EU´s retrenchment enigma

By Frank-Jürgen Richter

Khaleej Times, May 6, 2012

Last May the OECD noted “Millions of workers lost their jobs in the recent economic crisis. And with the global economy still subdued, the OECD expects unemployment to remain high. One lesson from the crisis has been the importance of skills in today´s workplace: job losses among skilled workers were much lower than among the unskilled.

In a globally competitive, knowledge-based economy, having a skilled workforce is necessary to ensure productivity and sustainable growth”.

Years ago it was sufficient to sit at the feet of masters and to be examined by them during the course of conversations to achieve a graduation: at that time knowledge did not change much and many of their theories live on today developed, for instance, by Pythagoras or Hippocrates. Now we demand our children are polymaths, but they rarely achieve their potential due to poor teaching, which we have inherited from our complacency over several generations.

Schools in Europe and America were set up by generous benefactors sometimes with a religious backing and the curricula reflected the Board´s ideas. Those passing with honours often returned as teachers so promoting the early aims… and the cycle continued. As the Board members saw success they did not think to change the curricula. Even just a few years ago as the knowledge base expanded fast the curricula did not look ahead – it was still locked into `learn this and repeat it to me in examinations´, which may have satisfied the teachers, but not the industrialists. They said, as they do now `… these young people know nothing relevant to the jobs they seek´.

We must ask if it can be done better. The failure of modern education has occupied, at least, two generations, and its rescue will take another two. So what might an interim solution be?

Through my recent travels and meetings I have been informed often of the growing crisis of unemployment, especially of the youth. Various ministers were aware of this but shrugged it off, saying it was an aspect of the financial crisis… `later we will re-employ these people´. But they forget that the idle lose their skill set: they need to exercise their brains and work a full day otherwise they atrophy and virtually die. Further, as time passes, new techniques are developed elsewhere and their machinery is changed confounding the failed managers in these countries who now have little capital remaining and thus their out-of-work have no hope, especially the young.

All however is not gloomy. Several trends are apparent. First is that Asia, especially China is looking to re-develop its workers´ skill set to add much more value to its export products (and to sell these items also to their own growing middle class market). Second is that logistics researchers sense a trend of retrenchment as manufacturers, hit by supply chain disruptions caused by large scale disasters, attempt to shorten their own supply chains and to negotiate multiple local sourcing.

The flooding in Thailand and the Fukushima Daiichi disaster in Japan caused direct and indirect chaos to supply chains, halting assembly of vital sub-components that were thus not able later to be incorporated into finished products so whole supply chains had to be closed. If new local supplies are to be sought, new factories have to be created, and new training schemes have to be instigated.

And that brings us full-circle to education again. Obviously, we cannot wait for 20 years for new school children to graduate and enter the job place – though we ought to agitate to have their curricula altered to look to the future. We must act in the short-term to bring youngsters back into a learning environment in conjunction with the once grumbling employers who could create suitable apprentice schemes that would offer diplomas in three to four years and which would train precisely for a given occupation. Critical thinking courses are still a requirement, but more stress will be laid upon skills training that `re-engineer and re-focus´ youth to do a good job of work in the near future.

This is not a panacea for these times. Nor should retrenchment be seen as a failure of globalisation, but rather it is an acceptance that the global/local needs a rebalance. Now is probably the right time to begin this change as we see our way to evolve out of the financial mess.

Frank-Jürgen Richter is chairman and founder of Horasis, a global business community