Apprenticeships: Managing the Skills Mismatch

bridges vol. 32, December 2011 / Feature Articles

By Barbara Posch

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Highly skilled and well-trained workforces are as important for an economy's competitiveness as are well-educated and excellent innovators. Austria and the US follow different approaches to training and educating those skilled workers. The following article tries to give a brief overview of vocational-training systems in Austria and the US, with a special focus on the Austrian dual (education and on-the-job training) system of apprenticeships.

Early unemployment hampers the career

When the financial crisis hit the real economy, many jobs in the production and manufacturing sector were lost. During the last decade (2000-2008) about 32 percent of jobs in the US manufacturing sector have been lost. This means not only putting people out of their jobs but simultaneously leaving young adults with no opportunities for employment in the first place.

Data collected and analyzed by the Organization for Economic Cooperation and Development (OECD) show significant worsening of the youth unemployment rate in the US: Between 2007 and 2010 it rose by 7.4 percentage points, hitting a peak in October 2009 with an unemployment rate of 27.6 percent among 16- to 19-year-olds. The most recent data provided by the Bureau of Labor Statistics show a slight decline of youth unemployment (age group: 16-24) during the Summer of 2011 (summer is generally a season of higher employment), compared to the same period in 2010. Nevertheless, those figures indicate underlying structural problems (e.g., trade imbalance, low worker mobility, lack of a skilled workforce), which are accelerated by the financial and economic crisis.

Recent OECD Studies prove that the initial experiences of young people in the job market influence their whole working life - especially dealing with first rejections and failure. The effects of unemployment very early in a career are therefore severe, not only on a personal but also on a socioeconomic level (e.g., long-term difficulty finding employment). The OECD recommends that their members introduce early intervention programs and effective job-search assistance for different groups of youth, strengthen apprenticeship and dual vocational training programs, and encourage companies to hire youth.

When comparing the unemployment data of various OECD countries, one can observe that countries with a fairly similar type of education system such as Austria, Germany, and Switzerland perform better than their peers; that is, they have a significantly lower rate of youth unemployment (see chart below). In these countries, the diversification of secondary education into two four-year periods enables a vocational focus on education, which not only depends on the type of school but also on the choice of taking up an apprenticeship. This education model produces a highly sought-after, well-trained, and skilled workforce for a high-quality and efficient production and manufacturing sector. At the same time, it maintains a relatively low unemployment rate among youth.

youth unemployment rate 2011

Youth (ages 15-24) unemployment rates in selected OECD countries in 2010.
The average youth unemployment rate in the EU was 21%, with a range from about 8% (Austria, the Netherlands) to around 40% (Spain). Three EU Member States (Austria, Germany, the Netherlands) and two European Countries (EFTA Members Switzerland, Norway) have a youth unemployment rate under 10%, as do Mexico (9.5%), Korea (9.8%), and Japan (9.2%). With a youth unemployment rate of 18.4%, the US is slightly above the OECD average of 16.7%.
Source: Organization for Economic Cooperation and Development (OECD), Employment and Labour Markets: Youth unemployment rate














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Apprenticeships: learning by doing

Europe has a long tradition of craftsmanship through training as apprentices: Especially in German-speaking countries (Austria, Germany, and Switzerland), students are trained for crafts and commerce in a place of employment and the theoretical background of the respective trade is taught in school. At the center of this dual apprenticeship system lies the idea of "learning by doing": After compulsory education, so usually after 9th grade, the youngsters who chose an apprenticeship acquire their knowledge, skills, and dexterity on the job while at the same time (usually the classes are offered in blocks of time during a couple of weeks every semester) attending a vocational school. The immediate application of skills - either learned at school and/or taught by a superior - at a young age (~ 15 years) is one of the greatest advantages of this system.

The Austrian education system enables vocational training - with a different extent, scope, and focus - not only via apprenticeships but also by vocational-technical middle (e.g., business school, schools for commercial and agricultural professions) and high schools (e.g., technical college, business college, tourism college, agricultural college), as well as schools for health-care services.

