696 Maja Lamza-Maronić x Ivana Ivančić x Mira Majstorović

THE ROLE OF VOCATIONAL EDUCATION AND TRAINING IN

THE YOUTH EMPLOYABILITY
Maja Lamza-Maronić, Ph.D.1, Ivana Ivančić, univ.spec.oec.2, Mira Majstorović, M.Sc.3
1
Faculty of Economics in Osijek, Josip Juraj Strossmayer University of Osijek,
Republic of Croatia, [email protected]
2
Economic and trade school Ivan Domac Vinkovci, Republic of Croatia, [email protected]
3
High-school of Economics Vukovar in Vukovar, Republic of Croatia, [email protected]

Abstract
The current slow economic development and high unemployment in the EU
have increased the need for policies that have a real impact in the short term. The
pressure of high unemployment, especially high youth unemployment is growing.
Investment in skills is a challenge and the policy agenda in Europe has put more
labour market relevant vocational education and training (VET) in the scope of
strategies for economic competitiveness. VET is designed to enable participants to
develop practical skills and understanding needed to find employment in a particu-
lar occupation. It is at the core of Europe’s response to the economic crisis and is an
essential part of the Europe 2020 strategy. In Europe, about half of all jobs require
a medium level qualification, primarily acquired through VET.
There is no single European VET system. It is very diverse with the variations in
systems, providers, regions and sectors. Croatia is involved in VET modernization
through new regulations in order to speed up the process of change.
This article provides a discussion of the role of VET in the youth employability
in the EU and Croatia. It poses two main goals: first, systematically analyzing and
presenting the issue of youth employability and the second, analyzing the system of
Croatian VET in the European environment.
JEL Classification: I21, I25, I28
Keywords: vocational education and training, labour market, unemployment,
youth employability
THE ROLE OF VOCATIONAL EDUCATION AND TRAINING IN THE YOUTH EMPLOYABILITY 697

Introduction
Vocational education and training (VET) has in recent years experienced a re-
vival in academic research as well as in the economic and political area. For in-
stance, the World Bank advocates vocational education to reduce poverty, promote
economic growth and increase competitiveness (Biavaschi et al.; 2010). Also, it is of
particular interest because there are reasons to believe that it is superior to general
education from the social point of view, as well as in promoting access to the labour
market (Nilsson; 2010). Therefore, the global economic system requires urgent and
innovative responses in the field of technical and vocational education and training
services so the demand for skills is now higher than ever before (Maclean and Lai;
2011).
According to the Organization for Economic Co-operation and Development
(OECD; 2009) there are three factors that stand out as reasons for the growing
interest of policy makers in VET today. Many OECD countries are concerned
with ever-increasing global competition. Since OECD countries cannot compete
with less developed countries on labour costs, they will need to compete in terms of
the quality of goods and services they provide. That means a highly skilled labour
force, with a range of mid-level trade technical and professional skills. VET is seen
as the right vehicle for up skilling those who would otherwise be unskilled and
ensuring a transition into the labour market. VET can play a central role in prepar-
ing young people for work, developing the skills of adults and responding to the
labour-market needs of the economy. Despite this role, it has been neglected and
marginalised in policy discussions, often overshadowed by the increasing emphasis
on general academic education and the role of schools in preparing students for
university education.
Many of the unskilled jobs existing a generation ago are disappearing fast be-
cause they have been replaced by technology. Provision in vocational programmes
reflects fast-changing employer needs. It means building a foundation of basic and
transferable skills into vocational qualifications, to reflect a world of career flow and
development rather than one job for life. Also, it means an effective partnership be-
tween government, employers and unions to ensure that the learning is connected
at all levels with the world of work. Strong vocational programmes increase com-
petitiveness but many programmes fail to meet labour market needs. Countries
need to compete on the quality of goods and services require a well-skilled labour
force, with a range of mid-level trade, technical and professional skills alongside
698 Maja Lamza-Maronić x Ivana Ivančić x Mira Majstorović

