Economist: The Great Mismatch
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Tags: Competition, Education, Employment, Labor Force, Living Standards, Poverty, Unsustainable Development
Schumpeter: The Great Mismatch
Skills shortages are getting worse even as youth unemployment reaches record highs.
IN PARTS of Europe and the Middle East more than a quarter of 15- to 24-year-olds do not have a job. In some black spots such as Spain and Egypt the figure is more than a half. Altogether 75m of the world’s young people are unemployed and twice that number are underemployed. This not only represents a huge loss of productive capacity as people in the prime of life are turned into dependants. It is also a potential source of social disruption and a daily source of individual angst. The Japanese have a word for the 700,000 young people who have withdrawn from society into domestic cocoons: hikikomori.
Yet at the same time companies complain vigorously that they cannot get hold of the right people. Earlier this year Manpower, an employment-services firm, reported that more than a third of employers worldwide had trouble filling jobs. Shortages are pressing not just in elite areas such as engineering but also in mid-level ones such as office administration. This week McKinsey, a consultancy, reports that only 43% of employers in the nine countries that it has studied in depth (America, Brazil, Britain, Germany, India, Mexico, Morocco, Saudi Arabia and Turkey) think that they can find enough skilled entry-level workers. Middle-sized firms (between 50 and 500 workers) have an average of 13 entry-level jobs empty while large employers have 27.
What is going on? And what can we do about it? McKinsey argues persuasively that a big part of the problem is that educators and employers operate in parallel universes—and that a big part of the solution lies in bringing these two universes together: obliging educators to step into employers’ shoes, employers to step into educators’, and students to move between the two.
The best way to do this is to revamp vocational education, which outside the German-speaking world has been treated as the ginger stepchild of the education system. Governments have poured money into universities. Universities have competed to sing their own praises. As a result, parents and their offspring have shunned vocational schools: many students surveyed by McKinsey chose to go to academic schools despite thinking that vocational ones would give them more chance of finding work.
But some far-sighted countries, schools and firms are busy reinventing vocational education, McKinsey argues. South Korea has created a network of vocational schools—called “meister” schools, from the German for “master craftsman”—to reduce the country’s shortage of machine operators and plumbers. The government pays the students’ room and board as well as their tuition. It also refers to them as “young meisters” in order to counteract the country’s obsession with academic laurels (South Korea has one of the world’s highest university-enrolment rates).
Technical schools are building exact replicas of workplaces in order to make it easier to cross the theoretical-practical divide: the TAFE Challenger Institute of Technology in Perth, Australia, has a fully functioning replica of a gas-processing plant (minus the gas). Talent-starved companies are striking deals with governments to mix practical and academic education: in Egypt Americana Group, a food and restaurant company, has a programme that allows students to spend up to half their time working for Americana (earning wages) and half their time in college.
Policymakers are also enjoying some success in using vocational education to reach underprivileged groups. South Africa’s Go for Gold, a partnership between the Western Cape Education Department and the NMC Construction Group, identifies promising schoolchildren for additional instruction and guarantees them a year’s paid work experience and a chance at a university scholarship. India’s Institute for Literacy Education and Vocational Training sends people to villages to speak to families about the opportunities on offer with blue-chip companies such as Taj Hotels and Larsen & Toubro.
It is easy to be sceptical about these attempts to bridge the gap between education and employment. Academic drift is one of the most powerful forces in educational life: look at the way Britain’s technical schools were allowed to wither on the vine and its polytechnics converted into universities.
Nevertheless there are reasons for optimism. For one, technology is greatly reducing the cost of vocational education—which has always been one of the most important reasons for its slow spread. “Serious games” can provide young people with a chance to gain hands-on experience, albeit of the virtual kind, at minimum cost. Miami Dade College, America’s largest community college, has introduced a system that sends automatic alerts to faculty advisers whenever one of their charges trips a warning wire, such as falling grades. Colombia’s Labour Observatory provides details on the graduation and employment rates of every educational institution in the country.
Master the meister
Second, more and more private-sector institutions are coming up with ideas to improve vocational training. China Vocational Training Holdings specialises in matching students with jobs in the Chinese car industry by keeping masses of data on both students and companies. Mozilla, the creator of the Firefox web browser, has created an “open badges initiative” that allows people to get recognition for programming skills. IL&FS Skills, an Indian training company, gives students a guarantee of a job if they finish its courses.
Better vocational education is hardly a cure-all for the global jobs crisis: millions of young people will be condemned to unemployment so long as demand remains slack and growth sluggish. But it can at least help to deal with an absurd mismatch that has saddled the world not just with a shortage of jobs but a shortage of skills as well.