VET Systems, Youth Employment, and Social Benefits

Andy Green

Professor of Comparative Social Science Director of LLAKES Research Centre

Institute of Education, London

Danish Minister of Education’s Summer SeminarSorø, August 10th 2011

The Global Context for VET VET Systems are operating in a challenging context with:

• The intensification of economic competition in a developing, global, service-based economy oriented increasingly to Asia

• The end of the ‘high skills – high value-added ’ growth guarantee• The global auction of high skills and the rise of the low wage/

high skilled jobs• Increasing positional competition for ET and ‘decent jobs’• High youth unemployment with extended and ‘bumpy’

transitions to work• ‘Hollowing-out’ of skills and increasing polarisation of skills and

incomes• Social consequences of inequality

Challenges to VET Systems

• Meeting growing demand for skills and qualifications

• Distributing the growing costs equitably • Maintaining the attractiveness and quality of

VET routes in the face of:• Widespread ‘academic drift’ - with rises HE

participation and increasing under-employment of graduates.

• Maintaining firm commitment to VET.

Types of VET Systems

• Integrated school-based systems (Norway, Sweden)

• Differentiated school-based systems (France, Japan and southern Europe)

• Dual apprenticeship systems (Austria, Denmark, Germany, Switzerland).

• Mixed, market-oriented Systems (UK, US)• Hybrid Systems (Denmark?, Singapore)

Strengths and Weaknesses of Market Systems

Strengths:• Flexible, modularised systems allow rapid response to

changing employer/individual demand• Produce high skills elites for knowledge-economy

Weaknesses:• Market imperfections lead to under-investment in skills• Overproduction of graduates• Under-supply of intermediate skills• Leading to polarisation of skills and incomes• Impoverished competency-based learning - weak on

professional socialisation

Strengths and Weaknesses of Dual Apprenticeship Systems

Strengths:• High quality occupational routes and high output of intermediate skills: • Reduces tendency to ‘hollowing-out’ and skills polarisation• Raises skills levels and pay of less-skilled jobs (Estevez-Abe, 2001)• Effective agent of professional socialisation (Evans et al; Brown)• Smoothes transitions to work and reduces youth unemployment

Weaknesses:• Less flexible and responsive• Slow to adapt to skills needs of some KE jobs (Soskice)• Highly dependent on LM conditions and employer supply of

apprenticeships• Relies on effective labour market social partner institutions which are

under threat.

Integrated School-based Systems Strengths:• Supplies broad-based knowledge and skills suitable for changes

nature of work and as a basis for future training• Provides flexible programme choice and good progression

routes for students • Reduces academic/vocational divides and skills polarisation• Can be used for citizen- formation

Weaknesses• High cost• Drop-out• Less assured transitions to work

VET and Transitions to Work• Strong evidence that Dual Systems of lower rates of

youth unemployment and smooth transitions to work (Allmendinger, 1998; Breen, 2005; Gangl, 2003; Busemeyer and Trampusch, forthcoming).

• High public investment in VET (in integrated systems) also reduces youth unemployment

• However, recent research (Busemeyer and Iversen) suggests that these effects only occur when accompanied by centralised wage bargaining - which is declining in Germany.

High Mixed Systems/market bargaining Public ET system/,decentralised

(US, UK) (Southern Europe)

Dual Systems/centralised bargaining

(Den; Ger; Swiss; Austria)

Wage Inequality

Public ET systems/centralised bargaining

(Sweden, Norway)

Low Youth Unemployment HighSource: Adapted from Busemeyer and Iversen (forthcoming 2011)

Skills Polarisation in USAJames Heckman’s (2008) influential research shows degree of skills polarisation in USA.

• Percentage of youth graduating with degree up (from 17% in 1980 to 36% in 2000 and projected 43% in 2020).

• Percentage of young Americans entering Job market with only high school education up (from 31.5% in 1980 to 38% in 2000 to projected 41.5% in 2020).

• Hollowing out of the middle plus increasing stratification in graduate jobs associated with rapid rises in income inequality.

• Is this the future fate of Europe also?

Effects on Skills Distribution

• Evidence from various sources suggests that mixed, market-oriented systems (UK; US) tend to increase skills polarisation which, in turn, is linked with higher income inequality.

• Differentiated school-based systems also linked with skills and wage inequality where wage bargaining is decentralised.

