Sunday, March 07, 2010

Youth unemployment: German lessons

Youth unemployment data across the EU suggest that countries with more developed apprenticeship policies have minimised the worst effects of the downturn.

In Britain, 17.9% of those below the age of 25 are unemployed. True, some countries are faring even worse. The percentage is 21.5 per cent in Ireland while, in Spain, the jobless amount amongst the young has now reached a staggering 42.6 per cent.

Countries like Denmark and Germany, however, show a different picture - with the unemployment rate amongst the under-25s standing at 8.9 and 10.5 respectively.

Of course, there is no obvious reason for this disparity. However, Germany has long been known as a country placing apprenticeships at the core of its education system.

The German system is a model for youth work contracts. It is called 'the dual system'. Once completed compulsory education, either at 16 or 19, a worker can start an apprenticeship at a company which can last between 2 and 3 and 1/2 years. During this period, for two days a week, the apprentice will have to learn the theoretical background at a vocational school known as Berufsschule.

The precise skills and theory taught on German apprenticeships are strictly regulated. The employer is responsible for the entire education programme.

There are aroud 350 trades to choose from: anything from accountant to builder or from medical worker to baker.

About two thirds of young people who finish school decide to begin an apprenticeship every year.

The fact that the contract is really an 'apprenticeship' doesn't mean that the worker has no rights. Unlike other countries such as Italy, contracts designed to help the young are not misused to maximise profits out of unprotected workers. The company is required to pick up the social security costs as well as unemployment insurance and pension entitlements.

What varies is the salary. For instance, an apprentice metal worker in the Baden-Wurtemberg region will earn around 810 Euros a month during his first year, €861 in his second, €937 in the third and €988 in his fourth. His counterpart in Berlin will probably take home €100 less each month.

This can partly explain why there is a lower percentage of university students in Germany when compared to other Western countries, but there is a much lower percentage of people entering the German labour market with no qualifications. This seems to have protected, at least partially, German workers and job seekers from the worst effects of the downturn.

Britain, instead was hit on two fronts.

One one side, the 1980s and 1990s saw a sharp decrease in the number of apprenticeships which was only reversed through increased investment since 1997. The number of learners of all ages starting on the Apprenticeships programme has more than doubled from around 75,000 to around 180,000 today.

On the other side, the Labour government was guilty of placing unrealistic expectations on the University system. You may remember the old Blairite obsession with having 50% of people in Higher Education by 2010. It was never going to be economically sustainable, which is why the Government is now -very shyly- trying to support graduate internship positions.

At the moment, it's not going very well. Out of 725,000 unemployed 18-24 Britons, there are 3,400 graduate internship positions, only 47% of which are paid.


socialist sam said...

But many other countries have attempted to replicate the German dual system and they were met with little success.

It goes to show that you cannot simply copy cultural or national phenomena and paste them elsewhere.

This is because Germany has a history of Corporatism that we don't share. It is de facto nationalization without being de jure nationalization.

It's what Soltwedel calls “cosy corporatism”, which underlies the modern German apprenticeship system as well as other aspects of employment.

I will say, however, that the Germans's emphasis on diversifying quality production seems to have paid off in the long term. Let's not forget, in fact, that it took them a good 10-15 years of aftershocks to fully absorb the economic impact of reunification.

Taronja said...

I agree with sam that such systems are primarily embedded on a cultural level and are difficult to export as such.

However, while I lived in Germany I noted this which was quite inspiring.

The balancing of costs and benefits occurs at two levels. First, for each apprenticeship, the training firm pays the trainee's wage and costs of on-the-job training in return for the aprrentice's labor.

But also, costs are shared amongst employers as a whole. Even those firms who do not offer apprenticeships (but often reaping the benefits of the skilled workers once they qualify), contribute through the compulsory membership fees they pay to the chambers of commerce and industry.

These fees help the funding of activities such as the monitoring of training schemes and administration.

Also, even the low allowances handed to a trainee are better money than their counterparts in higher education who are probably piling up debt at the same time.