Eur 21573 en

TECHNICAL REPORT SERIES
The Demography/Education Squeeze in a Knowledge Based Economy

(2000 - 2020)
EUR 21573 EN
Institute for Prospective Technological Studies
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000-2020)
Author: GRY COOMANS (GeoLabour.com) Research Associate at the WORK RESEARCH CENTRE, DUBLIN
The author of this report is solely responsible for the content, style, language and editorial control. The views expressed do not necessarily reflect those of the European Commission.
JANUARY 2005
Technical Report EUR 21573 EN
European Commission Joint Research Centre (DG JRC) Institute for Prospective Technological Studies http://www.jrc.es
Legal notice Neither the European Commission nor any person acting on behalf of the Commission is responsible for the use which might be made of the following information.
Technical Report EUR 21573 EN
European Communities, 2005 Reproduction is authorized provided the source is acknowledged.
Printed in Spain
Table of Contents
TABLE OF CONTENTS Executive Summary ................................................................................................. 5 Structure of the Report ............................................................................................ 7 Chapter 1: Knowledgebased Society Requirements for Qualifications............ 9 1.1 The link between employment rates and educational attainments.................... 9 1.2 The link between employment growth and educational attainments .............. 11 1.3 Employment growth and educational attainments: some conclusions ........... 14 Chapter 2: Demographic Trends and Labour Supply.......................................... 17 2.1 Decline of the working age population ........................................................... 17 2.2 Age distribution of the working age population............................................... 18 Chapter 3: Educational Attainments and Labour Supply.................................... 21 3.1 Transitions in education .................................................................................. 21 3.2 Generational progressions in education.......................................................... 22 3.3 Gender shares in education ............................................................................ 25 Chapter 4: Demographic and Educational Effects on Labour Supply ............... 27 4.1 Strict demographic effects on the labour force................................................ 27 4.2 Strict educational effects on the labour force .................................................. 28 4.3 Total demographic/educational effects on the labour force............................. 29 Chapter 5: Potential Growth of Tertiary-level Employment ................................ 31 5.1 A view on both periods: 2000-2010 and 2010-2020........................................ 31 5.2 An integrated view on the period 2000-2020................................................... 33 5.3 The fate of the younger cohorts in the period 2000-2020................................ 34 Chapter 6:. Policy Implications - Speeding up the Tertiary Transition .............. 35 Annex 1: Sources ................................................................................................... 37 Annex 2: Methodological Restrictions on Demographic Projections and Educational Statistics ............................................................................ 39 Annex 3: Methodological Restrictions - Calculating Maximum Employment Rates........................................................................................................ 41
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)
Executive Summary
EXECUTIVE SUMMARY Background and Objectives This report was prepared by Gry Coomans, for the Work Research Centre in Dublin, on behalf of the Institute for Prospective Technological Studies1 as part of a broad foresight activity aimed at reaching a better understanding of the uncertainties and challenges associated with the Enlargement process over a 10-year horizon. The main objective of this report is to suggest appropriate policy measures to support the development of the Information Society in the EU New Member States and Candidate Countries in line with the Lisbon Strategy. This report focuses on the disruptive impact of the demographic changes that Europe will witness over the next 10 to 15 years. Though we are all aware that the European society is ageing, there has been little research that clearly identifies what the effects of this change might be, particularly as regards the labour force in the emerging context of a knowledgebased economy. Even less has been published on its effects on the European New Member States. This report aims to document this issue and demonstrate the urgent need to take measures to avoid major problems in terms of labour shortages. It is our conviction that, if no measures are taken, the growth needed for the New Member States economies to converge may never happen. This conviction is based on two key findings. Key Findings First, in the emerging knowledge-based society, the number of jobs for people with tertiarylevel education is growing, while the number of jobs for those with lower education levels is decreasing in most fields. In both the US and Western Europe, the number of jobs requiring tertiary-level education has now risen to a multiple of the average employment growth, in a ratio of almost 2 to 1. Indeed, increased productivity depends on this, as any growth in the employment of people with lower education levels contributes more to social cohesion than to economic growth. In the EU-15, employment rates for those with tertiary education are the highest (83% on average, as against 49% for those with lower education levels). They are also the most homogeneous (falling between 78% and 88%, with an average unemployment rate of under 5%) as compared to the rates for those with middle and low education levels. Hence, the further growth of tertiary-level jobs will depend: - on the supply of educated youth, which is strongly determined by the output of the educational system - only to a very marginal extent on raising the employment rate of the tertiary-educated population. Second, the size of the incoming younger generation is undergoing a clear decline. This is particularly steep in the New Member States, with an expected 42% less young people aged between 15-24 in 2020, as compared with 2000. Any supplementary growth of tertiary-level jobs will therefore depend on the changing share of tertiary-educated population from one generation to the next. Indeed, all growth economies have gained their high yield as a result of past educational investments, as has been the case in Ireland, Finland and Spain. In the EU as a whole, 25% of the 25-34 age group now have tertiary level education, and this is expected to rise to 30% by 2020. However, the generational progression in educational attainment is still insufficient to
1
IPTS is one of the 7 institutes of the Joint Research Centre (JRC) of the European Commission. (http://www.jrc.es)
promote the knowledge-based society. The distribution across the EU of tertiary-educated people in the 25-34 age group is also uneven in some countries they represent less than 15%, whereas in others they represent close to or more than 50%. This (uneven) distribution will be one of the main determinants of the geographical distribution of future economic growth. Conclusions In this study, we have mapped the potential growth of employment at tertiary level, after combining the demographic projections and the projections for each educational level. This exercise leads to the following conclusions: Period 2000-2010: During this period, the growth prospects of tertiary-level jobs will be fuelled by high educational progression combined with slower economic growth and/or moderate demographic decline of the working age population. This has happened in Ireland, France, Spain, Greece, Malta, Cyprus and Poland where it is expected that the observable influx of the younger generations into higher education will compensate, to some extent, for the declining numbers of young people in such a combination that the expectable growth path can be fuelled with the necessary human resources. Stagnation of educational attainments combined with negative demographic trends could be a negative sign for economic growth in countries like Germany, the Netherlands or Switzerland i.e. three countries where the female population is still clearly lagging behind in education. All the Eastern European New Member States, with the exception of Poland, have clearly unfavourable prospects for tertiary-level job growth due to the combination of steep demographic decline and a transition to tertiary education that is too slow. Period 2010-2020 No country in the EU-25 will escape the strain of narrowing margins between the needs of the labour market and the availability of tertiary educated youth in the second decade of the century. In Estonia, Latvia, Germany, Czech Republic and Hungary, the growth in numbers of tertiary educated people of working age is projected to become negative after 2010. Only in Cyprus and Ireland will the annual increase of this group be above 2.5%. In Austria, France, Spain, Poland, Luxembourg, UK, and Belgium, their number will increase annually by between 1.0 and 1.8%. In all the other countries, the increase is expected to be below 1%. The potential growth of effective tertiary-level jobs will be closely constrained by these numbers. Only where the generational progression in educational attainments is highest (Cyprus, Spain, Poland, Ireland, followed by France and Portugal) can the increased participation resulting from improved education compensate for demographic stagnation or decline. However, demographic decline may be so steep that educational progression may not suffice to compensate as may be the case in Spain from 2010 to 2020. Germany, Italy and Finland in the worst position with clearly negative growth expected in the second decade. Policy Implications This reports states that, after two centuries of abundant supplies of young labour that made open labour markets possible, Europe is now facing a complete disruption in demographic trends. The main policy implication of this is the need to prioritise not only educational output, but also all reforms that would improve the capacity of the education system to fulfil the requirements of the knowledge-based society in both quantity and quality. 6
INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
Structure of the Report
THE STRUCTURE OF THE REPORT Chapter 1 of the report illustrates how, in the framework of our economies, the educational and qualificational characteristics of the Labour Force draw a renewed importance from the emergence of the knowledge-based society (KBS) that enforces new requirements in terms of competence building. Chapter 2 displays the downwards trends in demography affecting negatively the Labour Supply. Chapter 3 documents the educational transitions favouring the shift towards a growing share of highly qualified youth in some countries. Chapter 4 illustrates the problem under consideration in this study: the squeeze that might occur between demographic decline and educational transition. The shift in educational distributions might or not compensate for the declining demographic quantities by improving the shares of quality-educated populations, to a level seen as sufficient to fuel both employment growth and productivity growth. Coming back to the question raised in Chapter 1, that of the availability of tertiary educated labour force to fuel employment and economic growth, Chapter 5 provides a projection of the potential growth of tertiary-level employment, on the basis of activity rates that would reach the same levels attained now by the best performing EU countries. Finally, Chapter 6 aims at drawing some policy and research conclusions.
Conventions on educational attainments Following the International Standard Classification of Education (ISCED-1997) LOW = ISCED 0-2 = Less than Upper Secondary School MEDIUM = ISCED-3 = Upper Secondary Level HIGH = ISCED 567 = tertiary education
1. Knowledge-based Society Requirements for Qualifications
CHAPTER 1: KNOWLEDGEBASED SOCIETY REQUIREMENTS FOR QUALIFICATIONS 1.1 The link between employment rates and educational attainments The link between educational attainments and employment rates are usually straightforward: the higher the educational attainment the higher the employment rate of that category. The chart below illustrates this relation for employment rates of the 25-64 age group per level of education (2002) in 28 European countries,2 and ranks the countries of EU25 per share of employment among the low educated.
Employment rate per educational level
2002 (except 2003 LT and MT)
L=Low; M=Medium; H=High
NO CH RO BG EU25 PT NL DK SE ES CY LU GR MT FI AT IE UK FR IT DE SI BE LV HU LT EE CZ PL SK EU15 0 20 40 60 80
H M L
100
Source: Eurostat (Spring) LFS
EU25 + Norway, Switzerland, Romania and Bulgaria. Those non-EU countries are listed first in the chart
In all cases, the employment rates regularly increase together with the educational attainments: for the post-schooling age group (25-64), the EU15 average employment rates lie at 54% for the Low educated, at 73% for the Medium educated and at 84 % for the High (tertiary) educated. Moreover, as illustrated by the chart above, the national differences can be considerable between the employment rates for low educated (ranking within the EU-15 between 16% in Slovakia and above 60% in Denmark or in the Netherlands), while they are systematically much narrower for those at tertiary level (ranking between 77 and 87%). Portugal - where the low-educated make 80% of the population aged 25-64, against 34% on EU-25 average is the only country that displays lower employment rates for those at Upper Secondary level.
Unemployment rate per educational level
2002 (except 2003 LT and MT)
L=Low; M=Medium; H=High
NO CH RO BG EU25 SK PL LV LT CZ EE FI DE FR ES UK HU BE IT SI GR MT AT SE IE DK PT LU CY NL EU15 0
Expectedly, the relation is opposite for the unemployment: on EU15 average, the unemployment rate lies at 11.9% for the low educated, at 9.3% for the medium educated and at 4.8% for the tertiary educated for an average unemployment rate at 9% (2002 figures). This has far-reaching consequences. At one end, there is a large leeway to increase the employment of low educated, but there is hardly any for those at tertiary level: for the latter, any employment growth would be in need of an additional supply of highly qualified people. In other words, tertiary level employment can only be increased if the educational system provides a larger output.
H M L
10
20
30
10
1.2 The link between employment growth and educational attainments The second basic relation links the educational attainment and the actual employment growth. The chart below illustrates the employment growth rates in the EU15 and the USA during the last decade. It shows on total that growth has been positive and of similar range (1.4%) in both cases. Both in the EU and in the US, the employment growth of people with tertiary level education has been at least the double of that average of 1.4% - respectively 2.9% and 3.2% - while it was simply negative for those with the lowest attainments respectively 3.3% and -0.6%.
Annual growth of employment per educational level*

