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updated: 5/28/2013 9:39 AM

Europe's apprentice system shrinking

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By Bloomberg

Andreas Spindler was well-served by Austria's apprentice program, from which he graduated a decade ago. The skills he gained kept him employed steadily as a sous-chef in Vienna's finest eateries, including Cafe Central, the coffee house once favored by Sigmund Freud.

So when he saw a young apprentice throwing fresh lettuce hearts into the garbage and then defying orders to step aside and be shown how a salad is made, Spindler realized something had gone wrong.

"There used to be a code of honor between apprentices and employers," said Spindler, 31, exhaling a cloud of smoke into the sunshine along the city's Ringstrasse road. "Apprentices used to receive knowledge from employers. Now they're just a cheap workforce."

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.

No Qualifications

"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 decline reflects emerging fissures in the compact between Austrian labor, business and schools. The legacy of the apprentice system is one reason why this nation of 8.4 million has the European Union's lowest jobless rate, at 4.7 percent on average this year, and one of the highest qualities of life in the world.

The number of apprentices has fallen by 35 percent since 1980, when there were about 194,000 of them. Austrian companies had 125,228 apprentices last year, 34,000 of whom were starting the program, according to Austria's Chamber of Commerce.

Medieval Guilds

In Germany too, the number of apprentices has fallen to a seven-year low; the number of unfilled apprenticeships rose to 33,275 last year, according to an Education and Research Ministry report. The country needs to bring in unemployed youth from elsewhere in Europe to fill the posts, Labor Minister Ursula von der Leyen said in an ARD television interview May 26.

The issue of youth unemployment brought German Finance Minister Wolfgang Schaeuble and his French counterpart, Pierre Moscovici, to Paris today to discuss bringing cheaper credit to small businesses that want to hire young workers in southern Europe, where apprenticeships aren't a gateway to employment.

The apprenticeship system is a relic of medieval guilds, in which master craftsmen passed trade knowledge to apprentices under contract. It's helped give Austria Europe's lowest youth unemployment rate, with Germany, 7.6 percent in March. That compares with almost 24 percent across the EU and more than 50 percent in crisis-hit countries such as Greece and Spain, according to EU statistics.

Those who fail the post-apprentice exam and thus don't qualify for guilds do less well. The unemployment rate for Austrian unskilled workers, such as dishwashers, is 22 percent.

Door Frames

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.

Our Treasure

"We are running the danger of marginalizing our own system," said Mayr, adding that he worries more teenagers will opt for high school over tradecraft as Austria's secondary schools become easier to get into for a shrinking pool of young people. "We don't understand the treasure we're sitting on."

Voestalpine AG, the maker of high-quality steel for airplanes and automobiles, values its apprentices, more than 350 of whom work and learn at the company's Linz, Austria-based factory.

The apprenticeship system has elevated domestic productivity compared with workers the company employs in other countries, Chief Executive Officer Wolfgang Eder said. That in turn compensates for local labor costs 30 percent higher than in Corpus Christi, Texas, where Voestalpine is building a $711 million iron plant to exploit lower U.S. energy and carbon- emission costs.

English Lessons

"This advantage in productivity has been shrinking from year to year," Eder said from his office overlooking Voestalpine's factory abutting the Danube River. "We're not so much affected yet but others are."

To lure and keep the best apprentices, Voestalpine hired headmaster Andreas Pucher, who himself was an apprentice electrician at Voestalpine for three years in the 1980s. The company offers apprentices cut-rate London vacations to learn English, sponsors international trade competitions and gives young people regular access to management, Pucher said.

Apprentices inside the steel plant take home about 550 euros ($711) a month from Voestalpine, which in turn receives government subsidies covering a portion of the cost. That compares with 375 euros a month for first-year goods-haulers on the Danube, 350 euros for florists' helpers and 659 euros for roof installers, according to the Union of Young Workers, which advises and represents teenagers.

'Worthless Illiterates'

It isn't just Spindler at the cafe who's noticed incompetent apprentices. Plachutta, the Viennese restaurant known for posting photos of local celebrities on its walls, drew apprentice protests in April after its owner and chef, Mario Plachutta, called the majority of apprentices ''worthless illiterates" in an interview with Der Standard newspaper. Plachutta didn't return phone calls seeking comment.

Austria is facing a 17-year decline in the number of 15- year-olds that began in 2007 and won't turn upward until 2024, according to government data. Faced with a deficit of new apprentices, the country's labor ministry last month allowed asylum-seekers under age 25 to enter trade apprenticeships.

In addition, a growing number of apprentices begin at an older age, after they have finished secondary school.

Sebastian Wandl credits his success as a restaurant chef to his late start. He finished high school and studied architecture before becoming an apprentice. Now he runs the kitchen at Oben, atop Vienna's central library. It doesn't accept apprentices.

"It's their age," said Wandl, 26. "Puberty is complicated and it makes it hard to teach them."


Workers like him now make up 15 percent of all apprentices, from about 8 percent a decade ago, labor-market researcher Mayr said.

"Right now we have a good equilibrium but demography is the challenge," he said. "Increasingly, people are entering apprenticeships through non-traditional routes."

Meanwhile in Vienna, tired from the hours and intensity of kitchen labor, Spindler the chef quit his job last month. He's trying to decide between job offers from other restaurants and setting up his own eatery.

"An apprenticeship makes a person grow up and it did me good," he said. "These kids still need to learn the basics. That's what people have forgotten."

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