Youth Unemployment in Germany – Improving Educational Outreach to Disadvantaged Children and Young People

A ZEW study has shown that over the last few years 13 per cent of young people between the ages of 17 and 19 in Germany are not in employment, education or training – and this figure is on the rise. This is equivalent to 130,000 people in the cohort born in 1990. These young people are not in school, nor do they have regular jobs or stable, long-term friendships. ZEW education economist Dr Friedhelm Pfeiffer discusses the causes and repercussions of this worrying trend and calls for a move away from the current scatter gun approach in government funding aimed at children and young people.

Dr. Friedhelm Pfeiffer is deputy head of the ZEW Research Department “Labour Markets, Human Resources and Social Policy”. His research interests include the effects of optimised investment in education on individual and overall economic returns as well as the causes and consequences of individuals acquiring both cognitive and non-cognitive skills over the course of their lives. He coordinates this research with help from funds provided via the network “Non-cognitive skills: Acquisition and Economic Consequences”, a research network funded by the Pact for Innovation and Research and involving the Universities of Chicago and Konstanz as well as the Centre for the Economics of Education in London, the Central Institute of Mental Health (ZI) in Mannheim and the Socio-economic Panel in Berlin.

Germany is the Republic of Education. Do your studies provide any reason to doubt this?

Pfeiffer: The extent of the lack of employment, educational and social ties among young people greatly surprised us. 13 per cent of all young people in a single cohort is a concerningly high number. I should however qualify this by adding that this figure was calculated based on a sample from the Socio-economic Panel (SOEP), so the actual figure could be slightly higher or lower. However, a glance at the official education statistics shows that the extent of this issue is often underestimated. For example, in its latest report the German Council of Economic Experts points out that 8 per cent of children in any year group will leave school without any kind of qualification. The PISA studies have shown that up to 20 per cent of young people do not have a sufficient literacy or numeracy level.

Why is it that so many children and young people struggle at school?

Pfeiffer: Our analyses suggest that there are underlying causes to be found in children’s family environment. Schools are not doing enough to balance out the enormous differences in the quality of home environment. The basic skills needed to succeed at school are generally acquired in the home. Even the very early years of life have an important role to play in the acquisition of further learning capabilities. A stimulating, sympathetic environment in the early months and years of life is an advantage. Family circumstances involving various psycho-social and socio-economic stressors can hamper development. Despite their natural intelligence, children who grow up in these kind of conditions often do not develop the stamina and self-discipline necessary to keep up with their classmates at school. For example, we have found that having parents with a low level of education and growing up in an unstable family environment in the first fifteen years of life increases the likelihood of young people between the ages of 17 and 19 not being in employment, education or training.

What does this trend mean for the prosperity of our society?

Pfeiffer: The main problem for the economy is that young people not in employment or education are not fulfilling their potential in terms of cognitive skills (including memory capacity, information speed, association and logic). As a result, the current skills shortage may only get worse in the future, given that these skills tend to reach their maximum potential between the ages of 17 and 19. A lack of investment in this stage of life, in which the acquisition of skills and knowledge for a future career is associated with low costs, is linked to a variety of negative subsequent costs for both young people themselves and for the modern economy. Another central problem is a lack of social integration. At this age, as well as gaining high school and other professional qualifications, young people also learn the rules and norms of how to coexist and interact with others. In this area as well, there is considerable underinvestment in young people not in work or education, a deficit which can only be compensated later on with considerable effort on the part of young people and society as a whole.

What can we do to prevent this downward spiral?

Pfeiffer: First, young people who are currently not in work or education must be given the opportunity to make up for this deficit. The government funds required for this should be strictly concentrated on disadvantaged young people so that they can actually be effective. At the same time, more pro-active measures need to be taken to minimise the disadvantages that begin much earlier in childhood as much as possible. Current measures need to be augmented and focused as much as possible on the family circumstances of the most disadvantaged children. Many studies suggests that in the long term, this kind of investment in young people can reap considerable benefits for both the individual and society as a whole.