). Wage subsidies also play a role in France and the Netherlands for helping young people acquire work experience. In Germany, basic training and assistance for less educated youth are also gaining importance given the favorable labor market situation. Thus, the specific focus of ALMPs depends not only on the general orientation of a particular cluster but also on a country’s current economic situation.

In this cluster, the welfare system is based on a social insurance model with benefits financed by taxes (as in Sweden) and individual contributions. Similar to Sweden, benefits are income based, but young people do not have universal access to benefits. Indeed, depending on their status, young people can be excluded from or receive reduced benefits. In Germany, for example, young people receive a reduced amount of social assistance if they still live in their parents’ home, and they need the approval of their local authority if they wish to move out while still receiving benefits (Eichhorst, Wozny, and Cox 2015).

Likewise in the Netherlands, there is no automatic right of young people to either income or reintegration support (Bekker et al. 2015). According to the 2012 Work and Social Assistance Act (Wet Werk en Bijstand, WWB), young people (aged younger than 27 years) have to wait 1 month before claiming social assistance for the first time, and they must search for a job (or education/training placement). The aim is to encourage them to either (re)engage with education or attach themselves to the labor market, thus avoiding becoming NEETs. A comparison of unemployment rates and ratios as well as contract types and transition speed between 2007 and 2015 suggests that youth labor demand has been negatively affected by the recent crisis in the Netherlands and even more so in France, leading to lower and more unstable employment. Conversely, Germany has experienced higher youth labor demand as a result of its exceptionally favorable economic situation, with improved labor market conditions in 2015 compared to 2007.

3.3.3. Liberal Cluster

Liberal youth transition regimes—the United Kingdom in this study—are characterized by a comprehensive education system, high flexibility, and fragmentation in post-compulsory education. VET delivery models are not standardized and are accessible through school-based programs combining academic study with vocational elements, broad vocational programs, or specialist occupational programs delivered at both school and the workplace.

VET focuses rather narrowly on delivering particular occupational skills, albeit with less specialization and lower quality standards than in the (p.83) employment-centered model. Indeed, the United Kingdom’s VET provision has been criticized as being too focused on basic skills and relatively low-level qualifications.

The liberal regime is also characterized by limited employer engagement in VET provision, with employers viewing themselves as “customers” of the education system as opposed to partners (Tassinari, Hadjivassiliou, and Swift 2016). In fact, the decoupling of the education system and labor market—as well as the lack of joint delivery or codesign of VET—has made skill mismatch a recurring concern. A significant minority still leaves secondary education without the necessary skills and qualifications to compete in the labor market.

Recent reforms in the United Kingdom—especially the Apprenticeship Trailblazer reforms—have attempted to increase employer involvement in designing and delivering apprenticeship standards (Hadjivassiliou et al. 2015). Although the policy intention is to foster a major change in the STW transition pattern (expanding apprenticeships and revamping technical education and VET), it is too early to assess whether this initiative will lead to a permanent path shift. Indeed, due its deeply entrenched structural characteristics—that is, a fragmented market-based skills system with high flexibility but variable quality, employer resistance to assuming a more active role as providers instead of consumers of VET, and lack of parity of esteem between vocational and academic qualifications—the United Kingdom’s VET-related policy has been suffering from a perennial implementation gap between policy objectives and reality, which is likely to continue (Tassinari et al. 2016).

Despite efforts to expand apprenticeships among young people in recent years, there has been a step-change in growth for those aged 25 years or older, with only a moderate increase in apprenticeship take-up among those aged 19–24 years and a fall in the number of apprenticeships available to 16- to 18-year-olds (Hadjivassiliou et al. 2015). As already argued, this expansion of apprenticeships has so far been more about formalizing adult workers’ skills than meeting the youth-related policy objective.

To date, the evidence is unclear as to whether increased employer ownership in the United Kingdom is enough to guarantee quality in the new apprenticeship standards (House of Commons Education Committee 2015). Even so, it is also acknowledged that the ongoing apprenticeship/VET reforms with the new emphasis on, inter alia, increased employer involvement in VET provision, greater standardization and coordination, and improved quality of apprenticeships/VET linked to a more general upskilling push—which is likely to become more pertinent post-Brexit—show signs of potential paradigmatic change in the United Kingdom’s STW system (Tassinari et al. 2016).

The United Kingdom’s educational attainment data reflect this cluster’s distinctive feature, namely the relatively minor role of VET. Indeed, “academization” is highest for both 20- to 24-year-olds and 25- to 34-year-olds across all countries reviewed (see Table 3.4). For this reason, employability is an important concern (p.84) for the United Kingdom’s youth-related policy, as reflected in the work-first focus of youth-related ALMPs.

The liberal cluster is characterized by low EPL: The United Kingdom’s EPL is one of the lowest in the OECD, resulting in a less segmented labor market—reflected, for example, in the (lower) proportion of young people in temporary employment, which, in 2014, stood at 14.7% for those aged 15–24 years (as opposed to an EU average of 43.4%; Eurostat 2015). However, weak EPL also helps give rise to hyper-precarious forms of employment such as zero-hours contracts, in which working hours are set by employer demand, leading to unpredictable/unstable income. This transfer of business risk from employer to employee is especially prevalent among young people; indeed, 36% of people employed on zero-hours contracts are aged 16–24 years (Office for National Statistics 2016).