those high-level skills associated with university education. More often than not,
the skills are delivered through vocational programmes.
The concept of VET is a multidimensional concept and it is constantly chang-
ing. Because its relation to the other parts of education system and working life
differs among countries and changes over time, it is not possible to give one defini-
tion. One of them is given by the European Centre for the Development of Voca-
tional Training as all structured activities that aim to provide people with knowledge,
skills and competencies necessary to perform a job or set of jobs, whether or not they lead
to formal qualification (CEDEFOP; 2009, 8).
In a European context, VET is seen as a major tool in the transformation of
the European economy. Needing to modernise education and training systems,
the European Union launched the Copenhagen process (European Commission;
2002) to strengthen cooperation in vocational education and training. To build
on progress, at Bruges (Council of the European Union; European Commission;
2010), the Member States and social partners established a new framework for Eu-
ropean VET policy for 2010-20, which included qualitative priorities to support
the Europe 2020 strategy for smart, sustainable and inclusive growth (European
Commission; 2010a).
In a Croatian context, recent authors (Bejaković; 2004, Lamza-Maronić &
Glavaš; 2008, Matković; 2011) investigate problems to match education system
to labour market. Therefore, this research represents a contribution to the develop-
ment of this phenomenon analysing the role of VET in the youth employability
into three parts. The first part deals with the youth’s labour market situation. This
section explains how youth unemployment rates in European Union are affected
by the transition of young adults from education to the labour market. The second
part presents the European countries vocational education systems and their main
differences. The cross-country analysis presents that beyond the core of general
education, VET is a valued alternative, with the dual system seeming to be more
effective than school-based VET. In the third part of this paper there is an analysis
of the research results. In many countries, strengthening the vocational part of the
educational or schooling system and bringing existing vocational education and
training systems closer to the current needs of the labour market would help young
people have a smoother transition into work.
THE ROLE OF VOCATIONAL EDUCATION AND TRAINING IN THE YOUTH EMPLOYABILITY 699

1. Youth unemployment: general economic problem

The youth unemployment statistics on the global level is concerned. Unemploy-
ment rates among youths (aged 18 to 24) have soared since the Great Recession
of 2008, doubling that of the adult population in many developed and developing
countries. The global youth unemployment rate, estimated at 12.6% in 2013, is
close to its crisis peak. This means that 73 million young people were unemployed
in 2013. Youth unemployment increased by as much as 24.9% in the Developed
Economies and European Union between 2008 and 2012. On current projections,
the youth unemployment rate in the region will not drop below 17% before 2016
(ILO; 2013).
While many young people have responded to the sluggish labour market pros-
pects by continuing tertiary education and investing in their human capital, others
have altogether withdrawn from education, training and employment. Within its
abilities, the European Commission tries to fight youth unemployment by targeted
stimulus and to support reforms in the member states. First, the program “Youth on
the Move,” existing since 2010 as a part of the Commission’s strategy for a “Europe
2020”, needs to be mentioned. This program aims at improving the general educa-
tion, vocational training, higher education, the mobility of young apprentices and
job seekers as well as to support start-ups and the labour market entrance of young
people in EU countries with youth unemployment rates above average (European
Commission; 2010b). At the same time, the program “Youth on the Move” intends
to implement a European “Youth Guarantee” that enables every EU inhabitant aged
15 to 24 to claim the right for employment, vocational training, or participation
in a training programme.
Youth unemployment includes all the youth between the ages of 15 and 24 who
are unemployed. The main indicator of youth unemployment is the youth unem-
ployment rate for the age group 15-24. This uses the same standard definition as
the unemployment rate for the population of working age. For a given age group,
it is the number of those unemployed divided by the total number of people in the
labour market (employed plus unemployed).
As figure 1 shows in the EU-28 in 2012, there were on average 5.6 million
unemployed people aged 15-24 and 24.4 million persons of that age group in the
labour market, according to the EU labour force survey. This gives a youth unem-
ployment rate of 23.0 %.
700 Maja Lamza-Maronić x Ivana Ivančić x Mira Majstorović

The dimension of the problem can be illustrated by statistics.1 The unemploy-

ment rate among young persons in 2012 was higher than the rate for those aged
between 25 and 74 in all Member States. In Greece (55.4 %), Spain (53.2 %),
Portugal (37.7 %), Italy (35.3 %), Slovakia (34.0 %) and Ireland (30.4 %) youth
unemployment rates were particularly high. Germany (8.1 %), Austria (8.7 %) and
the Netherlands (9.5 %) were the only Member States with a youth unemployment
rate below 10 %.

