VET Systems, Youth Employment, and Social Benefits

1. 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 Seminar Sorø, August 10th 2011

2. 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

3. 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.

4. 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)

5. 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

6. 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.

7. 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

8. 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.

9. 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) LowYouth Unemployment High Source: Adapted from Busemeyer and Iversen (forthcoming 2011)

10. Skills Polarisation in USA James 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?

11. 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.

12. Proportions of Adults with Highest Qualification at Different Levels by Country – 2002/3 Source: Steedman, McIntosh, Green (2005)

13. Proportions of Adults with Highest Qualification at Different Levels by Country – 2002/3 Source: Steedman, McIntosh, Green (2005)

14. 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.

15. Inequality of Skills from IALS – 1990s

16. 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, Switzerland Integrated School-based Level 3 E and T = Norway, Sweden Mixed, Market-Oriented E and T = Britain and US Differentiated School-based E and T = Belgium, Portugal

17. Income Gini Means for Countries Groups by IVET Types Apprentice = Austria, Denmark, Germany, Switzerland Integrated School-based Level 3 E and T = Norway, Sweden Mixed, Market-Oriented E and T = UK and US Differentiated School-based E and T = France, Greece, Italy, Portugal and Spain

18. 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)

21. 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.

22. 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).

23. 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.

24. 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 apprencticeshipsystems – 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.

25. 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. LLAKES Research Papers can be downloaded from: www.llakes.org