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:
GÉRY 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: Knowledge–based 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)
3
Executive Summary
EXECUTIVE SUMMARY
Background and Objectives
This report was prepared by Géry 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)
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
5
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:
¾ 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.
¾ 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.
¾ 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
¾ 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.
¾ 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
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
7
1. Knowledge-based Society Requirements for Qualifications
CHAPTER 1: KNOWLEDGE–BASED 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
L=Low; M=Medium; H=High
2002 (except 2003 LT and MT)
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
H
M
L
0
20
40
60
80
100
Source: Eurostat (Spring) LFS
2
EU25 + Norway, Switzerland, Romania and Bulgaria. Those non-EU countries are listed first in the chart
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
9
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.
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).
Unemployment rate per educational level
L=Low; M=Medium; H=High
2002 (except 2003 LT and MT)
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
H
M
L
0
10
20
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.
30
Source: Eurostat (Spring) LFS
10
INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES
A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
1. Knowledge-based Society Requirements for Qualifications
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
USA - 1992-2002
4
4
3
3
2,9
2
2,0
1
1,4
3,2
2
2,2
0
1
-1
0,0
To
ta
l
G
ra
d
ol
l-
C
nd
SC
H
To
ta
l
H
ig
h
ed
.
M
Lo
w
-4
<B
ac
h
-1
S-
-3
0
-3,3
<H
S
-2
1,4
-0,6
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.
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
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
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.
CY
IE
NL
LU
FI
PT
HU
FR
IT
SE
UK
BE
GR
LV
DK
AT
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.
SI
DE
LT
SK
CZ
EE
PL
-12
-8
-4
0
4
8
12
-4
-2
0
2
4
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
5,1%
Low educat.level
Change in %
Total
-12,3%
-1,8%
0
55-64
45-54
-11
35-44
-12,3%
l
To
ta
h
ig
H
ed
iu
m
-4,6%
-9
-18
25-34
-20
15-24
M
Lo
w
400
200
0
-200
-400
-600
-800
-1000
-1200
-1400
-1600
( x1,000)
-20
* EU-15 excluding BE and NL
12
-10
0
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
Source: Eurostat (Spring) LFS
INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES
A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
1. Knowledge-based Society Requirements for Qualifications
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:
Share in total employment2003
Employment index in 2003
(index 100= 1999)
Agriculture
A
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
Industry
B
A
M'kt Serv.
B
A
Non-M'kt Serv.
B
A
B
3,8
92,5
28,2
98,0
38,7
107,4
29,1
107,2
5,2
90,8
28,9
97,0
40,5
102,5
25,4
104,0
1,7
87,3
25,4
97,0
38,4
105,0
34,5
102,3
4,2
115,7
23,4
110,0
47,6
114,5
24,8
125,2
4,5
85,3
40,1
98,1
32,6
100,6
22,8
106,3
2,3
79,6
31,6
89,8
36,1
101,1
30,0
100,0
3,1
96,1
23,2
85,5
37,1
104,7
36,3
104,4
6,2
72,6
31,7
99,4
36,3
107,2
25,9
103,2
5,5
89,4
31,0
114,8
41,3
116,5
22,2
120,8
5,0
83,4
26,8
98,5
35,6
105,2
32,2
105,2
108,4
4,2
108,9
24,6
99,6
38,5
108,6
32,1
15,1
97,1
22,3
97,5
40,2
104,9
22,4
103,6
5,4
81,0
33,5
100,7
34,2
108,6
26,9
107,3
5,6
83,0
28,0
109,0
40,3
113,8
25,6
122,6
4,5
93,6
32,0
104,9
37,1
111,6
26,5
106,2
18,3
93,9
27,6
99,6
29,4
107,0
24,7
93,9
2,3
127,8
19,4
94,4
44,2
108,4
33,8
111,7
14,1
88,0
27,2
108,3
33,2
112,0
25,5
100,6
2,4
29,9
40,1
27,6
3,0
97,2
20,8
95,5
42,2
105,1
34,0
17,2
97,7
29,0
88,1
30,0
98,5
23,7
97,3
8,9
97,7
34,7
98,5
35,0
108,2
21,5
101,7
2,2
95,0
22,7
96,5
36,7
112,5
38,3
109,8
6,7
80,0
37,6
98,8
32,8
108,5
22,2
104,1
6,0
84,0
38,2
101,1
30,4
108,0
25,3
100,8
1,2
83,7
23,6
94,5
42,8
106,2
32,2
111,5
32,6
32,5
33,5
9,9
79,1
31,1
18,7
16,6
3,7
92,3
22,6
41,4
29,5
3,7
82,9
21,7
37,0
37,4
EU15*: BE and NL excl.
