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Developing a response to youth unemployment

May 9th, 2012 by Graham Attwell

Since I wrote my last article on ‘What is the answer to youth unemployment?‘, elections in Greece, France and Germany have seen a decisive rejection of European austerity politics. This is hardly surprising. It doesn’t take a genius to work out that ever deeper cuts and austerity, whilst ultimately cutting the real cost of labour and thus boosting corporate profits, are unlikely to boost growth, jobs or individual prosperity in any way.

The EU reaction has been to call for a new strategy for growth, although details of what that might entail are pretty hazy.

As I wrote in the previous article, one of the main results of the recession has been a massive increase in youth unemployment and, in particular, a substantial increase in graduate unemployment. At the same time companies are increasingly requiring work experience prior to employment resulting in increasing pressure for new graduates to undertake low paid of unpaid internships. Pretty clearly new policies are needed for education and training but there seems little public discussion of this, let alone of what such policies might be. The prevailing EU policy is more of the same and try harder.

To rethink policies for education and training requires looking back at how we got where we are now. And it requires looking at more than just education and training policy – we need to examine the relationship between education and training, labour market policy and economic policy. here I am going to look at just a few aspects of such policies and hope to develop this a little more in the next week or so.

For the last decade – or even longer – economic policy has been driven by a liberal free market approach. In turn labour market policy has similarly been based on deregulating labour markets and removing protection for workers (interestingly, Germany, the one country in Europe where the economy is growing, has probably one of the highest levels of labour market regulation). At a European level, education and training policy has been dominated by a drive to make qualifications more transparent and thus comparable in order to promote the mobility of labour. Employers have been given a greater role in determining the content and form of qualifications. Employability has become a key theme, with individuals being made responsible for keeping their knowledge and skills up to date, often as considerable personal expense. A number of countries have tried to liberalise education and training systems by reducing subsidies for public education and introducing individual voucher schemes.

At them same time the rather ridiculous EU Lisbon declaration, declared the aim to make the EU “the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion”, by 2010. Obviously this failed. But in line with such thinking most countries in Europe saw the way forward as moving from old fashioned vocational training to mass university education to cater for the demand for the thousands of new knowledge jobs. These jobs never materialised (except in countries such as the UK in the deregulated financial services sector which ultimately triggered the economic meltdown). As Wikipedia notes:

Much of the initial theorizing about the advent of a fundamentally new era in which economic activity is increasingly ‘abstract’, i.e., disconnected from land, labour, and physical capital (machines and industrial infrastructure) was associated with the ‘business management’ literature of the ‘new economy’ NASDAQ bubble, which collapsed in 2001 (but slowly recovered, albeit, in a leaner format, throughout the 2000s). This literature was initially known more for its hyperbole and faddishness than for its academic/empirical integrity.

In reality, many of the new degree courses were vocational in orientation – such as in the new Universities in the UK or in the Fachshule in Germany. These courses were either for new occupations – for instance in computing or simply replaced traditional vocational qualifications. It is arguable whether such a policy was financially sustainable or even desirable. It is certainly arguable whether an academic programme of learning is more effective for such subjects than traditional forms of work related learning.

To further policies associated with the obsession with the knowledge economy were the raising of the school leaving age and the so called lifelong learning policy. Longer schooling was needed, it was argued, to cope with the needs for higher levels of knowledge and skills for the knowledge rich jobs of the future. And lifelong learning was needed for the learning economies in which knowledge is the crucial resource and learning is the most important process.

At them same time the EU and national governments identified a number of key sectors which were felt to be crucial and which were then promoted through he education systems. In the late 1990s, there were dire predications of a massive shortage of computer programmers which never came to pass. And in the last five years or so EU and national governments have promoted the importance of STEM subjects – Science, Technology, Engineering and Maths as key to the future of employment and economies. Such priorities were based on a business driven policy of skills-matching promoting the “involvement of businesses in forecasting skills needs, through an employers’ survey tool and qualitative studies on the skills needs of business” (EU New Skills, New Jobs policy).

