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Who needs a plumber with a PhD?
CONSTANTIN GURDGIEV



Under the new national skills strategy from the Expert Group on Future Skills Needs, 48% of the workforce will have a third- or fourth-level qualification by 2020, a policy that has virtually nothing to do with demand

ON 6 March, the Minister for Enterprise, Trade and Employment, Miche�l Martin, and the Minister for Education and Science, Mary Hanafin, launched a new national skills strategy, Tomorrow's Skills.

Prepared by the Expert Group on Future Skills Needs (EGFSN) the strategy "provides a strategic vision and specific objectives for Ireland's future skills requirements, and sets out a road map for how the vision and objectives can be achieved".

The EGFSN envisions that, by 2020, 93% of the Irish labour force will have qualifications at or above Leaving Certificate level; 48% will have a third- or fourth-level qualification. What does this mean? Well, virtually nothing apart from more distortion of the markets for labour.

Aiming to have 48% of the labour force with a third-level qualifications means that we will have plumbers and carpenters with advanced degrees in sciences. Our workers will have qualifications, but not necessarily skills. In the meantime, the cost of their labour will be going up without any relation to their productivity.

Then there is the question of 48%? Why not 50% or 45%? No one knows how the EGFSN came up with its numerical targets.

And here lies the main problem with all long-term planning efforts by the government. These plans virtually never coincide with actual demand.

The EGFSN has not the slightest idea which professions' qualifications will be needed by 2020, and in what proportions, relative to the overall labour force. Twelve years ago hardly anyone could have imagined that Ireland would need more bankers and investment fund managers than industrial engineers. In 1995, our mandarins were still plotting strategies that would see Ireland crisscrossed by landline phone connections running on copper wire.

In the real world the markets drive educational investment decisions by setting wages and benefits in response to demand for skills. In the Wizard of Ozland of EGFSN, the 'wise' men and women of planning committees decide who will be needed by our economy, and when.

According to EGFSN, to meet the 48% target we will need to uproot 500,000 workers from their jobs and throw them into education. The remaining workers will end up paying for this neo-Maoist educational leap forward. We are going to spend billions of euros on training programmes that so far have proven to be of little effectiveness.

Research across the OECD shows that investment in upskilling is effective only at the higher end of the skills spectrum.

It is largely wasteful for lowerskilled workers. In other words, giving additional training to high-end professionals already earning in excess of twice the average income makes sense economically, as they have greater capacity to absorb training.

"The Leaving Certificate retention rate for young people should rise to 90%, " says the road map. It then goes on to claim that "by 2020, the proportion of the population aged 20-24 with? Leaving Certificate or equivalent should be increased to 94%." Where will the difference of 4% be coming from? Immigration?

If so, this suggests that the strategy is envisioning continued mass importation of unskilled labour from abroad. This is hardly a model that fosters increased integration of immigrants into our society or that allows us to use international markets to attract the best talent into the country.

The strategy sets a target for increasing the progression from second- to third-level education from 55% to 72%.

But hold on - the strategy says that only 48% of our labour force will graduate with third-level degrees. Does this imply a 33% drop-out rate for those who enter tertiary education?

Last but not least there is a question about quantity versus quality in education. It is wellknown that our education - from pre-primary level all the way through to fourth-level - is mediocre at best. Simply producing more Masters and PhD graduates is not what we need.

We need better quality of degrees. Only two of our universities are competitive internationally when it comes to research and teaching. Unless EGFSN plans to build Manhattan-style PhD-breeding labs at Trinity and UCD, our new PhDs will not be worth the paper they will be printed on.

At the launch of the strategy, Miche�l Martin said, "This report provides a comprehensive vision for Ireland's future skills requirements."

Uh, sir, reality begs to differ.

Dr Constantin Gurdgiev is an economist and editor of Business & Finance magazine EU double-talk on the environment HAVING failed to revive the European constitution, German chancellor Angela Merkel switched her sights on saving the planet. Last week, chairing the EU summit on environment, Merkel said she hoped EU leaders will agree to cut 30% of emissions by 2020.

Two events in recent days have put the EU commitment to cutting emissions in doubt. First, according to the Centre for European Reform (CER), the EU will undoubtedly miss its original commitment to reduce greenhouse gases by 8% from 1990 levels by 2010. CER publishes an influential annual score card measuring how all EU countries are progressing toward Lisbon agenda targets, including Kyoto commitments.

In its 2007 edition, the score card forcefully states that the Emissions Trading Scheme (ETS) - the cornerstone of the EU system of allocating pollution allowances - has achieved the perverse effect of incentivising more pollution. The ETS effectively allocates surplus allowances to the larger utilities and pollution-intensive industries. This creates competitive disadvantages for innovative, less polluting firms.

CER gave the EU an overall grade of B- in terms of its environmental record in 2006, down from the grade of B in 2005. At the same time, the UK study released last week has shown that the highest-polluting business sector in Britain earns �800m a year from the ETS in 2005-07. These gains are not due to improved efficiency or cleaner energy. They are due to the system of permits that subsidises existent polluters. According to the report, UK power companies have passed the 'cost' of permits on to consumers, even though the majority of these permits they got for free.




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