104,9
24,9
Source: Eurostat LFS
Industry: Nace C-D-E-F
Agriculture: Nace A-B
Non-market services: other.
Market Services: Nace G-H-I-J-K
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
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
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).
4
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).
14
INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES
A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
1. Knowledge-based Society Requirements for Qualifications
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
paGrEdL10
CH
CH
CH
RO
NO
BG
RO
BG
RO
BG
LU
DE
CY
MT
PT
NL
ES
UK
LT
SE
DK
IE
AT
IT
FR
BE
GR
LV
FI
EE
SI
CZ
PL
HU
SK
EU25
-0,6
-0,6
EU15
1
0
-1
-2
-3
-4
-5
Annual growth of the population with Low Education, Age group 15-64, 2010-2020
paGrEdL20
NO
LU
DE
CY
MT
PT
NL
ES
UK
LT
SE
DK
IE
AT
IT
FR
BE
GR
LV
FI
EE
SI
CZ
PL
HU
SK
EU25
-1,7
-1,5
EU15
1
0
-1
-2
-3
-4
-5
Annual growth of the employment of Low-educated, Age group 15-64, 1996-2003*
5
EG_Low
0
-5
-10
-3,2
-3,5
NO
EU25
LU
DE
CY
MT
PT
NL
ES
UK
LT
SE
DK
AT
IE
FR
IT
BE
GR
LV
FI
EE
SI
CZ
HU
PL
SK
EU15
-15
* See timing under chart page 9 above.
Source: Eurostat LFS, Eurostat 2004 Demographic Projections (Baseline scenario) and Geolabour Projection
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
15
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
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
a
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
-15 -10 -5
0
5
2010-2020
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
10 15 20 25
-15 -10 -5
a
13,8
6,3
7,1
0,0
7,5
0,0
0,1
0
5
10 15 20 25
Source: Eurostat 2004 Demographic Projections
(Baseline scenario)
For CH, NO, TR: UN World Population Prospects
(Medium Variant - 2002 Revision)
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
17
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 seller’s 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%
5
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
18
INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES
A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
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
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
a
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
2010-2020
0
10
-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
20
-50 -40 -30 -20 -10
8,2
3,8
5,2
0,8
3,6
0
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.
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
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
EU15
20
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.
10
60_64
55_59
50_54
45_49
40_44
35_39
30_34
25_29
20_24
15_19
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.
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.
6
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 qu’il peut être, Ed. F. Maspero, 1980.
20
INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES
A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
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
3 3 ,7
4 6 ,2
3 6 ,8
0 ,0
2 0 ,0
Low
2 0 ,1
4 2 ,1
4 0 ,0
6 0 ,0
M e d iu m
2 1 ,1
8 0 ,0
1 0 0 ,0
H ig h
S o u r c e : E u ro s ta t L F S
7
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 för 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
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
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
2000
L
M
H
-5 0
-3 0
-1 0
10
30
50
S o u r c e : E u r o s ta t L F S
22
INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES
A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
3. Educational Attainments and Labour Supply
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
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
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
y = 12,734x0,2812
R2 = 0,8581
30
Females
25
20
y = 8,4089x0,2814
R2 = 0,8254
15
Males
10
5
20
02
20
00
19
98
0
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
1996-2001
200
150
100
50
0
CZ
EE
HU
LV
LT
PL
SK
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
24
INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES
A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
3. Educational Attainments and Labour Supply
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, Küche”
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
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
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
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
2 0 0 0 -2 0 1 0
2 0 1 0 -2 0 2 0
-3 0
-2 0
-1 0
0
10
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.
