The benefits of education in the labour market have been growing steadily and significantly since the regime change in Hungary in 1989. One exception is the decline in wage returns for vocational qualifications. Despite a sizeable demand for well-trained workers in several areas, the unemployment rate among skilled workers is high and many are forced into unskilled jobs. One reason is the low quality and lack of evolution of their vocational and educational training.
Research outlined in the 2008 and 2009 Hungarian labour market yearbooks (Kézdi et al, 2008 and 2009) suggests that the position of skilled workers with vocational qualifications in the labour market shows no sign of improvement. This update summarises the main findings of this research, along with some additional findings from current vocational educational and training (VET) research that point to the same conclusion.
Following the overthrow of the Communist regime in 1989, the labour market value of education increased significantly and the expansion of participation in education from the early 1990s onwards demonstrated that education is in fact a good investment. Both student numbers and the number of years spent at school have both increased to unprecedented levels. So also have the labour market benefits of education: higher educational attainment has a positive effect on both employment prospects and wages. The one exception, however, has been vocational schools
The expansion of higher education has fundamentally changed the function of secondary education. There are three types of secondary schools in Hungary:
At the end of their studies, most students at grammar schools and secondary vocational schools obtain their secondary school leaving certificate – the so-called Matura (‘examination of maturity’) qualification – at International Standard Classification of Education (ISCED) level 3A. This is the minimum entry requirement for any college or university course in Hungary. However, vocational schools do not offer their students the option of taking the exam for ISCED 3A; they can only take the vocational examination, being awarded ISCED 3C or 2C vocational qualifications. As a result, vocational school graduates cannot participate in the opportunities offered by the expansion of tertiary education, and cannot take advantage of the subsequent labour market advantages that come with higher educational attainment. If they wish to continue their studies, they need to spend an additional three years on a general education adult training programme in order to be able to obtain the necessary secondary school leaving certificate.
In accordance with the employment and earning trends that followed in the wake of the move to a transition economy and the consequent expansion of education, school-based initial VET has undergone fundamental restructuring (HU0802049I). On the whole, vocational schools have shrunk drastically while the number of students attending secondary vocational schools has risen significantly. Compared with the beginning of the 1990s, the number of students attending vocational schools fell by almost half (dropping at one point under 25%), while the number of students obtaining the secondary school leaving certificate rose from 37% to 55% within the decade.
At the same time, the sudden boom in the numbers obtaining a secondary school leaving certificate has a more negative connotation; that is, its absence carries more of a stigma today than it used to. Students with more ambition and better performance at school have abandoned vocational schools en masse; these pupils once constituted the ‘cream’ of vocational schools but now attend secondary vocational schools instead. Thus, vocational schools have become a repository for the most disadvantaged students with the lowest abilities. Even students who are stuck in vocational schools are well aware of the low labour market value of the qualification they will obtain. According to one survey (Mártonfi, 2004), the majority of students (about 80%) plan to study for the secondary school leaving certificate at some time in the future.
In short, the labour market is divided into two distinct groups: those with the Matura certificate and those without it.
The wages received in return for educational attainment have, in general, been increasing since 1989. While each additional year at school translated in 1987 into 7% higher pay, the corresponding figure in 2002 was 11%–12% (Kézdi et al, 2009). However, most of the difference can be accounted for by the steep increase in the wage return for tertiary education. In sharp contrast, the level of wages achieved by those attending only primary and vocational schools have remained at the same level as in the middle of the 1980s. For skilled vocational workers, wage differentials relative to eight years of primary schooling at best stagnated between 1989 and 2002. Over the same period, the wage return for completing secondary and higher education rocketed to 40% and 150% respectively. As the figure below shows, time appears to have stood still at vocational schools, with the wages obtained by their students falling increasingly below the average for Hungary.
Wages and educational attainment, years of schooling versus school types, 1986 and 2002
Source: Kézdi et al, 2009, p. 128.
