Title Subtitle - Department for Employment and Learning

Why is the Swiss Apprenticeship System held in such high regard? Introduction

Dr Bill McGinnis CBE, NI Adviser on Employment and Skills

Office of the Northern Ireland Adviser on Employment and Skills

Department of Economics

5 ingredients for a successful apprenticeship system Stefan Wolter Centre for Research in Economics of Education 29.9.2014, Belfast

Department of Economics

1 APPRENTICESHIP IS NOT FOR DUMMIES

3

VET for dummies Vicious circle Department of Economics

Low achievers in CTE/VET

Stigmatised form of education

Low engagement of firms

Low quality of training

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VET for all talents 2/3 of all students choose an apprenticeship

Department of Economics

Source: Swiss Education Report 2014 5

How can we attract talents into VET? VET: the need for permeable education systems

Department of Economics

Permeability between sub-systems

Professional education

Universities of applied science

Dual and school based vocational education

Academic universities

University entrance diploma

Compulsory schooling (9 y)

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The «US» view of skills Hierarchy of skills

Low

Middle

Department of Economics

High

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The Swiss-German – view: A mix of skills of equal importance

Socialemotional skills

Vocational skills

Department of Economics

General skills

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Department of Economics

2 APPRENTICESHIP IS STEERED BY REAL EMPLOYERS

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Strength of employers’ influence on content, curricula and jobs

Department of Economics

18 16 14 12 10 8

6 4 2 0

Source: Calculations from OECD 2010 10

Employer(s): Collective skill formation vs. single firms decisions

Department of Economics



Employers decide on everything, but there is a price to pay



The government never talks to single employers!



Collective skills formation is the condition for:    

Common definitions and standards across the industry Long term visions vs. short term interests Quality assurance by peer-review of skills acquisition Portability of skills (labour market mobility) (2/3 of the apprentices leave their training company after the apprenticeship)

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Department of Economics

3 APPRENTICESHIP PAYS OFF FOR EMPLOYERS

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Cost-Benefit – The simple model Benefit

Cost

Department of Economics

Average cost and benefit per apprentice for training firms in Switzerland (2009)

Per apprentice and year (in Euro)

Per apprentice and year (in Euro)

3y

4y

Gross costs

72’012.5

96’391.7

Productive contribution

79’273.3

103’380.8

Net benefit

7’260

6’989.2

ROI

10.1%

7.25%

Department of Economics

Source: Strupler & Wolter, 2012

Cost-Benefit – The augmented model

Department of Economics

Benefit

Cost

Reduced hiring costs

Machinery, tools, etc.

Skilled work (x productivity)

Trainer salaries

Unskilled work

Apprentices salary

Realised benefits in US$

Recrutive opportunity benefits per trained apprentice (2009)

Department of Economics

18000 16000 14000 12000 10000 8000 6000 4000 2000 0 1-9

10-49 50-99 Firm size

>100

Source: Strupler & Wolter, 2012

Training companies train because it is profitable – Non training companies do not train because it is not for them

Department of Economics

80000

Training firms Non-training…

70000

In Euro of 2005

60000 50000 40000

30000 20000 10000 0 -10000

Gross-cost

Benefit

Net-Cost Source: Wolter et al., German Economic Review, 2006

Department of Economics

4 A MARKET - WITH A SYSTEM MONITORING

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A volatile world needs systemmonitoring

Department of Economics

Source: Swiss Education Report 2014 19

Early decisions with good matches (~ 230 different occupations)

Department of Economics

Source: Swiss Education Report 2014 20

High levels of satisfaction Department of Economics

Source: Swiss Education Report 2014 21

Department of Economics

5 THE COMBINATION OF APPRENTICESHIP AND ACADEMIC EDUCATION CREATES A WIN-WIN-SITUATION 22

The advantages of a skill mix in an economy

• VET+ academic Education • preserves industrial production and manufacturing and fosters • «incremental innovation» • as well as quality leadership

Industry/ manufacturing

Economy/ Public Finances • creates competitiveness • reduces fiscal spending • and generates high fiscal revenues

Department of Economics

• allows to pay for academic excellence which • leads to «radical innovations»

Education/ Research

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Geographical proximity leads to growth and innovation: Myth or truth?

Department of Economics

“A growing number of American companies are moving their manufacturing back to the United States - Innovation suffered from the distance between manufacturing and design, and quality became a problem too.” (The Economist, 19.1.2013)

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Average public costs for VPET training and the share of company based training

Department of Economics

Source: Swiss Education Report 2014

Excellence in all sectors of the education system (if focused)

Department of Economics

Source: Swiss Education Report 2010 26

Summary Department of Economics

1) Apprenticeship training must be attractive also for

high achievers 2) Apprenticeship needs collective employers

engagement 3) Apprenticeship must pay off in the short run 4) The invisible hand is not enough (monitoring) 5) Apprenticeship is an integral part of the education

system generates advantages for everyone 27