The continent’s brain drain problem is growing

Few doubt that in the international economy of the coming decades, the winners will be those best placed to compete in the new skills of the «knowledge economy.» Unless a nation wishes to compete on the basis of paying its workers less than elsewhere, the crucial factor will be the level of human capital – the skill levels of its work force. The established economies face alarming new competition from China, India and the Far East. How does Europe stand as it enters the new decade? All the international comparisons show that Europe as such does not have a problem; rather, some laggards do. In the World Bank’s Knowledge Economy Index, for example, there are six EU member states ranked in the top 10 and each is placed above the US. Denmark, Sweden, Finland, the Netherlands, the UK and Ireland are placed among the elite, but by contrast Greece joins the 2004 EU entrants Poland, Slovakia, Cyprus, Malta, Latvia and Lithuania in the 30th-40th zone. Again, the pattern in terms of innovation is similar. The EU Commission’s Global Innovation Performance Index, for example, shows that of the top 16 countries in the world, eight belong to the EU. Again, the best performers are identified as the Scandinavians, the Dutch, the Germans, the French and the British. The Southern and Central Europeans come way down the list. Internationally, there is a real problem of a brain drain from the EU to the rest of the world. The EU produces more science PhDs per capita than the US, for example, but it ends up with fewer researchers. We train scientists, but we do not keep them. For the EU to achieve its target of 3 percent of GDP to be invested in research, it would need some 700,000 extra researchers. But, in reality, the EU suffers a net loss of graduates to the rest of the world. It loses some of its brightest to the US and the return rates are actually falling. Those lost by Europe have skills concentrated in the key sectors of the knowledge economy. There is clearly an indigenous European problem in providing sufficient incentives to retain talented scientists. Within the EU, the differences in salary levels for researchers are staggering. Those on the highest average salaries (in Austria and Denmark) are earning approximately 18 times more than the lowest paid (Bulgaria). Moreover, the differences within Europe are not just East-West, but also North-South. Salaries for researchers in Southern Europe are 50-60 percent of those in Denmark, Sweden, Ireland, the Netherlands, Germany and the UK. Internationally, when taking into account the cost of living, academic salaries in the US, Japan and Australia are a third higher than the EU average. By this same measure, even research salaries in India are higher than those in 18 EU member states. It is evident that European states vary enormously as to how well placed they are in the knowledge economy of tomorrow and in their capacity to sustain innovation in key sectors. Europe faces major international challenges, but some of its economies are far better placed than others. We have a Europe of contrasts and this has implications for the future. This is not a policy dimension that can be easily dismissed. The prospect is of a Europe of marginalization – of a successful core and of a weaker, laggardly periphery. From this perspective, the risks for Greece are huge. By most international measures, it spends less, trains poorly and retains fewer of those needed for the economy of the future. Moreover, Greece has a particular problem in re-skilling its work force. On the specific measure of those participating in lifelong learning, for example, the EU Commission reports 2.9 percent of Greeks taking such courses, as opposed to an EU average of 8.5 percent. The failure to adapt to new skill requirements undermines competitiveness and foreign direct investment. No one can believe that the solution is simply a matter of increased public expenditure on education. True, Greece spends a lower percentage of its GDP on education than the EU average. It is imperative to correct this shortfall. But it is highly unlikely to be sufficient in itself. There are major structural problems affecting the international competitiveness of Greek schools, colleges and universities. The internal politics of university administration are often a nightmare. The attempted reforms of the universities in recent years has provoked huge street protests. The improvements made over the last decade are, at best, modest. So much of the debate on the EU today rests on contrasts being drawn between the performances of its member states. The «default» mode of European states hanging separately looks more, not less, likely. If so, Greece will be even more exposed in the future knowledge economy: with further dangers for its social cohesion and economic balance. Kevin Featherstone is a professor at the London School of Economics and director of the LSE’s Hellenic Observatory.