Our education system squanders human capital at all levels, from preschools to universities. To deliver quality education, we first need quality teachers, but we are missing the opportunity offered by the PNRR (National Recovery and Resilience Plan) to reform teacher recruitment, salaries, and career paths. Additionally, we must “open” schools, both literally and metaphorically, to provide more opportunities for disadvantaged groups, starting with the children of immigrants.
If you ask a politician during an election campaign how they plan to fund their costly promises, you can bet they’ll say, “by eliminating waste.” The reason is simple: waste, at least in theory, can be cut without harming anyone. It’s like fixing a leaky pipe that wastes water—a vital resource—and causes annoying leaks into a neighbour’s home. If the repair can be done cheaply, it’s a win-win for everyone, and the repairman earns praise. But in reality, it’s hard to find areas in the public budget where cutting costs won’t upset some segment of the population. That’s why many battles against waste fade away after election campaigns, disappearing once the votes are cast.
However, there is one enormous wastage that could be reduced, benefiting everyone, yet it receives little attention during election season: the colossal waste of human capital. Hundreds of thousands of young people in Italy study, but struggle to find work. When they do find jobs, they’re often in fields unrelated to the skills they spent years learning. This happens while businesses that desperately need those very skills can’t find the workers they require. It’s a waste occurring in a country with high dropout rates, where the education system creates dead ends that neither lead to employment nor encourage further study, swelling the ranks of NEETs (Not in Employment, Education, or Training).
Labour Shortages and Unemployed Youth
We can no longer afford this waste of human capital. Demographic trends are forcing us to confront it. Each year, our workforce loses about 100,000 people—retirees who are not replaced by new workers, whether born in Italy or immigrants. In principle, businesses could adapt by adopting labour-saving technologies, but that’s not happening. The vacancy rate—the percentage of unfilled jobs—has tripled in recent years. While four years ago only one in twenty companies reported staffing shortages, today nearly half struggle to fill open positions.
Yet despite these labour shortages, we have nearly 2 million unemployed people and more than 3 million working-age individuals who neither have jobs nor are seeking them. The waste of human capital is compounded by the fact that today’s young people are generally better educated than those retiring. About 15% of people aged 60 to 65 have only a primary education, compared to less than 1% of those aged 25 to 30.
So, what can we do to reduce this immense waste of human capital? In this issue of Eco, we focus on how to avoid wasting the investment in human capital made by thousands of families and our education system every year. We explore ways to include disadvantaged students, starting with preschools. We look at how to reduce school dropout rates at all levels, not just in compulsory education but also during the transition from secondary to tertiary education. We assess how to achieve the goal of compulsory education—not as a selective process, but as a means of providing everyone, including the children of immigrants, with a foundational education. We also examine how to improve the quality of vocational training, better aligning it with labour market needs, and how to adapt university education to the challenges and opportunities presented by generative artificial intelligence.
Waste Occurs at Multiple Levels
School dropout happens at various stages: from missed preschool enrollments to the transition between lower and upper secondary school, and then the shift to university. We examine these different forms of dropout and consider possible solutions.
One goal of the PNRR was to increase the number of preschools, which are woefully lacking in disadvantaged areas of the country. This scarcity largely explains why only one in five children from low-income families aged 0 to 2 attends preschool in Italy. Prior to the PNRR, policies supporting early childhood education focused almost exclusively on demand-side measures, like preschool bonuses, which only benefited families living in areas with a relatively high availability of preschools. Unfortunately, the data show that the PNRR has so far failed to meet its objectives. Most funds have been spent on improving kindergartens (for children aged 3 to 5), which were already sufficient to serve nine out of ten children in that age group. Few new preschools have been created, as municipalities were not given adequate guarantees on how operational costs—starting with teachers’ salaries—would be covered. Unsurprisingly, in the latest PNRR review, the number of new preschool places was nearly halved, from 264,000 to 150,000, and even with this reduced target, many projects are delayed.
