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The "World of Work" for your children

As a parent, I think about the "world of work" that my daughter will enter and the options that will be available to her. 

The last line of this article from The walled world of work, "As economies grow more sophisticated, demand for cognitive skills will keep rising. The world’s schools are not even close to meeting it.", has me wondering if the focus on STEM really teaches people how to think.  Increasingly, IT companies are hiring Liberal Arts majors for jobs that previously would only have been held by someone with a technical degree.

Special report: The young



Jobs

The walled world of work

Youth unemployment is a massive waste of resources


Jan 23rd 2016 | From the print edition

CRISTINA FONSECA CAUGHT pneumonia a week before her final exams. “I thought I would die,” she recalls. When she recovered, she reassessed her priorities. As a star computer scientist, she had lots of job offers, but she turned them all down. “I realised that I didn’t want to spend my life doing anything that was not really worthwhile.”

She decided to start her own business. After a year of false starts she co-founded a company called Talkdesk, which helps other firms set up call centres. By using its software, clients can have one up and running in five minutes, she claims.

Ms Fonseca’s success helps explain why some people are optimistic about the millennial generation in the workplace. At 28, she is providing a completely new service in support of another service that did not exist until quite recently. She lives in Portugal but does business all over the globe.

She sounds very much like several other young entrepreneurs your correspondent met while researching this report, such as a Russian who set up a virtual talent agency for models (castweek.ru); an Asian-American electric cellist who teaches people how to make new sounds using a laptop (danaleong.com); and a Nigerian starting a new publishing house for African romantic novelists (ankarapress.com).

Elite youth today are multilingual, global-minded and digitally native; few can remember life before the internet or imagine how anyone coped without it. The best-known of them changed the world before they turned 30, including Facebook’s Mark Zuckerberg, Google’s Sergey Brin and Larry Page, and Instagram’s Kevin Systrom. The global economy works well for such people. Digital startups require far less capital than, say, building a factory, and a brilliant piece of software can be distributed to millions at minimal cost. So today’s whippersnappers of great wealth have made their money much faster than the Rockefellers and Carnegies of old.

But the world of work has been less kind to other young folk. Florence Moreau, a young architect in Paris, had the double misfortune to leave university in 2009, when the world economy was on its knees; and to be French. “I really need a full-time, permanent job,” she says. Under France’s 3,800-page labour code, workers on permanent contracts receive generous benefits and are extremely hard to get rid of. So French firms have all but stopped hiring permanent staff: four-fifths of new employees are on short-term contracts. Ms Moreau has had eight jobs, none lasting for longer than 16 months. With a small child at home, she has to keep looking for the next one. “It’s tiring,” she sighs. One employer suggested that she should become an “entrepreneur”, doing the same job as before but as a contractor, so that the firm could keep her on indefinitely without incurring heavy ancillary costs. She refused.

Insiders v outsiders

Youth unemployment in France (using the ILO definition of youth as 15-24-year-olds) is 25% and has been scandalously high for three decades. Occasionally the government tinkers with labour rules, but voters have little appetite for serious reform. Ms Moreau rejects the idea that insiders enjoy too many legal protections, and that this is why outsiders find it so hard to break in. She blames exploitative employers, and doubts that any government, left or right, will fix the problem.

Rigid labour rules are tougher on young workers than older ones. People without much experience find it harder to demonstrate that they are worth employing. And when companies know they cannot easily get rid of duds, they become reluctant to hire anyone at all. This is especially true when the economy is not growing fast and they have to bear the huge fixed cost of all the older permanent employees they took on in easier times.

France is not alone in having such problems. In the euro area, Greece, Spain and Italy all have rules that coddle insiders and discourage outsiders. Their youth unemployment rates are, respectively, 48%, 48% and 40%. Developing countries, too, often have rigid labour markets. Brazilian employees typically cost their employers their salary all over again in legally mandated benefits and taxes. South Africa mixes European-style labour protections with extreme racial preferences. Firms must favour black job applicants even if they are unqualified, so long as they have the “capacity to acquire, within a reasonable time, the ability to do the job”. Some 16% of young Brazilians and a stunning 63% of young South Africans are unemployed. Globally, average youth unemployment is 13% compared with the adult rate of 4.5%. Young people are also more likely than older ones to be in temporary, ill-paid or insecure jobs.

The first ten years are essential. They shape careers in the long term. This is when people develop the soft skills that they do not pick up at school

Joblessness matters for several reasons. First, it is miserable for those concerned. Second, it is a waste of human potential. Time spent e-mailing CVs or lying dejected on the sofa is time not spent fixing boilers, laying cables or building a business. Third, it is fiscally ruinous. If the young cannot get a foot on the career ladder, it is hard to see how in time they will be able to support the swelling number of pensioners. Fourth, joblessness can become self-perpetuating. The longer people are out of work, the more their skills and their self-confidence atrophy, the less appealing they look to potential employers and the more likely they are to give up and subsist on the dole.

