The labour market and vocational education and training – systems which do not always correspond

The major challenges

Companies are bemoaning the growing shortage of skilled workers. Requirements regarding employee competencies are rising and changing whilst the proportion of persons aged between 20 and 34 and not in possession of a vocational qualification has been steadily increasing for a decade.

The SINUS Study (cf. Schleer/Calmbach 2022) has also revealed career choice uncertainties among young people and delays in education and training decisions. This is linked with a lack of vocational orientation provision and the declining attractiveness of (initial) VET, which has led to a fall in applications and a significantly larger percentage of young people entering higher education study.

Changes on the labour market are primarily being driven by the increased needs for companies to adjust in the wake of the four big “Ds” – digitalisation, decarbonisation, deglobalisation and demography. According to the Rat der Arbeitswelt (2023), this could lead to a loss of 3.6 million jobs by 2040 as well as to the creation of a similar number of new positions (a development also indicated by the BIBB-IAB occupational projections, cf. Maier et al. 2022). Although not all companies are affected by the four “Ds” in the same manner and to the same degree, VET must nevertheless adapt to the fact that they will bring about a change in recruitment practice and in occupational structures.

This is giving rise to requirements for companies and also for occupations and employees indirectly. Some of these are new and are aligned to parameters which remain unknown or else are being determined by strategic/general policy decisions.

The key trends

Digitalisation is frequently named as currently the most important technological development. But what are its associated impacts for employees and competency requirements? Von dem Bach et al. (2022) show that the demand for and the supply of skilled workers certainly develop in a parallel fashion on the labour market (introduction of technology and workforce skills) and that the main focus needs to be on the extension and expansion of competencies rather than on the replacement of workers. The findings of Seegers/Ehmann (2021) also point in the same direction by demonstrating that task expansion and additional task requirements can also even be ascertained in areas in which technical replacement seems likely. Lewalder et al. (2019) present a differentiated view by suggesting that an occupation-sector matrix provides a better way of observing areas of potential for replacement.

Despite the “accelerated structural shift” (cf. Helmrich et al. 2016), the half-life period of knowledge does not shrink (cf. Helmrich/Leppelmeier 2020). We are also aware that developments tend to happen continually or are at least of a long-term nature (cf. Tiemann et al. 2021) but that they may also occur in an eruptive form in individual circumstances where a sector or an occupation is particularly affected.

Decarbonisation of the economy is a stated but malleable objective. Scenario calculations show that it may cause a huge, short-term growth in employment in the areas of construction, administration and supply and that the long-term expectation is a higher level of employment (cf. Schur et al. 2023; ZIKA et al. 2022). Adaptations made as a result of climate change are also leading to a further requirement for skilled workers (cf. Bernardt/Rausch-Berhie 2023). Here too, requirements are altering towards more specialised knowledge and greater communication skills.

In the case of demographic development, the BIBB-IAB projections show that, in the event of a virtually unchanged birth rate, the population of Germany will initially continue to rise and will not begin to fall again until after 2030. Total population will reach around 82.52 million persons in the year 2040. A large decrease is expected to occur in the working age population of persons between 15 and 73. The figure will fall from 62.4 million persons in 2021 to around 58.9 million in 2040 (cf. Maier et al. 2022, pp. 6 ff.). The reason for this is the baby boomer generation’s retirement.

Globalisation developments of the economy will slow down and be reversed in some areas (de-risking). Growth will locate to regions where population is undergoing the strongest increase. However, these national economies only account for a comparatively low share of world trade. At the same time, trade barriers will increase and transport will become more expensive. World trade will continue to grow, but more slowly. For Germany, this will lead to a reduction in exports. The expectation therefore is that there will be more domestic manufacturing and less production for export (cf. Mönnig/Dreuw/Lutz 2024).

The labour market

The labour demand has risen constantly over recent decades. 39.8 million persons were reported as being in active employment in the year 2000. By 2022, this figure had risen to 45.5 million (cf. Statistisches Bundesamt 2024). Nevertheless, the labour market gap between supply and demand is growing in many occupations (cf. Rat der Arbeitswelt 2023). This is either because demand is increasing more quickly than the supply of skilled workers or because a sharp decline is occurring in the case of the latter (cf. Maier et al. 2022; Zika et al. 2023).

A more detailed investigation of the labour market over the course of time reveals that rates of employment of older persons and women are increasing but remain constant amongst young people (cf. Maier/Kalinowski/Krinitz 2024). Annual working times are, however, falling.