Preschools are not just places where children are “parked” while their parents work. They are environments where children develop crucial non-cognitive skills. Here, they learn and practice social and pro-social abilities—some innate, others learned by imitation—such as showing empathy toward peers and alleviating their discomfort. It’s where they learn to build and maintain relationships, fostering a sense of belonging to a group, regardless of skin colour or country of origin. The ius scholae should encourage the enrollment of immigrant children in preschools, facilitating language acquisition and preventing delays in primary school programmes.
Although dropout rates in compulsory education have significantly decreased over time, they still affect a small portion of the population. However, dropout rates remain high during the transition from lower to upper secondary school and throughout the subsequent eight years. Nearly one in six students drops out of upper secondary school before obtaining a diploma, and among the children of immigrants, the dropout rate exceeds 20%. There is also a mass exodus from the education system during the transition from secondary school to university. In Italy, fewer than one in three people aged 25 to 34 pursue tertiary education, and 7% of students drop out after their first year of university.
What’s even more concerning is the phenomenon of implicit dropout—abandoning the learning process without formally leaving school. In Italy, one in five students finishing compulsory education lacks basic skills in reading comprehension, mathematics, and science, which are fundamental for active citizenship. When focusing on mathematics and Italian, implicit dropout affects as many as one in two students.
Opening Schools to Combat Dropout
The most effective way to combat this massive waste of human capital is to open schools. Opening schools means many things. First and foremost, it means keeping them open during the long summer break, on afternoons without classes, and at weekends, to address educational gaps that could severely compromise students’ learning paths. We provide a rigorous evaluation of the “Arcipelago Educativo” project, which offered educational workshops and personalised tutoring to 700 primary school students in nine Italian cities during the summer. The results—both quantitative and qualitative—are very encouraging, and this experience could easily be expanded nationwide. However, this will only be possible if the regionalisation of education, as outlined in the Calderoli law, includes equalisation mechanisms between regions. Otherwise, the already significant disparities between northern and southern Italy in terms of keeping schools open (by offering full-time education) will only widen.
Opening schools also means avoiding the segregation of many students into educational tracks that later prove to be dead ends. Technical Institutes (ITS) were supposed to be the primary route to offering professional tertiary education, providing a fast track to employment for graduates of technical and vocational schools—similar to what happens in France, Germany, and, to some extent, Austria and Switzerland. The PNRR allocated significant resources (€1.5 billion, compared to the €50 million annually allocated by the state fund for ITS) to increase the number of institutes and equip them with laboratories. Yet ITS still serve a negligible number of students (9,000 enrollments and 7,000 graduates in the most recent data), perhaps because there is no real connection with technical and vocational schools.
Opening schools also means not discriminating against foreign students in a system that too often segregates them into dead-end tracks. We show how teachers’ orientation activities tend to push foreign students toward technical and vocational schools, even when their academic performance is on par with Italian students who are encouraged to enroll in classical or scientific high schools. Discrimination based on nationality creates obstacles to the social integration of immigrants. Raising awareness among foreign students about the pros and cons of the educational paths available to them, and among teachers about the consequences of isolating foreign students, is crucial. The ius scholae, which introduces a path to citizenship based on completing a school cycle, could help counter this isolation and foster greater awareness. There are also persistent stereotypes regarding women’s abilities in scientific subjects and men’s in literary ones. These stereotypes contribute to labour market segregation, exacerbating gender pay gaps.
As we can see, opening schools doesn’t just mean allocating more resources to the education system. More importantly, it means using those resources more effectively. It also means conducting a genuine cultural battle at all levels, recognising the social value of teachers, appreciating the role of preschools in fostering social inclusion, challenging misleading stereotypes about the distribution of talent across socioeconomic groups, and providing young people with a better understanding of labour market changes as they choose their educational paths. Because education is an investment, starting from the first grade. The constant emphasis—even among economists—on the need to increase capital spending has led the PNRR to fund often nonsensical infrastructure projects instead of prioritising investments in education that millions of Italians demand, as we pointed out in the Eco issue dedicated to healthcare. Spending on education, even in the form of current expenses to pay the best teachers more and encourage others to improve, is a far more forward-looking investment than so-called “capital spending.” The real battle against waste is being fought in schools today.
