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I recently had the pleasure of participating in a 3-day ‘Winter School’ on ‘New Skills and Occupations in Europe: Challenges and Possibilities’, , organised by the Centre for European Studies here in Brussels. A slew of Commission representatives spoke and there were more PhDs about than you could shake a stick at, tossing around banter of the sort “nice little data set you’ve got there”. Lo, in the midst of all these learned types was I, doing my darndest to disseminate, and hoping to pick up some good stuff I could channel into our dear JobTown network.

What did I get out of it, other than some really quality conversation around the lunch sandwiches? Well a lot came up, some of it really quite technical, and covering a broad range of issues around employment and skills; some of it was sparkling and witty, some of it rather dry and some of it frankly depressing (clarification: because of the issues, not the people, who were a nice bunch).

I’ve recently been encouraged to chip in to this blog, so I thought I might share some highlights with the URBACT crowd:

The Europe 2020 goals for a 75% active population and poverty reduction are toast – it’s just not happening. No surprise really, but seeing what one assumed confirmed in hard cold figures does something in the stomach.

“Policies that are based on head count solely, deliver the wrong picture”– Hilmar Schneider, director of CEPS/INSTEAD

Everyone knows Europe is aging, but the nature and impact of demographic change is more complex than one might at first think:

• Age structure varies a lot across Europe: In Germany the aging and projected reduction of the workforce (unless immigration is allowed to mitigate it…) is quite significant, in France not as much, and in Poland a lot less.
• In of itself, a shrinking workforce puts an upward pressure on wages; all things being equal (they never are) wages should go up, and tax revenue with them.
• Around the wages-demographics axis, other factors come into play of course. Need proof? Look at Italy and Poland, which have shrinking demographics but no wage growth.
• The hit to productivity from a shrinking active population is to some degree countered by the rising skill rates of the younger workforce (go JobTown!).
• Myriad socio-cultural stuff affects demographics – gender for example. Spouses tend to retire together, leading to women on average retiring a year or two earlier than men.
• Migration is a wild card that simply can’t be predicted.

Skills?

• The wage spread between the high and the low skilled seems likely to grow – and thus, inequality is likely to grow.
• The way data on skills is collected and used across Europe varies enormously. Lack of harmonisation makes comparison difficult.
• European Union’s (EU) skills research is particularly valuable to smaller member states, like say the Czech Republic, which has less resources to dedicate to such matters.
• The European Commission wants to push the use of skills intelligence by sector – expect to hear more on this.
• The European Commission also wants to feed such intelligence into EURES (The European Jobs Mobility Portal), with a view to mitigating skills shortages via targeted labour mobility schemes. Problem is, skills shortages tend to be in mostly the same sectors across Europe – so potential complementarity is limited. (non-European immigrants anyone?)
• There was much talk of establishing European Sector Skills Councils (as a national practice its uncommon in the EU, being more of an Anglo world thing), but views were mixed on where, or if, this was going.
• Establishing and implementing an EU quality framework for dual education and apprenticeships is a Commission priority – more to come on that.
• According to the specialists, where’s the State of the Art in labour market analysis? Not here. Apparently it’s the United States Bureau of Labor Statistics, which, they tell me, far surpasses anything in Europe. Oh well. In some European programmes there is a tendency not to look farther afield than the EU area, while poles of excellence can be found elsewhere, and limiting one’s gaze is to lose out. Something to keep in mind.

Polarisation?

It’s commonly said today’s labour market is tending towards polarisation, that is lots of low skilled jobs and then high skilled positions, with the middle falling out. Different research says different things about this:

• Graphed data (Tomas Korpi, Stockholm University) shows a pretty stable picture over the last 15 years, across Europe. Generally one sees a sort of hump in the middle, with demand tapering down on both sides for high skilled and low skilled people – i.e. the bulk of jobs are still vaguely at a middling skill level. Shifts in which skills are required, country variation and so forth, muddle that simple image once you dig into it though.
• The picture is apparently different if you take a longer-term view; there is a continual upgrading of skills, and decline in low skilled work, (with big variation across countries) if you look over several decades.
• Polarisation (more highs and lows) and Upskilling (general raising) trends vary greatly by sector.
• Education levels are widely rising more strongly than employment levels. This could indicate a lot of people are ‘over-educated’ (hard idea for us to accept?) or at least followed a mistaken educational path to work.
• Over-education is compounded by people studying as a second choice to having a job; in many cases it is a weak labour market that drives education, not demand for educated labour.
• Inequality and gaps in wealth and inclusion are all growing.
• Employment and poverty don’t sync well; even when unemployment was lower, EU poverty rates stayed fairly flat. So it would seem we have lots of working poor, or a stable population just not accessing work (e.g. from workless households), or perhaps some combination thereof.

Young people?

• For young people the hump shifts more to the left; that is, they work more in lower skill jobs, with less autonomy etc.
• Throughout the last 15 years, there has been little shift in the basic skills requirements placed on young people. Thus a lack of skills cannot be interpreted as a significant causal factor of youth unemployment.
• Youth employment is consistently declining all over the Western world – i.e. the degree varies enormously, but the direction is all down, not up. The gap between core and marginal workers (e.g. youth and migrants) keeps growing.
• Rising job scarcity for young people is clear, though causality less so.
• Recessions lead to permanent losses in demand; with each recession, full employment seems to decline.
• Data in Sweden clearly correlates rising mental health problems with rising labour market difficulties; anxiety levels amidst the young have overtaken those of older people (carefree youth?).

Dual system?

• In most of Europe stats show long-term rises in education surplus – i.e. evermore educated people who are unemployed or overqualified for their work.
• Not so much in Germany and Denmark however, where the levels of deficit and surplus in demand and supply of educated workers remains fairly flat – education is clearly better linked with employment in these countries. It seems likely the Dual System is part of an explanation for this different performance.
• Problem: Establishing a Dual System can only be a long-term project (though it seems a good one); it can’t be a short-term solution for our current problems.

[On the german Dual System, see also Eddy Adams’s blog post!]

Employers?:

• Is what they want and what they say they want the same thing? Often not; hiring patterns don’t sync well with what employer surveys say is sought.
• Likewise, skills being solicited in job offers can’t be interpreted as cleanly what skills are required. With many applicants for a given position, employers regularly insert skills demands as a means of filtering out candidates, not so much out of actual need.
• Employers saying what they want is not automatically what we should do; their views – legitimately so – are formed by their own immediate needs and experiences, not the general good (e.g. a factory owner may need cheap labour and advise against extending higher education). May sound obvious, but it’s good to be reminded now and then.

Demand and Conclusion:

Our underlying problem seems to be a fundamental problem of demand, or rather lack of demand. A very real risk is that we address our current employment problems with measures and policies that, while essentially positive in effect, lack the calibre to be ‘game changers’.

Interested in more on this issue of fundamental lack of demand? Or simply want an excuse to keep using the internet?
A good International Monetary Fund (IMF) video getting talked about a lot in specialised economic press available here.
The bit getting all the attention is by Larry Summers, about 50 minutes in.

Ian Goldring is a Lead Expert for the URBACT project JOBTOWN , and the director of the ProjectWorks association, Brussels. You can check out his blog, on which the same article was published in December 2013.