Where the Future is a Dead End
From grade schools to universities, Europe's underfunded, antiquated education systems are failing a new generation.
by Stefan Theil
With Barbie Nadeau in Rome and Tracy McNicoll in Paris
(Newsweek International - June 2006)

At Europe's largest university, with 150,000 students, classes are held in circus tents because there's no money to repair crumbling lecture halls. And forget the days when a piece of brilliant research might have made headlines. Often as not, news now means the latest scandal involving professors selling grades for sex. None of that matters to Immacolata Curinga, who has master's degrees in education and psychology. "So few of us seem to be employable, we might as well have skipped university altogether." At 27, she survives as a part-time babysitter for ¤6 an hour.

That's life at La Sapienza, the University of Rome. Lest you think it an aberration, visit the Rütli School in Berlin, where more than the walls are crumbling. Located in one of the capital's poorest Arab-Turkish neighborhoods, a whopping 83 percent of its students don't speak German as their mother tongue. At this notorious Haupt-schule—just one of myriad dead-end pre-vocational schools where lower-class kids get sent as early as age 10—students have few if any hopes of ever finding a job or any other ticket into mainstream society. Listen to its former principal, Brigitte Pick. Last year, she says, not a single graduate landed a job or even a training spot. In March, teachers signed a unanimous appeal for their school to be dissolved. "We're at the end of our wits," they wrote. "What sense does it make to concentrate students [in a school where they have] no prospects?"

Though separated by a gulf of geography, class and ethnicity, these are windows on a Europe that is failing its young generation. As the world rapidly shifts from an economy based on labor and industry to one driven by knowledge and innovation, Europe's education systems aren't keeping pace. Indeed, some seem to be slipping into virtual dysfunction. It's well known that the continent's underfunded and overbureaucratized universities produce too few graduates with often outdated skills—an obvious threat to Europe's prosperity. Less well known is the fact that many European countries, for all their talk of social equality, foreclose opportunities for education and social advancement. If minds are a terrible thing to waste, what to make of La Sapienza or the Rütli School?

A scathing report comes out this week from London's Centre for European Reform. A "grim" educational "malaise" grips higher learning in Europe, the authors conclude. Most of its best universities are "clearly in the second division," they say, worsened by an "exodus of academic talent." The criticism comes on the heels of a February inspection tour by U.N. Human Rights Commissioner Vernor Muñoz Villalobos, who blasted Germany for keeping many of its immigrants stuck in third-rate, dead-end schools. He could easily have said the same of France, Spain or the Netherlands, where so-called black schools have become synonymous with poverty, underachievement and violence. If that weren't enough, a shocking recent study by the Organization for Economic Co-operation and Development (OECD) found that third-generation immigrants in Germany and several other countries actually do worse in school than their second-generation peers—an alarming trend that stands the upwardly mobile nature of immigration on its head.

Europe's education malaise isn't just about making tomorrow's workers a little smarter. Nor is it merely about keeping pace with foreign competitors in the global marketplace. To the contrary, it's about preserving Europe's social fabric. Without vibrant, knowledge-infused economies, the whole foundation of the modern European welfare state falls apart. Already, schools and universities graduate too many students, native and immigrant, straight onto the welfare rolls—a cost explosion that threatens to blow up Europe's budgets and drag its economies down even more. This spring, French university students scared of not finding jobs gave the country a whiff of revolution. Their nationwide protests have also paralyzed an entire nation's attempts at labor-market reform—perhaps the sine qua non for any revival of European economic growth. Add to this the problem of Europe's growing immigrant population, with its attendant issues of integration and epidemic joblessness, and you have a recipe for a long, hot summer of discontent. As violent riots set Paris's immigrant ghettos ablaze once again last week, Europe got another glimpse of the price it will pay if it can't offer its youth upward mobility and employable skills.

Numbers tell part of the story. At all three levels—primary education, secondary schools, universities—America and Japan significantly outspend Europe, according to 2005 OECD figures. The United States funnels 2.6 percent of its GDP into its universities alone, compared with just 1.1 percent each for Germany, Italy and France. Last year even Turkey passed these three. In the most recent global ranking of top research institutions compiled by Jiao Tong University in Shanghai, only nine European colleges made it into the top 50, the majority of them in the United Kingdom. Less than a quarter of Europe's working-age population has a university-level degree, compared with 38 percent in the United States and 36 in Japan. Study after study, by the OECD and others, has shown high-school achievement stagnant or slipping. The problems are particularly acute for the Continent's Big Three, drivers of Europe's economy. Exhibit A is Germany. Once a powerhouse of training and education, it now ranks 20th among 30 OECD countries in math and reading skills, and 23rd in the number of college graduates.

At the heart of the problem are education systems that often seem stuck in another age. In France and Germany, bureaucrats in giant ministries micromanage curricula, budgets and personnel assignments. Austria, Belgium, Germany and the Netherlands have retained 19th-century school systems that divide up kids as early as the age of 10 into different-level schools, all but cementing their future careers. Lower tracks, such as Germany's Hauptschulen, offer only a rudimentary education. This relic of feudalism might have made sense for industrial societies that needed a small university-educated elite and masses of simple workers. Today, in a globalizing, flexible world, such fixed hierarchies are more out of date than ever.