ALMPs are not specifically targeted at young people, apart from some flagship initiatives (e.g., the Youth Contract program) targeting unemployed youth. Unlike the other clusters, subsidies play a minor role, with interventions mainly focused on supply-side measures (Hadjivassiliou et al. 2015). Although the United Kingdom’s benefits system is universal, benefit levels are low and subject to increasingly stringent conditionality. Welfare reforms implemented after 2010 are generally aimed at encouraging young people to exit the benefits system quickly and achieve early labor market (re)integration by making rules governing access to benefits stricter and more punitive.

Youth unemployment and long-term unemployment rates (see Table 3.2) are comparatively low, achieved—as explained previously—by low EPL and strong conditionality for benefits. Whereas this reduces rigidities that are harmful for STW transitions, it also creates unstable working conditions: The employment rate 3 years after completing education tends toward the average for all education levels through high job turnover (see Table 3.3). In general, the United Kingdom is characterized by rapid but unstable STW transitions. Due to low EPL for permanent contracts, temporary contracts are rarely used (see Table 3.3). The United Kingdom’s labor market seems to have performed relatively well in the recent crisis, although long-term unemployment remains considerably above the precrisis level and is recovering more slowly than short-term unemployment.

3.3.4. Subprotective Cluster

The subprotective model—Spain in this study—is characterized by nonselective and comprehensively structured compulsory education systems, albeit with relatively low-quality, underdeveloped VET and comparatively high early school-leaving (ESL) rates (Eurofound 2014). The structure of educational attainment reflects this cluster’s nonselective education system and weak VET role. Indeed, the Spanish education system is rather polarized in that it has the lowest level of ISCED 3–4 attainment for those aged 20–24 years, and especially for those aged 25–34 years (see Table 3.4).

(p.85) Education and training are centrally standardized, and the incidence of apprenticeships is comparatively low, although there have been efforts to make VET more flexible and more closely aligned to employers’ skill needs (González Menéndez et al. 2015b).

The distinctive characteristics of the subprotective model include the relatively high EPL levels for permanent employees, as well as the relatively ungenerous benefits system, which in turn reflects this cluster’s traditionally weak welfare state and limited benefit provision, especially to young people (Eurofound 2014). The Spanish labor market is highly segmented, with a high incidence of temporary employment, especially among youth, as a result of the gap in EPL between highly regulated permanent contracts and deregulated fixed-term contracts. However, whereas past reforms only reduced protection at the margins and thus increased segmentation, recent reforms also deregulated EPL for permanent contracts (González Menéndez et al. 2015b).

The employment rate 3 years after completing education in Spain is the lowest among all countries reviewed. In particular, individuals with medium or high educational attainment have to contend with comparatively low employment rates (see Table 3.3). This cluster’s institutional features tend to generate the greatest difficulties for labor market entry, given large shares of low-skilled entrants, comparatively high EPL for permanent jobs, and the absence of a comprehensive social safety net (Gangl 2001; Brzinsky-Fay 2007). This makes STW transitions complex, lengthier, and unstable.

ALMPs are relatively underdeveloped, with challenges arising from the weak institutional capacities of the Public Employment Services (PES), although improving ALMP delivery and strengthening activation constitute some of the main areas of recent policy intervention. Spanish ALMPs seek to improve young people’s skills or provide them with work experience (González Menéndez et al. 2015b). An increase in the supply of work experience and/or job placements for young people is pursued through hiring subsidies that reduce nonwage labor costs.

Institutional factors are overshadowed by a lack of labor demand in Spain as the main factor explaining poor performance in youth transitions. Indeed, the Spanish labor market was one of the most adversely affected by the recession and the ensuing severe fiscal consolidation efforts, which is why every indicator must be seen in the light of extremely low levels of youth labor demand.

Spain had the highest youth unemployment rate and ratio in 2015. The discrepancy between these indicators is high for those aged 20–24 years, and it is much higher than in 2007. Young people seem to be staying longer in education in view of the economic downturn (see Table 3.2). In addition, long-term youth unemployment, the NEET rate, and temporary employment are the highest in 2015 among the eight countries (see Tables 3.2 and 3.3). Aside from temporary employment, these indicators were close to or below the EU average in 2007, indicating how labor demand fluctuations can change our assessment of STW transition regimes.

(p.86) 3.3.5. Post-Socialist/Transitional Cluster

In both Estonia and Poland, compulsory education systems are comprehensive, with post-compulsory general education remaining a more popular choice than vocational education, partly because of VET’s poor reputation and excessive rigidity (Ślęzak and Szopa 2015). In 2015, Poland had the lowest levels of low-qualified youth and the highest rate of medium ISCED attainment among those aged 20–24 years, partly because compulsory education lasts until age 18 years. Educational attainment in Estonia is closest to the EU average (see Table 3.4). In both countries, NEET rates are also slightly below the EU average for those aged 15–24 years. However, NEET rates for 25- to 29-year-olds are close to the EU average in Poland and five percentage points below average in Estonia.