EU15 - 1996-2003
4 3 2 1 0 -1 -2 -3 -4
H ig h ed . To ta l Lo w M
USA - 1992-2002
4
2,9 2,0 1,4
3 2 1
3,2 2,2 1,4 -0,6 0,0
-3,3
0 -1
<B ac h <H S nd G ra d ol lSC To ta l
S-
Source: Eurostat LFS US BLS (Bureau of Labor Statistics) * For the USA, : <HS comes for Less than High School , HS-SCnd for High School, some College (no degree) , <Bach for Less than Bachelor degree , Coll-Grad for College Graduates.
The chart next page illustrates this same data for all 28 European countries participating to the Labour Force Survey (LFS). The right hand chart shows the average annual growth of employment per country during the period 1996-2003. The left hand chart details those totals per level of educational attainments of the corresponding populations. The general trend is of course identical to that observed about EU15 as a whole, as well as USA, with some national variations: the employment growth of people with tertiary level education has been above the average, while it was negative for those with the lowest attainments. Most of the 28 countries represented show that same pattern. Furthermore, those displaying the highest overall employment growth are the current success-stories of EU in terms of economic growth: Spain, Ireland and Finland.3 As to the interpretation, it can be assumed that this is intrinsically linked to the emergence of the Knowledge-based Society and the progressive shift to high added value activities. This is equivalent to a shift away from the low-skill equilibrium that was part of the past technological paradigm.
3
The rare exceptions are located in Greece and Portugal, in the three Baltic States (where definitional problems pollute the figures), in Luxembourg and Romania (negative growth!). For Sweden, any methodological comment to explain its figures should probably refer to high participation rates to vocational training, but closer scrutiny is here also necessary.
11
The same trend can be further illustrated by what is currently happening in the manufacturing sector (see graph below), where the Annual growth rate of employment per educational level 1996-2003 employment decline (less 4.6% between Per educational level Total 1999 and 2003 in the EU-15) is High CH involving the low educated, but not the Medium NO tertiary educated. This internal shift is Low RO accentuated for the younger generations, BG with a massive drop of employment for young low educated workers.
ES CY IE NL LU FI PT HU FR IT SE UK BE GR LV DK AT SI DE LT SK CZ EE PL
-12 -8 -4 0 4 8 12 -4 -2 0 2 4
Across the EU-15, there are in fact a limited number of activities where the employment of low educated is still expanding, mainly catering and construction. It is also useful to consider the same indicator at regional level. Among the 200 NUTS2 regions of the EU-15, only 22 display an employment growth for the tertiary educated that lies below the average employment growth, for the same 1996-2003 period. In the regions of the New Member States, only Estonia displays such negative feature for the 1999-2003 period. Obviously, the trend towards higher shares of tertiary-educated employment and symmetric lower shares of low-skill jobs is a dominant observation across all of Europe. An important explanatory aspect to this trend lies in sectoral shifts, which themselves are at the core of the emergence of the Knowledge-based Society. The reallocation of the workforce between activities is one of the main sources of the labour supply for more productive activities. Historically, productivity growth in agriculture has been freeing labour forces for the sake of industry, and now both agriculture and industry are freeing workforce that can be reallocated in services. The table on the next page illustrates how, over the recent past (1999-2003) that reallocation has continued in Europe. On average, employment in agriculture went on declining fast, industry slowly, while the employment in market and non-market services keeps on an upward trend. Only
1996-2003, except 1997-2003 HU, LV, PL, RO; 1998-2003 CZ, LT, SK; 1999-2003 IE, UK, CY; NL 1996-2002. Source: Eurostat (Spring) LFS
Change in employment in Manufacturing
(Nace D) per educational level

EU-15*, 1999-2003
400 200 0 -200 -400 -600 -800 -1000 -1200 -1400 -1600 ( x1,000) 5,1%
Low educat.level Change in %

Total -12,3%
-1,8%
55-64 45-54 35-44 -11 -9 -18 -20 -20 -10
-12,3%
-4,6%
25-34 15-24
ed iu
To ta
Lo
ig
* EU-15 excluding BE and NL
12
Poland shows a decline in the four sectors. In the New Member States where agriculture still represents a high share of total employment and therefore significant reserves for reallocation like Poland, Lithuania and Latvia, the agricultural decline is unequal: steep in Latvia and Lithuania, but limited in Poland. In the latter country, the decline is steepest in industry. Three eastern European countries show a good resistance of industrial employment: Latvia, Hungary and Slovakia to which the Czech region of Jihozapad could be added, as well as the western region of Romania (RO05-Vest). On the contrary, no single region in Poland did preserve its industrial employment, and six display a decline by at least 15%. It also means that the old industrial belt of central Europe better resists in its southern rather than its western or northern area. Nevertheless, it is to be expected that industry in those countries will not be able to avoid further downsizing.
A: B:
A
Share in total employment2003 Employment index in 2003 (index 100= 1999)

