HYBRID OR UNILATERAL RESPONSIBILITY FOR TRAINING PLACES? VARIOUS PATHWAYS TO QUALIFICATION IN VET

MUTUAL LEARNING PROGRAMME: PEER COUNTRY COMMENTS PAPER - THE NETHERLANDS HYBRID OR UNILATERAL RESPONSIBILITY FOR TRAINING PLACES? VARIOUS PATHWAYS TO QUALIFICATION IN VET Peer Review on The dual training system Integration of young people into the labour market Germany, 24 25 September 2012 A paper submitted by Wim Sprenger in consortium with GHK Consulting Ltd and CERGE-EI

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CONTENTS 1 LABOUR MARKET SITUATION IN THE PEER COUNTRY... 1 2 ASSESSMENT OF THE POLICY MEASURE... 2 3 ASSESSMENT OF THE SUCCESS FACTORS AND TRANSFERABILITY... 5 4 QUESTIONS... 6 ANNEX 1: SUMMARY TABLE... 7

1 LABOUR MARKET SITUATION IN THE PEER COUNTRY This paper has been prepared for a Peer Review within the framework of the Mutual Learning Programme. It provides information on The Netherlands comments on the policy example of the Host Country for the Peer Review. For information on the policy example, please refer to the Host Country Discussion Paper. Although the Dutch labour market has been relatively severely tested by the economic and financial crisis since 2008, both general unemployment and youth unemployed were kept reasonably low in comparison with other EU countries. It seems that total unemployment will reach a height of 5% in 2012. The unemployment rate of 4.4% in 2011 was still lower than in Germany and less than half the EU-27 average. Dutch youth unemployment has usually been approximately twice the general rate, with the 7.6% in 2011 being nearly one third of the EU-27 rate. In Germany, youth unemployment used to be substantially higher in 2000-2009, but from 2009 the rate has approached Dutch levels (see Table 1). Table 1: Youth Unemployment (under 25) and total unemployment in the Netherlands, Germany and EU 27, 2000-2011 Country 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 NL Youth Unemployment 5,3 4,4 4,6 6,6 8 8,2 6,6 5,9 5,3 6,6 8,7 7,6 NL Unemployment 2,7 2,1 2,6 3,6 4,7 4,8 3,9 3,2 2,7 3,4 4,5 4,4 GER Youth Unemployment 8,5 7,8 9,3 11 13 15,5 13,8 11,9 10,6 11,2 9,9 8,6 GER Unemployment 8 7,8 8,6 9,9 10,8 11,3 10,4 8,8 7,6 7,9 7,2 6 EU 27 Youth Unemployment 18,3 17,3 17,9 18,1 18,6 18,6 17,3 15,5 15,6 19,9 20,9 21,3 EU 27 Unemployment 9,4 8,7 9 9,1 9,3 9 8,3 7,2 7,1 9 9,7 9,7 Source: Eurostat, Unemployment rates by sex, age and highest level of education attained (%) Since 1969, the Leerplichtwet (Law on Compulsory Education) 'obliges' children to qualify at level 2 before entering the labour market. Those who do not make this are seen as early school leavers. More intensely than before, education and labour market policies are now directed towards getting new entrants on the labour market with at least a level 2 qualification (startkwalificatie). Since 2007, compulsory education until the age of 16 is no longer enough. Those under level 2 have an extra 'qualification duty' until 18 or until they reach startkwalificatie. Although this has been an ambitious objective, recent statistics show encouraging results. As one part of the anti-crisis package of the Dutch government the Wet WIJ (Investeren in jongeren, Investing in Youngsters) has been introduced, changing the labour market regime for the target group from 1 October 2009. This law gives local authorities more responsibility to cope with those between 18 and 27 'not in work or education'. Those youngsters have no longer a right to get a benefit when unemployed. Instead they obtain the right to get either training/education or work within two months after registering. Recent evaluation shows 70% of those registering effectively gets training or 'work', although for about 30% this is referred to as 'care' (3%) or 'social activation', reflecting their 'distance from the labour market'. 1 The labour market population aged between 15 and 65 grew 1 J. Leenheer, H. Adriaans, J. Mulder, Evaluatie Wet Investeren in jongeren (for the Ministry of Labour), September 2011 1

