The “Situation Room” for Youth Employment

A serious lack of employment opportunity for younger workers has long been a structural issue in Italy, along with a well-documented deficiency in productivity across the entire labor force.

Here I share with you my published response to an opinion piece that appeared earlier this month in Il Sole 24 Ore, one of Italy’s most influential newspapers, about the problems facing youth employment, with recommendations for how government, and more importantly, private enterprise, can address them.  As you will read, the problem is multi-faceted, but there is hope based on some recent developments, and successful models to emulate from across the EU.

My co-author is Federico Butera, a Professor Emeritus from University of Milan Bicocca, who has deeply studied such issues.  You will see recommendations based on programs developed and implemented by Altagamma Foundation, whose mission is to increase the competitive position of high-end Italian brands and producers, while also contributing to Italy’s economic growth. I serve as the Foundation’s Chairman.

Whether or not you do business in or with Italy, I think you’ll find themes within relate to your business or your country’s economy.

Between school and work, beyond the editorial by Carlo Carboni

The “Situation Room” for Youth Employment

By Federico Butera and Andrea Illy

In his thoughtful editorial, Carlo Carboni describes youth unemployment in Italy as “a structural wound” cushioned by the family (Il Sole, April 11,, 2017).

Despite that clear reality, Carboni said that youth unemployment has not been put onto the agenda as an emergency by the government, which tends to “fly high.”

There are several reasons for the current situation, and there is not a single strategic weapon to combat it. Certainly, we must begin from the area which Carboni called the “middle ground,” namely the integration of school and work in education.

There are three primary areas of action that can be taken in this middle ground, including technical training, and in particular Higher Technical Education (known as ITs in Italy); programs modeled on Germany’s Fachhochschule programs that alternate between school and work, launched under that country’s laws for Good Schooling; and a rethinking of how professional degrees are awarded.

Fortunately, the gap between the educational system and businesses has diminished over the last few years: this is a train already in motion. It is now a matter of speeding it up in order to produce quantitative and qualitative results equal to the magnitude of the problem of youth unemployment.

Here is how each of these three action areas can be addressed:

1) Higher Technical Education is the post-diploma educational channel in Italy that parallels the University, producing an average rate of employment of 95% of Its graduates within one year of receiving their diplomas. A decree from The Prime Minister’s Office in 2008 relaunched this channel after it had been effectively dormant since 1999. The Ministry of Education and different regions, together with many businesses, are initiating critical new opportunities year after year. There are about 90 foundations, each supporting one or more ITs in various regions of Italy and across various business sectors.  By comparison, however, Germany’s Fachhochschule schools have 880,000 students, while Italy’s ITs Higher Technical Education schools have fewer than 9,000.

So what can we do to accelerate these opportunities (serving not 40 students per course, but 4,000) in order to build new skills for new jobs, to not only bridge the existing skill gap by at least 150,000 jobs in Italy, but above all to create new fields and professions which are given renewed life by evolving proficiency? And furthermore, to extend them to all regions of the country, particularly in the south?

There appear to be three key factors: a) removal of regulatory restrictions; b) getting the strongest participation possible by businesses; c) investments and incentives.

  • a) Existing regulations restrict the ITs through regionalism and inflexibility regarding specializations and degrees. Above all, they have restricted the ITs to financing centered only around ex-post ministerial projects and recognition. Maybe these restrictions could be removed. Furthermore, it would be beneficial to promote higher visibility of diplomas and the availability of financing to make the two post-diploma channels appealing to youth and their families alike (as is the case throughout the rest of Europe), and to make the transition from ITs to a University easier, for those wishing to continue their education.
  • b) There are still only a few businesses that participate in the Foundation. These are mostly large or medium in size, with a strong tradition of high quality technical education, and mostly oriented towards constructing schools that directly fulfill their own needs for qualified labor. At the moment there are no strong economic incentives or regulations on the horizon geared to encouraging a larger number of businesses to participate.
  • c) The research and experimentation geared to expanding jobs and skills require investments that are today fragmented into a thousand rivulets. Incentives encouraging businesses to actively become part of the development of educational channels could be strengthened, for example in the form of tax breaks for hiring graduates. President Boccia has suggested this repeatedly.

2) Current programs that alternate school with work, promulgated by the laws for Good Schooling and strongly promoted by the Ministry of Education, call for an obligatory period of enrollment in public or private organizations for a very high number of students, not only with regard to technical and professional institutions, but also for academic high schools. A remarkable amount of effort was put into this: 87.4% of all schools (state-funded and private) participated in the school-work program during the 2015-2016 school year, compared to 42% during 2014-2015. There were, of course, many problems, but this is an area in which businesses must find reasons and models (and maybe incentives) to participate in a more advantageous manner, avoiding the “study tour” effect, and instead creating forms of work that are productive, even if they are simplified.

3) The structure of and number of Italian Universities are in line with other European countries’. Ninety-five Universities, public and private, provide for over 1.6 million students. Recently, a project to establish vocational degrees in all courses of study was implemented, but was then immediately suspended for a year. The problem that needs to be solved is reciprocal cannibalization between ITs and vocational degrees, which was successfully addressed by systems implemented in France, Germany and Switzerland. We urgently need to develop the framework for an approach that makes both systems compatible, synergistic, and permeable.

For about a year and half now, the Altagamma Foundation has been examining these issues with the intention of designing a pilot technical vocational school called “Polytechnical School of Italian Know-how”.

We have therefore experienced — after having started discussions with Assolombardo and the Polytechnic University of Milan, and agreeing upon regulations with the Ministry of Education, along with a large-scale understanding with the Lombardy Region – the complexity and the difficulty of creating an innovative proposal for educational development.

We have come to believe, on the basis of extensive discussions with institutions and companies, that it would be beneficial to open a “situation room” that tackles, if not all issues regarding youth unemployment, at least a portion of them: the topic of ITs, of alternating work/study programs, and of vocational degrees.

Altagamma would be honored to contribute, offering the experiences of businesses that participate in the Altagamma Foundation, many of them involved with prominent corporate academies.

Furthermore, the topic of educational reform is central to not only our critical unemployment situation, but also for the development of higher productivity in Italy.

The job market will change a lot between now and 2025; 45-50% of jobs required by that future do not yet exist. Meanwhile, those that exist today will be greatly modified. Organizations and workers, especially young people, will need to acquire skills, flexibility, and innovations that their counterparts during the second industrial revolution did not have. A coordinated national program could also highlight the “best cases,” represent a technological-organizational future, and make the evolution of more innovative organizations, professions, and employment, especially in small and medium-sized businesses, a national effort.

All of this could give rise to a new concept of labor that enhances the value of the individual and the professional growth of our youth, while augmenting the innovativeness and competitiveness of our businesses.

This happened in post-war Germany, Scandinavia and Japan. It is happening once again, right now, in Germany, with its Industry 4.0 programs, and in Denmark, California, Korea and Singapore. It could happen in Italy.

Federico Buttera is Professor Emeritus of the Sciences of Organization, University of Milan Bicocca

Andrea Illy is Chairman of both Illycaffè and the Altagamma Foundation