Industry B 3,8 5,2 1,7 4,2 4,5 2,3 3,1 6,2 5,5 5,0 4,2 15,1 5,4 5,6 4,5 18,3 2,3 14,1 2,4 3,0 17,2 8,9 2,2 6,7 6,0 1,2 9,9 33,5 3,7 3,7 79,1 92,3 82,9 97,2 97,7 97,7 95,0 80,0 84,0 83,7 92,5 90,8 87,3 115,7 85,3 79,6 96,1 72,6 89,4 83,4 108,9 97,1 81,0 83,0 93,6 93,9 127,8 88,0 A 28,2 28,9 25,4 23,4 40,1 31,6 23,2 31,7 31,0 26,8 24,6 22,3 33,5 28,0 32,0 27,6 19,4 27,2 29,9 20,8 29,0 34,7 22,7 37,6 38,2 23,6 32,6 31,1 22,6 21,7 95,5 88,1 98,5 96,5 98,8 101,1 94,5 B 98,0 97,0 97,0 110,0 98,1 89,8 85,5 99,4 114,8 98,5 99,6 97,5 100,7 109,0 104,9 99,6 94,4 108,3 M'kt Serv. A 38,7 40,5 38,4 47,6 32,6 36,1 37,1 36,3 41,3 35,6 38,5 40,2 34,2 40,3 37,1 29,4 44,2 33,2 40,1 42,2 30,0 35,0 36,7 32,8 30,4 42,8 32,5 18,7 41,4 37,0 Source: Eurostat LFS Agriculture: Nace A-B Market Services: Nace G-H-I-J-K 105,1 98,5 108,2 112,5 108,5 108,0 106,2 B 107,4 102,5 105,0 114,5 100,6 101,1 104,7 107,2 116,5 105,2 108,6 104,9 108,6 113,8 111,6 107,0 108,4 112,0 Non-M'kt Serv. A 29,1 25,4 34,5 24,8 22,8 30,0 36,3 25,9 22,2 32,2 32,1 22,4 26,9 25,6 26,5 24,7 33,8 25,5 27,6 34,0 23,7 21,5 38,3 22,2 25,3 32,2 24,9 16,6 29,5 37,4 104,9 97,3 101,7 109,8 104,1 100,8 111,5 B 107,2 104,0 102,3 125,2 106,3 100,0 104,4 103,2 120,8 105,2 108,4 103,6 107,3 122,6 106,2 93,9 111,7 100,6
Agriculture
EU15* AT BE CY CZ DE DK EE ES FI FR GR HU IE IT LT LU LV MT NL PL PT SE SI SK UK BG RO CH NO
EU15*: BE and NL excl. Industry: Nace C-D-E-F Non-market services: other.
Age group 15-64 except BE and NL age group 15+. All 1999-2003 exc. BE and NL 1999-2002, PL 2000-2002.
As to the service sector, where employment growth is concentrating, growth was high enough to compensate for the declines in agriculture and industry only in Hungary, and to a much
13
lesser extent in Latvia and Slovenia. In all cases, market services4 were heading to higher employment levels, except in the Czech Republic where they hardly increased, and in Poland, where there was a unique 1.5% decline. However, it is clear that this is where future employment growth will have to concentrate. Compared to the 39% share of market services in overall employment in the EU15, Estonia lacks 2.5 percentage points, Hungary and Latvia close to 5 percentage points, Slovenia and the Czech Republic 6 percentage points, while Poland, Lithuania and Slovakia lack more than 8 percentage points. Together with those sectoral shifts, the trend towards more education -intensive jobs is widespread across all activities as illustrated by the chart above on the manufacturing industry. That trend - the growing educational level requested by the labour market - gives a good indicator of how the shift occurs towards higher added value activities. 1.3 Employment growth and educational attainments: some conclusions As to the consequences of the relation between employment growth and educational attainments, they are manifold. First of all, it sets the supply of tertiary-educated labour supply as the main bottleneck both for future overall employment growth and for productivity growth making together the overall economic growth. It is indeed tempting to draw from the chart page 9 the following statement: to achieve any level of overall employment growth, say 1%, it is needed to have twice that growth, say 2%, of employment of tertiary educated. Second, remembering that the employment rate of the tertiary educated can hardly be raised, this 2 to 1 ratio then means that unless some generational progression of educational attainment is widening the supply of tertiary educated workers, future growth could only depend on raising the employment rate of lower educated, who make a limited contribution to productivity growth. This is where educational progression appears as the only possible remedy to stagnating or receding demography. A third consequence is that the reserves for employment growth that would derive from low overall employment rates are less important than the future availability of tertiary educated. For example in Italy, the slow progression in the number of tertiary-educated reduces the margin to overcome the shortcomings of the industrial-district-based model and to extend the use of new technologies that would allow for its revival. While the best educated young tend to be absorbed by smart activities, the activities where modernisation lags behind are at risk to be trapped in an endless race for cost-containing along defensive patterns. Lack of tertiaryeducated would then feed a dual system where the strain from globalisation will concentrate on the lower end. Finally, the basic relation that puts the tertiary educated to the fore of employment growth also involves that unemployment might develop at the lower end at the same time that skillshortages multiply at all other levels. Considering the global trends to generational progressions in educational attainment, the question can be put as a problem of scissorsshaped evolution: will the demand for low educated workers decline faster or slower than their supply? (See box on the next page).
Market Services are: wholesale and retail trade, repair of motor vehicles, motorcycles and personal and household goods (Nace G); hotels and restaurants (Nace H); transport, storage and telecommunications (Nace I); financial intermediation (Nace J); real estate, renting and business activities (Nace K). INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
14
Box: Will the demand for low educated workers decline faster or slower than their supply? During the 1996-2003 period and on EU-15 average, the employment of low educated people decreased by over 3% annually (in the 15-64 age group), and the projection of the number of low educated people in the same age group displays an annual decrease of 0.7% in the present decade, and an annual decrease of 1.5% in the second decade of the century (See EU15 figures in tables below). In other words, the low educated are at risk of increasing unemployment and decreasing employment rates. The reduction of their supply is a possible answer to this negative evolution. The charts below show a variety of prospects. Nevertheless, inasmuch the past decline of employment of those with low educational attainment was to continue along the same trends as today, there are not many countries where the scissors effect would seem to work to any significant extent in a favourable direction: besides Latvia (where the educational data appear fragile), we find in this list the countries where the generational progression in educational attainments has most contributed to the reduction in the number of low educated (Spain, Belgium, Finland and France). In Portugal, Cyprus and the Netherlands, the employment of low-educated was still displaying some residual growth. But two in these countries rank first in the EU as to the overall employment rate of low-skilled the Netherlands in the 15-24 age group, due to their highly developed active employment policies for the youngsters, and Portugal for those in the following age groups, where low-educated still make up over 70% of the population.
Annual growth of the population with Low Education, Age group 15-64, 2000-2010
1 0 -1 -2 -3 -4 -5
paGrEdL1 0
-0,6
-0,6
HU
DK
EU15
EU25
RO
CH CH
UK
CY
DE
FR
SK
EE
BE
SE
LV
ES
CZ
LU
AT
PL
NL
PT
SI
FI
Annual growth of the population with Low Education, Age group 15-64, 2010-2020
1 0 -1 -2 -3 -4 -5
paGrEdL20
-1,5
EU15 HU DK FR UK CY DE BE SK EE SE ES CZ LU AT NL PT SI FI GR LV IE IT PL LT MT
-1,7
EU25
RO
Annual growth of the employment of Low-educated, Age group 15-64, 1996-2003*

