PwC Study: Improving Vocational Training Would Lead to Billions in GDP Growth

PwC Study: Improving Vocational Training Would Lead to Billions in GDP Growth

In its 2017 Young Workers Index, PwC surveyed the economies of the 35 OECD member countries, creating an indexed ranking of the countries’ expected productivity from younger workers. Switzerland, Iceland, and Germany, were the top three, while the US finished 12th and the UK landed in 18th: both moved up two spots from last year’s rankings.

Germany’s result is probably the most impressive given that it also has the fourth-highest GDP in the world. The US has the world’s largest GDP while the UK is fifth in the measure of economic productivity. France, which stands sixth in GDP, was ranked 29th in the Young Workers Index while Canada, with the world’s 10th-largest GDP, was ranked sixth.

The study also looked into the effects automation will have on job prospects for workers in this age cohort. It found that 39 percent of jobs for US workers aged 15-24 are at risk of being lost to automation, compared to 24 percent in Japan, 28 percent in the UK, and 38 percent in Germany.

One of the metrics tracked in the Young Workers Index, the NEET (not in education, employment or training) rate, is identified as a key metric for overcoming the risks of automation and driving growth. The study claims that if all 35 of the OECD countries lowered their NEET to that of Germany (9.3 percent), it would lead to $1.2 trillion in GDP growth. For the United States, it predicts a $428 billion, or 2.2 percent, rise in GDP by lowering NEET from 15.8 percent down to Germany’s level.

The best way to lower NEET and prepare the workforce for pending automation, according to the study, is improving vocational training programs. The study’s three recommendations are:

  1. Promote a variety of career pathways by broadening vocational training,
  2. Focus new vocational training investment into STEM work, which is at lower risk of automation, and
  3. Engage employers to improve training strategies.

One ongoing development in the United States and the UK that could help reduce the NEET rate, is the renewed focus on apprenticeships. Recently, the US Labor Department formed an apprenticeship task force consisting of corporate executives, union leaders, and politicians following President Trump’s executive order in June, which called for a new focus on apprenticeships. In the UK, the apprenticeship levy is aimed an incentivizing companies to offer more of these opportunities. All are seeking to reach the gold standard set by Germany, where apprenticeship programs and vocational training are curbing job loss even as industry there becomes increasingly automated.