Asset Publisher

Event Reports

Europe Emerges from the Crisis

H.E. Ursula von der Leyen, CDU Federal Minister of Labor and Social Affair, Vice Chair of the CDU gave a talk entitled “Europe Emerges from the Crisis” at a luncheon discussion organized jointly by the American Council on Germany and the Konrad Adenauer Stifung at the University Club in New York City on February 12th, 2013.

Asset Publisher

Minister von der Leyen opened her remarks by noting that we must consider the origins of the Eurocrisis in order to determine how to solve it. She stated that the Euro is a stable currency. The problem is not the weakness of the Euro, but the loss of confidence on the part of investors. In the long-term view, the Euro is a highly competitive currency. She reinforced her argument by noting that the ratio of debt to GDP is considerably higher in Japan and the U.S. than it is in the Eurozone. The real issue is the discrepancy amongst Eurozone members with Greece at one end of the spectrum and prosperous Luxembourg at the other. In spite of this, markets trust Japan, but they do not trust the Eurozone. With seventeen sovereign states, who is to determine policy for all? Barroso, Draghi, Merkel, Hollande? The lack of confidence is directed not just towards countries like Greece and Portugal, but towards the entire Eurozone.

Turning to the question of employment, Minister von der Leyen noted that Germany’s unemployment rate is 5%, the lowest since unification. On the other hand, it is 25% in Spain and Greece. Youth unemployment, the biggest problem, is 55% in Spain. Something must be done to remedy the huge gap in competitiveness.

Individual countries do not want to relinquish their national sovereignty, but it is essential to have coordinated policies within the Eurozone. It is necessary to build mutual trust and confidence. Policies must be implemented to promote sustainable growth and sustainable jobs. This will produce a return of confidence.

Youth unemployment in Germany is low at 8%. This is because Germany, along with Austria and the Netherlands, has instituted the policy of dual vocational training. Some 50% of students go to structured vocational training programs that are closely tied to the job market. This track is no longer seen as a second class education because it leads directly to employment. The work force is now closely matched to the requirements of industry. Students do not pay for this training. Employers are responsible for covering the cost of training for those who will work in their respective industries. Sweden does not use this system and a result 25% of its youth is unemployed.

There are other positive results. For example, the majority of new patents come from those skilled workers who have gone through these programs. They know what the market needs. Initially, Spain rejected this system, but now Spain, along with Italy, Portugal and Greece, has taken a new interest. The fact is that this is an urgent issue. The youth in these countries need answers now. They cannot wait five years.

Minister von der Leyen next addressed the question of demographic change. She noted that 70% of global GDP is located in aging societies. Eventually, this phenomenon will impact the entire globe.

Minister von der Leyen offered several remedies: the attitude towards older workers must change, the female work force must not be neglected, and immigration policies must be liberalized. Older employees bring valuable life experience and business knowledge to the workplace. The greatest productivity comes from combined teams of older and younger workers. As for the female work force, it is well known that girls are doing better than boys at school. They should not be excluded from making a contribution to society through their labor. The idea that women should have to choose between having children and having a job is not valid. Here, Minister von der Leyen recounted her very positive experience at Stanford University where it was assumed that she would resume her professional career as a medical doctor, despite having three young children. She stated that it is essential to implement policies that support both fathers and mothers.

Finally, on the question of immigration, the Minister argued that skilled migrants create new jobs. It is important for Europe, with its declining birth rates to encourage and welcome skilled immigrants.

Asset Publisher

Foto Lars Hänsels Kamera
Fritz Stern und Ministerin von der Leyen Aufnahme von Dr. Lars Hänsel mit KAS Kamera

comment-portlet

Asset Publisher