VET in Poland is mostly school based, whereas in Estonia it involves a greater share of company-based training, albeit still within a school-based delivery model. In Estonia, apprenticeships account for only approximately 2% of students, whereas they are marginally more common in Poland (European Commission 2015a). Employer involvement in VET is relatively low, although there have recently been efforts to increase employer engagement in VET. The linkages between the education system and the labor market are also weak, resulting in considerable skills mismatch (McGuinness, Bergin, and Whelan, this volume).

Similar to the United Kingdom, low incidence of work-based training increases the need for ALMPs to enhance youth employability, especially by providing financial incentives for employers to hire young people. Both countries also focus on specializing and standardizing education paths in line with labor market needs (Eamets and Humal 2015; Ślęzak and Szopa 2015). In both countries, the policy instruments used to support STW transitions include training and/or employment subsidies to increase the supply of work-experience placements. Whereas ALMPs in Estonia mainly concentrate on less educated youth, in Poland they also target highly qualified young people, given that graduate unemployment is quite high.

In both countries, welfare benefits are a mix of universal and contribution-based systems without any specific focus on young people. But they differ in relation to EPL: Estonia has relatively low EPL for permanent employment and relatively high EPL for temporary employment; in Poland, EPL is much stricter for permanent as opposed to temporary employment, making the latter more attractive for employers. The incidence of temporary employment in 2015 among 15- to 29-year-olds was extremely high in Poland (54%), whereas it was the lowest (8%) in Estonia among the countries reviewed (see Table 3.3). Institutional rigidity—which hampers adjustments to labor market changes—is one major impediment to smooth STW transition in Poland. The youth employment rate within 3 years after completing education corresponds to the EU average in both countries, when all education levels are considered together. (p.87) However, educational attainment in Poland is very important: Those with the lowest levels of educational attainment face similar labor market entry barriers as in France (see Table 3.3). This is related to the Polish education system, which produces the lowest proportion of young people with low educational attainment, who may face a crowding-out effect by more highly educated youth, leading to overqualification (see Table 3.4). In 2015, the Polish unemployment and long-term unemployment rates were close to the EU average. Estonian unemployment rates were among the lowest in the EU in 2015, although they had dramatically increased during the first period of the crisis. Both countries have recovered rather well from the crisis: Unemployment rates in 2015 are similar to those in 2007, and long-term unemployment rates have considerably declined (Table 3.2).

3.4. Institutions in flux: How are youth transition regimes changing?

Although the recession has been a global phenomenon, there are significant differences between countries regarding its depth, duration, and impact on young people (European Central Bank 2014). Whereas Germany, the Netherlands, and Austria consistently recorded youth unemployment rates of less than or approximately 10%, other countries fared much worse (with France and Poland recording rates of greater than 20% and Spain and Greece rates of greater than 50%; Hadjivassiliou et al. 2015).

After the recessionary years (2008–2009), the most important policy prescription recommended (or imposed—in Greece, Ireland, and Portugal) by the EU and the European Central Bank was “fiscal consolidation.” All the countries most severely hit by the economic downturn, notably Southern countries but also some in Central and Eastern Europe, were recommended to combine austerity policies to cut public deficit and debt with structural reforms (including labor market reforms—to introduce more “flexibility” combined with an expansion of ALMPs). This produced contradictory outcomes for young people. The resulting macroeconomic environment generated weak or insufficient labor demand in many member states—or, in the case of the subprotective cluster, dramatically reduced demand for labor—and further exacerbated young people’s labor market situation, given that they face more elastic labor demand relative to adult workers (Eurofound 2014; Eichhorst, Marx, and Wehner 2016; Grotti et al., this volume).

These developments have resulted in (1) a dramatic rise in youth unemployment in most countries; (2) lengthier, unstable, and nonlinear STW transitions; (3) a deterioration of youth employment quality combined with greater precariousness; (4) increased discouragement and labor market detachment; and (p.88) (5) greater labor market vulnerability of disadvantaged youth, such as the low skilled, migrants, and the disabled. Although recession-related economic deterioration and subsequent job-poor recovery account for such developments, these are also rooted in persistent structural deficiencies such as poorly performing education and training systems, segmented labor markets, and low PES capacity. The degree to which these deficiencies adversely affect young people varies considerably between and even within clusters, although a general deterioration in the length and quality of STW transitions is observed in all five clusters.

Against this backdrop, it is unsurprising that considerable policy action at the EU and national levels has focused on reforming the institutional arrangements that structure the STW transition process (Smith et al., this volume). In Section 3.4.1, we discuss some of the most notable institutional changes observed in 2007–2015 across the eight countries in the five clusters reviewed, including the implementation of the YG (2013 onward).4

In view of this changing policy landscape, some of the characteristics of each regime are in a state of flux, although more in some clusters (subprotective) than in others (universalistic). Moreover, competing trends of convergence and persisting divergence in different policy areas across clusters appear to be emerging. The implications of these ongoing processes of institutional change for the coherence and applicability of the existing typologies of youth transition regimes, as well as the quality of STW transitions, are assessed in Section 3.4.2.