Austrian Education System (c) OeAD
The Austrian Education System

The above chart (click on chart to enlarge image) shows how the Austrian education system is highly diversified and is also open to tertiary education. Since 2008, apprentices under the age of 19 have been able to pass their vocational A-Levels (Berufsreifeprüfung) free of charge and parallel to their training, to enhance the accessibility of tertiary education. Furthermore, the differentiated system of general higher education (usually high schools focused on the humanities, sciences or languages) and vocational high schools (commerce, tourism, technology), graduating with A-Levels, prepares well-educated young people for the labor market. This has had positive effects on youth unemployment rates, especially during the financial and economic crisis. Similarly structured countries, namely Switzerland and Germany, have experienced the same effects.

"Lehre in Austria" - the apprenticeship model in a nutshell

Currently 242 regulated, legally recognized, teaching professions (Lehrberufe, List available in German) exist in Austria. The structures of apprenticeships (single, group, specialized, or module) are regulated via federal law (Berufsausbildungsgesetz, BAG) under the Minister of Economy.

About 40 percent of Austrian young people decide to take up an apprenticeship in a regulated teaching profession. In doing so, they acquire a full vocational training. The only prerequisite is finishing compulsory education, which in Austria lasts for nine (school) years.

The apprenticeship is based on a dual model:

  • 80 percent of the apprentices' time is on-the-job training in the workplace, learning specific vocational knowledge and skills and lessons;
  • 20 percent of the apprentices' time is lessons at a vocational school specializing in the respective craft, but also teaching basic knowledge and general education.

This training usually takes two to four years (depending on the job), concluding with a major exam (Lehrabschlussprüfung or, colloquial, Gesellenprüfung), but there are exceptions (e.g., shorter duration of the training) for people who have completed postsecondary education or another apprenticeship.

Passing the final exam, the so-called Lehrabschlussprüfung, qualifies the apprentice into a skilled worker or journeyman (Geselle, a term used especially in classical trades and crafts). This is also the precondition to pursuing a Master (Meister), graduating through an exam (the Meisterprüfung), and being certified via diploma (the Meisterbrief). The exam comprises five modules; one of these modules is the exam that qualifies one as a future instructor of apprentices.

But not every organization can or wants to train apprentices. Its fitness to do so must be approved by the local chamber of commerce (Wirtschaftskammer). Apprentices can only be trained at a training site with an existing trade license, and the trade license must match the occupation for which the apprentice is being trained. This guarantees a certain quality standard for and protection of the apprentices.  The size of the enterprise is not a criterion, as it is much more important that an apprentice should learn in principle all the skills and knowledge necessary to fulfill the job requirements.

Egon Blum
Egon Blum, former Austrian National Commissioner for Apprentices

Egon Blum, a well-known Austrian expert on apprentices, with life-long experience in vocational training and education, was Austrian National Commissioner for Apprentices between 2004 and 2008.  Since then, the position has remained vacant. Mr. Blum sees the dual education model as crucial for the sustainability of the Austrian economy "because this guarantees a balanced qualification structure, and we need excellent scientists and scholars and, just as much, people who apply their ideas." In Austria, the Company Blum is considered a Model Company for apprenticeships. Their philosophy is expressed by their participation in and success at World Skills, a competition to promote the importance of vocational training worldwide. Blum also founded a successful outlet in North Carolina in the 1970s, which will be described below.

One of Blum's recommendations as Commissioner for Apprentices was the so-called Blum-Bonus (officially, Projekt '06), which was introduced in September 2005. By 2008, this program had created about 12,000 apprenticeships (as well as coaching via Lehrstellenbearater). The bonus can best be described as financial support (Betreuungszuschuss) provided by the government for apprenticeships. The amount of support depends on the year of the apprenticeship (Lehrjahr): 400. per month in the first year, 200. per month the second year, and 100. per month the third year of apprenticeship. These grants especially help Small and Medium-sized Enterprises (SME).

Since 2008, after a change of the government, this system was modified and different supports were introduced; and in November 2011 the Ministry of Economy decided not to introduce a support system modeled after the Blum Bonus - mainly due to the bonus' main emphasis on creating apprenticeships (the demographic reason behind this decision was years with lower birthrates). The new system introduces basic grants combined with measures to enhance the soundness of vocational training for the right occupation. Job information and coaching are important elements of the system.

International experiences in vocational training

anthology vocational training
OeAD anthology on experience abroad and vocational "dual" training.

Another new feature of the new system is more support for apprentices to spend time abroad.  Until now, an apprentice obtained grants through the EU's Leonardo Da Vinci Program, a subprogram for vocational training and education of the lifelong-learning initiative.