Upcoming generations are ultimately unable to cover the purely arithmetical replacement requirement caused by retirement of the baby boomers (cf. Maier et al. 2022). Immigration must thus compensate for the lack of a new labour supply.

The training market

A different picture is revealed on the training market. In this case, the supply of training places (newly concluded training contracts and vacancies) fell from 582,072 in 2009 to around 544,011 in 2022. There was also a decrease during the same period in the number of persons seeking a training place (newly concluded training contracts and unplaced applicants) from 652,947 in 2009 to 535,545 in 2022 (cf. Oeynhausen et al. 2023, p. 35). The number of entrants to school-based VET programmes rose slightly from 219,678 in the year 2010 to 235,138 in 2022 (cf. BIBB 2024, p. 81). The number of entrants to German institutes of higher education increased more sharply from 369,273 in the winter semester of 2009/10 to 398,244 in the winter semester of 2022/23.¹ Even cumulatively, however, the numbers of trainees and higher education students are not sufficient to fill a constantly growing skilled worker gap.

Another factor is that a fall in the number of persons unsuccessfully seeking a training place (from 88,640 in 2009 to 60,400 in 2022) has been accompanied by a rise in the number of companies unable to fill their training vacancies (17,766 in the year 2009 as opposed to 68,868 in 2022) (cf. Oeynhausen et al. 2023, p. 35). The proportion of training contracts prematurely dissolved has seen an upwards trend since 2009. In 2022, it reached a new record level of 29.5 percent of training contracts commenced. The main concentration here was on smaller companies (cf. BIBB 2024, pp. 153 ff.). Regional differences in the relation of training place supply to training place demand have also risen significantly over recent years. In this case too, the shift has been in favour of potential training place applicants (cf. Christ et al. 2022).

These figures indicate matching problems, which exhibit massive variances both with regard to training occupations as well as in respect of regions. And this is more likely to occur in occupations urgently required for the upcoming transformation processes, including the smallest category of craft trade companies specialising in sanitary, heating and air conditioning systems. In 2007, the training rate of companies with fewer than ten employees was 8.1 percent, significantly above the overall average rate of 6.5 percent at the time. By 2022, this had nearly halved to 4.6 percent and was lower than the overall average rate, which in turn had also fallen to 4.7 percent (cf. BIBB 2024, p. 191).

Effects of the four Ds on companies

The four big “Ds” and general policy conditions require adjustments to the ways in which companies act. These are, however, subject to a natural time lag, i.e. there is a considerable delay until the problem is recognised, behaviour is changed and the impact enters into force. Germany is also currently experiencing a stagnation in decision making, which means that the degree of momentum in the economy is too low.

Training managers need to be able to respond to the following questions. Which personal, social, professional and methodological competencies will be required in which occupation in future in order to shape this shift, and how can these competencies be imparted or acquired? The establishment of teaching capacities and resources for the implementation of initial and continuing VET is time-consuming and costly. For this reason, many companies do not believe that they are in a position to develop and execute relevant training strategies initiated by the four “Ds”. Nevertheless, such adaptations are necessary. If sufficient success is not achieved in this regard, it must be assumed that the numbers of vacant training places and unfilled skilled worker jobs, which have presently already reached a record level, will continue to rise – with attendant consequences for the labour market and for economic development.

VET is not an end in itself. It must be aligned to the requirements and needs of the companies and to the capabilities of the trainees. It creates a basis to serve new requirements on the labour market over the long term and to lay the foundation for continuing professional education. But vocational training contents and their practical execution are also subject to a time lag. Further challenges arise for companies too, such as the initiation of contact with applicants, the completion of internships, as well as measures for the support and integration of trainees.

Many companies are withdrawing from the dual VET system, with one of the justifications being that a large proportion of training place applicants no longer fulfils expectations with regard to the necessary general education. There is, however, an absence of evidence for this (cf. Granato/Krekel/Ulrich 2015). Especially during the pandemic, the particular protection against dismissal accorded to trainees led to the unintended consequence that companies were reluctant to recruit trainees whilst the crisis continued. In addition to this, increased competition on the markets for goods and services is associated with a greater degree of specialisation. This means that it is more difficult to cover the component parts of a VET programme. Especially in the case of smaller firms, temporary withdrawal from company-based VET may frequently result in permanent disengagement because the internal structures necessary for training are lost (cf. Baas/Baethge 2017).