• Dual systems reduce skills and wage differentials, particularly when linked with centralised bargaining.

Proportions of Adults with Highest Qualification at Different Levels by Country – 2002/3

Source: Steedman, McIntosh, Green (2005)

UK France Germany Singapore USA0

10

20

30

40

50

60

70

80

Below Level 3Level 3Above Level 3

Proportions of Adults with Highest Qualification at Different Levels by Country – 2002/3

Source: Steedman, McIntosh, Green (2005)

UK France Germany Singapore USA0

5

10

15

20

25

30

35

40

45

50

Below Level 2Level 2Level 3Above Level 3

Stocks of Qualifications among Young Adults by Country, 1997/8.

Source: LFS data on Highest Qualifications Held: Brown, Green and Lauder, High Skills, OUP, 1990.

Population aged 25-29 by Highest Qualification Attained

55.0

19.3

50.2

5.7 8.917

65.8

12.2

59.5

44.6

28.0

14.9

37.6 34.8

46.5

0.0

20.0

40.0

60.0

80.0

100.0

UK (1998) Germany (1997) Singapore (1998) Korea (1998) Japan (1997)

Below Level 3Level 3Level 4 and above

Inequality of Skills from IALS – 1990s

Standard Deviations of Scores for Country Groups

0

5

10

15

20

25

Country Group

SD

Prose SD

Document SD

Quantitative SD

Average SD

Skills Inequality Means for Country Groups by IVET Types for 1990s

Skills Inequality measured by Test Score Ratios using IALS data for 1990s

Apprentice = Denmark, Germany, Netherlands, SwitzerlandIntegrated School-based Level 3 E and T = Norway, SwedenMixed, Market-Oriented E and T = Britain and USDifferentiated School-based E and T = Belgium, Portugal

Income Gini Means for Countries Groups by IVET Types

Apprentice = Austria, Denmark, Germany, SwitzerlandIntegrated School-based Level 3 E and T = Norway, SwedenMixed, Market-Oriented E and T = UK and USDifferentiated School-based E and T = France, Greece, Italy, Portugal and Spain

The Social Consequences of Skills and Incomes Inequality

Research shows that skills and incomes inequality is associated across developed countries with:

• Lower levels of public health (Wilkinson, 1996)

• Higher rates of anxiety and depression (Wilkinson and Pickett, 2009)

• Lower levels of social trust and civic cooperation (Green, Preston and Janmaat, 20076)

The Challenge to Dual Systems• Dual apprenticeship systems still seem to bring the greatest

benefits in terms of reducing youth unemployment and lowering skills and incomes polarisation. They also raise the quality of less skills jobs which becomes increasingly important to mitigate the looming problems of graduate under-employment.

• However, the benefits depend on strong LM institutions and centralised bargaining – which are under pressure currently.

• Dual systems also under pressure from academic drift – whereby more students choose HE routes and large companies increasingly recruit graduates instead of apprentices. Job progression for apprentice recruits also appears to be threatened in some countries.

• Various forms of hybridization seem to have been effective in mitigating these tendencies.

Benefits of Hybridization • School-based apprentice routes (SKP) with individualisation

of programmes in Denmark have provided an effective back-up in the face of inadequate supply of firm apprenticeships (Juul) and help to reduce youth unemployment, but low esteem still remains a problem.

• Dual Qualification Apprenticeships in Austria and Switzerland provide better progression routes for apprentices and have helped maintain esteem, stem academic drift and maintain apprentice numbers.

• Successful short technological degree programmes (IUT in France).

Singapore’s Skills Innovations

Singapore’s hybrid VET system combines state-organised and funded apprenticeships (15% of cohort) with Polytechnic-based accelerated technician training (3 years from lower secondary) (45% cohort).

• High investment in VET learning technology• Generous state funding• Achieves very high participation/qualification rate and

good employment outcomes.

Conclusions

In a world where many countries are experiencing high youth unemployment and an increasing polarisation of skills and incomes with negative social effects, dual apprencticeship systems – backed up where necessary by school-based VET– still offer the best social and economic outcomes so long as the social partner, labour market organisations which support them remain strong.

Green, A., Preston, J. and Janmaat, J-G, Education, Equality and Social Cohesion, Palgrave, 2006.

Green, A. and Janmaat, J-G., Regimes of Social Cohesion: Societies and the Crisis of Globalisation, Palgrave, 2011.

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