3.4.1. Trends in Institutional Change and Convergence

Between 2007 and 2015, there was a change in governance structures, institutional frameworks, and actual policies and mechanisms associated with each STW transition regime across all countries in the five clusters. In many countries, the introduction of the YG in 2013 acted as a catalyst for structural reforms.5 We identify five areas in which institutional change was especially prominent in 2007–2015: the strengthening of ALMP and PES capacity, the decentralization and localization of governance and delivery of youth employment policy, targeting of NEET policies, reforms of VET and apprenticeships, and EPL reforms. Next, we discuss the parallel trends of convergence and persisting divergence in these policy areas across clusters.

3.4.1.1. Strengthening of ALMP and PES Capacity

The institutional field of ALMP was a focus of substantial policy innovation between 2007 and 2015, and it was subject to some contradictory trends regarding the trajectory of change. Countries in all five clusters have intervened to strengthen their ALMPs and related infrastructure, most notably PES, although this has not been matched overall by an increase in available resources.

The YG—the EU’s flagship youth employment program—has arguably been a potentially important driver of change in this area. Its implementation combines (p.89) measures to help young people into employment in the short term with comprehensive structural reforms aimed at introducing systemic change in the structuring of STW transitions. These include introducing properly designed activation policies, well-functioning PES, cross-sectoral partnerships, multiagency working and outreach measures aimed at NEETs and disengaged youth, and effective VET and apprenticeship policies (European Commission 2015b).

In Estonia, France, Poland, and Spain, the implementation of the YG has involved PES restructuring to provide young people with individualized support, foster better links with both employers and education and training providers, and adopt a more targeted and proactive approach toward supporting NEETs (European Commission 2015b). It seems that the YG has improved the capacity of the Spanish PES to play a more active role in addressing youth unemployment (González Menéndez et al. 2015b).

The countries reviewed have also introduced new or have strengthened existing ALMPs and brought about changes in their activation models. In some cases, this emanated from the YG’s focus on properly designed activation policies, whereas in others such reforms were enacted independently. For example, the YG’s specific focus on young people’s integrated STW transitions represents a departure from Estonia’s traditional lack of labor market policies targeted at youth. As such, it arguably represents a “new way of doing things,” especially by focusing on increasing the combined effect of different measures for vulnerable youth (Eamets and Humal 2015). Focusing even more on early intervention and activation, Sweden’s government has reinforced its YG with a gradual introduction of a 90-day guarantee (Wadensjö 2015; Forslund 2016). Moreover, there is a much stronger focus on closer cooperation between Swedish central and local government (and PES) to ensure that youth-related ALMPs have greater impact at the local level.

Independent of the YG, the United Kingdom also implemented a raft of youth-related ALMPs such as the Youth Contract, introduced in 2012 with a strong focus on early activation and/or education and training. Similarly, in the Netherlands, there has been a distinct reinforcement of activation combined with severe restrictions to benefit access for youth aged 18–27 years following the 2009 Investment in Youth Act (Eichhorst and Rinne 2014).

Although the YG concept—including its focus on early, personalized, and integrated interventions—has been welcomed, its implementation across the EU has unsurprisingly been patchy and uneven (Bussi 2014; Eurofound 2015; Eichhorst and Rinne 2017). Reflecting the different institutional setups, labor markets, and economic structures and performance, the scope for YG-related change at the national and/or regional level has varied considerably. In Germany and the Netherlands (employment-centered cluster) and Sweden (universalistic cluster), the focus of the YG has been on the continuation, upscaling, and improvement of existing measures, as well as on improved cooperation and cross-agency working, rather than on any major change (Weishaupt 2014; Düll 2016). (p.90) In Spain (subprotective cluster), the YG led to some policy innovation and provided the framework whereby local initiatives already in place were formalized as part of its implementation (Petmesidou and González Menéndez 2016; see also Petmesidou and González Menéndez, this volume).

However, the EU funds earmarked for the YG are viewed as being inadequate for its effective implementation (Dhéret and Morosi 2015; Eurofound 2015; International Labour Organization 2015; Eichhorst and Rinne 2017). The uneven absorption capacity of these funds across the EU—especially at the regional level—combined with a lack of mobilization of some countries has cast further doubt on their ability to successfully implement the YG (Bussi 2014; ETUC 2016).

These examples point to the emergence of a partly contradictory trend, in which changes in policy design to strengthen ALMPs’ effectiveness have not been matched by adequate increases in capacity. With the exception of Germany and—to some extent—Sweden, in most other countries reviewed (EE, ES, NL, PL, and UK), such efforts have not been accompanied by an increase in funding commensurate to the magnitude of youth unemployment. In Spain—where youth unemployment rose dramatically during the Great Recession—substantial fiscal consolidation linked to its austerity program has led to PES recruitment freezes and thus affected PES capacity to help increasing numbers of young jobseekers (European Commission 2016). Likewise, the Polish PES did not receive additional funds (Ślęzak and Szopa 2015). Estonia, one of the countries with the most severe austerity, experienced adverse implications for PES capacity (Eamets and Humal 2015).

This focus on PES capacity indicates potential convergence regarding policy objectives across clusters. However, the ability of a PES to actually strengthen links and cooperation with both employers and education and training institutions is highly variable, often limited, or even missing (Dhéret and Morosi 2015). In both Spain and France, there has been concern about PES’s capacity to adequately service the large number of unemployed young people (European Commission 2016). However, concerns about capacity in the delivery of ALMPs extend beyond PES. In Sweden, there are concerns that reinforced municipal responsibility for youth-related activation measures has not been accompanied by a commensurate realignment between municipalities and centrally financed PES for financial incentives for ALMPs, thus limiting the municipalities’ outreach capacity (European Commission 2016).

