Circé Consultants Thessaloniki – 31 Janvier 2008 page 1 Discussion about the “individual learning account” in France Jean-Marie Luttringer Thessaloniki – 31 Janvier 2008

Circé Consultants Thessaloniki – 31 Janvier 2008 page 2 1 – Political Situation  The frenetic reform process in France today also extends to vocational education and continuing training policy.  According to President Sarkozy the current system is out of breath. He suggests, amongst other reforms, the creation of an “individual learning account”.  Social partners signed, on the 11th of January, an inter- sectorial agreement on modernizing the labour market. The agreement gives an important part to training as a mean of securing career paths and emphasizes the place of the individual as agent of his development.  2008 should be a year of reforms, carried out through collective bargaining and lawmaking, which will perhaps see the building of a new means that should facilitate the access to the training : the training savings account.

Circé Consultants Thessaloniki – 31 Janvier 2008 page 3 2 – diagnostic 1. The access rate to training is unfair, especially for people with few qualifications, the young and seniors. 2. As noted in a recent senatorial report, the vocational education and training system can be characterized by 3 Cs: - complexity - compartmentalisation - corporatism

Circé Consultants Thessaloniki – 31 Janvier 2008 page 4 3. The reform should be organized around 3 Ps : - people - partnerships - proximity

Circé Consultants Thessaloniki – 31 Janvier 2008 page 5 2 – diagnostic(suite) 2 – diagnostic (suite) 4. According to the senatorial report the training savings account represents a sort of “philosopher’s stone” that would make the 3 Cs disappear and give rise to the 3Ps.  It’s a mutagenic germ of simplicity.  The saving account must be thought of as giving people an easy and visible access to actions that would increase their employability by acquiring essential qualifications.  The idea of such an account is closely linked to the idea of professional safety.

Circé Consultants Thessaloniki – 31 Janvier 2008 page 6 3 – As a reminder of main features for the continuing training funding 1. Vocational education and training is a public good  Financed through national solidarity (State and Regions)  The volume of funding is estimated at 7.6 billions euros (excluding funding of civil servants training)  The notion of “public good” encompasses: information, advice, right to a basis of qualification, access to permanent education....  Public or private training offers and associated actions are financed following state’s markets regulations, hence applying competition law.

Circé Consultants Thessaloniki – 31 Janvier 2008 page 7  The beneficiaries have a specific status as “trainee of the vocational education and professional training” and can sometimes receive payment. Key points: The funding is guaranteed by a “third-party payer” for those who will benefit from access to the training through a prescription. There is no reference to individual solvency nor of a specific saving account.

Circé Consultants Thessaloniki – 31 Janvier 2008 page 8 3 – As a reminder of main features for the continuing training funding (suite) 2. The vocational education and training as a private good of the collectivity. -  Financed by industry on the basis of a sort of contributing obligation and collective bargaining.  Industry grants collected by joint agencies (OPCA, FAF) are a social guarantee (insurance system).  The financing is estimated at 12 billions euros.  The scope of the notion of private good of the collectivity englobes training of employees and job seekers indemnified by the unemployment insurance, the personal training leave (Congé individuel de formation)

Circé Consultants Thessaloniki – 31 Janvier 2008 page 9 3 – As a reminder of main features for the continuing training funding (suite)  The financed loans cover the training and all linked loans useful for building a professional career and training path (information, advice, orientation, evaluation, individual accompagnement).  Beneficiaries have a labour contract or are covered by the unemployement insurance system.

Circé Consultants Thessaloniki – 31 Janvier 2008 page 10 Key points:  Third-party payer (company, joint accredited collection Agency, unemployment insurance)  Prescription system or validation of the scheme (CIF)  No solvent and no individual account system.  For employees, development of the DIF is a first step towards the establishment of a special “time or hours” account assigned to training.

Circé Consultants Thessaloniki – 31 Janvier 2008 page 11 3 – As a reminder of main features for the continuing training funding (suite) 3. Training as a "private good"  Financed by "households" or individuals on their own resources  The volume of this financing is estimated at 1 billion euros  The perimeter of training as a "private good" includes virtually every type of training into practice…  No special "status" for beneficiaries

Circé Consultants Thessaloniki – 31 Janvier 2008 page 12 Key points:  Access to training and financing are linked to the "status" and not to the individual  Training is either free (funded by National Solidarity…) or paying. The private bank insurance institutions intervene for loans to the initial training, but very little for training throughout life (is there a market?)  The proposed savings account aims to increase the share of private individuals in financing their own training and solvency of people by transferring public or collective funds on individual savings accounts

Circé Consultants Thessaloniki – 31 Janvier 2008 page The DIF is characterized by 4. The DIF is characterized by the “individual learning account”  It can be regarded as the constitution of a “time saving account” spent on training of 20 hours a year capitalizable over 6 years  The agreement of January 11, 2008 on the modernization of the labour market provides for the transferability of the DIF to the unemployment insurance system or to future employers

Circé Consultants Thessaloniki – 31 Janvier 2008 page Some questions to solve for the creation of an 5. Some questions to solve for the creation of an “individual learning account”  What are the theoretical, economical and social foundations of the proposal: human capital, individual accountability, employability, motivation…  What are the outcomes? Are they achievable?  Is there a spontaneous "individual saving" behaviour by households and users?  What arbitration between "saving for training” and other purposes (purchasing material or immaterial goods)? Is the concept of saving relevant?

Circé Consultants Thessaloniki – 31 Janvier 2008 page 15  Is the control of companies – through funding (third- party payers) and prescription – on the training system threatened by the solvency of individuals?  What will be the behaviour of training providers accustomed to third-party payers facing solvent and direct buyers?  What consequences for existing funding mechanisms: CIF, DIF, unemployment insurance, State, Region and trainee status: is it an additional device or a device replacing something existing?  Should governance of the account be linked to the market ?