Figure 1 Population employed/unemployed/inactive, 2012.

Source: Eurostat, http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Youth_unem-

ployment [12/01/2014]

Croatia’s youth unemployment rate average in 2013 reaches up to 51.2 % plac-

ing it at the very top of the infamous chart of EU youth unemployment record
holders. According to Eurostat (Figure 2) youth unemployment rate in Croatia
increased to 49.80 % in December of 2013. It averaged 33.95% from 2000 until
2013, reaching an all time high of 51.20 % in April of 2013 and a record low of
21.50% in July of 2008.

1
Following data was generated through the database of the Eurostat Service on http://epp.eurostat.
ec.europa.eu/statistics_explained/index.php/Unemployment_statistics , (15.01. 2014)
THE ROLE OF VOCATIONAL EDUCATION AND TRAINING IN THE YOUTH EMPLOYABILITY 701

Figure 2 Croatia youth unemployment rate

Source: Eurostat, http://www.tradingeconomics.com/croatia/youth-unemployment-rate

[10/01/2014]

From a school-to-work-transition perspective, the target destination is satisfac-

tory integration into the labour market (Ryan; 2001).
In addition to, in the next chapter we shall analyse connection between youth
unemployment with a school to work transition perspective which serves as a
framework for analysing an individual’s path from education to stable employment
on an institutional basis.

2. Development of VET across the Europe

VET around the world can be classified into three different systems: (i) a school-
based education, (ii) a dual apprenticeship system combining school training with
a firm-based approach, and (iii) informal-based. The supply of VET by the govern-
ment through the educational system can be justified as a means to improve the
opportunities of youths who lack the skills demanded in the labour market, or the
ability or motivation to continue with higher education. Individuals might prefer
this option to academic education as it implies shorter investment of human capital
and facilitates earlier entry into the labour market.
Evidence available from cross-country comparisons in Europe (Woessmann;
2008, CEDEFOP; 2013) points to several systematic elements of VET success:
(i) To ensure relevance of curricula, all stakeholders (government, employers,
social partners, educational institutions) are involved in its development.
702 Maja Lamza-Maronić x Ivana Ivančić x Mira Majstorović

(ii) To maintain a close contact to the labour market, a system of continuous

feedback from employers and private-sector institutions is required.
(iii) To maintain a high level of training quality, a decentralized system of ac-
creditation and quality assurance is important.
Despite many European countries maintain a large vocational schooling system
as a part of their upper-secondary education, they generally differ with respect to
how the vocational system is operated (CEDEFOP; 2013). Only few countries
have well-developed dual training systems which are basically apprenticeship sys-
tems. By linking training with workplaces these systems have the advantage that
they are able to impart competences needed in the world of work. Therefore, we
start our analyzing European VET systems with this.

2.1. Dual VET System

The term “Dual System” (Deissinger; 2007, 365) refers to an institutional frame-
work including legal provisions and training arrangements which is determined by
the partnership of two “learning sites”: the firm providing the apprenticeship and
the vocational part-time school.
The system is more complex than the term indicates as it unfolds a network of
private, semi-private and public interests and responsibilities including the trade
unions and, above all, the chambers (of industry and commerce, the crafts and the
professions) which are in charge of monitoring in-company training and off hold-
ing exams.
Dual VET is common in Austria, Denmark and Germany and partly in France.
This countries share some common and distinctive features in the set-up of the dual
vocational education, which we outline using the example of Germany (Eichhorst
et al.; 2007), with the four key institutional elements of the dual system described
below:
x A high degree of formalization that only provides training in centrally ac-
credited occupational qualifications. The training content is continuously
adapted to meet the changing requirements of the labour market.
x Strong involvement of social partners in developing and maintaining cur-
ricula at the governmental and federal level, through representative advisory
boards. The implementation and monitoring is undertaken by regional trade
and/or occupational committees.
THE ROLE OF VOCATIONAL EDUCATION AND TRAINING IN THE YOUTH EMPLOYABILITY 703

