1. 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

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

3. Department of Economics APPRENTICESHIP IS NOT FOR DUMMIES 1 3

4. Department of Economics VET for dummies Vicious circle Low achievers in CTE/VET Low engagement of firms Low quality of training Stigmatised form of education 4

5. Department of Economics VET for all talents 2/3 of all students choose an apprenticeship 5 Source: Swiss Education Report 2014

6. Department of Economics 6 Compulsory schooling (9 y) Dual and school based vocational education University entrance diploma Academic universities Professional education Universities of applied science How can we attract talents into VET? V E T: the need for permeable education systems Permeability between sub-systems

7. Department of Economics The «US» view of skills Hierarchy of skills 7 LowMiddleHigh

8. Department of Economics The Swiss-German – view: A mix of skills of equal importance 8 Social- emotional skills Vocational skills General skills

9. Department of Economics APPRENTICESHIP IS STEERED BY REAL EMPLOYERS 2 9

10. Department of Economics Strength of employers’ influence on content, curricula and jobs 10 Source: Calculations from OECD 2010

11. Department of Economics Employer(s): Collective skill formation vs. single firms decisions  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) 11

12. Department of Economics APPRENTICESHIP PAYS OFF FOR EMPLOYERS 3 12

13. Department of Economics Cost-Benefit – The simple model BenefitCost Apprentices salary Trainer salaries Machinery, tools, etc. Unskilled work Skilled work (x productivity)

14. Department of Economics Per apprentice and year (in Euro) 3 y Per apprentice and year (in Euro) 4 y Gross costs 72’012.596’391.7 Productive contribution 79’273.3103’380.8 Net benefit 7’2606’989.2 ROI 10.1%7.25% Average cost and benefit per apprentice for training firms in Switzerland (2009) Source: Strupler & Wolter, 2012

15. Department of Economics Cost-Benefit – The augmented model BenefitCost Apprentices salary Trainer salaries Machinery, tools, etc. Unskilled work Skilled work (x productivity) Reduced hiring costs

16. Department of Economics Recrutive opportunity benefits per trained apprentice (2009) Source: Strupler & Wolter, 2012

17. Department of Economics Training companies train because it is profitable – Non training companies do not train because it is not for them Source: Wolter et al., German Economic Review, 2006

18. Department of Economics A MARKET - WITH A SYSTEM MONITORING 4 18

19. Department of Economics A volatile world needs system- monitoring 19 Source: Swiss Education Report 2014

20. Department of Economics Early decisions with good matches (~ 230 different occupations ) 20 Source: Swiss Education Report 2014

21. Department of Economics High levels of satisfaction 21 Source: Swiss Education Report 2014

22. Department of Economics THE COMBINATION OF APPRENTICESHIP AND ACADEMIC EDUCATION CREATES A WIN-WIN-SITUATION 5 22

23. Department of Economics The advantages of a skill mix in an economy 23 VET+ academic Education preserves industrial production and manufacturing and fosters «incremental innovation» as well as quality leadership Industry/ manufacturing creates competitiveness reduces fiscal spending and generates high fiscal revenues Economy/ Public Finances allows to pay for academic excellence which leads to «radical innovations» Education/ Research

24. Department of Economics Geographical proximity leads to growth and innovation: Myth or truth? “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) 24

25. Department of Economics Average public costs for VPET training and the share of company based training Source: Swiss Education Report 2014

26. Department of Economics Excellence in all sectors of the education system (if focused) 26 Source: Swiss Education Report 2010

27. Department of Economics Summary 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