This “scarring” effect is worse if you are jobless when young, perhaps because that is when work habits become ingrained. Thomas Mroz of the University of North Carolina, Chapel Hill, and Tim Savage of Welch Consulting found that someone who is jobless for a mere six months at the age of 22 will earn 8% less at 23 than he otherwise would have done. Paul Gregg and Emma Tominey of the University of Bristol found that men who were jobless in their youth earn 13–21% less at age 42. And David Bell of the University of Stirling and David Blanchflower of Dartmouth College found that people who were unemployed in their early 20s are less happy than expected even at the age of 50.

“The first ten years are essential. They shape careers in the long term,” says Stefano Scarpetta of the OECD, a think-tank for mostly rich countries. This is when people develop the soft skills that they do not pick up at school, such as conscientiousness, punctuality and teamwork.

Over the next decade more than 1 billion young people will enter the global labour market, and only 40% will be working in jobs that currently exist, estimates the World Bank. Some 90% of new jobs are created by the private sector. The best thing for job creation is economic growth, so policies that promote growth are particularly good for the young. Removing regulatory barriers can also boost job creation. Mr Scarpetta applauds recent attempts in Spain, Italy and Portugal to make labour rules a bit more flexible, but argues that such laws should generally be much simpler. For example, it would be better to scrap the stark distinction between temporary and permanent contracts and have only one basic type of contract in which benefits and job security accumulate gradually. Denmark shows how a labour market can be flexible and still give workers a sense of security. Under its “flexicurity” system companies can hire and fire easily. Unemployed workers are supported by the state, which helps them with retraining and finding new jobs.

Trade unions often favour a minimum wage. This can help those who already have jobs, but if it is set too high it can crowd out those with the fewest skills and the least experience, who tend to be young. It makes more sense to subsidise wages through a negative income tax, thus swelling take-home pay for the lowliest workers without making them more expensive for the employer. But this costs taxpayers money, so many governments prefer to raise the legal minimum wage, passing the cost on to others. America’s Democratic Party is pushing to double the federal minimum wage, to $15 an hour—a certain job-killer.

Putting the tyke into tycoon

Making it easier for young people to start their own business is essential, too. They may be full of energy and open to new ideas, but the firms they create are typically less successful than those launched by older entrepreneurs. The young find it harder to raise capital because they generally have a weaker credit history and less collateral. They usually also know less about the industry they are seeking to enter and have fewer contacts than their older peers. A survey by the Global Entrepreneurship Monitor found that businesses run by entrepreneurs over the age of 35 were 1.7 times as likely to have survived for more than 42 months as those run by 25-34-year-olds.

Young sub-Saharan Africans show the greatest enthusiasm for starting their own business: 52% say they would like to, compared with only 19% in rich Western countries. This is partly because many have little choice. There are fewer good jobs available in poor countries, and in the absence of a welfare state few people can afford to do nothing.

Bamaiyi Guche, a Nigerian 17-year-old, is a typical example of a poor-country entrepreneur. He goes to school from 8 to 12 every morning, then spends the afternoon in the blazing sun selling small water sachets to other poor people without running water in their homes. He makes $1 a day, half of which goes on his school fees. He wants to be a doctor one day.

Some youngsters from well-off families forge careers as “social entrepreneurs”, seeking new ways to do good. Keren Wong, for example, recognises that she was “born into privilege”. (Her parents were prosperous enough to support her at Cornell University.) A Chinese-American, she now runs a non-profit called BEAM which connects teachers in rural Chinese schools so they can swap ideas for teaching more effectively.

Alas, there is a huge mismatch everywhere between the skills that many young people can offer and the ones that employers need. Ms Fonseca says she cannot find the right talent for Talkdesk. “I need very good engineers, very good designers and people who speak very good English. But there aren’t enough of them,” she says. As economies grow more sophisticated, demand for cognitive skills will keep rising. The world’s schools are not even close to meeting it.


Special report: The young



Education

Train those brains

Practically all young people now go to school, but they need to learn a lot more there


Jan 23rd 2016 | From the print edition
Sure beats media studies

JASCHA DÖKER IS a big man with a big beard, a nose ring and tattoos. His father is Turkish, his mother Austrian. He works as an electrician at the Salzburg Festival, a celebration of classical music in Mozart’s home town. He is not an opera fan—he likes the orchestra but not the singing—yet he does his bit to bring Austrian high culture to a global audience.

As well as working, Mr Döker, who is 18, attends the Landesberufsschule, a vocational school. Classes mix theory with hands-on practical work. One classroom has an oven and a dishwasher; another has a mock-up of part of a production line; another lets students control an imaginary “smart building”.

The school moves with the times. “We used to train lots of television and radio repair men, but now people just throw these things away,” says Eberhard Illmer, the director. The basic philosophy, though, remains the same: the school works closely with local employers, who send their apprentices there to ensure that they acquire skills that are in demand. Asked if he fears unemployment, Mr Döker says: “I’m not worried about that.”

Vocational schools in Germany and Austria have a fine reputation, and for good reason. They recognise that not every young person will benefit from a purely academic education. “When I was at school I got bored,” says Mr Döker, “but the technical education here is great.” Youth unemployment in both countries is half the average for the euro area.

