FES07 - Ann Mettler: Education must become the first, second and third European priority

(Running notes from the second Future of Europe Summit in Andorra)

My friend Ann Mettler (photo) co-founded the Lisbon Council, a think-tank in Brussels, and she starts her speech by strongly taking issue with the previous speech by Ed Phelps. Europe is doing much better than the bleak portrait painted by Phelps, she says, productivity growth for example is higher than in the US. What Europe urgently needs, she says, is a stronger focus on education skills and human capital, which are the defining way to raise your competitiveness. Going forward, our international competitiveness is depending entirely on how well we do on developing human capital and attracting talent.
Also, on social cohesion: Europeans don't need to be embarrassed that we have a very good social system; but we need to take into account the fact that it's becoming increasingly difficult to be a low-skilled workers and not have sufficient education.
Europe, she says, is under-investing in education across the board, from pre-primary to university. We like to think of ourselves as a knowledge economy, but if you look at the number of people who have college degrees or more, only in 9 of the 27 EU member states they are more than 25% of the workforce.
Italy is the most striking example: over 50% of its workforce falls in the category of low-skilled, only 10% are highly skilled. This is a G-8 country, and it will have a very difficult time sustaining its status.
Let's do a Lisbon Agenda reality check. One of the targets in the LB was a 3% of GDP invested in R&D. In order to really get there, Europe would need 600'000 additional researchers by 2010. But even if we could spend that 3%, we wouldn't have the researchers to do that, our universities don't graduate enough of them. Another target is a 70% employment. Among the highly skilled, employment is at 82%; among the low-skilled: 46%. We are not going to be able to find jobs in the future for low-skilled people.
We still have a long way to go before we have a dynamic knowledge-based economy. We need a massive and sustained investment across the board in people, young and old, women and immigrants, every person in Europe needs to be invested in. Education needs to become much more of a "hard policy" issue, a core finance and economics issue.
She mentions the paradigmatic shift happening in Denmark around the concept of "flexicurity" (from Wikipedia: "a welfare state model with a pro-active labour-market policy). Denmark has full employment today. 30% of its workforce will change jobs every given year. There are strong training policies: every Danish worker is entitled to two weeks of training a year, paid for by the employer.
I keep hearing that Europe is slow-moving, but I see alot of dynamic and very innovative companies. I keep hearing that the European labor market is sclerotic, but the reality is that 40% of Europeans work on non-traditional contracts and another 15% is self-employed, so the majority of Europeans aren't into lifelong corporate jobs.
A problem is the size of companies. 99.8 % of European companies are small and medium entreprises, their average size is 5. In the US is 19. So the problem is company growth and commercialization of products and services. Governments keep focusing on getting more people to become entrepreneurs; we need to focus much more on the companies and get them to grow.