Impact of collective agreements on continuous training

In April 2006, the employers’ association for the metalworking and electrical industry, Gesamtmetall, and the German Metalworkers’ Union, IG Metall, signed a new collective agreement, which included measures aimed at fostering continuous vocational training. During the 2006 bargaining round, the social partners disagreed on whether collective agreements on continuous training represent an appropriate means to tackle the imminent skills shortage in the German labour market.

On 22 April 2006, the employers’ association for the metalworking and electrical industry (Gesamtmetall) and the German Metalworkers’ Union (Industriegewerkschaft Metall, IG Metall) signed a new collective agreement (in German) in North Rhine-Westphalia, containing measures that aim to foster continuous training. While employer organisations and trade unions disagree on whether collective agreements on continuous vocational training are necessary, recent studies reveal that the impact of such policies is quite insignificant.

Agreement terms

The collective agreement on continuous training in North Rhine-Westphalia obliges employers and works councils to identify, once a year, companies’ need for continuous training. If continuous training is relevant for the employees’ current assignment or if they have to qualify for an equivalent (or more demanding) assignment as a result of company restructuring, the employer has to bear the costs of the continuous training. If employees undertake continuous training on their own initiative to qualify for a more senior post, they themselves have to incur part of the costs: only half of the time required for the training will be counted as working time, the other half is taken from the employee’s leisure time (see IG Metall’s outline of agreement (in German)).

Strategies to fight skills shortage

Before starting the bargaining round in 2006, IG Metall highlighted the imminent skills shortage in the German labour market and called for collectively agreed continuous training (press release of 21 January 2006 (in German)). Employer organisations also acknowledge the necessity of continuous training (in German), which ‘is a future assignment for companies, but also for employees, to ensure competitiveness, innovative capabilities and employability’, according to the Confederation of German Employers’ Associations (Bundesvereinigung der deutschen Arbeitgeberverbände, BDA). Nevertheless, the social partners disagreed on how best to tackle the problem of the imminent skills shortage; this problem has become even more acute as recent studies have shown that demographic changes will lead to a further decrease in the number of skilled workers within the next 10 years.

While IG Metall opts for industry-wide collective agreements that commit employers to determine their labour needs and to discuss continuous training schemes with their employees, the BDA considers that companies need reactive continuous training schemes that would allow for fast and individual adjustments in an ever-changing environment. This would enable companies to exert their autonomy in the decision-making process with regard to continuous training (see BDA’s draft guidelines (in German, PDF 293Kb) for managing continuous training at company level).

Research results

On 1 April 2006, Ralf Mytzek-Zühlke, a researcher at the Social Science Research Centre Berlin (Wissenschaftszentrum für Sozialforschung Berlin, WZB), stated in an interview with the Frankfurter Rundschau that it is generally assumed that collective agreements on continuous training encourage an increase in such training; however, his research only partially confirms this assumption. In 2005, Mr Mytzek-Zühlke analysed differences between the vocational training activities of companies in four EU Member States, Denmark, Germany, Sweden and the United Kingdom (UK). The study revealed that only 32% of employees in German companies that employ 10 or more workers participated in continuous training in 1999, compared with 61% in Sweden, 53% in Denmark and 49% in the UK. Collectively agreed measures to foster continuous training had a great effect on participation rates in the UK. In Germany, single works agreements on continuous training seemed to encourage such training significantly; however, collective agreements signed by the social partners were shown to have no effect.

Continuous training is one of several possible adjustment strategies by companies to manage current and future demand for skilled employees. The Cologne Institute for Economic Research (Institut der deutschen Wirtschaft Köln, IW Köln) shows in its fifth survey on continuous training (in German, PDF 93Kb) that 84% of all companies examined offered continuous training in 2004. Some 56% of the employers questioned expect an increasing need for continuous training, and 68% of the employers wanted their employees to become more proactive in relation to continuous training efforts, so that workers could protect their own employability.

Commentary

In order to maintain or strengthen their market position, employers should determine their companies’ needs for continuous training. Investment in employees’ human capital should be discussed as the need arises and should match company requirements. As the fifth IW survey shows, companies are aware of the importance of engaging in continuous training; however, only 13% of those employers surveyed stated that collective agreements were an appropriate means to foster continuous training.

Sandra Vogel, Cologne Institute for Economic Research (IW Köln)

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