To further promote the opportunity to gain vital work experience abroad, the Ministry of Economy will compensate a company for the period of time an apprentice is away.

The importance of vocational training and work experience abroad was underlined in a recently published anthology by the Austrian agency for international mobility and cooperation in education, science and research (OeAD) on "experience abroad and dual training." The publication focuses on grants and initiatives within the framework of the EU lifelong-learning program and collects reports of the experiences of apprentices, enterprises, schools, and NGO's, thus providing insight into personal and practical aspects of the program.

Vocational training in the US

The US system of artisan- and craftsmanship had its origins in Europe, but developed differently, mainly due to lacking the historic infrastructure of guilds and also to the different demands on early US settlers. This enabled very flexible approaches in creative problem solving and also a constant redefining of innovation and occupation, characteristics that have accompanied American industrial history ever since.

The US does use training of workers via apprenticeships, which are overseen by the Federal Government and regulated through the National Apprenticeship Act (also called the Fitzgerald Act). Similar to the system in German-speaking countries, apprenticeships combine theoretical and practical approaches. Generally, apprentices in the US are older than their European counterparts - usually between their mid-20s and 30s). The legal minimum age is 16, sometimes 18 in hazardous occupations.

Training for demands of industry: keeping the mind-to-market potential

Ten years ago, the National Association of Manufacturers (NAM), representing 11,000 manufacturing companies across the US, published a report called The skills gap 2001. Manufacturers confront persistent skills shortages in an uncertain economy. This report basically analyzed responses to a survey conducted among NAM members. Already in 2001, the report indicated a shortage of skilled workers in the US manufacturing sector. The study concluded that the skills gap "derives from long-term forces - demographics, technology, and globalization." It also underlined the problematic approach of proposing short-time solutions for long-term problems. In the years that followed, further studies have researched that issue, and in 2009 the NAM-endorsed Manufacturing Skills Certification System was introduced and is currently being implemented.

Emily Stover DeRocco
Emily Stover DeRocco, President of The Manufacturing Institute

Emily Stover DeRocco, former assistant secretary of the Employment and Training Administration at the US Department of Labor and current president of The Manufacturing Institute, a research, education and innovation center affiliated with the NAM, explained that the US lost its commitment to vocational education due to an underlying cultural push for every child to obtain a college degree, and also because of more attention to liberal arts than to the so-called STEM subjects (science, technology, engineering, math). This development resulted in a broad array of symptoms, e.g., in 2009, the average dropout rate in high schools (9th through 12th grade) was 4.1 percent (the total drop-out rate of 16- to 24-year-olds is 8.1 percent) leaving young people unprepared for any job except the very lowest level of service jobs.  In addition, this left employers with poorly trained employees. The large middle-class jobs, associated with the highly skilled and trained technical workforce, which could apply the creative thoughts of the innovators, was growing smaller. Emily Stover DeRocco: "It was the mind-to-market-potential that the country was losing." The so-called baby-boomers, generally trained in a more vocational education, had been filling that gap. But that generation is retiring, which leaves many open jobs but less-qualified applicants. This year the skills gap survey was renewed and indicates that around 5 percent of current jobs at interviewed manufacturers are unfilled for that reason.

NAM-Endorsed Manufacturing Skills Certification System

The overall goal of this system is to "access talented individuals with a high-quality education and advanced skills" who can provide the link between innovation and production. This goal helps not only the talented individual but also the employers. The Manufacturing Skills Certification System introduces creditable credentials, examined via written as well as performance tests, recognized by the industry and applicable to all sectors in the manufacturing industry, which will enable and enhance mobility between different spheres of the manufacturing sector. These credentials aim to validate "book smarts" as well as "street smarts" and to create a professional technical manufacturing workforce with valuable industry credentials. This has positive effects on companies' innovative force, competitiveness, and marketability.

The obtained certifications are aligned with secondary and postsecondary programs of study (mainly at community colleges, which are very flexible), and are used in cooperation with enterprises. The programs of study offer a broad range of programs for working students, giving them basic education along with the industry-relevant training they need for entry-level employment, advancement, or to pursue a degree. The basic or core skills are defined for all sectors in manufacturing:

  • Personal Effectiveness Skills
  • Basic Academic Requirements
  • General Workplace Competencies
  • Industry-wide Technical Competencies

This idea of basic or core skills also targets enhancing and enabling the mobility between different spheres of industrial production.

