ISE06/14-15

• For the second consecutive year in 2015, the Chief Executive has pledged in his Policy Address to "further promote the attractiveness of vocational education as one of the multiple pathways" for the younger generation in Hong Kong. A Task force on Promotion of Vocation Training was set up in June last year and it planned to submit its final report by mid-2015.
• Globally, there is a renewed emphasis on apprenticeship in vocational training. Hong Kong is no exception to this trend. The Vocational Training Council ("VTC") has in recent years launched a number of new pilot apprenticeship schemes for selected industries.^{1Legend symbol denoting VTC has been running a number of apprenticeship schemes for various trades under the Apprenticeship Ordinance enacted in 1976. About 4 000 apprentices were trained in more than 100 trades in 2013/14. This apart, VTC has launched some new pilot schemes since 2011. For example, a pilot traineeship scheme for selected service industries (e.g. beauty care and hairdressing) was launched in late 2011, training 300 trainees. Another new pilot training scheme was launched for the retail sector in 2014, offering 400-500 training places. The Pilot Training and Support Scheme which integrated structured apprenticeship and career progression pathways was also launched in 2014, aiming to attract and retain talent for specific industries with a keen demand for labour. A total of 2 000 places for printing, clocks and watches, and electrical and mechanical trades in construction were offered by the Scheme.}
• That said, vocational training in Germany is widely acclaimed to be one of the best in the world, on the back of its century-long apprenticeship system. Not only one-half of Germans have attained vocational qualification, three-fifths of young apprentices have also been offered full-time employment in the training firms after the apprenticeship. Hence, youth unemployment in Germany is amongst the lowest in the world. This issue of Essentials reviews the German training model and its ingredients for success.

Key features of vocational training in Germany

• Germany runs a rather unique dual system in vocational education and training ("VET"), in which apprenticeships in workplace are well integrated with classroom teaching in vocational schools. Usually, VET trainees work for the enterprises for three to four days each week, and study in vocational schools for the rest of time. About 40% of the school work is in conventional subjects like mathematics and sciences, while 60% is in subjects directly related to the chosen profession. Trainees are certified after two to three years of apprenticeship and upon passing the state examination.
• Apprenticeships straddle some 350 occupations across manufacturing and service sectors in Germany. All stakeholders (i.e. government, trade associations, companies and trade unions) work closely together to ensure that workplace training can meet the professional standards and market needs. In 2011, as many as 500 000 or 25% of German firms participated in the apprenticeship, employing at least one apprentice.
• Contrary to the misconception that apprenticeship is a "second-class" career path, apprenticeship in Germany is a well-respected pathway towards professional careers. Subject to further advanced training, VET graduates can ascend not only to master craftsmen or engineers, but also managerial position in the firms. As a matter of fact, many prominent celebrities including former Chancellor Gerhard Schröder^{2Legend symbol denoting Gerhard Schröder was the Chancellor of Germany during 1998-2005. His career started from apprenticeship in retail sales during 1958-1961. While working as a sales clerk afterwards, he studied at evening school for a high school diploma and then proceeded to a law degree at the University of Göttingen in 1971.} kick off their careers from vocational training at the very beginning.
• Reflecting its attractiveness as a career path, 59% of Germans opt for VET at upper secondary level, surpassing the rest of 41% choosing academic studies leading eventually to university education. This VET ratio is higher than the corresponding figure of 46% in Organisation for Economic Cooperation and Development ("OECD") as a whole.
• In 2013, a total of 1.5 million apprenticeship places were offered in Germany. Each apprenticeship is estimated to cost the employer around €1,250 (HK$12,890) per month, including an average monthly training stipend of €680 (HK$7,010) paid to the apprentice. Yet the business community in Germany generally views the training expense as a sort of investment, as trainees can become the full-time staff of the training companies upon successful certification.
• The cost of the apprenticeship borne by the private sector is estimated to be around €23 billion (HK$237 billion), while the public sector contributes another €3 billion (HK$31 billion) in vocational education. Overall training cost thus amounts to 0.9% of GDP in Germany, showing the strong commitment of its business community to vocational training.

Ingredients for success

• Tri-party consensus: Although apprenticeship is regulated in Germany, the German government generally makes policy decisions only after obtaining consent from the representatives of both trade unions and employers. The consensus principle ensures smooth implementation of the training programmes throughout the country.
• Legal backing: The VET system in Germany is underpinned by legislation which provides the legal basis for the German government to regulate the various aspects of the VET system, including training contracts between employers and trainees. The law also empowers the government to develop training regulations to safeguard the interests of trainees.
• Skill transferability: The firm-based training is also required by law to be worked out by not just employers but also sector representatives, ensuring transferability of skills across companies. This serves to protect the interests of VET trainees on the one hand, and ascertain a well-trained and reliable manpower source for the entire economy on the other.
• Business incentives: Firms are given incentives to participate in apprenticeship. First, the monthly training stipend ranging €500 - €1,000 (HK$5,160 - HK$10,310) paid to VET apprentices is lower than the market wage by some 20-60%, representing savings in labour cost. Secondly, employers are not obliged to hire the apprentices after the end of apprenticeship, giving them more flexibility and longer observation period in making staffing decision.
• Embedded in tradition: VET in Germany is essentially an extension of its ancient guild-based apprenticeship. Back to the Middle Ages, guilds of artisans or merchants controlled the practice of their own craft in towns, including training up newcomers. This tradition is then succeeded by employer associations and chambers of commerce in modern Germany. This unique historical and cultural backdrop sometimes makes it difficult for other places to replicate its success.

Observations

• Reflecting the success of VET, the unemployment rate for German youths aged 24 and below was only 7.8% in 2013, less than one-third of the respective figure of 25.9% for the European Union. It is also lower than that of 10.3% in Singapore and 9.1% in Hong Kong.
• At the Ministerial Meeting in May 2012 in Guadalajara, G20 agreed that "quality apprenticeships" have an important role to play to boost youth employment. This view is echoed by other global organizations like OECD, International Labour Organization and European Commission.
• The German model suggests that it is of utmost importance to engage all relevant parties in workplace training. Flexibility should also be built into the VET system for attracting the youths and keeping the employers engaged with the apprenticeships. Skills acquired must be market-driven, broad-based and transferable, so that apprenticeship can become a respectable career path in society.

Prepared by Kari CHU
Research Office
Information Services Division
Legislative Council Secretariat
11 February 2015