Italy’s ageing population is shrinking the workforce, yet many young people still struggle to enter stable employment. Helping young people succeed at school and work is now essential for the country’s long-term growth.
by Emilia Soldani and Tim Bulman, OECD Economics Department
This June, around half a million youth will complete their final year of mandatory schooling in Italy. Based on recent patterns, only around two-thirds will obtain a high school diploma and less than half of them will go to university. As the number of young people declines, Italy needs to make the most of its youth, better integrating them into the economy and society.
Population ageing in Italy is expected to reduce the number of working age individuals by over one-third by 2060. Although young people are becoming an increasingly scarce resource in Italy (Figure 1), the 2026 OECD Economic Survey of Italy identifies their potential to contribute more to the economy, along with other groups that are underrepresented in the labour market, such as women.
Many young people struggle to transition from school into the workforce, and nearly one in five are out of work, education or training (NEET), while many others emigrate in search of better working conditions (the so-called “brain drain”).
Italy’s future growth depends on making better use of the available talent. The 2026 OECD Economic Survey of Italy highlights two main pillars for action: improving the education system and making the labour market work better for young people. Helping young people succeed at school and work will be essential for the country’s long-term growth and wellbeing.
Equipping young people with the skills to succeed
School and university reforms should aim at better engaging students, reducing drop-out rates and balancing general education with work-relevant skills.
There has been progress. Over the decade to 2024, the school drop-out rate decreased from 15% to 9% and the NEET rate in the age group 15-29 fell from 27% to around 16%, while the share of 25- to 34 year-olds with a university degree rose from 24% to 32% (Figure 2).
However, school-to-work transitions remain difficult and many students leave the education system with weak competencies. In the latest OECD PIAAC survey of adult skills, for instance, individuals aged 16- to 24-years of age generally performed worse than their peers across the OECD, especially in adaptive problem-solving tasks.
Students’ performance can be improved by investing in the quality of education, for instance by better linking teachers’ salaries, which are currently well below those of most other tertiary educated workers, and their careers prospects to performance.
Dropping out of school early is often a signal of vulnerability and can become the first step into social and economic marginalisation. Early identification of young people at risk of dropout and marginalisation can ensure they can receive appropriate support: formal integrated systems that monitor attendance, achievement and behaviour can help in this regard. At the same time, expanding summer activities in schools can strengthen students’ engagement in the community and their sense of belonging.
Strengthening the role of practical experience and learning by doing can improve students’ engagement in school and help them choose across different career opportunities or fields of further studies. At the same time, it can support the development of transferrable soft skills like teamwork, time and conflict management, and problem solving, ultimately improving their entry into the labour market. To ensure students pursue such opportunities, Italy made Italy curricular internships mandatory in 2015 for all students in grades 11 to 13.
Change takes time and the benefits of education reform can only be expected to emerge in several years. In 2022, the latest PISA survey found over four-in-five 15-year-old-students had never participated in an internship, well above the OECD average (Figure 3). Further expanding the duration of curricular internships and strengthening their quality will aid the transition from school to employment as students gain technical knowledge, practical skills and a greater awareness of their career possibilities and preferences.
Reforms to strengthen vocational education and training, including the expansion of the network of ITS technical tertiary schools, and to increase university-industry collaborations would help young Italians leave the education system endowed with the skills and abilities that employers seek, helping to build more secure careers and supporting the country’s economic future.
Despite progress, participation in technical and vocational pathways remains below most other EU and OECD economies, including due to the perceived gap in quality between general education and vocational pathways and the limited offer of vocational tertiary education courses. Furthermore, geographical inequalities pile up: many of the same areas where average educational outcomes are lower and job opportunities scarcer have fewer places in ITS academies.
Giving young people a chance in the labour market
In the decade to 2023, over 6% of young people aged between 18 and 34 left the country in search of better opportunities abroad, amounting to the loss of 400 000 young people. Many of these are high skilled and appear unlikely to return to work in Italy. This “brain drain” weakens Italy’s long-term growth potential, aggravates skill shortages, and reduces the return on public investment in education. Multiple factors contribute to the brain drain, including wages, career prospect and labour market duality.
Wages for young people are often lower than those available in other economies and rise more slowly with experience than elsewhere. A symptom of this is the share of young workers at risk of poverty, which is higher than in most other EU countries. Labour market reforms can help attract and retain young workers through better pay and working conditions.
While reducing the incidence of income taxes and social contributions on low wage earners would help improve their living standards subject to fiscal space, reviving slow productivity growth remains the main challenge to supporting wage growth for all workers.
Training and job-to-job mobility can lead to wage increases, yet few workers in Italy have access to career guidance services or to training, especially in smaller firms with weaker managerial practices. Strengthening managerial training and improving access to subsidised adult training for lower educated workers and for those in SMEs would support workers’ ability to advance their career. These efforts can be supported by the ongoing strengthening of the network of public employment services, which can help the unemployed as well as the employed secure better paid jobs.
The Italian labour market is characterised by stark dualism: older workers tend to hold secure permanent contracts, while younger workers and those who do not have citizenship more often have precarious and lower-paid jobs. This divide can delay financial independence, family formation and long-term career development. At the same time, unstable employment creates a cycle of insecurity that becomes difficult to escape and can erode workforce skills, both through movements out of the labour force or out of the country and through obsolescence for those who remain.
Stable employment relationships not only improve workers’ conditions but also encourage firms to invest in training, including in areas like digital and managerial skills, ultimately promoting productivity growth and helping Italian firms remain competitive.
High uncertainty about the costs of severing permanent job contracts often induce employers to prefer temporary contracts, which are easier, quicker and much cheaper to dissolve and offer lower protection and fewer training opportunities to workers. Reducing the uncertainty of worker dismissal costs could help transform some of the temporary job contracts into permanent hires.
Engaging youth to support the labour market
Italy’s ageing population makes engaging youth in the economy more urgent than ever. For the students completing their education in the coming years, improving the schools, university and training systems will help secure a better future and contribute to economic prosperity. Chapter 2 of the 2026 OECD Economic Survey of Italy describes how better school-to-work pathways, stronger vocational education and more stable labour market conditions could unlock significant economic and social benefits and help reduce the economic burden associated with population ageing.
References
OECD (2026), OECD Economic Surveys: Italy 2026, OECD Publishing, Paris, https://doi.org/10.1787/539538b2-en.
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