Washington, DC: On Wednesday, February 13, 2013, the German Marshall Fund of the United States hosted a luncheon discussion with Ursula von der Leyen, Federal Minister for Labor and Social Affairs of Germany.  Dr. von der Leyen addressed the state of European labor markets and the continent’s economic future.  The luncheon was attended by more than 50 people, including GMF board members, government officials, and representatives from embassies, think tanks, and academia.

In her remarks, Dr. von der Leyen laid out that the United States and the European Union share many common goals as well as challenges for their future economic success, and she stressed that countries on both sides of the Atlantic must tackle sovereign debt, increase competitiveness, and promote jobs and employment.  She provided a brief overview of the European sovereign-debt crisis.  She described the crisis as a “confidence crisis” of investors about the ability of certain member states to repay their debts.  She maintained that the EU must now fix the architecture of the euro, which will involve fiscal policy coordination, and in the long term should work on increasing competitiveness.

Dr. von der Leyen focused also on the issue of youth unemployment.  She pointed to Germany’s dual system of vocational training as a major factor in Germany’s comparatively low rate of youth unemployment.  She noted that other countries, including the United States, are starting to emulate Germany’s model, which involves hands-on enterprise training that is demand-driven by employers.  She suggested that peripheral Eurozone countries which have very high levels of youth unemployment could establish similar vocational training systems and provide stipends to young unemployed people to fill open dual-vocational jobs in other member states.  She acknowledged the psychological impact of youth employment, noting that young people who find jobs in the EU will become invested in its future.

During the following question and answer session, Dr. von der Leyen stated that the U.S. and the EU share a commitment to upward mobility.  She noted that the European social model is based on this premise, and emphasized that the social security systems in EU countries must be sustainable and maintainable in order to survive.  She pointed to the success of welfare systems in Scandinavian countries to argue that this goal can be achieved by increasing productivity.  She also related that one lesson of the 2008 crisis was Europe’s realization that its social security system was a stabilizing factor.

Finally, Dr. von der Leyen addressed the challenges facing Germany’s economy.  She stressed that while Germany has a very robust labor market, it must tackle demographic change, particularly an aging workforce, in order to be a leading global actor.  She also discussed the issue of women in the workforce.  She expressed strong support for policies which allow women to have both children and a career, and encouraged more investment in education for girls in the maths and sciences.  She spoke about Germany’s immigration policies, relating that while Germany has experienced a rise in the number of immigrants from the southern EU member states that have been hit hardest by the crisis, the number of immigrants from the eastern EU member states such as Poland has also increased.  She explained that skilled migration is increasingly accepted by the German population.