slightly between 2001 and 2011 (from 10.800.000 to 10.994.000, or by 1%) 2. The numbers and percentages of those with startkwalificatie rose more significantly than the population; from 61 to 69%. The qualification gap between the older generation and the younger generations has diminished. Two thirds of the older labour market group nowadays have a qualification of level 2 or higher. This might partly be because proportionally, many low skilled workers have left the labour market in (early) retirement during this decade, although the average age of retirement has increased 3. The increase also reflects the rising qualification levels of those aged over 45 4. 2 ASSESSMENT OF THE POLICY MEASURE Main pathways in Dutch VET: different responsibilities of schools and employers, shared qualifications The Dutch education system is quite diversified and combines general and vocational education in interdependent relationships. This opens a series of bridges/gateways to the labour market, indicated by the dark blue arrows in Figure 1 below. 16% of any cohort of school starters enter the labour market directly from VET (MBO level 2, MBO level 3 and MBO level 4). Another 17% continues education in HBO (Higher Vocational Education, Polytechnics, with a substantial compulsory traineeship share in the curricula). Figure 1 Diagram of the Dutch education system Source: Cedefop/Refernet, Overview of the Dutch vocational education and training system, Country report 8, 2010 After Primary education 94% of the pupils enter the Basisvorming (VO course years 1 and 2, from 12 years of age). From here the majority (53% of all pupils) continue in VMBO (VET preparation), 39% in HAVO/VWO (general education preparing for Higher Professional Education (HBO) and universities (WO). Most VET (= MBO) 5 students come from VMBO. They can finish at ISCED levels 1, 2, 3 or 4, the last giving a possibility to enter HBO 2 The participation rate (those active on the labour market) went up from 64% in 2011 to 69% in 2006. Since then, the rate decreased to 67% in 2011/2012, reflecting the general growth in unemployment. 3 From 2001-2006 the average retirement age was 61 years, from then it rose to 63,1 in 2011 (CBS, Pensioenleeftijd werknemers ruim 63 jaar, 17.01.2012) 4 See also the graph Educational attainment, by age and birth cohort, in OECD, Education at a Glance. 5 MBO (Middelbaar Beroepsonderwijs) is the general. 2

studies. Approximately 45% of all pupils enter VET. Recently the VET sector covered 630,000 students in regular VET courses and adult education programmes. Qualifying VET education can be achieved along two learning pathways within VET education: BOL (beroepsopleidende leerweg, professional education), school-based full-time or part-time programmes with practical periods in enterprises of at least 20% of the study time to a maximum of 59%. Schools are responsible for finding work practice places. No one can be excluded from a BOL program. BBL (beroepsbegeleidende leerweg, apprenticeship based), a dual pathway (more like the dominant German system) in which learning and working are combined. Here training takes place in a company during at least 60% of the study time, and most students have a labour contract with the employer. The employer thus decides who is allowed a BBL pathway, by offering a recognized apprenticeship place. BBL courses are concentrated in technical sectors, health and care and economic professions. 6 out of 10 students are men. Both pathways are communicating vessels since the same qualifications/diplomas can be achieved through both of them. Participants in the school-based pathway are mainly young people, while 40% of those following the dual pathway are aged 25 and over. However, unlike the German situation a dual vocational training system is not the core pathway to the labour market in the Netherlands. In Germany, according to the host paper, two thirds of each age cohort pass apprenticeship training, the rest get training in vocational schools, applied universities for applied sciences and academic universities. Contrary, the Dutch dual system (BBL) only covers a small minority of each age cohort. The three existing VET levels (level 2 startkwalificatie, level 3, and level 4 with the possibility to enter HBO) only count for 16% of the cohort. In the season 2011-2012, 539.300 students took part in a VET course. Of these 165.200 (=31%) were in the dual BBL system. In periods of crisis and unemployment the dual system can face problems since: employers cannot offer enough apprenticeship places for all applicants (the 'production oriented training motive') and Employers raise their selection criteria, in order to only pick out the best students, the most promising future employees ('the investment oriented training motive'). The policy measure in Germany should help cope with these risks, compensating for employer's motives turning into a practice of heavy selection or simply closing the door for apprenticeships. Opening these doors as far as possible is in the interest of many students. OECD data suggest Germany is very successful in accompanying students to levels 3 or 4. The dual system seems effective as a qualification development model. Both in the under- 25 age group as in the group between 25 and 65 over 50% of the German labour market entrants reach level 3 or 4. In the Netherlands, 35-40% of both groups have a 3 or 4 level of qualification, slightly above the EU-21 average. Although the definitions of VET and general education vary among countries, OECD points at the strong relation between high scores on qualification levels 3 and 4 and a robust system of dual learning in VET: 'Vocational education appears to be particularly important in those countries where a large proportion of the population has an upper secondary education (ISCED 3/4). In Austria, the Czech Republic, Germany, the Slovak Republic and Slovenia, more than 50% of 25-64 year-olds have an upper secondary education (ISCED 3/4), and over 90% of them have a vocational qualification.' 6 6 OECD, Education at a Glance, OECD Indicators, 2011 (Box A1.1) 3