Vocational orientation and attractiveness of initial VET

The attractiveness of VET and matching problems on the training market are contingent on a multitude of factors and developments. Absent or misdirected vocational orientation and greater access to institutes of higher education reduce willingness to commence VET. Shortages are exacerbated by rising contract dissolution rates, by employment prospects which are not always good and by thwarted income expectations upon completion of training. The search for possible solutions is made even more difficult in that these bottlenecks also greatly vary from region to region, both qualitatively and quantitatively.

Studies show “that the risk of premature termination of initial VET is associated with career choice compromises. The further the training occupation achieved deviates from a person’s own professional aspirations with regard to occupational specialism, the higher this risk will be.” (BIBB 2023, p. 215; cf. also Beckmann/Wicht/Siembab 2023).

Young people are now more likely to aspire to higher level school qualifications, and those in possession of a higher education entrance qualification usually exhibit a greater propensity for degree level study. Greater societal recognition and the better earnings prospects enjoyed by graduates generally play a major role in this regard (cf. Stüber 2022; Bosch 2023). Changes are thus also revealed here. The proportion of persons in the dual system with a higher education entrance qualification has increased by more than ten percentage points since 2007 (cf. Kroll/Lohmüller/Ulrich 2016). At the same time, interest in vocational training in the dual system has declined sharply, particularly amongst young women. The number of young women as a proportion of the total number of trainees has decreased by more than five percentage points since 2010 alone (proportion of women in 2010: 39.8% as opposed to 34.6% in 2022) (cf. BIBB 2024, p. 102).

Alongside the issue of those unable to find a suitable training place in their preferred occupation, there is also currently a further crisis at the transition from school to work. The proportions of young adults aged between 20 and 34 being “released” onto the labour market without VET are rising. Even though this group of persons without formal qualifications (NEETs) is very heterogeneous and despite the fact that immigration is one of the reasons for its growth, such a development is neither acceptable for the young people themselves nor for the labour market against the background of the skilled worker shortage. Wolter (2022) finds that the “[...] erosion feared in VET [...] is very much being caused by exclusion (‘from below’) of the great potential offered by the not inconsiderable number of young people who permanently remain without a vocational qualification rather than by the expansion (‘from above’) of academic training. Failure to tap into this resource constitutes the actual Achilles heel in terms of securing a supply of young skilled workers.” (p. 64).

The Federal Government has attempted to support lower ability young people in accessing company-based training by introducing a training guarantee. The aim is for particular consideration to be given to regional circumstances and to the needs of the young people.

Approaches to changes

The labour market and VET are mutually interdependent. Reforms to initial VET aimed at increasing the speed of adaptation could be targeted at various points.

• The focusing of company-based VET on core components of the training occupations
• The range of options for companies to structure their own training
• Cooperation between companies

Relevant positive experiences are already in place.

The aim must be to conduct research which will permit precise observation and evaluation of the upcoming changes. However, the timely establishment of general policy making conditions is just as important so that these can be robustly integrated into training contents.

Bellmann/Schmid (2023) follow on from Euler/Severing (2006) in particularly suggesting a modular structuring of vocational training provision. Modules which are easily manageable for young people and companies and which are embedded into familiar occupational fields increase transparency and acceptance from their point of view. They are also indispensable for vocational regulatory policy nationally and increasingly at a European level (European Qualifications Framework and European Credit System). To this end, however, we need to ensure that this type of modularisation is linked into broad and utilisable initial VET. This means that there must be no dissolution of the concept of the regulated occupation.

The objective should be to develop skilled worker training solutions for the target groups and to use target-group specific instruments to facilitate these in order to open up medium-term and long-term second-chance training (certification-oriented partially qualifying training), the retention or expansion of professional knowledge and skills (updating training) as well as occupational advancement (upgrading training). Within this context, the planned Professional Validation Act² is an important building block for the realisation of such a goal.

Lutz Bellmann
Professor, Nicolaus Copernicus University in Toruń, Professor Emeritus, University of Erlangen-Nuremberg and former Head of the Research Department “Establishments and Employment” at the Institute for Employment Research in Nuremberg
 

Robert Helmrich
Professor, Head of Department at BIBB, Honorary Professor in the Faculty of Sociology at the University of Bonn

Translation from the German original (published in BWP 3/2024): Martin Kelsey, GlobalSprachTeam, Berlin