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April, 2013
Our starting point
Youth (15-24) unable to find a job
Employers reporting difficulty
finding talent
Our ongoing global research
2012 Survey
2013 Survey
Country-specific analysis
~8,000 youth
~5,000 employers
~1,500 post-secondary
education providers
100 case studies covering
25 countries
Only one in two youth believe their education
improved their chances of finding a job
% of respondents agreeing
60%
Saudi Arabia
59%
Brazil
54%
India
53%
Germany
51%
Mexico
46%
Turkey
Morocco
44%
United States
44%
United Kingdom
40%
Average:
50%
39% of employers say skills shortages are a
leading driver of entry-level vacancies
Lack of skills as common reason for entry-level vacancies
Percent of employers respondents
56
Turkey
53
India
48
Brazil
45
United States
40
Mexico
38
Saudi Arabia
32
Germany
30
United Kingdom
Morocco
12
Average: 39%
36% of employers also
reported a lack of skills caused
“significant problems in terms of
cost, quality, and time” or worse
Demand for university and vocational labor in China is
expected to exceed supply by ~24 million workers in 2020
China labor demand and supply by education level, 2020E
Million workers
Gap
Million workers Percent1
University
Vocational
Secondary
Primary or lower
821
62
79
823
54
63
-8
-13
-16
-20
3
1
23
14
514
511
169
192
Demand
Supply
1 Gaps are percent of demand for shortages, and percent of supply for surpluses
NOTE: Numbers may not sum due to rounding
SOURCE: China National Bureau of statistics; McKinsey Global institute analysis
If China does not close its high-skilled labor gap, China
could face an opportunity cost of ~$250B, or 2.3% of GDP in
2020
GDP impact of China tertiary labor gap, 2020
Tertiary labor gap
Millions of workers
Vocational
University
Total tertiary
SOURCE: National Bureau of statistics; McKinsey analysis
16
GDP impact
USD billions
GDP impact
Percent
145
8
1.3
113
24
1.0
258
2.3
The education to
employment journey
is fraught with
obstacles
We have framed youth’s
journey from education
to employment in
three “intersections”
Enrollment
Finding a job
Can young job
seekers find open
Are enough youth
being trained for the
job market?
positions?
Building skills
Is training giving
youth the right
skills?
8
Preparation of new graduates
for the workforce
Employers
42%
72%
Providers
Youth
45%
% who agree youth are adequately prepared
The perception challenge of vocational
education
Value of program types
Vocational/skills program
Academic program
100%
Most helpful for
getting a job
69%
Personally prefer
to pursue
More valued
by society
Actually
attended
31%
52%
36%
30%
48%
64%
70%
2
Taking a segmented
approach to tackling
unemployment
2 out of 7 youth segments have positive
outcomes
Unemployment Rate:
10-19%
20-39%
40%+
(% of youth in segment)
Not well
informed
Well-positioned (20%)
“I’m focused and prepared”
Disheartened (17%)
Driven (18%)
“I know enough to not care”
“I’m motivated because I know
education matters”
Disengaged (18%)
Struggling (26%)
“I don’t care to know much”
“I want to know more”
Too cool (57%)
Too poor (43%)
“I’m not interested in attending
post-secondary”
“I’d like to go to post-secondary,
but can’t afford to”
Care a little
Care a lot
Post-secondary
Moderately
informed
Sizable and distinct segment
not identified
High school
Well
informed
Countries have different mixes
of post-secondary youth segments
Well-positioned
Driven
Struggling
Disheartened
Disengaged
% of respondents
22
14
10
20
21
20
8
27
19
43
21
29
6
31
18
21
26
27
13
26
30
34
23
24
25
18
15
Brazil
20
18
16
13
13
22
10
25
27
18
21
Germany
14
India
18
17
40
6
10
10
Mexico
14
Morocco
Saudi
Arabia
16
Turkey
20
21
18
United
Kingdom
United
States
Grand
Total
Only one out of the three employer segments
is engaging heavily – and seeing results
31%
of employers
25%
of
employers
Positive
outcomes
44%
of employers
SEGMENT
1: STALLED
SEGMENT 2:
NEUTRAL GEAR
Level of engagement
SEGMENT 3:
RACING
3
Creating a successful
education to employment
system
Three success factors
Employers and education providers
actively stepping into each others worlds
Innovation in delivery of education and
training
Designing a system that works
16
Successful programs are all defined by
education providers and employers actively
stepping into one another’s worlds
Employers “pre-hiring” before
enrollment or providers with
off-take agreements
Co-developing curricula to
ensure industry relevance
Providers bring the workplace
to the classroom through
apprenticeships and simulations
Regular feedback from industry
on graduates
17
MOOCs as one piece of a broader puzzle
Delivering education to India’s vast
rural population
Tech-enabled remote teaching
centers
Digital test preparation with
pre-loaded tablets
% of urban population
Over 50%
25-29.9%
45-49.9%
20-24.9%
40-44.9%
15-19.9%
35-39.9%
Under 15%
30-34.9%
SOURCE: Geocurrents
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Making education-to-employment success
systemic requires new incentives and structures
#1
#2
#3
Better data
collection and
dissemination
More sector-wide
collaborations
Creation of an
education to
employment
“system integrator”
to educate
stakeholders, build
transparency and
manage performance
to build industry
consensus and share
costs of improving
education
that coordinates,
catalyzes and
monitors activity
“System integrators” vary in scope and mandate,
but are typically played by government
Private sector
Oil and Gas Industry
National Skill Development
Corporation, India
Prominp, Brazil
Unemployed segment
Country
Federal Labor Agency, Germany
Australian Workforce and
Productivity Agency , Australia