It seems lessons can be learnt from other countries, including the new policy initiatives aiming at opening this successful pathway for more German students and job seekers. Two arguments however make these results less convincing: 1) OECD aggregated the percentage of those with qualifications below upper secondary education (in general levels 1 and 2), or tertiary education (levels 5 and 6). Here, the differences between Germany and the Netherlands are striking as well. In those 9 years the share of upper secondary level (VET qualification) did not change in both countries, Germany staying far ahead of the Netherlands. The decrease of the group below secondary level was higher in the Netherlands, but there is still a difference of 12 points whereas tertiary qualifications matched even in 2009 and are now substantially higher in the Netherlands. It seems the strong dual VET system in Germany dominates qualification developments at the middle level, whereas the mixed system in the Netherlands appears to be more successful at shifting the high share of lower qualifications towards mid-level, and in its turn upgrading mid-level qualifications to third level (growth of the tertiary educated). This surplus of flexibility can block robust VET education in the short term, but can create more competencies and chances for mobility and upgrading in the longer term. 2) Table 4 compares recent unemployment within qualification groups. Despite the fact that Germany has substantially fewer lower qualified on the labour market, the unemployment rate among this group is about double as high. The rates in 2011 are more comparable in the 3/4 and 5/6 groups. It seems the relatively small group of low skilled school leavers in Germany faces more difficulties on the labour market than the bigger cohort in the Netherlands (see Table 4). Table 2 Education levels 2000-2009 in Germany, Netherlands and EU-21, in % Germany 2000 Germany 2009 Netherlands 2000 Netherlands 2009 EU-21 average 2000 EU-21 average 2009 Below upper secondary 19 15 35 27 36 25 Upper secondary 58 59 41 41 45 48 Tertiary 23 26 23 33 19 27 Source: OECD, Education at a Glance, OECD Indicators, 2011 (Table A1.4) Table 3 Unemployment rates in 2010 and 2011 by highest level of education attained 2010, levels 0-2 2011 levels 0-2 2010 levels 3-4 2011 levels 3-4 2010 levels 5-6 2011 levels 5-6 Germany 15.1 13.4 7 5.8 3.2 2.5 Netherlands 7.4 6.9 4 4.1 2.8 2.8 EU-27 16.2 16.7 9.1 9 5.5 5.6 Source: Eurostat 2012, author Policy measure The need to introduce special programmes for guiding and facilitating youngsters 'into' the dual system is less urgent in the Netherlands. Given the concentration of BBL in technical jobs and healthcare, the German policy measures might be most interesting for stakeholders in these sectors (social partners, local authorities, PES). But in general, the 4

actual system has already a series of possibilities to improve labour market chances of low performing students. Firstly, a responsibility for admission into VET education is shared between employers and educational institutes. For the smaller dual system, BBL employers decide who can get an apprenticeship place, selecting both on the basis of 'production oriented and 'investment oriented' motives. In times of recession the number of places can go down, as can be seen in recent years. But the bigger BOL system, though partly based on work and practice elements (traineeships), has no such entrance limits: schools are obliged to take on board every pupil, regardless of labour market competencies; they have to find trainee places, in some cases even 'between companies and school (special trainee workplaces). Secondly, students have a variety of choices. Not all of these are immediately directed to a better integration in the labour market. There is a formal level 1 stream, qualifying for assistant in certain professions. Some of these students might start in an assistant job from there, and later move into VET education. Others can directly stream into formal VET education, BBL or BOL. And thirdly, the 'road' from VET into higher education is a real alternative for labour market integration, as Figure 1 illustrates. 3 ASSESSMENT OF THE SUCCESS FACTORS AND TRANSFERABILITY The host country paper concentrates on the experiences with 'Einstiegsqualifizierung' (EQ, qualification to enter the labour market) and the Berufseinstiegsbegeleitung' (guidance of entering into professions) from 2009 and 2011. In fact the first measure, based on a national pact, hoped to create additional training places for youngsters not admitted to formal VET, given the shortage of apprenticeship places with employers and lacking competencies. The second measure aimed at special vocational guidance counselling for low performing students in the last year of lower secondary schools, until two years after school leaving or maximum six months within VET; run by the PES. EQ seems rather successful in creating a pre-vet qualification stream, which helps both employer and future VET students to adapt and start a pathway to a formal VET trajectory. However, often the certification of what has been learnt and recognition of these learning results in the VET period are lacking. Elements of these initiatives might be useful in the Dutch VET context. But Dutch VET institutions already have a variety of tools/pathways to cover these problems. First the dominating BOL model cannot refuse any student certified in pre-vet education (VMBO). The school is responsible for finding adequate trainee places, or creating them. Second there is a formal level 1 pathway, qualifying for assistant. This can be an alternative for those who lack qualifications to start a formal VET course, or those not able to find a place in BBL. Moreover, the Dutch education system (Figure 1) is less dominated by the dual learning pathway. From time to time the advantages of the German model are discussed, in particular: the strong labour market position VET students can obtain by a long term combination of work experience and development of professional skills, and the positive learning effects for students and employers of this structural combination of the worlds of school and work. Many stakeholders, including the Dutch PES, recognize the strengths of the Dutch system in that: it is less vulnerable during economic downturn, as declining apprenticeship places can be compensated in BOL courses 5