5
EG_Low
0 -5 -10 -15 SI IE HU RO CH GR EU15 EU25 NO BG CZ FI IT MT CY DK UK DE EE BE SE SK ES LV FR NL PL AT PT LU LT -3,5 -3,2
* See timing under chart page 9 above. Source: Eurostat LFS, Eurostat 2004 Demographic Projections (Baseline scenario) and Geolabour Projection
15
NO
BG
NO
GR
BG
IE
IT
LT
MT
2. Demographic Trends and Labour Supply
CHAPTER 2: DEMOGRAPHIC TRENDS AND LABOUR SUPPLY We have seen above that employment growth and educational attainments demonstrate to have observable relations. A further aspect impacting directly the future labour supply are the demographic trends. 2.1 Decline of the working age population Along the recent (2004) demographic projections, the working age population (i.e. the 15-64 age group under the EC convention), is to reach its peaking volume for the EU15 slightly after 2010: the working age population of the EU15 would be peaking at 258.4 million in 2011 i.e. 1.3% above the 2004 figure, or 3% above the 2000 figure - and then decline to 254 million in 2020.
Decennial growth of the 15-64 age group 2000-2010
2010-2020
TR NO CH RO BG EU25 CY IE MT LU ES GR SE SK FR NL BE UK PT PL FI AT SI DK CZ HU DE IT LV LT EE EU15
22 5,8 -1,9 -2,5 -7,2 2,0 19,4 15,0 12,6 10,8 8,1 6,4 5,4 4,7 4,5 4,2 3,9 3,7 2,5 2,0 1,9 1,4 1,3 0,9 0,3 -0,1 -2,4 -2,4 -5,7 -6,7 -7,5 2,1
TR -0,2 NO CH -7,7 -7,4 RO -13,3 BG -2,7 EU25 CY IE MT LU -0,9 ES -2,1 GR -1,6 SE -5,9 SK -1,1 FR -0,4 NL -1,4 BE UK -3,1 PT PL -8,2 -6,1 FI AT -5,3 SI -1,5 DK CZ -9,7 HU -7,7 -2,5 DE -3,7 IT LV -10,3 -7,0 LT EE -9,9 -1,6 EU15
-15 -10 -5
13,8
6,3 7,1 0,0 7,5
0,0
0,1
-15 -10 -5
10 15 20 25
10 15 20 25
Source: Eurostat 2004 Demographic Projections (Baseline scenario) For CH, NO, TR: UN World Population Prospects (Medium Variant - 2002 Revision)
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Developments in the immigration policy might change this. The above projection assumes an immigration remaining, for the EU-15, at 2.5 per 1,000 population. Doubling the immigration rate to 5 per 1,000 (to compare with the 4 per 1,000 long term immigration rate of the USA ) would add 8 million working age people by 2020, making a 3% increase of the Labour force. But national prospects are here heterogeneous.5 At European level, the 2000-2010 decade shows still a slight positive growth of the working age population at EU15 and EU25 level. But by 2020, the EU15 figures would be back below their 2004 level and even so by 2015 when considering EU25 as a whole. These figures of course vary from one country to another. The two earlier graphs illustrate those trends for the first (2000-2010) and second (2010-2020) decades of this century, showing that in a dozen of countries (including all Eastern European countries and also Germany and Italy) the trend affects negatively the working age population much earlier and/or sharper than in others. For both decades, the Baltic States display the sharpest decline, with an average loss close to 15% of their working age populations. Among the other Eastern European countries, the Czech Republic and Hungary display hardly better figures, with respectively 9.4 and 7.7% decline. Poland would lose 6% of its working age population, and Slovenia only 4% - thanks, in this latter country, to increased immigration. Among candidate countries, prospects appear even worse for Bulgaria (less 19% over the two decades), and Romania (-10%). In Western Europe, Switzerland displays a 10% decline, while Italy, Germany and Finland show between 4 and 6% decline. At the upper end, Cyprus, Ireland, Luxembourg and Turkey would all show close to or more than a one fifth increase during the 2000-2020 period. Malta displays a one eighth increase. All other countries would keep closer to the 2000 index, either slightly below (Slovakia, Portugal and Denmark) or slightly above (Austria and Belgium at +2%, France, the Netherlands, the UK, Sweden and Greece, all with +3 to +4%). Spain, where the working age population was previously projected to stagnate and to decline sharply after 2020 - is now to show a fast increase (+7% between 2000 and 2020) which is obviously due to its high immigration rate since the turn of the century, that led the 2005 figure 10% above that projected in 2000. It must be recalled that stagnating or declining figures represent an extremely far-reaching disruption in historical trends: it is where the economist expects and where the world of human resource managers and recruiters sees - the shift from a buyers market (or an open labour market) to a sellers market (or a tight market, with high scarcity), whereby most behaviours on the labour market will involve major adjustments and require innovative behaviours. The comparison of the two charts above clearly indicates that it is in the second decade (2010-2020) that the strain will spread around. 2.2 Age distribution of the working age population The figures above represent only the first aspect of the demographic changes ahead. A second aspect is related to the age distribution of the labour force. On one hand, in most of Europe, it is the ageing workers group, i.e. the 55-64 age group, that will increase fastest (plus one third in the EU25 in the 2000-2020 period), while the number of those aged 45-54 will only increase by 13%, and that of those aged 15-44 will decline by 12.4%
Source: GeoLabour Projection. The present report does not develop this line of research, but immigration and its related policy could be researched thoroughly to further document the same labour supply issues. On this subject see also our methodological note on page 5 INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
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2. Demographic Trends and Labour Supply
On the younger side It is on the younger side of the age span that the changes are due to be most impressive. On EU15 average, decennial declines in the 15-24 age group will amount to 4 and 5.6% in the present and the next decade respectively, ending up with a close to 10% decline during the 2000-2020 period.
Decennial growth of the 15-24 age group 2000-2010
2010-2020
-3,1 TR -3,4 NO -17,3 CH -28,7 RO -33,3 BG -10,0 EU25 -15,2 SE LU -9,4 UK NL -18,0 CY DK -10,2 AT -4,5 BE -11,9 DE FR -8,7 FI -13,1 MT LT -34,5 LV -41,4 EE -34,4 -30,2 SK IE -2,8 IT -30,6 PL -20,2 HU -19,6 SI -27,8 CZ -12,6 GR -4,1 PT -2,5 ES -5,6 EU15 -50 -40 -30 -20 -10 0
a
TR NO CH RO BG EU25 SE LU UK NL CY DK AT BE DE FR FI MT LT LV EE SK IE IT PL HU SI CZ GR PT ES EU15
6,6 11,5 0,0 -18,3 -23,4 -6,3 19,2 18,3 9,6 8,6 6,9 6,3 4,9 2,9 2,4 -0,3 -1,3 -1,7 -3,5 -4,7 -11,4 -15,2 -15,4 -16,1 -16,4 -17,3 -19,9 -20,4 -22,3 -22,7 -23,7 -4,0 -50 -40 -30 -20 -10 0 10 20
8,2 3,8 5,2
0,8
3,6
10
20
Source: Eurostat 2004 Demographic Projections (Baseline scenario) For CH, NO, TR: UN World Population Prospects (Medium Variant - 2002 Revision)
The collapse of the number of young people in most of the Central European economies is a high-certainty evolution. In all eastern European New Member States, the number of those aged 15-24 is due to decrease by slightly over 40% on average of all 8 countries within the limits of 34% (in Lithuania) and 53% (in Estonia). A decline of such a magnitude is unprecedented in modern times, and the extent of consequences on the labour market can only be surmised. But if ones stresses that young educated people should be introducing updated qualifications into the Labour Force, such a decline of their global number may involve tremendous consequences on the economic capacity of the country.
19
On the older side Simultaneously, the group of the ageing workers will represent an increasing share of the labour force. The chart below illustrates the prospects for the EU15 and those for Germany where this ageing is to be most pronounced, due to the past fertility calendars.
Projection of age distribution Total civilian workforce
20
EU15
15
For lack of data availability, such projection cannot be made for the New Member States, but in terms of cohorts, the ageing process is to remain more progressive until the effect of the fertility collapse that took place after 1990 exerts its full effects on the age distribution i.e. in the second decade.
The EU-15, on one hand, has clearly passed the stage where ageing workers paid the 5 highest price: the employment rate of the 5564 age group in the EU15 has regained 5.5 points between 1996 and 2003 (from 36% to 0 41.5%), although half of this age group still displayed low educational attainment in 1996 2001 2003. Along this progression, the target set at 2011 2021 the Stockholm Summit in 2001, i.e. bringing Source of data: Eurostat LFS, GeoLabour Projection the employment rate for this age group to an average 50%, is unlikely to be attained, but much may here depend on the contribution given by the overall employment growth. But in the New Member States, the ageing workers have paid a high price to the transition - besides the other victimised groups, being the women, the youngsters and the low qualified and their employment rate has not yet recovered from its slightly above 30% level.
15_19 20_24 25_29 30_34 35_39 40_44 45_49 50_54 55_59
10
To illustrate some of the changes in behaviours that such quantitative evolutions are likely to introduce on the labour market, it is useful to look at the forerunner in this respect, namely Japan. Indeed, Japan is undergoing a decline in the number of young people aged 15-24 of 25% between the peaking year 1990 and the year 2005. This has begun to produce extremely typical changes in the youngsters behaviour: the freeter derived from free and the German arbeiter is now the current naming for those young (mostly but not exclusively qualified) workers, ready to zap from one to another employer at short notice, for whatever reasons and at first vexation as it may happen. Even in Europe and in the USA, human resource directors are more and more often explaining that they are confronted with similar behaviours of young zapping employees even adopting group resignation, all at once or with some delay,6 or adopting behaviours that are hard to integrate into old-shaped organisational frameworks.
This kind of behaviour is in fact anything but unprecedented. Before Taylorism managed to sequentialize the work procedures, this behaviour was common among qualified craftsmen, who were in a strong position vis-a -vis their employer. A famous book relates this first published by a French employer in 1870, complaining about the difficulty to enforce discipline-based work organisations. See: Denis POULOT, Le sublime, ou le travailleur comme il est en 1870, et ce quil peut tre, Ed. F. Maspero, 1980. INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
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60_64
3. Educational Attainments and Labour Supply
CHAPTER 3: EDUCATIONAL ATTAINMENTS AND LABOUR SUPPLY We have seen that there are strong links between employment growth, educational attainments, and demographic trends. The educational level of a given population plays a key role7 among those links: a low share of tertiary educated people among a declining cohort of young people appears to be a major threat to both employment rates and economic growth. In line with such hypothesis, the following three sections integrate the available data related to the outputs of the educational system across Europe. As said in the introduction of the report, the analysis relies on traditional educational output data given the common assumption that the educational attainment remains an efficient predictor of professional and qualification flexibility were this predictor weakening over time or unevenly questioned across countries.8 3.1 Transitions in education As shown in the graph below, most of Europe has by now achieved the secondary transition,9 partially by means of raising the compulsory schooling age and partially because education appears both to parents and youngsters as a high-yield investment. Only around one third (33.7%) of the EU25 cohorts aged 25-64 of still remains at low educational level, while 46.2% achieve the secondary level.
D is t r ib u t io n p e r e d u c a t io n a l a t t a in m e n t A g e g ro u p 2 5 -6 4 2000
N O C H R O B G E U 25 P T IT S K C Z P L H U A T S I G R LV LU F R E S LT D E IE N L C Y D K B E S E U K E E F I E U 15 0 ,0
3 3 ,7
4 6 ,2
2 0 ,1
3 6 ,8 2 0 ,0 4 0 ,0
4 2 ,1 6 0 ,0 8 0 ,0
2 1 ,1 1 0 0 ,0
Low S o u r c e : E u ro s ta t L F S
M e d iu m
H ig h
8 9
By focusing on Education, we simply underline that in such area, policy certainly matters. Still, one could argue that in demographics (family policies and associated) policy could play a key role also. This should be further investigated. See Th. Lindh, J. Palme, Report on Study of the implications of demographic trends on the formations and development of human capital, E.C. DG Empl. Institutet fr Framtistudier, Dec. 2004. On this subject see our methodological note on page 5. Transition in the educational attainments by which the young cohorts are brought up to the Upper Secondary level
21
Portugal is clearly lagging behind, and still displays 80% of the 25-64 age group with only Low educational attainment (ISCED 0-2, i.e. less than Upper Secondary). The other Mediterranean countries seemingly display also the least favourable distribution, with Spain, as will be discussed below being a special case. As to the New European Member States, they all show a share of Low educated population below 20%, except Slovenia (25%) and Hungary (29%), Bulgaria (31%) and Romania (33%). This means that all of them are doing better than the EU15 average (35.2% in 2002, down from 44.3% in 1996). 3.2 Generational progressions in education A dynamic view tells more about the present achievements. The best indicator is based on the comparison of the shares of each educational level for the older generation (the 55-64 age group) and for the younger generation (the 25-34 age group) as shown in the chart below. The difference between the two figures tells the generational progression in educational attainments, and this is where the relative positions undergo far-reaching changes. The generational progression in educational attainments shows that, on EU15 average, the share of low-educated has diminished by 26 points: from 52% in the 55-64 age group to 26% in the 25-34 age group. The share of high-educated increased by 10 points: from 15% in the 55-64 age group to 25% in the 25-34 age group. The medium education level has also increased by the remaining 16 points (from 33% to 49%). Overall, the chart below, where EU25 countries are ranked per increasing importance of their tertiary transition, shows that all countries in EU25 have raised their educational attainment level from one generation to the other during the last 40 years.
C h a n g e in th e e d u c a tio n a l d is tr ib u tio n b e tw e e n th e 5 5 - 6 4 a n d th e 2 5 - 3 4 a g e g r o u p
CH RO BG EU25 MT LV DE CZ EE HU SK AT IT SI PL PT NL UK LT SE LU DK GR FI FR BE IE CY ES EU15 -5 0 -3 0 -1 0 10 30
2000
L M H
50
S o u r c e : E u r o s ta t L F S
22
The chart shows also where the overall progression was highest (right side of the chart): following Romania, Cyprus and Greece, the highest general progression happened in Spain, Ireland, Belgium, Finland, and France, then Hungary, Italy, Poland and Slovakia. Positive performances in terms of tertiary transition10 (dark blue lines in the chart), are to be found mainly in Spain, but also in Cyprus, Ireland, Belgium, France, Finland and Greece all cases where employment growth was steady in recent years.
The strong case of generational progression in Spain When concentrating on the increasing share of High attainments (dark blue lines on the right on the chart), Spain clearly stands out, with an increase of 25 points (from below 10%, in 2000, for the 55-64 age group to above 34% for the 25-34 age group), and considering only women a 32 points increase (from 6 to 38%, and even 41% in 2003) against +18 points for men (from 13% to 31%, and even 34% in 2003). It clearly tells that Spain engaged in the tertiary transition even before achieving a full secondary transition, and now displays a unique x-shaped distribution for the younger generation, with a 40% (Low) 23% (Medium) 37% (High, all in 2003) distribution. It also means that more than half of those reaching the Upper Secondary level study further to obtain a tertiary degree. In some regions of Spain (Pais Vasco, Navarra or Madrid), it is now close to (for males) or above (for females) half of the 25-34 generation that display tertiary attainments. In line with the overall hypothesis of this study, this dramatic generational progression can be seen as the crux of the explanation of the Spanish performance in terms of employment growth: between 1996 and 2003, the overall employment increased by 3.9% annually, and the employment of tertiary-educated increased by an annual 7.3% summing up all age groups between 15 and 64. And the unemployment rate, over the same period, decreased from 22 to 11% (from 42 to 22% for the active youngsters aged 15-24).
On the opposite, Italy for example illustrates how the progression concentrated on attaining the Upper Secondary level, while the progression to tertiary attainments still remains moderate (7% of the age group 55-64 at tertiary level, and still only 13% of those aged 2534). The case of Germany is also interesting and resembles that of the USA: they started from relatively high levels, with close to a quarter of those aged 45 and over at tertiary level, but they display hardly any progression in the younger generations: 22% in the 25-34 age group, with a moderate progression for females compensated by a regression for young males. This is obviously a considerable handicap for the German economy, where overall employment grew by an annual 0.1% between 1996 and 2003, to compare with only 1.2 % for those at tertiary level. In the New European Member States, while only Estonia and Cyprus start from a high share of highly educated people in the 25-64 age group, the chart above suggests hardly any case of tertiary transition. In such case, the issue of a tertiary transition would become the major challenge of the Educational system in those countries during this decade.
