GIZ study “Financing of VET - Advisory Approaches

Stefan HummelsheimCompetence Center « TVET and Labour Market », GIZ

Brussels, 27th November 2014

Overview

• Reference Points• Selected Challenges• General Integrated Approach• Specific Advisory Approach• Messages

Reference Points

• In particular: GIZ Study “Advisory approaches for TVET Financing”. Guidelines for program planning and implementation 2013 - in particular

• In addition: Delegates asking for the Transfer of the dual system, Integrated approach, Empirical evidence from GIZ program implementation

Selected challenges

• On the supply side: (Initial) TVET System in developing countries are mostly state and school driven, underfinanced with low quality and labour market orientation, high informal sector structure, many micro and small enterprises

• On the demand side: dramatic high birth rates, push on the upper secondary level

• Intensive search for alternative and capable TVET Funding Systems

Selected challenges - 2

• Delegations asking for the “Transfer of the German dual System of Initial TVET”

• Delegates do have high expectations• very low youth unemployment rate (integration

function)• high transition into the labor force (allocation function)• market oriented production of qualified skilled workers

for the needs of the enterprises (qualification function)

Selected challenges - 3

• Delegates are much surprised concerning the financing structure of the dual system

Basic aspects Part-time vocational education Initial vocational training

Financing 16 Länder funding and municipal

revenues, no fees Self-responsible enterprise funding

Costs Staff, material Staff, material and apprentice remuneration

Contract No contract Private law contract between enterprise and apprentice

TVET

Labour market strategies + instruments

Labour marketmatching

mechanisms

Productive and sustainable

employment

(Demand of labour)

Increased employability

(Supply of labour)

Private sector develop-ment

Economic policy

General Integrated Approach

TVET

Increased employability

(Supply of labour)

General Integrated Approach - 2

Specific Advisory Approach

• Political and Strategic Consulting• Initiation of stakeholder processes• Advice on cost-benefit analyses• Capacity development including management

consulting• Participation of the economy in decision-making

processes• Advising TVET institutions for enterprise cooperation

Specific Advisory Approach - 2

• Initiation of awareness about the benefits of Vocational Training for enterprises

• Financial cooperation with the donors• Advising concerning training fund models

Messages

• There is a rationality problem between the single enterprise behavior and the needs of the society and economy

• Simple copy process of the Dual System neglect the historical grown commitment of the enterprises and the single enterprise funding scheme

• Need to initiate a benefit debate instead of a cost debate, training is an investment

• Net benefits normally after the training phase

Messages - 2

• Sharing the financial burden could be solution, but it depends on the specific conditions

• Guiding questions• Stable social consensus that the social rationality is

more important?

• Is there a commitment of the companies to support the levy financing system?

• Is the design of the public authority efficient and effective and does not create new competition failures?

Many thanks for your attention

GIZ TVET Headquarter Germanystefan.hummelsheim@giz.de