Is There a Shortage of University Graduates in Germany? Bachelor's and Master's Degrees Facilitate the Mobility of Highly Qualified Workers within Europe

Germany is often criticised for producing too few university graduates compared with other countries. Most recently, the OECD warned that too few young people are pursuing university education in this country. Yet Friedhelm Pfeiffer, an educational economist at the Centre for European Economic Research (ZEW), considers this focus to be too narrow.

PD Dr. Friedhelm Pfeiffer coordinates the "Economics of Education" research area at the Centre for European Economic Research (ZEW) and is vice head of the research department of "Labour Markets, Human Resources, and Social Policy". Friedhelm Pfeiffer has been a member of the Panel on Economics of Education of the Verein für Socialpolitik ("German Economic  Association") since 2009, and a member of the Mannheim Advisory Council on Education since 2010. His research focusses on the effects of optimised educational investments on social outcomes at the individual and macroeconomic levels; among others, he investigates the causes and economic consequences of the acquisition of cognitive and non-cognitive skills by individuals during their life-cycle.

Are there too few university graduates in Germany?

According to the findings of the most recent OECD education report, the share of university graduates in Germany is around 26 per cent. In comparison with other OECD countries, this is relatively low: Germany is ranked near the bottom. In the U.S., by contrast, 41 per cent of the populace has a university education. However, 35 per cent of U.S. graduates studied for less than three years. Furthermore, in Germany, ten per cent of non-graduates have completed high-quality post-secondary education or training – programmes that in many cases do not exist in other countries. Consequently, it is not possible to judge whether there are too few graduates in Germany on the basis of the figures published by the OECD. Germany has always placed a strong emphasis on education, and enjoys a manifold educational system. If, for the general population, the average length of time spent in education is compared, rather than the proportion of graduates, Germany is one of the leading OECD nations, with a figure of around 13 years. Freedom of choice to select one’s occupation also should not be forgotten. Investment in university education must eventually pay off for students: costs and risks (e.g. earnings risks) have to be taken into account, along with available alternatives for education and training (particularly when one considers Germany’s the dual vocational training system).

Many companies complain of a shortage of skilled labour in the areas of engineering, mathematics and the natural sciences. Are such complaints justified?

Complaints such as these, which are particularly pronounced in periods of macroeconomic stability, should be taken seriously, but they should not be overated.  There are almost always signs of shortfalls in certain occupations – such as currently in the natural sciences, but also in early childhood education, to name one other example. By contrast, there is also evidence of a surplus of skilled labour in other occupations: chefs, among others. Despite the generally good employment prospects for university graduates in particular, overall unemployment rates are still too high in Germany. The adaptation of educational systems to the new demands of the labour market requires time, and, not infrequently, a surplus follows a shortage. An additional factor is that the borders to many Eastern Europe countries have been open since last summer; in the case of Bulgaria and Romania, the borders will be opened in 2014.

Will the shift to Bachelor's and Master's degree programmes lead to higher graduation rates and thus counteract the shortage of skilled labour?

The Bologna Process can certainly contribute to higher graduation rates and mitigate the shortage of skilled labour by increasing comparability in qualifications. This will help to create a European labour market for highly qualified workers. However, due to linguistic and cultural heterogeneity in Europe, barriers remain to free flow of workers. Furthermore, in Germany there is a need to harmonise the expansion of tertiary education with the development of the dual vocational training system. It should not be the case that undergraduates end up with ‘half-baked degrees’, and that their human capital is lower than those who have completed a three-year dual vocational training programme.