Social partners slam proposed subsidy scheme for vocational training

The federal government plans to introduce a general subsidy scheme for initial vocational training. The scheme provides a financial incentive for companies to create additional apprenticeship places for young people who have successively failed to conclude a vocational training contract. However, employer organisations and trade unions reject the planned subsidy scheme and have called for major changes to the draft bill.

On 20 February 2008, the federal government announced in a press statement (in German) that the federal cabinet (Bundeskabinett) had approved a draft bill providing for a general subsidy scheme for initial vocational training (Ausbildungsbonus). The bill will implement a temporary subsidy scheme for companies which create additional apprenticeship places for so-called ‘old applicants’ (Altbewerber). The latter are defined as young people who have failed to obtain a contract for vocational training in recent years.

Background and content of draft bill

In 2007, for the first time in six years, the number of vocational training contracts concluded in Germany exceeded 600,000. However, more than half of all applicants for vocational training places were so-called ‘old applicants’ who had tried but failed to obtain a training place in 2006 or previous years. Since these applicants who missed out in the last application round will now have to compete for an apprenticeship place with the new entrants to the vocational training market in the autumn of 2008, the backlog is creating a rising demand for apprenticeship places.

In light of this, the federal government has drafted a bill that seeks to improve the situation of young people looking for a vocational training position. Among other stipulations, the bill provides for the introduction of a subsidy scheme for initial vocational training. The federal government plans to grant bonus payments of €4,000, €5,000 or €6,000 depending on the level of apprentices’ wages laid down in collective agreements or commonly paid in a given region. Financial subsidies are to be allocated to companies or establishments which offer additional apprenticeship places for:

  • ‘old applicants’ without a school leaving certificate;
  • ‘old applicants’ with a school leaving certificate from a basic secondary school, but who have only obtained the minimum grade in a core subject;
  • deprived or educationally challenged young people who left school more than a year ago.

Under certain circumstances, public agencies will be able to award grants at their own discretion to companies for additional apprenticeships for young people with better grades in their secondary school leaving certificates or even higher school qualifications, but who have not succeeded in obtaining a vocational training contract for over two years.

Although the bill is still in draft form, the federal government hopes that the legislation will come into force this summer in time to cover the next generation of applicants entering the vocational training market. By the time the subsidy scheme expires in 2010, the federal government aims to have placed another 100,000 young people in apprenticeships, in addition to all the new entrants to the vocational training market.

Position of social partners

In a joint press statement (in German, 35Kb PDF) on 20 February 2008, the German Confederation of Employers’ Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände, BDA), the Federation of German Industries (Bundesverband der Deutschen Industrie, BDI) and the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB) called for major revisions to the current draft bill.

BDA, BDI and DGB stated that the planned subsidy scheme should be restricted to exceptionally disadvantaged young people and ‘old applicants’. The umbrella organisations jointly called on the German parliament to define criteria for the allocation of subsidies more strictly by narrowing the target group. They suggested limiting the subsidy scheme to ‘old applicants’ who fulfil all of the following three conditions:

  • having at most a leaving certificate from a basic secondary school;
  • having been unsuccessful in the search for an apprenticeship place for over a year;
  • being disadvantaged for individual reasons.

Only by limiting the target group would career counselling services be enabled to reach young people who have so far failed to obtain vocational training places. The umbrella organisations emphasised that false incentives were to be avoided.

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

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