PwC Young Workers Index 2017

14 December, 2017

Young workers face increased challenges in an age of automation

  • Findings show potential US$1.2 trillion boost to OECD economies in the long term through improving young workers’ skills, enrolment in education and job opportunities.  Ireland would receive a GDP boost of €10 billion (or 3.6%) in the long term if it lowered its young workers not in education, employment or training (NEET) to the same level as Germany, one of the top performers in the Index.
  • Switzerland, Iceland and Germany are the top ranked OECD economies in PwC’s Young Workers Index for second year in a row based on a range of employment, education and training indicators.
  • Across OECD countries existing jobs for young workers could be at risk of automation by the early 2030s.  Overall, however, we see offsetting job creation for young workers giving a broadly neutral impact across the OECD in the long run. There will be considerable disruption to labour markets in the process and it will require retraining and other support to those who lose their jobs to help them find work elsewhere.
  • Enhanced vocational training and particularly STEM skills are needed to make young people adaptable enough to thrive in an increasingly automated world.

Findings published in the PwC Young Workers Index 2017 compare levels of participation in employment, education and training of 16-24 year olds across 35 OECD countries. The report also considers what policy lessons can be learnt from the top performers and focuses in particular on the longer-term challenges and opportunities posed by automation. 

Across the OECD, findings from the study include:

  • Latest available information shows that the proportion of young workers not in education, employment or training (NEET) is back down to its pre-crisis levels of around 17% on average across the OECD. However, youth unemployment levels remain high in many countries, notably in Southern Europe.  Ireland’s NEET rate for 20-24 year-olds is 17% (from 26.1% in 2011), compared to the OECD average of 17% and 9% in Germany.
  • On average, students from lower socioeconomic backgrounds are three times more likely not to achieve a baseline level of proficiency in science.
  • This disparity is especially pronounced for young men with low education levels, who could face risks of automation of up to 50% by the early 2030s, as compared to only around 10% for both male and female university graduates.
  • Reducing NEET levels across OECD countries to the same level as Germany, one of the top performers in the index, could boost total OECD GDP by around US$1.2 trillion in the long term.

John Hawksworth, PwC Chief Economist comments: “Automation through technologies like AI and robotics will boost productivity and wealth, and so create many new opportunities for young people with the right skills. However, our analysis also shows that many young people with lower education levels—and particularly young men in sectors like retail, transport and manufacturing—could face major challenges from automation if they do not upgrade their skills over the course of their careers. A focus on providing young people with the right education and vocational training will be critical to preparing them for the more automated workplace of the future.”

Overall, Switzerland, Iceland and Germany hold the top three spots in the PwC Young Worker’s Index. Countries such as Germany have further improved their already high index scores this year as youth unemployment and NEET rates have fallen further. The US, UK, Czech Republic, Canada and Poland are amongst those countries that have risen in the rankings since last year, as this table shows.

Gerard McDonough, Director, People & Organisation, PwC Ireland, commented:  “Ireland has consistently improved its ranking since 2011, although it still ranks 26th out of 35 OECD countries.  The key reason for the relatively lower score is due to Ireland’s relatively high proportion of young workers not in education, employment or training, though has improved since 2011.  As a nation, and in the light of many businesses experiencing skills challenges, Ireland has some work to do to ensure our young people are equipped with the skills needed for a digital world including providing the right training and education.”

Ciara Fallon, Director, People & Organisation, PwC Ireland, said: “In relation to the longer-term challenge of automation, the study finds that young workers who tend to start out in part-time employment within the retail, accommodation and food service industries face relatively high risks of these entry-level jobs being automated by the early 2030s.

“By contrast, young workers with strong science, technology, engineering and mathematics (STEM) skills should be less at risk from automation across most OECD countries. STEM-focused sectors remain a relatively small employer of young workers but demand for these skills is rising fast, leading to a skills gap. More needs to be done to address gaps in STEM skills, particularly for young people from more disadvantaged backgrounds, if new digital technologies are not to add to income and wealth inequalities in the long run.”

John Hawksworth, PwC Chief Economist comments: “There are lessons to be learned from the top performing countries in our index, such as Switzerland, Germany and Austria with their strong vocational training programmes for young people.

“Countries with strong STEM skills, such as Japan, also perform relatively well in our index and could move further ahead as technological advances put a greater premium on these kinds of skills. Our analysis shows that other countries could make large economic gains from greater investment in these areas.”

Notes to Editor:

  1. Methodology: The PwC Young Workers Index is a weighted average of eight indicators, including NEET rates, employment and unemployment rates, incidence of long-term unemployment, school drop-out rates and educational participation rates. The age range covered is generally between 15 and 24, but varies as appropriate by indicator.
    These indicators are normalised, weighted and aggregated to generate index scores for each country. The index scores are rescaled to values between 0 and 100, with the average value across all 35 OECD countries set, by definition, to 50 in 2006. Index scores were also calculated for 2011, 2015 and 2016 (or the closest years for which internationally comparable data were available).
  2. Further details of the methodology, including the calculation of potential long-term boosts to GDP from lower NEET rates, is contained in the full report. This will be available from 11 October at www.pwc.co.uk/youngworkers.

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Ciara Fallon
Director, PwC Ireland (Republic of)
Tel: +353 1 792 8857
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Gerard McDonough
Director, PwC Ireland (Republic of)
Tel: +353 1 792 6170
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Johanna Dehaene
Corporate Communications, PwC Ireland (Republic of)
Tel: +353 1 792 6547
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