10
Transition in the educational attainments by which the young cohorts are brought up to the Tertiary level of the Educational system
23
The case of Poland deserves closer scrutiny. The chart below shows how the share of tertiaryeducated in the 25-34 age group has recently begun to climb even if the jump between 2002 and 2003 is statistically uncertain.11 Such a progression is of course rather delicate to project into the future, as its presents the feature of a starting process that makes it uncomfortable to consider the recent changes as a basis for future trends. Therefore, all projections build on such trends must be labelled as high-uncertainty projections.
Share of tertiary attainments in Poland, Age group 25-34, 1998-2003
35 30 25 20 15 y = 8,4089x0,2814 R2 = 0,8254 y = 12,734x0,2812 R2 = 0,8581
Females
Males
10 5 0
20 00 19 98 20 02
Source: Eurostat LFS
The statistical disruption is evident when looking at the years 2000-2002. This progression is confirmed by other available data, like those shown below in the chart on tertiary diplomas delivered in Poland over the last two decades. A similar chart for other countries also suggests that tertiary progressions are under way in Hungary, Latvia or Slovakia. But they do not seem to present the same level of dynamics as in Poland. On the contrary, the figures of the Czech Republic might be rather worrying.
coo30605trav Annual number of tertiary diplomas per period of attainment (Index 100 = annual average 1986-1990) 300 1991-95 250 200 150 100 50 0 CZ EE HU LV LT PL SK 1996-2001
Source : Eurostat LFS 2002
11
The reference years of the corresponding statistical series are too recent - further observation should validate the sustained existence of this tertiary transition INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
24
3.3 Gender shares in Education An additional aspect is the role of females in the generational progression of educational attainments. The following chart illustrates the difference between male and female shares of tertiary attainments in the 25-34 age group, both for 2000 and for 2020 along the loglinear projection of those shares for each gender. On EU15 average, females now display a higher share of highly educated as compared to males, and this gap is likely to increase. In the lower area of the chart, the countries where females are still lagging behind males are Germany, the UK, Luxembourg, Malta, Austria and the Czech Republic, and massively in Switzerland. Noteworthy, the projection suggests that the gap might persist during the next two decades in Germany, Luxembourg and Switzerland. The reason for this may well appear linked to the paradigm of Kindern, Kirche, Kche paradigm, where women would be preferably assigned, but other elements are adding up on the argument such as those of earnings differentials of females and males at tertiary level. The stake in this might thus be the D iffe re n c e b e tw e e n fe m a le a n d m a le s h a re s following: the countries with massive o f te rtia ry a tta in m e n ts in th e 2 5 -3 4 a g e g ro u p overall progressions have indeed given 2 0 0 0 * a n d 2 0 2 0 a central role to females in terms of NO CH labour force, whilst those with R O stagnating educational attainments, BG like Germany or Switzerland, did not EU25 2020 They are at risk of handicapping EE 2000 FI themselves through gender inequality. SI Reducing this inequality would be a LT first rank priority in those countries to LV PL improve the overall progression in the BE educational attainments of the Labour PT force, and to raise the female ES SE contribution to economic growth.
GR DK IE FR HU IT CY NL SK CZ AT MT LU UK DE EU15
-2 0
-1 0
10
20
2 0 0 0 *: a v e ra g e 1 9 9 9 -2 0 0 0 -2 0 0 1 , e xc . 2 0 0 3 fo r L T a n d M T . S o u rc e : E u ro s ta t S p rin g L F S fo r 1 9 9 9 -2 0 0 0 -2 0 0 1 . G e o L a b o u r P ro je c tio n fo r 2 0 2 0
25
4. Demographic and Educational Effects on Labour Supply
CHAPTER 4: DEMOGRAPHIC AND EDUCATIONAL EFFECTS ON THE LABOUR SUPPLY The implication of the different progressions across countries is that it puts the countries in different positions to compensate the diverse recessive demographic effect on the Labour force by the activation effect of the educational progressions. Indeed, the rate of participation to the Labour force increases together with the educational attainments, as seen above, and any progression in educational attainments exerts a pull effect on the average participation rate. The charts below illustrate this step by step and per country. 4.1 Strict demographic effects on the labour force The chart below presents the sheer demographic effect on the labour force.12 This can be considered as a constant activity scenario per gender and age, regardless of any educational dimension. For example, the high growth in Cyprus derives from the high demographic growth of the age groups 25-54, where activity rates are highest, notwithstanding the relative decline of the younger age group (as seen in 2.1). Reversely, the decline in Estonia corresponds strictly to the projected decline of its population, employment rates being considered as constant (2000) regardless of educational attainments change. Hence, if it was only for the demographic changes, the evolution of the labour force in EU25 would stay favourable for only some countries during the 2000-2010 period, and would become frankly negative for about all of EU25 during the next decade.
D e m o g ra p h ic e ffe c t o n th e la b o u r fo rc e
2 0 0 0 -2 0 1 0 a n d 2 0 1 0 -2 0 2 0
E xp re s s e d a s % o f th e la b o u r fo rc e in th e firs t ye a r o f th e d e c a d e
NO CH RO BG EU 25 CY IE LU ES GR SE UK PT SK NL FR AT DK BE PL SI HU DE CZ FI IT LT LV EE EU 15 -3 0 -2 0 -1 0 0 10
2 0 0 0 -2 0 1 0 2 0 1 0 -2 0 2 0
20
30
S o u rce : G e o L a b o u r, b a se d o n E u ro sta t 2 0 0 4 D e m o g ra p h ic P ro je ctio n (B a se lin e sce n a rio )
12
It is calculated by applying constant rates per gender and age (as in 2000) onto the projected demographic cohorts.
27
4.2 Strict educational effects on the labour force The second chart below presents the sheer educational effect.13 It is equivalent to a neutralisation of the demographic changes, isolating what is strictly due to the educational shift. Here Cyprus shows an example of how the sheer educational shift, that exerts by itself a pull effect on the average activity rate, would increase the size of the labour force even if the size of the different gender and age groups remained constant. On the opposite side, Romania, the Baltic countries or the Czech Republic show obviously negative trends, as was already predictable from the earlier data about the generational progressions in education (see Chapter 3). Hence, if it was only for the educational progressions, the evolution of the labour force in EU25 would stay favourable for all countries during the 2000-2010 period with the exception of Romania, and those favourable effects would continue but decline in proportion during the next decade, with negative impacts in Estonia and Lithuania.
Educational effect on the Labour force 2000-2010 and 2010-2020 Expressed as % of the Labour force in the first year of the decade
NO CH RO BG EU25 ES IE IT BE HU NL CY FR PT FI SK PL DK SE LU GR AT CZ SI EE DE LV LT EU15 -4 -2 0 2 4
2000-2010 2010-2020
Source: GeoLabour, based on Eurostat 2004 Demographic Projection (Baseline scenario) and Labour Force Survey (spring)
No data available for UK, IE and MT
13
It is obtained by applying the 2000 activity rates per gender, per age and per educational attainments onto the demographic projections of cohorts per educational attainments, and by deducing what is strictly due to the demographic shift as it is calculated earlier in section 4.1. INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
28
4. Demographic and Educational Effects on Labour Supply
4.3 Total demographic/educational effects on the labour force Finally the third chart presents the total growth of the labour force, summing up the demographic effect and the educational effect meaning a scenario of constant behaviour per gender and age group AND per educational level, given the projections that are made for the size of each gender/age/educational subgroup. The resulting chart shows how, for the EU15, the total effect amounts to a 4.6% increase of the Labour force during the present decade, being the combination of 3.2% due to the demographic shift and 1.3% due to the educational progression. For the second decade, the educational effect would increase the Labour force by 1.4%, whilst sheer demography would cut it by 3.3%, ending up with a 1.9% decline unless of course activity rates are raised for other reasons. This chart show for example how Spain would similarly fuel its Labour force growth in the present decade, thanks to a 4% educational push adding up above the 10.2% demographic effect, totalling an increase of the Labour force above 14%. But for the second decade; the educational push (+3.4%) would not compensate for the negative demographic effect (less 4.1%), ending up in a slight decline. But Spain, where the employment rate increased from 47.6% in 1996 to 59.6% in 2003 (as compared to 64.5% in the EU15) could also further increase the activity rates to fuel employment growth.
Decennial growth of the Labour force 2000-2010 and 2010-2020 Expressed as % of the Labour force in the first year of the decade
NO CH RO BG EU25 CY LU ES GR SE PT NL SK BE FR DK AT DE HU PL IT SI FI CZ LV LT EE EU15 -20 -10 0 10 20
2000-2010 2010-2020
30
40
Source: GeoLabour, based on Eurostat 2004 Demographic Projection (Baseline scenario) and Labour Force Survey (spring)
No data available for UK, IE and MT
29
Amongst eastern European New Member States, the prospects for each of the next two decades are very different. For the present decade, in the Baltic States, the impact of demography is clearly negative, and notwithstanding some educational progressions in Latvia and Estonia, the total demographic/educational effect on the Labour force is negative, and continues to be so in the second decade. For Slovakia, Poland and Slovenia, a residual demographic in the present decade is reinforced by some educational progressions, but the total effect is only significant in Slovakia (+5.3%), while it is moderate in Poland and Slovenia (close to 2.5% in both countries). In the second decade, the total effect is clearly negative, and brings the final figure below its 2000 level both in Poland and in Slovenia. Poland, which is now displaying the lowest employment rate (51%) in the EU25, as well as Slovakia and Slovenia could certainly find large additional reserves in the re-activation of inactive people. Hungary, where the demographic appears close to neutrality in the present decade, finds some expansion in the generational progression in education, but it must be said that this progression entirely derives from the progressive exit of the low-educated generations born before 1945 as the transition to secondary education was achieved in the first post-war decade, with hardly any further progression for the generations born in the last 40 years. Therefore, in the second decade, the contribution of the educational progression is extremely limited, and far from compensating for the steep demographic regression. Last, the Czech Republic: the educational progression remains much too moderate to compensate for the demographic decline that becomes steep in the second decade.
30
5. Potential Growth of Tertiary-level Employment
CHAPTER 5: THE POTENTIAL GROWTH OF TERTIARY-LEVEL EMPLOYMENT The previous chapters assumed that employment-related behaviour remain constant across time i.e. that activity rates in each gender, age and educational subgroup would remain constant reflecting a choice that were to remain stable in each gender and age group during the next decades. This of course is a simplification: further activation of inactive people can be organised to fuel employment growth as it can be seen today by comparing national situations across Europe.14 Also, activity rates change together with the transformation of the economy as we have seen earlier. Hence, any estimation of the potential employment growth that would take in account changing employment rates will depart from the constant activity scenario we have used up to now. Still, we will see that the benchmarking along the best European performers is not adding up a lot above the demographic and educational effects, due to the rather homogeneously high employment rates for tertiary-educated across the EU, leading to the conclusion that demographic and educational shifts will act more and more as highly determining factors for economic growth. The charts below display the potential growth in tertiary-level employment, making a distinction between the potential annual employment growth of the 2003-201015 period and of the 2010-2020 period. The calculation is based on projections about demography, educational attainments and employment rates, while activity rates would converge to the values of the best performers. 5.1 A view on both periods: 2000-2010 and 2010-2020 In the EU15, the least demographically recessive countries and those that performed simultaneously a high generational progression in educational attainment - i.e. Ireland, France, Spain and Luxembourg - are those that have at their disposal the highest growth margins for the tertiary-educated, and henceforth also for the rest of the Labour force. Greece presents similarities with Spain in all main aspects, although in a somewhat attenuated form: both countries had preserved high fertility rates into the 1980s, i.e. one decade later than for most other European countries, and this is still fuelling the growth of the working age population in the present decade; high immigration in recent years still compensates for the effect of the fertility collapse starting in the mid-1980s; and educational progression was steady. In both countries the second decade of this century will involve a high price paid to demographics, due to the record collapse in fertility between the early 1980s and the early 1990s (from approx 2.2 in 1980 down to below 1.4 in 1990). Belgium combines a high yield on past educational investments and a moderate pressure at this stage from demographic recession. The UK, Sweden and Portugal are in an intermediate position, with all a potential slightly close to or slightly above 3% annual growth for the employment of tertiary-educated. Still in the present decade, Finland, Italy and Germany, Austria and the Netherlands all display a residual potential lying between 1.9 and 2.6% - which may reveal rather short to fuel vigorous employment growth, and certainly so, for the latter four countries, if they do not manage to reduce the gender gap. Last, in Denmark, where the educational attainments
14 15
For some further details, see Annex 3 Except 2002-2010 for the Netherlands and Luxembourg.
31
already are high, the stability of demographic figures combined with the high employment rate at the starting point leave no margin for further growth in the present decade.
P otential annual em ploym ent grow th T ertiary-educated, 15-64 age group 2003-2010
2010-2020
NO CH RO BG E U 25 CY PL LT LV CZ SK EE HU SI GR ES IE FR LU BE UK SE PT IT FI NL DE AT DK E U 15
-2
4,0 -0,4 2,6 2,8 3,7 5,1 4,0 3,1 2,2 1,7 1,6 1,6 1,5 1,5 6,3 6,0 5,5 5,5 4,9 3,8 3,5 3,3 2,9 2,6 2,4 2,1 2,0 1,9 -0,4 4,1
NO CH RO BG E U 25 CY PL LT LV CZ SK EE HU SI GR ES IE FR LU BE UK SE PT IT FI NL DE AT DK E U 15
1,3 -0,2 0,1 0,2 0,7 3,3 1,4 0,3 -0,4 -0,2 0,6 -0,6 -0,3 0,7 0,7 1,4 2,6 1,7 1,4 0,9 1,1 0,5 0,9 0,4 0,2 0,6 -0,5 1,7 0,3 0,8
-2
Source: G eoLabour, based on Eurostat 2004 Dem ographic Projection (Baseline scenario) and LFS (spring) For non EU25 countries: population based on UN W orld Population Prospects (M edium Variant - 2002 Revision)
In the New Member States, besides Malta and Cyprus that display large reserves, only Poland could draw a significant advantage from its recent rush to tertiary attainment, with a 4% annual potential growth of tertiary-level employment but this holds as long as the fertility collapse of the 1990s does not affect the working age population as it will be the case in the second decade.. Lithuania, insofar definitional problems are not distorting the prospects, appears in an intermediate position, with an annual 3% growth potential. All other countries (Estonia and Latvia, Czech and Slovak Republic, Hungary and Slovenia) display much lower margins, whose limited magnitude cast a doubt as to their capacity to keep pace with the requirement of the KBS not to mention the question of leapfrogging. For the second decade, the narrowing of growth margins is general across all of EU25. Only three countries, where demographic figures are not stagnating, show margins above 2%: Malta, Ireland and Cyprus. The two latter combine the advantages of past educational investment and of demographic dynamism. Two countries display 1.7% potential annual growth of tertiary-level jobs, namely France and Austria the latter owing more too immigration, the former to less deteriorated fertility in the
32