Not all education systems serve the young so well. At a village meeting in the Indian state of Uttar Pradesh, parents were told that after attending the village school for five years, most of their children could not read a simple story. Many could not even recognise the letters of the alphabet.

This came as a shock. One parent stood up and said to the headmaster: “You have betrayed us. I have worked like a brute my whole life because, without school, I had no skills other than those of a donkey. But you told us that if I sent my son to school, his life would be different from mine. For five years I have kept him from the fields and work…only now I find out that he is 13 years old and doesn’t know anything. His life won’t be different. He will labour like a brute, just like me.” The headmaster retorted: “It is not our fault. We do what we can with your children. But you [are] right, you are brutes and donkeys. The children of donkeys are also donkeys.”

One of the people at the meeting was Lant Pritchett, an American economist now at Harvard. He argues that Indian public schools are wretched because they are unaccountable. They have to meet government targets for enrolling pupils, but they do not have to demonstrate to parents or anyone else that the children are learning anything. Barely half the teachers bother to show up on any given day. A study cited in Mr Pritchett’s book, “The Rebirth of Education: Schooling Ain’t Learning”, found that after eight years of school, 60% of Indian children could not use a ruler to measure a pencil.

Sure beats media studies

The good news is that in recent decades all countries, rich or poor, democratic or despotic, have made huge strides in getting young people into classrooms. In 1950 the average adult over 15 had received just three years of schooling; by 2010 the figure had risen to eight. In rich countries it went up from six to 11 years over that period, and in poor ones it shot from two to seven. These are remarkable figures. Modern Zambians or Haitians spend longer in school than the average Italian did in 1960. Furthermore, university, once the preserve of a tiny elite, has become a rite of passage for the global middle class. Some 41% of 25-34-year-olds in rich countries now have tertiary education, up from 26% in 2000. Developing countries are catching up fast.

The bad news is that how much people actually learn in classrooms and lecture halls varies widely. In developing countries, which account for the majority of pupils, many schools are atrocious. PISA, the OECD’s international benchmark for 15-year-olds’ attainment in science, maths and reading, does not cover the poorest nations, but results in several low-to-middle-income countries are disappointing. A Finnish student is 170 times more likely than a Mexican one to be a “top performer” in the PISA science test. In the maths test, more than 60% of the Brazilians would be among the bottom 10% in South Korea. In most developing countries ranked by PISA, more than half the students achieved only very basic competence in maths. In rich countries only a fifth did this badly.

Those who cannot read or manipulate numbers earn less. Robert Barro of Harvard and Jong-Wha Lee of Korea University estimate that, on a global average, the wages of those who have completed secondary school are about 77% higher than of those with only primary schooling, and college graduates make 240% more. If developing countries are to realise the “demographic dividend” from a young, energetic population, those young people will have to be educated better.

Since the biggest gaps in test scores are between rich countries and poor ones, you might think that money played a big part. Yet “resources per se have little to no statistically significant impact” on how much pupils learn, concludes Mr Pritchett. Rich countries have doubled or tripled spending on schools since around 1970, to little effect. America spends twice as much as Poland, yet both countries’ 15-year-olds get similar results on PISA. South Africa spends more than Kenya but does much less well.

Many educational fads are harmful. One survey found that 85% of American parents thought they should praise their children to bolster their self-esteem, but studies suggest that undeserved praise makes children complacent. Amanda Ripley, the author of “The Smartest Kids in the World”, describes how an American student visiting one of Finland’s outstanding schools was surprised to see so few gleaming trophies on display.

What works

Good school systems come in many shapes. Sweden and the Netherlands have voucher-like systems, where parents can spend public money on the private or public schools of their choice. South Korea has a centralised system in which public-school students also use private crammers to get through a high-stakes exam at 18. Finland went from also-ran to world-beater by insisting that only the brightest graduates could become teachers, whereas in America “almost anyone who claim[s] to like children” can find a place on a teacher-training course, says Ms Ripley. And what works in one country may not travel easily to another. For example, Dieter Euler of the University of St Gallen found that Teutonic vocational schools cannot easily be replicated in other countries where governments, firms and unions do not have the same close relationship.

The quality of teachers clearly matters, and in countries with great schools they tend to be well paid. But if the system is dysfunctional, offering them more money is pointless. In parts of India teachers’ pay is so high that people who have no interest in teaching pay large bribes to be hired.

Nearly all systems, public or private, produce some excellent schools. To improve results across the board, Mr Pritchett urges decentralisation. Central governments should set standards and make sure that private schools are not preaching jihad, but headmasters should have the power to hire and fire teachers and good schools should be allowed to drive out bad ones. Crucially, performance should be independently measured. Brazil’s education reforms after 1998 loosened federal control and let the money follow the child. As a result, Brazilian students achieved the largest gain on PISA maths tests in 2003-2012.

Overall, young people are better educated than ever before. But as H.G. Wells once put it, history is “a race between education and catastrophe”. No nation can afford to slow down.


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