Don‘t save, educate!

recently published on Zeit Online (September 10, 2014):

English version:

If Europe wants to tackle youth unemployment, it has to strengthen the vocational education in its member states. But that’s not enough: The Union needs to create incentives for companies and funds to invest in sustainable infrastructure.

by Carlo C. Jaeger, Christoph Bals, Klaus Milke

7.5 million young Europeans are without a job or training – the Centre for European Economic Research (ZEW) just reminded us of this alarming number when it presented its study on youth unemployment in the EU last week. It shows once again that Europe, whose stability is essential not only to Germany, is in the largest crisis since the founding of the Union in 1951. Prosperity, qualified jobs, high quality in industry and crafts – that’s what Germany symbolizes for thousands of young people from Southern Europe who come to the country without a return ticket. But how long can the German success story prevail?

Many analyses have shown that one of the major advantages of German companies in terms of competitiveness lies in their high number of skilled and well-trained workers. Most of them completed a vocational training in the so-called dual system, combining schooling and practical work on the job or in full time schools just like in Scandinavia. The workers have truly become professionals in their field. In most other countries, the majority of the work force has a job, but not a profession.  Some have completed school, others qualify for university – but most lack a professional vocational training. Though rarely mentioned, the difference in productivity in countries with a strong educational training system and those who lack this cultural resource is an important factor in the Euro-crisis.

But government and industry in Germany have let the praised dual system erode, and the EU has added to this process with its reform of  professional qualification recognition standards. What Germany should do instead is carefully foster the dual system and at the same time take an active role in making professional training a European strength. Reducing the confusingly large number of recognized trades to a small amount of sustainable and long-term occupational fields could be an important step in this process. ICT, intelligent energy systems and health care are  especially relevant in the face of future economic, social and environmental challenges.

To effectively tackle unemployment (especially of young people) on the continent, however, a reform of the vocational education system is not enough. The enormous amount of savings that is currently not invested needs to be mobilized to modernize and transform European infrastructure, for example by retrofitting buildings to make them energy efficient. This is a huge challenge in terms of investment, especially in times of restricted public spending and strict austerity policies in Europe.

Michael Diekmann, chairman of the board of management of one of Europe’s largest insurance companies, Allianz, has recently expressed an idea: Instead of having the government finance infrastructure investments, it could mobilize private money by guaranteeing minimal returns for specific bonds. Former minister of the environment and UNEP-director Klaus Töpfer proposed a similar scheme, opting for a public fund to partly finance innovation costs of renewables.

A green investment shift in Germany and Europe could help create a more sustainable infrastructure and advance the transformation to a decarbonized economy. And at the same time, it could help young Europeans with a solid professional training find the jobs they deserve.

European governments cannot promote sustainable innovation – smart grids, decentralized energy storage, e-mobility to name only a few – alone. Instead of trying to negotiate international treaties, Europe should try to form transnational alliances or clubs that explicitly include companies, research institutes, unions and – especially in the field of sustainability – input from the civil society. Innovation Clubs for Sustainability Skills in the education system could be a start.