Emily Stover DeRocco noted that the Manufacturing Skills and Certification System is conducive to an apprenticeship model, working within the context of the US public-school system, resulting in credits that allow individuals to "always have an open door to the pursuit of higher degrees and to a combination of work and education."

The NAM-Endorsed Manufacturing Skills Certification System therefore marks a soft reform (systemic reform process) of the US education system, which still endorses elements of the 19th (agricultural calendar) and 20th (industrial structure) century. Ms. DeRocco further explained that this system focuses on theoretical education, and the industry recognized the need to "develop different educational pathways within the current system." There was certainly a necessity to do something "because it was not going to happen naturally via education leadership."

Currently, The Manufacturing Institute is releasing a series of career-specific certification pathways.  After having developed a system focused on entry-level skills, they are shifting their emphasis to add higher-level, career, and occupation-specific credentials to the system.

Blum in North Carolina - liaising the Austrian apprenticeship model with the US system

The Austrian Company Blum opened a production site in North Carolina in the late 1970s. Although realizing quite early the need for local skilled workers, it was only in 2000 that they, along with other mainly German and Swiss enterprises, initiated the program Apprenticeship 2000. This program basically tries to import the so-called dual system into the US, but within the currently existing educational system.

The project can best be described as a training community under the leadership of Austrian, German, and Swiss Enterprises, producing goods in North Carolina. It basically introduces their dual apprenticeship system of training skilled workers. Their first challenge was to find a school that could provide the necessary theoretical education for apprentices. Since then, the Central Piedmont Community College in Charlotte has been a crucial project partner. Training in the practical skills occurs on the job, under the supervision of a skilled worker.

Each year, Apprenticeship 2000 recruits students from 27 high schools in six surrounding counties and from the existing workforce of the participating companies (ca. 6,500 young people). Apprenticeship 2000 is now training its 11th group of apprentices. Currently, seven enterprises are part of the project: Ameritech, Blum, Daetwyler, Pfaff, Sarstedt, Siemens and Timken.

The driving force behind the creation of the project was the Austrian enterprise Blum. Egon Blum attributed the success of this training method to the company's philosophy of filling youngsters with enthusiasm for the occupation they aspired to and integrating the employees into the company. With that philosophy, they are incredibly successful with training apprentices. This finds expression in their success rate at the World Skills competition, which promotes the importance of vocational training worldwide. Especially noteworthy was World Skills 2001 in Seoul, Korea: In the category CNC-turning, the company managed to win the gold medal for Austria and silver for the US (N.B.: This was the same year that Apprenticeship 2000 was introduced). Austria is generally well represented and successful at the World Skills competitions.

Different starting points but the same obstacles

Despite the advantages of the dual system in Austria and its quite successful export to the participating firms in North Carolina, Egon Blum does not perceive current Austrian policy measures in the area of apprenticeships to be as rosy as the government presents them. He points out that "the dual system is not to be questioned" because Austria needs not only brilliant inventors and innovators but also a brilliant and highly skilled workforce, which is usually provided and guaranteed by the apprenticeship-model. But the current model actually does need some adjustments, e.g., compulsory tests of the practical skills before the so-called Lehrabschlussprüfung (final vocational exam).

Both Emily Stover DeRocco and Egon Blum came to a similar conclusion: A skilled workforce is a core pillar of every innovative society. This is also underlined by a recent study sponsored by the Manufacturing Institute and Deloitte concerning The public's view of the manufacturing industry today. This survey suggests that a vast majority (86 percent) of those interviewed consider America's manufacturing base to be important; yet, at the same time, there is a shortage of certain skilled workers. Blum and Stover DeRocco also see a return of production from low-wage countries, mainly due to the negative effects of uncoupling innovation from production.  As Stover DeRocco summarizes the situation: "The jobs [the US] lost in manufacturing were largely the lowest-skilled jobs in production. The highly-skilled production jobs, which relate directly to a technology-infused production environment, are continuing to grow."

The US and Europe, or in our case Austria, are experiencing similar problems: Jobs in the production and manufacturing sector have a poor image; they are usually not perceived as requiring high skills as well as a broad technical knowledge; and a career in this area is often not a young person's first choice. Therefore, it is necessary to educate future generations more towards their skills and their application for the society, while recognizing the equal value of every career path.

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