And they're patently unfair. Of children in Germany with a Turkish background, about two thirds are shunted off after fourth grade to the Hauptschulen, or to schools for the disabled, or they drop out altogether. No wonder the share of immigrant kids in vocational training has declined from 9.4 percent in 1994 to 5.6 percent in 2004, even as their share of all students has risen to 27 percent. With immigrants projected to make up a third of the school population by 2020, countries like Germany face a social and economic time bomb if they don't get their educational act together.

The waste of talent, time and resources is astonishing. Dropout rates average 10 percent at German Hauptschulen and a horrendous 60 percent at Italian universities. Many of these kids land straight in the lap of the welfare state. In Germany, the Federal Labor Office has 960,000 "customers" under 25 and spends ¤6 billion just on remedial programs that teach youngsters the most basic of skills, like simple math or how to use Microsoft Word. Despite 4.5 million registered unemployed, companies complain that they can't find skilled workers—not just engineers and specialists but plain-vanilla graduates with the social and learning skills to start simple on-the-job training. "The education system is sending us people who aren't even ready to be trained," says Labor Office chief Frank Weise. In contrast, countries like South Korea that have invested in education and raised the number of university graduates have enjoyed both higher growth and declining unemployment. Each additional year of education returns 8 percent in higher pay and productivity, says Jürgen Wössmann, education economist at Munich's IFO Institute. Germany's education troubles, according to estimates, cut the country's growth rate by 0.9 percent.

You would think better investment in education, along with wholesale reform, would therefore be a no-brainer. Instead, change has long been blocked by a combination of ideology and a desire to stick one's head in the sand. Take the universities, similarly cash-strapped in much of Europe. Public coffers are empty, yet egalitarian ideals mean schools are barred from charging tuition beyond a nominal fee. When Prime Minister Tony Blair tried to raise tuition in Britain, both opposition Conservatives and his own Labourites resisted, ultimately capping yearly tuition at a relatively modest £3,000. "It's absurd," says Michael Burda, economics professor at Berlin's Humboldt University. "There's no more money for public funding, but at the same time we prohibit universities from raising it themselves."

That it took more than a decade of debate and litigation for German universities to be permitted to charge fees of a mere ¤500 a semester is testament to the painfully slow pace of change. The money will amount to no more than ¤16 million for the average university. Even today, the education debate is marked by absurdity and distortion. Politicians talk about creating "elite" universities, yet they refuse to allow selective admissions. After the Rütli School's case became public, politicians demanded everything from salary bonuses for Hauptschule teachers to a new law making "refusal to integrate" a crime. Anything to avoid having to talk about the elephant in the middle of the room: that the system of educational segregation is ineffective and cruel.

Indeed, education authorities often go out of their way to evade such problems. France, for example, ordered data struck from the OECD report that show achievement gaps between rich-neighborhood schools and poorer (mostly immigrant) ones to be 60 percent higher than in the United States, citing "flaws" in the study's methods. French ideals of égalité make it illegal to identify students by race or ethnic background—making it virtually impossible to monitor educational integration. Italy is one of several countries that have no system of testing and assessment at all, so there's no way for any school to tell how it's doing. For 25 years, German Education ministers blocked schools from participating in international tests after a 1970 study showed German students doing worse than expected. Even today, bureaucrats won't allow researchers access to the newest data for fear they'd name and shame nonperforming schools.

There is another way. Finland, ranked by the OECD as having the world's best education system, faced many of these same problems in the 1960s. In international tests, its students barely made the OECD average. Since then, Finland has devolved decision making from Helsinki bureaucrats to the schools themselves, setting only guidelines for what students should be able to do. Schools and teachers are monitored for quality, and constantly evolve in terms of curricula and methods. The old-fashioned sorting of kids into different-level schools has been abandoned. Now Finnish 15-year-olds not only score highest in a number of skills, but also show the least effect of class background on achievement, a key measure of meritocracy. Small wonder that Finland is today a high-tech powerhouse with high growth and low unemployment.

There are other bright spots. Like Finland, the Scandinavian countries also boast some of the world's best school systems. Britain's top universities are truly world class. Elsewhere, though, reform has been piecemeal and reluctant. The Netherlands deregulated schools in 2000, giving them more authority to make their own decisions. France has funneled extra funds to poorly performing schools, and a new honesty has crept into recent studies of how immigrants do in school—yielding Bordeaux professor Georges Felouzis's shocking 2005 verdict of "academic apartheid" to describe ethnic segregation in the country's schools.

Pressure is also coming from companies as education turns into an economic issue. German chemicals giant BASF, which has tested arriving trainees for more than 30 years, recently complained that basic skills have sharply declined. In Amsterdam's Bijlmer and other disadvantaged districts, IBM and other companies have sponsored a network of "Weekend Schools" to mentor immigrant kids for careers outside the ghetto. At the University of Potsdam, software billionaire Hasso Plattner has funded an elite computer-science institute, complete with an incubator for students' business ventures. That kind of business-university partnership, which plays such a powerful role in America's scientific and entrepreneurial prowess, is sorely lacking in Europe. So far, however, these are all changes around the edges. "None of these countries are having a strategic debate over where they want to be in 10 years," says the OECD's Andreas Schleicher. Nor do they seem willing to address the true causes of the malaise. Unless that changes, Europe's future will be bleak indeed.