Institutes of technology and polytechnics will have to focus on providing for "disengaged youth" if they want to catch the Government's attention.
Finance Minister Bill English says the National Government is committed to helping 16- to 20-year-olds move into vocational training, but no money is available to boost tertiary providers beyond that.
Twenty per cent of youth in this age group are neither in training nor employed, he said.
Mr English said the Government could not afford to leave a "cohort [of youth] at the bus stop" as it was working to protect New Zealanders from the sharp edge of the recession.
Manukau Institute of Technology executive director of external relations Dr Stuart Middleton said the country's "pandemic of educational failure" cost the economy $1 billion a year, and it was up to techs to work within schools to address it.
Not every child suited the traditional schooling system, he said: "Schools are a toxic learning environment for many people."
But it was because of a lack of realistic alternatives that:
* The education sector lost 20 per cent of youth by the age of 16.
* 4500 students left primary but failed to enter secondary school.
* 80 per cent of young people who appeared in the Youth Court had left or were absent from school.
- And between 17,000 and 25,000 of 15- to 19-year-olds were neither in employment, education or training.
Dr Middleton said techs had to work on providing flexibility in their courses for 15- to 19-year-olds, and that included free access.
"It's an absolute monument to stupidity that we have charged kids to leave school," he said.
MIT is working towards opening its own tertiary high school at the beginning of next year.
This will take Year 10 students who have been identified by their teachers as being likely to fail or disengage and will see them complete NCEA through to Level 3 as well as two years of a vocational programme.
The Government's $65 million Youth Guarantee Scheme, which would allow all 16- and 17-year-olds free access to study a programme in or out of a school setting, could help with this when implemented.
Techs urged to reach out to youth
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