1. Summary of Key Messages: “Fiscal Efficiency and Vocational Education in the EU 8 Countries” Mary Canning, lead author Presentation by Michael Mertaugh World Bank

2. Constraints encountered in VET reform in New EU Countries VET reform is one of the most difficult issues in education policy worldwide. VET reform is usually divorced from considerations of general education reform. VET reform should be articulated with Secondary and Higher Education and Life Long Learning.

3. Early context of reform in EU 8 Government funds for VET fell sharply as GDP and public revenues contracted early in the transition. Crisis in enterprises meant that employers were shedding workers and could not afford to train or to pay for training Quality of VET declined because of lack of funds for materials and equipment and reduced involvement of employers. VET graduates increasingly had difficulty finding jobs. Narrow wage differentials provided little incentive for individuals to improve their skills.

4. Transition to markets - background Labor market skill needs changed -- first with the transition, and more so with globalization. Structure of occupations was changing. Institutions and instruments for managing VE were missing. Quality controls involved inputs rather than outputs. Falling student demand for VET.

5. Efforts to reorient VE systems in new EU countries Most comprehensive reform in Hungary – most extensive reform of VE in EU8 Slovenia Poland

6. Vocational Education and Fiscal Efficiency Issues Quantitatively important: VE accounts for between 25 percent and 79 percent of upper secondary enrollment in the EU8 Indirect impacts – via labor productivity, economic competitiveness, growth, and public revenues Direct impacts – claims on budget finance, through direct expenditure, support to employers and students

7. Unit costs of VET are higher than for general education. Differences in student/teacher ratios – lower in vocational secondary schools VE tend to have larger numbers of non- teaching staff Larger premises – workshops Dormitories Proportion of students receiving stipends

8. % by which vocational school unit costs exceed general school unit costs at upper secondary level, Poland, Czech Republic & Lithuania, 2003 and 2004 Source: Country questionnaires

9. Student/teacher ratios by type of secondary school, Poland, Slovakia, Hungary & Czech Republic Source: Country questionnaires

10. But earnings and employment prospects are often lower for VET graduates

11. Average earnings by level of education and sex, population aged 15+, 2004, Poland Source: Labor Force Survey database

12. Average annual pay in main job by sex and education, 15+ population, 2004, Slovakia Source: Country questionnaire.

13. Unemployment rate by level of education and sex, population aged 15+, 2004, Poland Source: Labor Force Survey database.

14. Unemployment rate by sex & education, 25-34 year olds, Lithuania, 2004 Source: Labor Force Survey database

15. OECD Findings (PISA) General education often does a better job than general education in providing essential skills in areas of most rapid job growth: Quantitative skills, Synthesis and problem solving, communications (including foreign languages) and teamwork These skills also facilitate job mobility and provide a better basis for subsequent life-long learning.

16. High quality and equity can be attained simultaneously (Finland and Korea). There is not necessarily a trade-off between learning achievement and inclusiveness.

17. Reflections on Reform Implications Existing VET programs need fundamental reforms – including financing and management reforms -- to improve efficiency and relevance. VET content needs to be consolidated into fewer options with broader coverage in order to promote job mobility and reduce costs. Increasingly, high-quality general education may be the most cost-effective vocational education.

18. Other suggested directions of reform Convergence in management and content of VET and general secondary education, Encouragement of specific training through LLL financed by beneficiaries (individuals and employers), and offered through diverse training providers,