Following the overthrow of the Communist regime, employment rates fell in every segment of the labour market. With the exception of the services sector, there was an overall decline in the demand for skilled labour with vocational qualifications, and the virtually full employment level that characterised state socialism dropped to 70%–80%. While the employment rate for skilled workers working in occupations that did not match their qualifications or for those not working at all stood at 35%–40% prior to the transition, today it stands at around 60%–70%. Of those who do not find employment matching their qualifications after an extended period, a third are not employed at all and the rest work in unskilled jobs that do not require vocational qualifications.
Although labour market data on earnings and employment indicate belittling of vocational qualifications, it is often the shortage of skilled labour that gains the attention of the media, or is articulated by policymakers or economists. However, the contradiction between the high unemployment figures and the real or perceived shortage of skilled labour is not a true paradox. For one thing, such claims often rely on questionable methodologies or unreliable data. In addition, it is often special interest groups motivated by their own short-term agenda that voice claims of allegedly high numbers of skilled workers missing in specific occupational groups. Furthermore, even though the occupational mismatch certainly exists, it cannot be singled out as the sole reason behind the disparagement of vocational qualifications.
It is instead the quality and content of VET that should be examined: properly trained skilled workers who are prepared for lifelong learning are, in fact, in short supply. Rapidly changing workplace conditions and requirements have resulted in increased appreciation of general skills across the board, while specific skills have undergone a drastic devaluation – regardless of how well a particular specific skill happens to match the demands of the labour market at a given moment in time. It is the content and quality of VET that has failed to adapt to the new challenges of the labour market in as much as it does not endow students with the ability to adjust to economic–technological changes and to upgrade their skills accordingly.
The deficiencies in VET, along with the devaluing of vocational qualifications, are not a recent development. The problem has just become more visible and pronounced. Even prior to 1989, vocational schools produced workers with specialised vocational skills that rapidly and continuously lost their value during the course of their career. This was masked, to some extent, by the relatively high wages these young workers were able to earn at the start of their career, though this advantage was soon lost. Back then, masses of poorly-educated workers with low literacy skills were employed in occupations where vocational skills were hardly needed or used. With the regime change, these jobs were swept away overnight. The new type of labour market in post-socialist countries demands new and higher level skills. At the same time, the content of primary and vocational education has not been revised accordingly; that is, to focus on the development of basic and general competences and transferable skills.
Even though the heritage of the past is still being dragged up, it would be misleading to blame the previous regime for all the current VET problems in Hungary. International comparisons such as the International Adult Literacy Survey (IALS) reveal that the extremely low employment rate since 1989 of those with a low level of education is accompanied by a very low level of basic skills. Even worse, today’s primary and vocational school graduates lag behind in these surveys more than their parents did.
A comparative analysis of the results of international (Programme for International Student Assessment, PISA) and national assessment surveys also confirms that the performance of vocational schools in Hungary is consistently poor, both in absolute and in relative terms. In other words, students in vocational schools achieve low scores, not only in comparison with the performance of students in equivalent educational institutions in other countries, but also nationally. This is in contrast with other educational programmes (grammar schools, secondary vocational schools), and occurs from the very beginning of their studies.
In short, students entering vocational schools already suffer from a significant disadvantage carried over from primary school. Their VET years then cause them to lag still further behind. Instead of having their deficiencies compensated for, they continue to fall behind to such a degree that three quarters of them classify as functionally illiterate, with their mathematical skills no better. Vocational school graduates and dropouts constitute well over one third of the total output of public education; in other words, those pushed out to and kept at the peripheries make up quite a large group. The failure of the education system is to no small extent responsible for the excessively low employment rate in Hungary.
However, vocational school students themselves (the group with the highest proportion of those from a poorly-educated family background) are planning to aim higher. They harbour no illusions about the value of their vocational qualifications and wish to continue their studies. However, their ability to realise their ambitions is contingent on their social background. VET research confirms the slowing down of social mobility; Hungarian society is becoming increasingly segmented and rigid.
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Krisztina Domján, Observatory for Educational Development, Corvinus University of Budapest