5. Potential Growth of Tertiary-level Employment
1990s. Luxembourg displays 1.4% and the UK 1.1% - and both countries are handicapped by the somewhat lagging female catching up in higher education.. Eleven countries display a potential somewhere between 0.2 and 0.9%. Five countries display negative figures, meaning that along the recent trends, no educational progression could compensate for the demographic declines. Four of them are New Member States: Estonia and Latvia, Hungary and the Czech Republic. The fifth is Germany, which pays a high price to its educational stagnation like Switzerland and also the USA.16 5.2 An integrated view of the period 2000-2020 When making no distinction of period up to 2020, the rankings remain expectedly alike. It tends to confirm that the effective employment growth might concentrate along the Atlantic shoreline of Europe, with Ireland, France, Spain, Luxembourg, Belgium and the UK displaying more than an annual 2% growth of the tertiary-level jobs over the two decades. Greece and certainly Cyprus besides Malta for which indications are more partial, would belong to the same high-growth group.
P o te n tia l a n n u a l e m p lo y m e n t g r o w th T e r tia r y - e d u c a te d , 1 5 - 6 4 a g e g r o u p 2 0 0 3 -2 0 2 0
NO CH RO BG EU 25 CY PL LT SI SK LV CZ HU EE IE FR ES GR LU BE UK AT PT SE IT NL FI DE DK EU 15
2 ,4 -0 ,3 1 ,1 1 ,3 2 ,0 4 ,1 2 ,5 1 ,4 1 ,1 1 ,0 0 ,6 0 ,6 0 ,5 0 ,3 3 ,8 3 ,3 3 ,3 3 ,0 2 ,8 2 ,1 2 ,0 1 ,8 1 ,7 1 ,6 1 ,3 1 ,2 1 ,1 0 ,5 0 ,0 2 ,2 -1 0 1 2 3 4 5
S o u rc e : G e o L a b o u r, b a s e d o n E u ro s ta t 2 0 0 4 D e m o g ra p h ic P ro je c tio n (B a s e lin e s c e n a rio ) a n d L F S (s p rin g ) F o r n o n E U 2 5 c o u n trie s : p o p u la tio n b a s e d o n U N W o rld P o p u la tio n P ro s p e c ts (M e d iu m V a ria n t - 2 0 0 2 R e v is io n )
16
See G. Coomans, Atlas, op. cit.
33
Among central and eastern European countries, the picture appears clearly patchier. Poland prospectively seems to have at least part of the available reserves to keep pace with the requirements of the KBS. Indeed with less than 2% growth per year for tertiary-level jobs, it is to be feared that productivity growth might not be diffused throughout the economic system. Wherever the best part of the labour force could not be attracted, harsh competition will force into defensive strategies. 5.3 The fate of the younger cohorts in the period 2000-2020 It is useful to make a distinction between age groups, by isolating the younger cohorts at tertiary level to the rest. The younger cohorts are indeed reputed to bring better updated qualifications and to be more flexible. The prospects are then put under heavy strain. Considering the 2003-2020 period, only Cyprus, Poland and Ireland display close to or above 4% of potential annual growth in the numbers of tertiary-educated people aged 15-44. France and Spain display above 2%. Five countries (Austria, Sweden, the UK, Slovenia and Slovakia rank from 1.9 down to 1.4%, followed by Greece, Luxembourg and Hungary, all three between 1.4 and 1%. Seven countries (Italy, Belgium, Portugal, the Czech Republic, Finland, Denmark and the Netherlands) display a potential below 1%, but still positive. Four countries, of which the three Baltic States, display a negative figure, with Germany displaying a negative 1.2% annually i.e. an overall decline of more than 20% between 2003 and 2020. This is where Germany pays a high price both to its demographic recession and its educational stagnation like Switzerland.
P o te n tia l a n n u a l e m p lo y m e n t g r o w th T e r tia r y - e d u c a te d , 1 5 - 4 4 a g e g r o u p 2 0 0 3 -2 0 2 0
NO C H- 1 , 6 RO BG EU 25 CY IE PL FR ES AT SE UK SI SK GR LU HU IT BE PT CZ FI DK NL 0 ,0 LV -0 ,3 EE D E -1 ,2 L - 3T ,1 EU 15
-2 0
1 ,2 0 ,7 1 ,4 1 ,0 5 ,2 4 ,3 3 ,9 2 ,5 2 ,0 1 ,9 1 ,8 1 ,6 1 ,5 1 ,5 1 ,4 1 ,3 1 ,0 0 ,6 0 ,6 0 ,6 0 ,5 0 ,3 0 ,3 0 ,2
0 ,9
S o u rc e : G e o L a b o u r, b a s e d o n E u ro s ta t 2 0 0 4 D e m o g ra p h ic P ro je c tio n (B a s e lin e s c e n a rio ) a n d L F S (s p rin g ) F o r n o n E U 2 5 c o u n trie s : p o p u la tio n b a s e d o n U N W o rld P o p u la tio n P ro s p e c ts (M e d iu m V a ria n t - 2 0 0 2 R e v is io n )
34
6. Policy Implications - Speeding up the Tertiary Transition
CHAPTER 6: POLICY IMPLICATIONS - SPEEDING UP THE TERTIARY TRANSITION First, what is at stake is the tertiary transition in education. Today, the educational system is commonly supposed to provide a young labour force with updated school qualifications in line with basic computer literacy. These are acquired at the end of secondary education through a mix of school learning and intra-generational mimetism. However, the productive use of ICTs requires more than basic computer literacy, and an educational shift that involves young people in ICT education up to tertiary level is needed. Second, considering the speed of technological change in both production and consumption, permanent up-skilling is required to take advantage of all opportunities. This is, of course, related to lifelong learning or lifelong development of competencies along the lines of the Lisbon strategy. Depending on a countrys training systems and cultural attitudes, this can be more or less formalised. It can be tracked statistically by recording the numbers that participate in formal training, but more research is needed to scrutinise the links between the knowledge-based society on the one hand, and the new rationale of competence building on the other. Third, the conditions of collective productivity are changing due to the need for organisational innovation embedded in ICTs. In the former Taylorist/Fordist technological paradigm, organisational forms reflected the existing technology by combining relatively closed professional stratifications and discipline-based monitoring of individual performance through formalised and prescriptive tasks. The efficient use of ICTs, however, needs teamwork and responsible autonomy, i.e. flexibility, learning capacity, and tacit and social skills. In these circumstances, formal educational attainments have become, de facto, less important in hiring practises.17 Therefore, what becomes a central issue is the capacity to promote organisational innovation, creating learning organisations that depend less on formal qualifications and are able to achieve effective lifelong development of competencies for both productivity growth and personal fulfilment. Fourth, the importance of widening the tertiary-educated labour supply to promote the knowledge-based economy as the matrix of future productivity growth has been demonstrated by the recent trends in differentials in employment growth according to educational level. Promoting the mobilisation of existing reserves and the extension of the supply should therefore be a first priority in labour market policies. As regards the available reserves, anything that prevents the attainment of gender parity must be seen as more and more counterproductive. Whether tertiary-educated women are being under-utilized or whether limited rewards discourage them from making the continuous educational investment necessary, women nevertheless constitute the main reserve that could improve the productive capacity of the labour force. In this respect, family-friendly policies both at government and enterprise level - are a pre-condition of better mobilisation. Age-friendly policies will improve the participation of ageing workers. There is no future for our ageing societies unless active ageing becomes a priority. Given the handicap that closed professional paths represented for the industrial age, and given the existing unfavourable skills distribution, things can only improve over time. It can also be assumed that difficulties,
17
See Laurie J. BASSI, Are employers recruitment strategies changing?: Competence over credentials? in Competence without credentials, March 1999, US Department of Education, available under www.ed.gov/pubs/Competence/section3.html . This shift is by the way becoming more and more a concern in the hiring business, where a lot of efforts are devoted to develop both job assessment and skill assessment techniques.
35
due to shortages, in replacing outgoing workers with young people will encourage ageing workers to participate more in training and re-skilling in the future. The present low level of immigrant integration allows for wide improvements. In Spain, Ireland and Finland, immigrants already make up a significant share of additional employment. Immigration will be more viable if immigrants are invited to fully participate in the educational progression that is becoming the norm for nationals. Their educational ascension would also give room for continuing immigration coming in at the lower end. Fifth, there can be no doubt that education policy should become a priority for all countries. By 2020, it is expected that the share of tertiary-educated people in the 25-34 age group will range from over 50% in Norway and Cyprus, to below 15% in Italy, the Czech Republic, Slovakia and Romania (with a European average of 30%). Margins for further growth are therefore considerable. Reforming educational systems to adapt to the knowledge-based society is as important as increasing educational output. Qualification systems are often inherited from the past, when they were assigned to closed professional and social paths. Improving the modularisation of education as the Bologna reform has begun to do is one of the most important means to improve the fit with the knowledge-based society. Giving up the selection through failure and the locked positions provided by the hierarchy of school certificates will open up the game, and allow the mobilization of all talents, essential in times of shrinking labour supply. Too many diploma-based entitlements to work have simply been inherited from the highly stratified industrial age. The knowledge-based society principle requires that acquiring knowledge and know-how, experience and tacit skills, and learning and social skills, is not constrained by credentials-based entitlement to work. It also requires that a new approach is taken even with jobs requiring low qualifications, to allow better recognition of the effective competencies involved so they can better be mobilised for productivity growth. After two centuries of abundant labour supply that made the open market labour markets possible, the emerging demographic change will give rise to a structural shortage of the talent needed to fuel a healthy economy in our ageing society. Only the principle of the learning organisation can provide the basis for active ageing and for sustained growth. There can be no doubt that the capacity to promote the learning organisation principle will determine and is already determining both collective and private competitiveness. Promoting education, training and lifelong development of competencies is both the target and the means. Anything that prevents equal access, whatever your gender or age, to learning facilities at any level in the educational or training system and work organisation will incur increasing costs in terms of growth potential. The importance of this issue requires that more research and closer scrutiny be devoted to identifying the bottlenecks to equal access, and setting up not only active ageing, but also learning ageing.
36
Annex 1: Sources
ANNEX 1: SOURCES The database that was used is a collection from: Eurostats Labour Force Survey (LFS, Spring), including data on employment, unemployment and education. Eurostats New Cronos data for past population figures Eurostats Demographic Projections (2004 revision, baseline scenario) for all EU25 Member States + Bulgaria and Romania. UN World Population Prospects (2002 Revision, Medium Variant) for all other European countries. OECD for additional educational data (Education at a Glance, 2003 and 2004) US Bureau of Labour Statistics, for US-related employment figures. GeoLabour Projection (Dublin) for all regional projections (G. Coomans, Atlas of Prospective Labour Supply, 2004)
37
Annex 2: Methodological Restrictions on Demographic Projections and Education Statistics
ANNEX 2: SOME METHODOLOGICAL RESTRICTIONS ON DEMOGRAPHIC PROJECTIONS AND EDUCATIONAL STATISTICS Demographic projections, as well as a statistical approach to qualificational and educational requirements related to the emerging KBS generate numerous methodological issues. Two majors ones that the reader should have on mind are detailed here. A first issue is the uncertainty that entails the projections for demographic and educational figures. Demographics, on one side, are known to display a supposedly higher level of predictability compared to other fields in social sciences. For example, it could be stated that all who will be in the working age population (15-64) in 2020 were born latest in 2005. Nevertheless, in times of fast changing demographics due to irregular past fertility calendars, adjustment policies and behaviours can change the deal at relatively short notice: the best example is the high increase of immigration rates in the recent past in Mediterranean countries where the catastrophic projections that were made until the late 1990s are now revised. On the other side, the projections of numbers per educational attainment cannot be built but under the assumption that past trend can be extrapolated in some way preferably with loglinear functions instead of linear ones. When the past trends are regular and display no signs of being polluted by statistical noise, the projectionist feels comfortable. When recent trends are disrupting medium term trends, then the projection must be labelled as highly uncertain and this is precisely the case in some transition countries such as Poland. But in all cases, educational attainment projections are policy-relevant in the medium term, and therefore any past trend-based projection must here be considered as no more than a constant behaviour projection or as a constant progression projection were it softened by a loglinear future trend. Its usefulness totally lies in one question: what happens if no policy or behaviour change affects the present trend? Contributing to giving answers to this question is a main ambition of this report. Second, it is in many cases by reference to old schemes that the real qualifications are considered, both as to their substantial nature and as to the extent to which experience accumulated over years is enriching them. As to their substantial nature, no theoretical model has ever been produced that allows to objectivize the notion of qualification, although many elements indeed were separately. It is therefore important to go beyond the argument that ideological biases or some accepted social recognition would pollute the in se content of a given qualification. Indeed the qualification and its contents should now be referred also to the changing organisation of work and to the changing organisational requirements that are embedded in the new technological paradigm and in globalisation. For example, does the naming low qualification allow taking full account of the flexibility that is more and more required to have some job done, and does it allow to recognize the extent of competences that are mobilised and developed while doing it? Similarly, to what extent must the experience accumulated over years be made equivalent to some sort of qualification and know-how building while the previous Taylorist/Fordist paradigm was mostly assigning the skill-building within closed professional paths? The issue in these questions is not speculative nor simply definitional, but it has much to do and no less when it is about so-called low qualified jobs- with the tuning of the combinations of factors of production that end up in higher productivity in the frame of fast changing technology, and even more so when declining demographic numbers force to renew
39
both the work organisation and, first of all, its analytical categories.18 In times of fast changes in the sector allocation of production factors, whether in transition economies or in mature economies, these aspects can reveal to have a central importance. Where the pressure will arise from local bottlenecks in the labour supply, then there will be no other solution, if any, than giving up the adequationist approach by which some given qualified worker is supposed to just fit for a given job, and shifting to more constructivist approaches that allow to build higher-level fits, through multi-skilling and cross-training. The problem here lies as much in the real changes as in the social recognition of what the positive content of flexibility involves. For all those reasons, the attention paid to educational attainments must be considered as typical of statistics-dependent analysis. It simply relies on the common assumption that the educational attainment remains an efficient predictor of professional and qualification flexibility were this predictor weakening over time or unevenly questioned across countries. Nevertheless, mentioning the limitations of this predictor still has to bow in front of resisting indications that the educational attainments remain, at a macro level, the most significant determinants of employability, as is illustrated below by employment and unemployment rates distributions.
18
See Paul Santelmann, Qualification ou comptences, En finir avec la notion demplois non qualifis , Editions Liaisons, 2002 INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
40
Annex 3: Methodological Restrictions on Calculating Maximum Employment Rates
ANNEX 3: METHODOLOGICAL RESTRICTIONS ON CALCULATING MAXIMUM EMPLOYMENT RATES