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
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
2000-2010
2010-2020
-4
-2
0
2
4
6
8
Source: GeoLabour, based on Eurostat 2004 Demographic Projection (Baseline scenario)
and Labour Force Survey (spring)
13
No data available for UK, IE and MT
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.
28
INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES
A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
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
2000-2010
2010-2020
-20
-10
0
10
20
30
40
Source: GeoLabour, based on Eurostat 2004 Demographic Projection (Baseline scenario)
and Labour Force Survey (spring)
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
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
INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES
A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
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.
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
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
a
NO
CH
RO
BG
E U 25
4,0
2,6
2,8
3,7
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
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
-2
0
2
4
a
NO
CH
RO
BG
E U 25
-0,4
6
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
0
2
4
6
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
INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES
A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
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
a
2 ,4
-0 ,3
1 ,1
1 ,3
2 ,0
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
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.
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
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
a
NO
C H- 1 , 6
RO
BG
EU 25
1 ,2
0 ,7
1 ,4
1 ,0
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
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
0
2
4
6
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
INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES
A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
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 country’s 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.
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
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
INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES
A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
Annex 1: Sources
ANNEX 1: SOURCES
The database that was used is a collection from:
ƒ
Eurostat’s Labour Force Survey (LFS, Spring), including data on employment,
unemployment and education.
ƒ
Eurostat’s New Cronos data for past population figures
ƒ
Eurostat’s Demographic Projections (2004 revision, baseline scenario) for all EU25
Member States + Bulgaria and Romania.
ƒ
UN World Population Prospects (2002 Revision, Medium Variant) for all other European
countries.
ƒ
OECD for additional educational data (Education at a Glance, 2003 and 2004)
ƒ
US Bureau of Labour Statistics, for US-related employment figures.
ƒ
GeoLabour Projection (Dublin) for all regional projections (G. Coomans, Atlas of
Prospective Labour Supply, 2004)
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
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
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
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 compétences, En finir avec la notion d’emplois non qualifiés »,
Editions Liaisons, 2002
40
INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES
A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
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
1996
LT
2003
SI
LU
IT
ES
DE
GR
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.
FI
IE
FR
NL
UK
AT
DK
BE
PT
SE
EU15
-5
0
5
10
15
20
* 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
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%,
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.
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
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
Low
Medium
High
L
M
H
15_24
68
79
89
NL
NL
NL
25_34
91
93
96
PT
NL
NL
35_44
92
95
98
PT
PT
PT
45_54
86
92
98
PT
NL
PT
55_64
65
71
81
SE
SE
SE
80
86
92
Average
Female
15_24
61
80
94
NL
NL
NL
25_34
76
82
91
PT
NL
NL
35_44
71
88
95
SE
PT
PT
45_54
72
85
94
FI
SE
PT
55_64
54
70
81
UK
UK
SE
67
81
91
Average
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.
42
INFORMATION SOCIETY DEVELOPMENT IN THE NEW MEMBER STATES
A CONTRIBUTION TO THE LISBON STRATEGY ON MORE AND BETTER EMPLOYMENT
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
0,1143
35
y = 22,145x
R2 = 0,9651
30
EU15
0,1065
y = 20,581x
R2 = 0,9417
Females
25
20
Males
15
10
5
19
9
19 7
9
19 8
99
20
0
20 0
01
0
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 (R²) appears extremely high in economies that are nearing maturity. On
the opposite, the R² 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.
THE DEMOGRAPHY/EDUCATION SQUEEZE IN A
KNOWLEDGE-BASED ECONOMY (2000 – 2020)
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