3.4.1.2. Decentralization and Devolution of Responsibility

The extent to which major changes regarding governance structures and/or institutional frameworks underpinning STW transitions were implemented as a result of the YG varied across contexts, largely depending on the pre-existing institutional setup. However, across the clusters we can observe convergence in terms of greater decentralization and devolution of responsibility for supporting (p.91) effective STW transitions at the local level, combined with greater autonomy and flexibility in addressing the specific needs of young people, especially NEETs.

In Germany and the Netherlands, where the YG can be considered an upscaling of existing measures, change has mainly occurred in the form of ongoing decentralization and localization of the responsibility for supporting STW transitions from the national to the local level. The objective is to enhance the cooperation and cross-agency working of local partnerships and to provide more integrated services to disadvantaged youth (Düll 2016). In the Netherlands, the responsibility for delivering employment and youth care services has shifted since 2015 to local authorities (Bekker, van de Meer, and Muffels 2015; Bekker et al. 2015). In Germany, municipal-level initiatives such as the Jugendberufsagenturen in Hamburg have developed effective local models of one-stop shops offering integrated, multiagency services to young people (Gehrke 2015).

Although municipalities (and the state) have always been the main actors for youth-related policies in Sweden (Wadensjö 2015), their activation responsibility has been strengthened since January 2015, as they are now directly responsible for activating early school-leavers and following up NEETs for targeted support (Forslund 2016). Devolution is also occurring in the United Kingdom, where local authorities now have formal responsibility for tracking young people’s participation in education or training and for supporting NEETs in finding suitable training (Hadjivassiliou et al. 2015).

There seems to be convergence—sometimes instigated by YG implementation rules—in setting up broader stakeholder partnerships to offer integrated services, especially to youth at risk. Most countries are improving or setting up new governance structures, such as stronger partnership working arrangements and broader stakeholder engagement to address fragmentation in youth-related policies (Eurofound 2015; International Labour Organization 2015). For example, the introduction of the YG in Spain has led to better PES coordination between different levels of government and improved interregional cooperation (European Commission 2016) while providing a new framework for policy transfer across several government levels (González Menéndez et al. 2015a; Petmesidou and González Menéndez, this volume). Nonetheless, such broader stakeholder involvement and partnership working is not always easy to achieve in contexts with no tradition, structures, or mechanisms for cross-agency collaboration (e.g., France and Poland).

Both Estonia and France have strengthened partnership working across government agencies (European Commission 2016). For example, Pôle emploi (French PES) and missions locales (local PES for youth) are negotiating an agreement to improve their partnership working and provide adequate services to young people (European Commission 2016). How successful this attempt will be is debatable. The coordination of actors has historically been problematic within the fragmented French STW transition system, which lacks an overarching coordinating structure and integrative logic (Smith, Toraldo, and Pasquier 2015; (p.92) European Commission 2016). Similarly, in Poland, the YG has stimulated enhanced cooperation between local-level employment offices (Poviat) and a wide range of organizations, such as academic career centers, local Voluntary Labor Corps (Ochotnicze Hufce Pracy (OHP)) units, social welfare centers, and schools (Weishaupt 2014). However, effective cooperation between PES and OHP regarding youth-related ALMPs remains a challenge (European Commission 2016). Early indications regarding YG implementation show that social partner and youth organizations’ involvement has been very limited in most countries (Dhéret and Morosi 2015; Eurofound 2015).

3.4.1.3. Targeting of NEET Policies: Addressing Low Skilling and Early School Leaving

Another common pattern across clusters has been a stronger focus on NEETs, early school-leavers, and other at-risk youth groups (low qualified, from an ethnic minority/migrant background, or from a lower socioeconomic/disadvantaged background).

Education-related reforms have addressed low educational attainment. Policy interventions across all clusters have focused on reducing ESL age so that young people obtain the minimum labor market entry requirement of at least an upper secondary education qualification (European Commission 2015a; Hadjivassiliou 2016). In Spain, the 2013 education reform (Ley Orgánica para la Mejora de la Calidad Educativa) sought to reduce ESL by allowing those aged 15–17 years to enroll in basic professional training to obtain the upper secondary school qualification and eventually access higher level training (González Menéndez et al. 2015a, 2015b). In Sweden, given the large share (approximately 25%) of youth who have not successfully completed upper secondary education, so-called “education contracts” were introduced in 2015 to encourage unemployed young people aged 20–24 years to complete their upper secondary education (Wadensjö 2015; Forslund 2016).

There has also been an increased focus on targeting NEETs across all clusters (Mascherini, this volume). Training and education or activation measures, rehabilitation programs, more integrated services, and outreach activities to identify, register, and (re-)engage NEETs have all been used. This is crucial given the large numbers of NEETs who are not registered with PES and cannot access YG-related and other supportive interventions. Although many countries—including Spain and Germany—have set up online outreach tools, the engagement of unregistered, “hardest-to-reach” youth through grassroots actions (e.g., street outreach work) and multiagency working remains less common (Eurofound 2015; Hadjivassiliou 2016). This constitutes a serious limitation because online outreach tools (e.g., using Facebook and other social media and/or designated online platforms/portals to reach out to NEETs) cannot replace face-to-face interaction, especially when it comes to youth with more complex problems (International Classification of Functioning 2015).

