20130528 Links

1. Spain: the process of structural reform; 2. Sweden: Peace & Love Festival declares bankrupty; 3. Austria: The apprenticeship system is cracking.

1. Spain: ¿Brotes verdes en un tronco seco? (Green shoots on a dry stump?)

The Economist makes a brief analysis of where Spain stands in the process of structural reform. They correctly point out that home prices have fallen by more than 30% from their peak. In another recent article, however, the Economist estimated that homes are still about 15% overvalued. Banks are still probably in poor shape, and unable (or unwilling) to open up the credit spigot. And I detect, from reading the local news, certain complacency among Spanish political leaders with the amount of progress made so far. Plus, elections are due in late 2015. I am afraid Spain will go far enough with structural reforms to avoid a full rescue, and yet fall short of what is possible (in the absence of political incentives and constraints). And if that happens, real progress in raising productivity, liberalizing the service sector, changing labor laws, diversifying the sectoral composition of the economy, and reforming the welfare, pension, health, and education systems will stall, and Spain will fall back in lo mismo de siempre.

2. Sweden: No peace and love without profit.

Organizers of Sweden's popular Peace & Love music festival declared bankruptcy on Tuesday, announcing the 2013 festival in Borlänge had been cancelled, much to the disappointment of fans of headlinersDepeche Mode and First Aid Kit.(...)
But organizers decided to pull the plug on what would have been the 14th installment Peace & Love when an expected boost in ticket sales failed to materialize this week following the weekend when Swedes receive their monthly paychecks.Since 2007, the festival, which had grown to a perennial stable of Sweden's summer festival music scene, had sold an average of 23,000 tickets during May and June."But with 9,000 tickets sold, we are far short of our goal," organizers explained."We're unable to pay our operating costs and the closer the festival comes, the harder it gets to reorganize and cancel."

3.  Austria's (no longer) got talent:

Austria’s apprentice system, still a gateway to work for about 40 percent of the Alpine republic’s labor force, has fallen into disrepair. Fewer of the nation’s youth are entering the program, which places 15-year-olds in companies for three to four years in lieu of school to learn such trade skills as carpentry, electrical wiring and bread baking. At the same time, the youth population itself has been declining since 2007, reducing the potential apprentice pool.

More and more young people who do choose to pursue trades are struggling to meet standards. Almost one in five who completed apprenticeships flunked the March exam to qualify in their fields, the highest failure rate in 42 years. Rather than training a new generation of workers, companies are passing over apprentices and opting for older people with more experience. 

“We have no jobs any more for people with no qualifications,” said Johannes Kopf, the managing director of Austria’s Public Employment Service, or AMS, which helps young apprentices find companies. “Twenty years ago, it was enough for a warehouse worker to be strong. Today, they need to know how information technology functions and manage inventory.” 

(...) 

The system still works in places like Krumau am Kamp, Austria, an hour northwest of Vienna, where Franz Sinhuber accepts one new apprentice each year to learn carpentry. His teenage helpers learn to turn wood from local forests into custom-made kitchen cabinets, desks and chairs, he said last month while supervising a 15-year-old boy silently hauling hand-built door frames from the bed of his pickup.“We can still find able bodies here,” Sinhuber said as he deployed a level to make sure the door frame was even. “The problems are found in the cities.” 

Vienna’s Institute on Economic and Educational Research agrees with the carpenter’s analysis, director Thomas Mayr said. The apprentice systems fare best in Austria’s western provinces, where sparse populations are more homogeneous and the apprentice system is well-known. 

That’s not always the case in cities like Vienna, where every third person has a foreign background and thus may be unfamiliar with apprenticeships. Last year, about 39 percent fewer apprentices worked in the Austrian capital than in 1980.

Is this a demand or a supply problem? Is Austria's industrial structure changing in a way that even entry-level workers need higher qualifications? Has the quality of young apprentices changed? Has the opportunity cost of pursuing an apprenticeship increased? Is globalization to blame?