December 7, 2011 12:26 pm

Europe warned on erosion of R&D base

Europe’s industrial research and development base will erode over the next 10 to 15 years unless European countries produce or recruit from abroad hundreds of thousands more engineers, European big business warned on Wednesday.

Speaking on the eve of a crisis summit of European Union leaders, Leif Johansson, chairman of the European Round Table of Industrialists (ERT), said it was a mistake to think that one meeting would solve Europe’s economic problems overnight.

The acute shortage of engineers is a good example of the formidable long-term challenges facing Europe that have received too little public attention over the past two years because of the sovereign debt and banking crises, he said.

“Here in Europe we make wonderful speeches about the knowledge society. But we’re actually looking at a very serious shortage of engineers in maths, science and technology,” Mr Johansson told the Financial Times.

“We need to fill a gap of 350,000 to 400,000 engineers by 2025. If we as industrialists have a shortage of engineers, there’ll be an erosion of the R&D base,” he said.

Mr Johansson, who is also chairman of Ericsson, said Europe at present hosted about two-thirds of the R&D facilities of the large European multinationals that make up the ERT’s membership.

In order to maintain this R&D base, European governments need to improve their secondary education systems and universities, so that they produce more engineers, and encourage skilled non-European immigrants to move to Europe, he said.

Governments must also concentrate on the fiscal and structural reforms required to generate higher levels of economic growth and attract business investment, Mr Johansson said. “A decade or two of low growth is bound to affect business decisions about investment in Europe.”

Mr Johansson said it was an illusion to think that all would be well in the 17-nation eurozone if Greece were to abandon or be stripped of its membership of the club. “All of us in the ERT would say that, were Greece to leave, it would just move the problem somewhere else.”

Referring to Greece, Italy and other eurozone countries with a long record of disorderly public finances and inadequate structural reform, Mr Johansson said: “If you do something wrong for 20 or 30 years, then it won’t get fixed in one quarter.”

He said all ERT companies wanted the euro to survive, but they would not find it difficult, from a technical point of view, to cope with the reintroduction of national European currencies. “Large corporations like ours are dealing with hundreds of currencies already around the world,” he said.

“What concerns us much more is, what would be the effect on the real economy? Would it push Europe into a prolonged recession? We need a European market that is growing and healthy.”

Additional reporting by Robert Anderson, Andrew Hill and Nikki Tait

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