Gender difference in employment rates* 25-44 age group, Tertiary-educated 1996-2003* CH NO RO NMS EE CZ HU SK LV CY PL LT SI LU IT ES DE GR FI IE FR NL UK AT DK BE PT SE EU15 -5 0 5 10 15 20 1996 2003
Potential employment growth can be calculated along different methodologies. It can be benchmarked, for example, against any level of overall employment rate. It can, alternatively, be benchmarked against the employment rates per gender, age group and educational level as given by the best EU national averages considering for example that for the males aged 55-64 with medium educational attainment Sweden, as the best performer, would set the standard for all others.19 And any similar methodology would certainly make sense if the question was about comparing mature economies the one to the other. Nevertheless, if the emphasis is put on the eastern European countries, such systematic benchmarking would appear unrealistic. There are indeed arguments to consider that the benchmark should be chosen in a more selective way. As a matter of fact, their overall performance in employment growth does not seem to be dependant in the first place on their capacity to increase the employability of low-educated workers, who were up to now mostly victims of the transition. If anything was uttermost important in any strategy aiming at achieving any level of leapfrogging, there is hardly any doubt that it should refer to their capacity to promote high added value activities. Even more than it is the case for mature economies, this statement sets their potential growth of employment of tertiary-educated as the central issue, and also as the main bottleneck for overall growth whether in terms of employment growth or in terms of productivity growth. Moreover, as illustrated by the charts above, the margins are much wider, in the eastern European New Member States and candidate countries, for any growth of both low educated and medium-educated. For low educated, among all ten countries (8 new Members States + Romania and Bulgaria), the highest employment rate is that of Romania, at 44%, against an EU15 average close to 50% (15-64 age group). For those at Upper Secondary level, only the Czech Republic (73%) lies above the EU15 average (71%) but the UK, Sweden, the Netherlands or Denmark lie close to 80%. As to the tertiary educated, as has been said before, the dispersion is much lower: Only Bulgaria stands out with 76%, while all other (nine countries) display an employment rate for tertiary educated between 80 and 86%,
* Difference between male and female employment rate, 25-44 age group, tertiary education. ** All 1996-2003, except NL 1996-2002; CY 1999-2003; CZ, EE, HU, LV, LT, PT, SI, SK, NMS, EU25, RO 1998-2003. EU25 and NMS (New Member States) excl. MT. Source: Eurostat (Spring) LFS
19
This methodology was systematically applied, down to the regional NUTS2 level for all EU countries and for other countries covered by the Labour Force Survey, in G. Coomans, Atlas of Prospective Labour Supply, GeoLabour, Dublin, 2004.
41
as compared to 84% on EU15 average and this of course confirms both that 1) there is hardly any leeway to raise them further and 2) that the supply is dependent on additional young people joining in with their tertiary attainments. Therefore, given that the emphasis is here put on the CEECs, the potential for employment growth will be calculated based on the following assumption: the maximum level of employment of tertiary educated per gender and (10-year) age group is benchmarked along the highest employment rate of tertiary-educated for each gender and age group amongst the 15 EU Member States national averages as in the year 2000 (See Table left). Those best gender/age employment rates are thereafter applied onto the projected numbers, for 2010 and 2020, of tertiary-educated people in each gender/age group, ending up with what can be considered as the maximum employment that could reasonably be reached for the tertiary-educated. This assumption, in other words, relies on the hypothesis that, through any set of incentives, all countries might end up with a high degree of utilization of the best part of the labour force which is made possible by the higher employability and flexibility of tertiary educated. It must indeed be emphasised that the non-weighted average of the four benchmarking employment rates of tertiary-educated people taken into consideration (25-34 to 55-64) amount to 93.2% for males and to 93.5% for females. Even in the younger generations, a vast majority of countries still display a extremely significant gender gaps, as illustrated by the chart below. And the benchmarking against the best performance cannot ignore that it assumes that gender parity is within reach within the time horizon here considered. The projection of cohorts per educational level relies on the diagonal method, by which for example the tertiary-educated males aged 35-44 in the year 2000 become in 2010 the tertiaryeducated males aged 45-54, and the 55-64 tertiary-educated males in 2020. Such shift requires that the first age group (the 25-34) be replaced by the new incoming cohorts, whose share of tertiary educated must be estimated.
Employment rates per gender, age and educational level Best performers amongst 15 Member States, national averages, 2002 Best performers in 15 MSs Male 15_24 25_34 35_44 45_54 55_64 Average Female 15_24 25_34 35_44 45_54 55_64 Average 61 76 71 72 54 67 80 82 88 85 70 81 94 91 95 94 81 91 NL PT SE FI UK NL NL PT SE UK NL NL PT PT SE Low 68 91 92 86 65 80 Medium 79 93 95 92 71 86 High 89 96 98 98 81 92 L NL PT PT PT SE M NL NL PT NL SE H NL NL PT PT SE
Source: Eurostat LFS (Spring 2002)
Among the different possible methodologies, the one that has been used here holds that: 1. the share of tertiary-educated in the male and female 15-24 age group is kept constant over time20 and 2. the share of tertiary-educated in either the male or female 25-34 is changing along a loglinear trend that extrapolates the 1996-2003 series i.e. like in the first chart of page 16.21 The graph of the next page shows the projected values for the EU15, as an example.
20
21
As the share of tertiary-educated in this 15-24 age group is extremely low (3.6% on EU15 average) and declining, its impact is by all means marginal on overall results. Whenever a series of at least five 3-year mobile averages mobile averages could be used, the projection was build on this series of mobile-averages, in order to reduce the statistical noise. INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
42
Annex 3: Methodological Restrictions on Calculating Maximum Employment Rates
3= Loglinear projection of 3-year mobile averages of shares of tertiary educational attainment in the 25-34 age group, per gender.
3 Proj loglin of 3-y mobile averages EU15
35 30 25 20 15 10 5 0
y = 22,145x R2 = 0,9651
0,1143
y = 20,581x R2 = 0,9417
0,1065
Females Males
This choice of a loglinear trends appears consistent with the usual path that is observed for changes in distributions of structural Labour force characteristics. Quite expectedly, the correlation coefficient (R) appears extremely high in economies that are nearing maturity. On the opposite, the R is much lower in all cases where the growth is only beginning like in Poland and the projection then remains highly uncertain: the future speed of change, inflexions, accelerations and decelerations can less easily be estimated. Moreover, as the basic data come from the sample-based Labour Force Survey, statistical noise must be taken into account, even when the figures are well above the reliability limits indicated by Eurostat. Last but not least, the definitional questions must also be taken into account for example for the UK, where half of cohorts reach the statistical definition Upper Secondary level at the age of 16.3 years, while the equivalent threshold lies at 20 years in Germany, the Netherlands or Denmark, and at 19 on EU15 average.22 There are at least two cases where over-year abrupt changes in distributions cast doubts on the definitional stability Latvia and Lithuania. In these cases, uncertainties are piling up, and interpretation must remain extremely cautious.
22
By the way, all CEECs display a threshold between 18 and 19 years, and are homogeneous in this respect. See G. Coomans, Demographic change in EU-pre-accession countries: the challenges of an enlarged EU, in IPTS / ESTO Prospective Study on Enlargement Futures, November 2001, pp. 108.
19 9 19 7 9 19 8 99 20 0 20 0 01
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TECHNICAL REPORT SERIES