(p.93) Overall, it is fair to say that in many cases, the YG has provided an additional impetus in focusing on NEETs, although the actual implementation in countries with high youth unemployment falls short of initial expectations.

3.4.1.4. VET and Apprenticeships

VET and apprenticeships suggest elements of convergence across clusters, although changes may be confined to policy objectives rather than actual outcomes. There has been a universal effort to reform or strengthen the role of VET/apprenticeships in STW transitions, although the extent of change seems to be more far-reaching—at least in terms of policy intention—in the subprotective cluster (European Commission 2015a; González Menéndez et al. 2015b). Spain has recently embarked upon a major education reform to improve the links between its education system and the labor market. Royal Decree 1529/2012 laid the foundations for the gradual introduction of the dual-training principle in Spain’s VET and sought to foster greater participation by companies (González Gago 2015; González Menéndez et al. 2015b). Recent education reform introduced more vocational pathways in lower secondary education and a new 2-year VET module to address ESL (González Gago 2015).

Since 2013, the United Kingdom (liberal cluster) has been implementing a major VET and apprenticeship reform. Apprenticeship Trailblazers seek to put employers at the heart of the apprenticeship system, representing a potential paradigm shift within the UK context (Tassinari et al. 2016). The reforms aim to promote VET and associated career pathways as a high-quality option and to expand apprenticeship take-up (Hadjivassiliou et al. 2015). Similar VET/apprenticeship reforms have been introduced in Estonia (2013), Sweden (2014), and France (2013 and 2014).

VET and apprenticeships may potentially become more important STW transition mechanisms, even in the liberal (UK) and the subprotective (ES) clusters, where they have traditionally been underdeveloped. However, introducing apprenticeship/VET reforms at the policy design level is not sufficient to bring about deep-seated institutional change. This requires a change in the attitude of training providers and employers, as well as increased partnership working between the two, which is not easily achieved in countries lacking such a tradition of cooperation, such as France, Poland, Spain, and the United Kingdom (Eurofound 2015; Hadjivassiliou, Tassinari, and Swift 2015; Ślęzak and Szopa 2015; Smith et al. 2015).

VET reforms also require strong and unequivocal employer support in terms of offering an adequate supply of quality placements and associated training (Eichhorst 2015). Change is also required in the attitude of young people and their families, whereby apprenticeship/VET is not viewed as a second-best option. Nonetheless, VET still suffers from a rather poor image in the subprotective (ES), post-socialist (EE and PL), and liberal (UK) clusters (Eamets and Humal 2015; González Menéndez et al. 2015b).

(p.94) There is also concern about the education and training systems’ ability to quickly adapt in line with the new VET/apprenticeship reforms to deal effectively with the current cohort of unemployed youth, as well as the gap between employer demand and the VET system’s ability to respond satisfactorily (Eurofound 2015). These factors may act as barriers to deep institutional change in this policy area.

3.4.1.5. Flexibilization of Youth Labor Markets and EPL Reforms

Persistent labor market segmentation is evident across all five clusters, although the trajectory of change seems to be one of convergence toward greater “flexibilization,” along with the loosening of EPL for prime-age workers rather than greater security. Reforms of EPL have focused on achieving a better balance in protection between those on permanent and those on temporary contracts, thus reducing existing dualisms. In the Netherlands, EPL changes since July 2015 seek to strengthen the position of workers on temporary contracts (Bekker et al. 2015). Similarly, in Spain, following the 2010 and 2012 labor market reforms, the deregulation of EPL for permanent contracts has reduced the dualism between temporary and permanent employment protection (González Menéndez et al. 2015a). The Estonian Employment Contracts Act (2009) introduced major reforms aimed at increasing labor market flexibility. In France, highly controversial and politically difficult EPL changes have proved to be more limited but in any case have sought to reduce labor market dualism.

However, it is too soon to gauge the impact of these changes on youth labor markets, especially against a backdrop of limited labor demand in some of the countries examined. More worryingly, existing evidence suggests that the share of temporary contracts among youth has even increased in countries (FR and ES) that deregulated EPL during the crisis (Eichhorst et al. 2016; Grotti, Russell, and O’Reilly, this volume). The available evidence suggests that attempts to loosen EPL for permanent contracts in highly dualized labor markets (FR and ES) are likely to result in worsening working conditions and more unstable employment for all workers rather than in easier STW transitions (Eichhorst and Rinne 2014; González Menéndez et al. 2015a, 2015b). Even the traditionally better performance of some STW regimes seems to come under question, with temporary, precarious employment rates increasing among young people in countries such as the Netherlands, thus pointing to a potential convergence toward lower quality of transitions across the board.

3.4.2. Assessing the Impact of Institutional Change on Youth Transition Regimes

The ongoing processes of institutional change in the targeting, design, and governance of ALMPs, the status of VET systems, and the design of EPL institutions are leading to a reconfiguration of European youth transition regimes. The five convergence trends in the trajectory of policy change during the crisis are (p.95) accompanied by persisting divergence in institutional and fiscal capacity across countries that—together with dynamics of institutional path dependency—affect the depth and effectiveness of reform implementation and thus raise doubts about the possibility of substantial institutional change occurring in the short term.

