Vocational training pays off

At the end of March 2009, the German social partners commented on the employment prospects for apprentices in 2009. Although the economic downturn is affecting companies’ employment strategies, a severe decline has not yet occurred in the number of apprenticeship positions available in the labour market. In fact, a newly published study shows that it pays companies to maintain their vocational training programmes.

On 2 April 2009, the Federal Institute for Vocational Education and Training (Bundesinstitut für Berufsbildung, BIBB) released a new study (in German, 283Kb PDF) on the costs and benefits of the German vocational training system. From April to August 2008, 2,986 establishments with 10,751 apprentices participated in a survey on vocational training. The survey covered the 51 most important occupations requiring vocational training from all fields of economic activity, including industry and commerce, the trades, public services and agriculture. The following study results highlight the fact that training young people initially generates additional costs. In the long run, however, vocational training generally pays off for both companies and establishments.

Survey findings

Cost of apprenticeships

The study’s cost-benefit analysis shows that vocational training generated average gross costs of €15,288 per apprentice and year in 2007. These costs can be divided as follows: €9,490 for personnel expenditure (61%), €3,292 for in-house trainers or instructors (22%), €691 for non-personnel costs (5%) and €1,814 for other costs (12%), such as fees for training courses outside the establishment. However, when the apprentices’ productivity, valued at €11,692 per person, is taken into account, expenditure for the vocational training of apprentices decreased to €3,596 per year and apprentice in 2007.

With three-year training courses, net costs were highest in the first year, amounting to €3,286 per apprentice. In the second and third years, however, the net costs declined considerably – to €2,451 and €199 respectively. The gradual decrease in costs shows that apprentices were able to exhibit their newly learned skills and benefit their establishments in a productive manner.

Regional and sectoral variations exist. For example, in eastern Germany, net costs for the training of apprentices were below the average, amounting to €2,557 in 2007, compared with €3,880 in western Germany. Different regional wage levels represent the main cause for such disparities. Another reason for the differences lies in the distinct pay scales of each industrial sector. While annual net costs for apprentices in 2007 were highest in public services (€7,234) and industry and commerce (€4,607), they were much lower in the trades (€2,513) and in agriculture (€962).

Benefits of training apprentices

However, the BIBB analysis emphasises that training apprentices not only generates costs but also produces benefits for those involved. For example, establishments that retained their apprentices after their training saved the expense of recruiting other staff. In addition, the risk of employing unsuitable staff declined. Former apprentices had already proved themselves on the job during their training period.

Indeed, 60% of the companies surveyed explained that they offered vocational training programmes because they wished to avoid recruitment failures. Some 84% of the companies stated that they wanted to train future staff to ensure that their qualifications exactly matched the establishment’s needs. Finally, 70% of the enterprises surveyed indicated that they liked to select from among the best apprentices. All of these reasons illustrate the economic advantages of training young people.

Position of social partners

On 30 March 2009, the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB) acknowledged the difficult situation for trainees. In a position paper (in German, 59Kb PDF), DGB put forward several suggestions on how to protect apprentices in times of economic crisis. Among other things, DGB called for the introduction of a bonus to be paid to companies or establishments that:

  • took over apprentices from bankrupt companies;
  • continued vocational training while putting other staff on short-time work;
  • supported disadvantaged young people who were most likely to be left behind during the economic downturn.

On 31 March 2009, the Chair of the German Confederation of Employers’ Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände, BDA), Dieter Hundt, stated in a press release (in German, 19Kb PDF) that the economic crisis was not sparing the labour market for apprentices. However, additional efforts were being made to counter the decline in apprenticeship positions. Many companies were retaining their apprentices and vocational training programmes. When considering their establishment’s involvement in training young people, managers were taking not only their short-term order situation into account but also their medium-term goals, including the need to train skilled labour for the future.

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

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