The Demography/Education Squeeze in a Knowledge Based Economy

Institute for Prospective Technological Studies

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000-2020)

Technical Report EUR 21573 EN

Technical Report EUR 21573 EN

European Communities, 2005 Reproduction is authorized provided the source is acknowledged.

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

Structure of the Report

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

1. Knowledge-based Society Requirements for Qualifications

L=Low; M=Medium; H=High

Source: Eurostat (Spring) LFS

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

L=Low; M=Medium; H=High

1. Knowledge-based Society Requirements for Qualifications

Annual growth of employment per educational level*

2,9 2,0 1,4

3,2 2,2 1,4 -0,6 0,0

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

Change in employment in Manufacturing

(Nace D) per educational level

Low educat.level Change in %

55-64 45-54 35-44 -11 -9 -18 -20 -20 -10

* EU-15 excluding BE and NL

Source: Eurostat (Spring) LFS

1. Knowledge-based Society Requirements for Qualifications

Share in total employment2003 Employment index in 2003 (index 100= 1999)

EU15*: BE and NL excl. Industry: Nace C-D-E-F Non-market services: other.

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

1. Knowledge-based Society Requirements for Qualifications

Annual growth of the employment of Low-educated, Age group 15-64, 1996-2003*

0 -5 -10 -15 SI IE HU RO CH GR EU15 EU25 NO BG CZ FI IT MT CY DK UK DE EE BE SE SK ES LV FR NL PL AT PT LU LT -3,5 -3,2

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

2. Demographic Trends and Labour Supply

6,3 7,1 0,0 7,5

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

2. Demographic Trends and Labour Supply

Decennial growth of the 15-24 age group 2000-2010

8,2 3,8 5,2

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

3. Educational Attainments and Labour Supply

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

3. Educational Attainments and Labour Supply

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

Source: Eurostat LFS

Source : Eurostat LFS 2002

3. Educational Attainments and Labour Supply

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

4. Demographic and Educational Effects on Labour Supply

S o u rce : G e o L a b o u r, b a se d o n E u ro sta t 2 0 0 4 D e m o g ra p h ic P ro je ctio n (B a se lin e sce n a rio )

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

No data available for UK, IE and MT

4. Demographic and Educational Effects on Labour Supply

No data available for UK, IE and MT

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

5. Potential Growth of Tertiary-level Employment

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

5. Potential Growth of Tertiary-level Employment

See G. Coomans, Atlas, op. cit.

THE DEMOGRAPHY/EDUCATION SQUEEZE IN A KNOWLEDGE-BASED ECONOMY (2000 2020)

6. Policy Implications - Speeding up the Tertiary Transition