Nonetheless, our analysis suggests that the STW transition regimes defined by Pohl and Walther’s (2007) typology may be in a state of flux as a result of policy developments during the recent crisis. Rubery’s (2011) “regime hybridization” concept is relevant here for capturing the nature of the ongoing institutional changes affecting the structure of youth transition policy regimes in Europe. Indeed, recent policy developments are blurring the distinctions between regimes and potentially altering the underlying logic structuring youth transitions in each cluster. Countries across all regimes have recently adopted reforms in regulation and policy instruments that do not belong to their “traditional” institutional legacy as captured by Pohl and Walther’s typology. Furthermore, a tendency toward greater liberalization of employment regulation has been accompanied by increased policy activity in “new” areas, such as ALMPs, to address existing gaps in support and protection, in line with the trajectory identified by Rubery for European welfare regimes as a whole.

For example, reforms of VET and apprenticeship systems have achieved prominence in countries in the liberal and subprotective clusters, where these instruments have traditionally been secondary in importance, while at the same time the sustainability and effectiveness of VET have faced challenges in the employment-centered and universalistic cluster countries, where VET has traditionally been more established. The increased focus on “supportive” and targeted ALMPs—traditionally characteristics of the universalistic cluster—is now spreading to countries where such instruments were considerably less developed, such as those belonging to the subprotective and post-socialist clusters, largely as a result of the policy convergence process driven by the YG. At the same time, processes of labor market flexibilization are changing the institutional architecture of employment regulation toward greater liberalization across the board, including in countries traditionally characterized by entrenched dualisms in protection (i.e., subprotective or employment-centered clusters).

Although developing revised typologies was not an objective of our analysis, our findings show that it is necessary to consider institutional configurations and “clusters” as being dynamic, while continuing to devote attention to processes of institutional and structural change that may be altering the underlying logic of distinct youth transition regimes over time.

Although the limited number of countries in our sample did not allow us to systematically explore the internal “coherence” of the different youth transition regimes outlined by Pohl and Walther (2007), our analysis has shown that considerable variation exists across countries, even within clusters that share common underlying logics of institutional configuration. This suggests that (p.96) although the “youth transition regime” concept can act as a useful heuristic, analytical device, generalizations at the cluster level in terms of performance need to be examined judiciously.

In terms of impact on performance, most reforms introduced in the aftermath of the Great Recession are very recent, making it difficult to estimate their potential to contribute to positive changes in the future quality and speed of STW transition to tackle performance challenges. However, some preliminary remarks can be made. In the universalistic cluster, where the main challenge arises from the difficult labor market integration of specific groups of disadvantaged youth, current efforts to improve the speed and targeting of activation measures may prove helpful. In the employment-centered and subprotective clusters, where a key youth-related challenge arises from high levels of labor market segmentation, the current policy trend of greater labor market flexibilization may actually be counterproductive in ensuring fast and secure transitions. Indeed, it has already resulted in higher levels of temporary and precarious employment—at least in the short term (Eichhorst et al. 2016).

Increasing PES capacity and strengthening ALMP comprise another fundamental area of intervention to help disadvantaged youth across clusters, especially in the subprotective and post-socialist regimes. Likewise, reforming VET to increase linkages between education and the labor market could help address the skills mismatch pervasive in the subprotective and liberal clusters. However, the depth of policy change in these areas remains limited by dynamics of institutional path dependency and the low availability of resources for effective implementation. The overall emerging picture is thus one in which policy changes aimed at strengthening supportive policy instruments—such as expanding ALMP and PES capacity and strengthening VET systems—are currently limited in their reach and potential effectiveness. At the same time, the trends of liberalization and deregulation of protective institutions, such as EPL, contribute to making young people’s STW transitions potentially more unstable, at least in the short term.

3.5. Conclusions

Our comparative analysis has shown that countries’ institutional configurations matter considerably in shaping the structure of young people’s STW transitions and in mediating the impact of the Great Recession on youth unemployment. Drawing upon Pohl and Walther’s (2007) concept of “youth transition regime” as a heuristic framework for comparison, we have assessed the performance of countries belonging to different clusters regarding the speed, ease, and quality of STW transitions. The divergence in performance between countries belonging to different regimes—which had already started in 2007 and has accelerated (p.97) since 2009—shows the important role of institutional arrangements in shaping STW transitions in the fields of employment regulation, education and training, and ALMP.

In line with existing evidence, well-integrated VET systems with strong employer involvement and clear labor market connections alongside supportive ALMPs have emerged as important institutional characteristics that have historically facilitated the comparatively better performance in STW transitions of the universalistic (SE) and employment-centered (DE and NL) clusters. Therefore, it is unsurprising that recent policy interventions introduced by European countries during austerity, including the YG initiative, have focused on strengthening these two institutional areas. In VET, the focus has primarily been on expanding apprenticeships as a transition route and increasing linkages between training systems and the labor market by enhancing employer involvement. In ALMP, policy intervention has focused on improving PES capacity and diversifying existing activation measures to provide more personalized support to unemployed youth, including NEETs. Given the well-documented “scarring” effects of NEET status, this renewed NEET focus is welcome, as is the tailoring of responses across clusters in recognition of the NEET population’s heterogeneity (Mascherini, this volume; Zuccotti and O’Reilly, this volume).