It is clear such policies have failed  and exhorting governments and agencies to try harder will go nowhere. What is needed is a fundamental rethink. As Professor Phillip Brown points out, the Lisbon Strategy was based on the idea that the technological lead then enjoyed by advanced industrial economies would be maintained with an increasing polarisation between highly skilled and well paid jobs in those countries and low paid low skilled manufacturing jobs being undertaken in developing countries. For a variety of reasons, including rapid technology transfer and a massive expansion of public education systems in countries like China and India, this hasn’t happened.

Indeed it may be the very manufacturing sector which was downgraded by EU policy which is the future for jobs in Europe especially in Small and Medium enterprises. For all the talk of high tech, knowledge based jobs. The construction industry is the biggest industrial employer in Europe with 13,9 million operatives making up 6,6% of the total employment in EU27. In addition it has a substantial influence on other industries represented by a multiplier effect. According to a study by the European Commission, 1 person working in the construction industry is responsible for 2 further persons working in other sectors. Therefore, it is estimated that 41,7 million workers in the EU depend, directly or indirectly, on the construction sector. Out of the 3,1 million enterprises 95% are SMEs with fewer than 20 and 93% with fewer than 10 operatives (pdf file). And manufacturing makes up almost 25 percent of the German economy, as opposed to only 11 percent in the United States. German mittelstands – small, family-owned and mid-size manufacturing companies – are key to the manufacturing sector. Rather than relying on university graduates for skills and knowledge, the mittelsands tend to employ graduates from the Dual apprenticeship system.

Indeed, many countries are promoting apprenticeships as one way out of the present mess. The present English coalition government boasts of the increase in the number of apprenticeship places. But in truth most of these places are apprenticeships only in name. The supermarket chain, Morrisons is the largest apprenticeship provider in the UK with many apprenticeship consisting of short induction training courses. To deliver the skills and knowledge for workers in a manufacturing economy through apprenticeship requires high quality training and the active involvement of employers and train unions alike. Moreover it requires social (and financial) recognition fo the value of apprenticeships. that seems a long way away.

To overcome the present crisis of youth unemployment requires a series of radical and interlinked policy initiative involving economic and labour market policies rather than just tinkering with education and training curricula. At a macro econ0omic level it means developing manufacturing industry rather than merely relying on financial services and the high tech knowledge industry sector. It means making sure companies provide high quality training, rather than forcing individuals to be responsible for their own employability. It means making sure that those who have gained vocational qualifications have opportunities to use those skills and knowledge and are properly rewarded for their learning. It means freeing up capital for starting small companies. It means proper financing for vocational schools and providing alternatives to young people rather than just more school and expensive university courses. It means abandoning skills matching and planning for future societal skills needs.

In other words we have to abandon liberalisation and free market ideologies and to recognise that economies and employment are a social function. As such society has to plan for the future of employment and the provision of jobs for young people. Is this too much to ask?

 

 

2 Responses to “Developing a response to youth unemployment”

  1. John Cuthell says:

    An extremely pertinent comment, Graham, on what the Masters of the Universe have let the European (and, more particularly, the UK) economy become.

    I remember that, when the first surge of deindustrialisation was washing through the factories, steelworks, shipyards and mines of Northern England and Wales, Peter Jay considered the case of those who had been left without jobs or a future. His conclusion was ‘They die.’ Of course they do. Eventually. But their children, and grandchildren, are still here.

    Shirley Williams commented at about the same time that we couldn’t build an economy by selling hamburgers to one another. But we thought that we could. And we did.

    The myth is that social justice and a social economy don’t work. What the myth-makers conveniently ignore is that the allegedly ‘liberal’ economy works for a minority. A very, very small minority.

  2. Graham Attwell says:

    I also remember Norman Tebbit standing on a corner at Baglan Bay and exhorting us all to Get on our Bikes. Where to I wonder. It is interesting that policy makers continue to see mobility as the answer to economic woes – rather than sustainable development.

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