Christelle Garrouste. Towards a Benchmark on the Contribution of Education and Training to Employability: Methodological Note.

“Given the importance of enhancing employability through education and training in order to meet current and future labour market challenges, the Commission is invited to submit to the Council a proposal for a possible European benchmark in this area by the end of 2010” (Council Conclusions of 12 May 2009 on “Education and Training 2020”, 2009/C 119/06).
Following this request, the Directorate-General for Education and Culture (DG EAC) commissioned to the Centre for Research on Lifelong Learning (CRELL) a series of analyses of the contribution of Education and Training systems (E&T) to employability.
The first CRELL report proposed an analytical framework and indicators to measure E&T systems provision of essential skills, facilitation of the school-to-work transition and support of lifelong learning (LLL), (Arjona Perez, Garrouste and Kozovska, 2010a). Based on this study, the Member States Expert Group on Employability Benchmarks concluded on March 3, 2010 that i) Vocational Education and Training (VET) plays a key role in supplying skills that are valued in the labour market; ii) the duration of the transition from education to work and the (mis)match between education and occupation are both topics of policy interest; iii) participation in LLL of older and low qualified workers and returns to education at a later age were also two possible areas for educational benchmarks supporting employability. The Expert Group requested an in-depth analysis of each of the above topics, with information on data availability and a list of indicators from which a benchmark could be chosen. The resulting work was compiled in a second CRELL report (Arjona Perez, Garrouste and Kozovska, 2010b). CRELL prepared a preliminary statistical report presenting different methods to conduct forecast estimations on transition phase indicators which was presented to DG EAC, EUROSTAT, DG EMPL and CEDEFOP at an inter-service consultation meeting on Septembre 13, 2010.
Based upon the comments from the Standing Group on Indicators and Benchmarks (SGIB) and suggestions from EUROSTAT, DG EMPL and CEDEFOP, DG EAC decided to focus the benchmark proposal on one sole indicator of transition from education to employment that would target a percentage increase of the employment rate of 20-34 years old graduates. The present report describes the methodological framework applied to define the proposed benchmark. Section 1 briefly discusses the relevance of an indicator on the transition from education to work as a proxy of the contribution of education to employability. In turn, section 2 presents in details the nominator and denominator of the retained benchmark indicator and section 3 displays the corresponding 2004-2010 historical trend data computed by EUROSTAT. Moreover, in section 4 we report results from preliminary robustness checks, confirming the validity of that data to measure employability. Further, section 5 explains the method applied to define the target value at the horizon 2020. Results from the three deterministic forecasting methods retained are presented in section 6 along side with the results from Monte Carlo simulations. Finally, section 7 concludes with a benchmark proposal on education for employability.
The analysis presented in this report is based upon the September 14, 2011 extractions from EUROSTAT’s EU-LFS annual data from 2004 to 2010.

In section 4.2., we showed that two deterministic forecasting methods out of three estimate an overall increase between 2010 and 2020 by almost 5 percentage points, with significant variations across individuals with different educational attainment levels. For instance, we observed a 3 percentage points decrease for the medium educated (when considering the conditional trend model). The only educational group for which a positive increase is predicted by all three methods is the high educated (with an increase comprised between 2 and 3 percentage points).
In view of the variability of these results, we relaxed the assumption that each scenario predicts the overall employability rate at an equal weight. We conducted Monte Carlo simulations for each method to estimate the impact of a random change of weight in one scenario at a time (section 4.3). This final adjustment revealed that in the case of method 1, the assumption of equal weight could be validated; while in the case of methods 2 and 3, scenario 4 was less likely to occur than the other three scenarios, and in the case of method 2 only, scenario 3 was more likely to occur than the other three (see Table A.4 and Figures A.6-A.8).
In turn, the Monte Carlo simulations yield a lowest possible value of 75.91% (based on method 3) and a highest possible value of 83.96%. (based on method 1) (see Table A.4). In terms of plausible percentage point changes between 2010 and 2020, this means that the benchmark target should be defined within a range of [-0.6; +7.5]. A negative benchmark target being of course excluded, we need to choose a value within the range [0; 7.5].
The choice of the actual target value within that range becomes at this stage more political than statistical. Still, one last statistical option in support of the final political decision is to look back at the overall mean value estimated by the deterministic forecasting methods (Table 1), namely +3.79, which enables us to finally reduce the plausible range of values to [3.79;7.5].
Finally, considering the full analysis presented in this report, DG EAC decided to formulate the following benchmark proposal as defined in Box 3 below (European Commission, 2011).
As demonstrated above, this choice of a minimum of 5 percentage points increase is motivated by the fact that such a target would guarantee a plausible (and thereby, realistic) improvement of the employability of all educational groups (supported by all forecasting methods and controlling for uncertainty). As shown by Figure A.9, such a target would lead the majority of the MS above 75% of employability for their 20-34 year-olds graduates. The main outliers are IT, GR, LV and EE, who are expected to remain below 70% of employability. When looking at the higher educated sample, only countries below 80% by 2020 are GR and IT. For the medium educated sample, six countries are expected to be below 70% by 2020, namely EE, IT, LV, LT, IE and GR.
Of course, such an overall target would require specific sub-targets by gender, by type of educational programme (vocational vs. mainstream), by field of education, and, in some countries, by immigration status.
Overall, “the purpose of a benchmark on Education for Employability is to enhance policy exchange on what constitutes good education policies to stimulate employability. Relevant policy steps have already been outlined in "the Framework for Youth Employment" in "Youth on the Move" and within the "Agenda for New Skills and Jobs". These would suggest that education systems shall engage in systematic monitoring of the labour market situation of young people and develop better and more responsive educational policies which reflect labour market realities, including the provision of the mix of skills or key competences that are relevant to the labour market; combating early school leaving; enhancing school-business links; providing transparent information on learning outcomes; aligning the orientation of graduates to future labour market demands; and providing guidance and counselling” (European Commission, 2011). Download Towards a Benchmark on the Contribution of Education and Training to Employability: Methodological Note.