These areas of policy change could be viewed as a potential sign of convergence across regimes in terms of their underlying logic of STW transitions. However, the extent to which such policy changes can become embedded in other contexts crucially depends on existing institutional and coordination capacity, as well as the availability of resources. Indeed, VET systems are complexly interwoven within the broader institutional fabric, with the evidence suggesting that the potential for far-reaching change may be limited by dynamics of institutional path dependency (e.g., the lack of established mechanisms for social partner engagement and coordination). Likewise, the absence of pre-existing institutional infrastructures of coordination in numerous countries jeopardizes the success of attempts to improve PES capacity and establish effective partnership working between different agencies to engage difficult-to-reach youth.

Resource limitations—both fiscal and in terms of actors’ capacity—also act as a barrier to more deep-seated institutional change, potentially making the transfer of “good practice” across regimes inherently difficult. Despite EU funding, in most cases reforms are being introduced against a backdrop of tight public finances and spending cuts, which undermines the effective implementation of policies such as the expansion of ALMP and PES capacity. Moreover, in the context of a fragile economic recovery in many countries—or second-dip recession in a few—employer capacity to provide training places (e.g., apprenticeships) and jobs to young people may be limited (Eurofound 2015).

Employment regulation has also emerged from our analysis as a key factor affecting the quality and nature of STW transitions. Differential levels of EPL (p.98) between temporary and permanent employment have led many countries—especially in the subprotective and employment-centered clusters—to entrenched labor market segmentation, with young people being increasingly confined to the labor market’s temporary segment. Since 2010, many countries have tried to tackle segmentation by deregulating permanent contracts (Eichhorst et al. 2016). Despite being more pronounced in the most segmented countries, such as France and Spain, this has also occurred in better-performing countries such as the Netherlands. While reducing segmentation, excessive flexibility can lead to low employment quality and high precariousness, as the experience of the liberal and post-socialist clusters shows. The trend emerging from reforms implemented during the Great Recession thus seems to point toward greater labor market flexibilization, which is not promising in terms of ensuring that transitions are stable and secure in the long term. Balancing flexibility and security in youth labor markets represents a key outstanding challenge that is yet to be fully confronted in all clusters.

Although institutional configurations are very important in shaping the structure, nature, and effectiveness of STW transitions, the performance of countries is also significantly shaped by macroeconomic trends, especially by levels of demand for youth labor. Divergence between countries in economic performance accounts for many of the observed differences with regard to the performance of youth labor markets. The comparatively positive performance of the Polish youth labor market is largely explained by the fact that Poland did not fall into a recession. Likewise, Germany, the Netherlands, and Sweden started recovering from the recession relatively sooner compared to the other countries, accounting for their comparatively better performance in youth employment.

In a context in which youth labor demand remains low, policy interventions focused solely on the supply side or that encourage flexibility will remain limited in their effectiveness. Our analysis illustrates how the institutional configurations of STW regimes in Europe are “in flux.” The validity and applicability of established typologies, such as that of Pohl and Walther (2007), are limited in the present historical phase because of ongoing dynamics of regime hybridization (Rubery 2011). Current trends of emerging “convergence” across clusters in the design of youth-transition policy instruments may alter the logic of transition systems across regimes in the long term, making a new conceptualization of youth transition regimes necessary. However, currently, this institutional change remains limited in terms of impact and superficial in terms of actual implementation. Differences in performance across regimes persist, with some faring better than others, although at the same time a common, worrying trend can be identified across clusters: a progressive deterioration of the quality of youth transitions across the board, despite the positive policy intentions to strengthen and improve the efficacy of transition regimes.

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Notes:

(1) Although we are aware of the importance of other policy instruments such as in-work benefits, which may act as pull factors for what concerns the labor market transitions of young people, we are unable to address them in this chapter due to space constraints (see Smith et al., this volume).

(2) This chapter is based on seven in-depth case studies completed in 2015. See STYLE Working Papers, WP3, Country reports, CROME. http://www.style-research.eu/publications/working-papers.

(3) The different indicators capture different aspects of youth labor market performance. High youth unemployment rates reflect young people’s difficulties in securing employment. However, this does not mean that the number of unemployed young people (aged 15–24 years) is large, because many in this age group are in full-time education (i.e., inactive). This may make meaningful comparisons between different countries difficult (Wadensjö 2015). A more reliable indicator is the youth unemployment ratio (O’Reilly et al. 2015).

(4) Although the introduction of the YG by the European Commission in 2013 has been welcome, it has been subject to a number of criticisms, not least that it was introduced quite late and was accompanied by inadequate financial resources (Dhéret and Morosi 2015). According to International Labour Organization (2015) estimates, the proper implementation of the YG in EU28 requires spending of approximately €45 billion, whereas the available EU financial support—under the Youth Employment Initiative, which is funding the implementation of the YG across the EU—amounts to €6.4 billion.

(5) All the country reports on the YG mentioned here were published by the European Commission in 2016 on the website http://ec.europa.eu/social/main.jsp?catId=1161.