it is less dependent on employer decisions about who is selected and thus who is refused, so more capable of avoiding extreme labour market segmentation It creates more possibilities for flexible careers and skill development, as it does not focus that much on one set of professional competencies. Recently, a Dutch education expert pleaded for keeping BOL as the dominant and core VET pathway to professional qualification, in order to better qualify for lifelong learning and improve education perspectives for those with lower chances: 'VET plays a dual role, functioning as a step on the educational ladder for the 'smartest' students from disadvantaged backgrounds and as a (direct) connection to the labour market. (..) Our VET, if compared to general education, provides a reasonably good transition from school to work at short notice, and does not score too bad in the longer term. This is not the case in systems dominated by a dual vocational education. (...) Hanushek, Woessman & Zang make clear that in these systems the chances to be employed at higher ages decrease substantially. 7 Transfer of the German policy measure seems most helpful in activities the Dutch PES and local authorities undertake to open the labour market for unemployed (early) school leavers like reintegration of low skilled youngsters with physical or psychological handicaps by the PES and of the unemployed aged 18-27 (Wet WIJ) by the local authorities. For mainstream VET education, there appears to be less learning to gain from the German measures. 4 QUESTIONS The policy measures are directed towards those students who cannot enter an apprenticeship, due to employers decisions. Creating new 'transition' trainee places seems to be successful. Does this help convincing employers they should be less 'selective' in recruiting VET students, or is it seen as a lower quality extra stream within VET? Early school leaving is a tough problem for students from minorities with low-skilled parents. In the BA pilot, one third of the participants left before the end of the course. In the Netherlands, one of the ideas is creating special schools (Vakcolleges) for 'risk' pupils during preparatory education (VMBO) with already a lot of practical professional experience. Is the BA initiative not intervening 'too late' for involving the most vulnerable groups into the education labour market system? Are employers (and trade unions?) involved in these measures in any other ways than by signing a pact and receiving students on trainee places? Has there been a more intensive contact between employers and VET institutions (for the Netherlands one of the key policy issues for better VET outcomes)? 7 S. Karsten, Enkele gedachten over het mbo in de toekomst (Some thoughts about the future MBO), in MBO en Dynamisch Vakmanschap, B. Hövels & I. Overdiep eds, 2012 6

ANNEX 1: SUMMARY TABLE Labour market situation in the Peer Country Relatively low total unemployment (4.4% in 2011) and youth unemployment (7.6% in 2011) 1% growth of the labour market population between 2001-2011, while 7% more participate in the 'start qualification' (at least ISCED level 2). In 2007, compulsory education age increases from 16 to 18 for those without level 2 qualification. Wet WIJ (2009) ended benefit rights for those 18-27, 70% gets training or 'work' within 2 months Assessment of the policy measure VET education via BOL (school-based programmes with practical periods in enterprises of at least 20%, 2/3 of the students) and via dual learning BBL. Both pathways are communicating vessels, offering the same qualifications/diplomas. BOL participants are mainly young people, while 40% of BBL are aged 25 and over. Over 50% of the German VET students reach ISCED level 3 or 4, in the Netherlands this percentage is around 35-40%. The VET system in Germany produces more qualifications at level 3 and 4, while the Dutch mixed system is more successful at shifting lower qualifications towards mid-level qualification and upgrading from mid-level to tertiary level qualifications. Assessment of success factors and transferability Dutch VET institutions already have a variety of tools/pathways to cover the type of beneficiaries that EQ (Einstiegerungsqualifizierung) covers in Germany. They are therefore less dependent on employer selection decisions and less vulnerable during economic downturn (declining apprenticeship places can be compensated in BOL which has no entry limits: schools are obliged to take on board every pupil, regardless of competencies and the system has to find trainee places for them),. In the Netherlands, there is flexible careers and skill development, not focusing on one set of professional competencies. Questions Do EQ and BA help convince employers they should be less 'selective' in recruiting VET students, or is it seen as a lower quality extra stream within VET? Is the BA initiative not intervening 'too late' for involving the most vulnerable groups into the education labour market system? Are employers (and trade unions) involved any other way than by signing a pact and receiving students on trainee places? 7