x The school-based part of the dual apprenticeships is provided by vocational

schools, covering both general and occupation-specific education. The costs
of training in the schools are financed by the government.
x Firms have to meet certain technical standards to be accredited as a training
firm. Offering apprenticeships is optional for companies, with a match be-
tween firms and trainees following standard application procedures. The costs
of training within the firm are covered by the training companies.
The advantage of VET in Germany was grounded in the fact that on the one
hand companies could train a well-prepared work force, and on the other hand
young people with low levels of qualifications from basic schooling could be in-
tegrated into professional life. Young people with learning difficulties and early
school leavers could pass into the less qualifying dual training programs.
Austria and Denmark are most similar to Germany in also relying on a strong
dual apprenticeship system as part of their upper secondary vocational education.
However, variations in the institutional details arise across the respective countries
due to institutional, political and economic differences. Differences between the
Danish and German system arise in terms of a more decentralized planning of the
educational content in the vocational schools in Denmark (Cort; 2008).
While the German system issues training plans in the school-based part at the
state level, the local entity in Denmark is much smaller and represented by 115
vocational colleges. Furthermore, these colleges enjoy a higher level of autonomy
in terms of designing curricula, as the Ministry only issues directives rather than
concrete plans. In contrast, the Austrian system is entirely centralized, with school
and firm curricula developed at the state level. This leads to a higher degree of
standardization of the occupational degrees, potentially enhancing the mobility of
workers across firms and regions (Ebner; 2009).
All countries face the problem of cyclical variations in the supply of apprentice-
ship places due to the voluntary participation of the firms in dual apprenticeship
systems, which might leave youths entering unemployment before integrating in
VET. Hence, incentive mechanisms have been implemented for firms to stimulate
supply.
For instance, Austria offers financial incentives for firms to become a training
company or increase their training activities (Ibw; 2009). In Denmark, an “em-
ployers’ reimbursement fund” was established already in 1977, with all compa-
704 Maja Lamza-Maronić x Ivana Ivančić x Mira Majstorović

nies having to contribute as a function of their company size, yet independent of

whether they participate in the system. When they participate, 90 percent of the
wages paid to trainees during the school-based training periods are financed by this
fund (Cort; 2008).

2.2. School-based vocational education

VET in Southern European countries such as Spain, Portugal, Italy and Greece
as well as France only plays a marginal role, and is largely school-based. There are
only 4% of those in vocational upper-secondary education in Spain combining
school and work-based training, in contrast with the 74% share in Germany, where
dual VET is most prominent (CEDEFOP; 2010). The relatively marginal role of
VET in these countries can be explained by a limited interest of employers in more
formal VET and also by strong expectations of young people and their families,
thus creating strong preference in academic training. Finally, the focus on subsi-
dizing youth employment in these countries has backfired. Over the last 30 years,
Spain has reduced employers’ costs of hiring young workers via subsidies. Similarly,
there has been a long tradition of subsidizing temporary employment and training
contracts in both Italy and France (Eichhorst et al.; 2007).
In the countries of Eastern Europe such as Poland, Czech Republic, Hungary,
Estonia, Latvia, Lithuania and Romania there is an expansion of a general educa-
tion and the dilution of vocational education to the technical variant which typi-
cally has mixture of theoretical and general subject matter. This meant that students
from these tracks are not successfully progressing to higher education and have
no very specific vocational skills to enter the labour market. This has frequently
given rise to the expansion of post-secondary, non-tertiary programmes taken im-
mediately after secondary education. Hungary is a good example (West; 2013). Its
4-year technical stream has now become largely pre-vocational and its students who
do not go onto higher education specialize vocationally, often at the same institu-
tion, for further 1-2 years. Romania’s “Post High Schools” are somewhat similar.
As part of the modernization programme many countries have undertaken a
curriculum reform. This has not only involved up-dating vocational curricula to
reflect changes in the industrial and commercial world, but introducing entirely
new syllabuses (typically in IT, mechatronics and business services).
THE ROLE OF VOCATIONAL EDUCATION AND TRAINING IN THE YOUTH EMPLOYABILITY 705

2.3. VET in Croatia

VET schools in Croatia are technical, industrial, trade and others. They are
defined by the type of instructional plan and program they offer, carry out an in-
structional plan and program of from one to five years, at the end of which students
receive a secondary professional degree, and programs of from one to two years, at
the end of which students receive a basic professional degree.
There are two separate systems of training for professional occupations in Croa-
tia. Within the dual system for the crafts there is a standardized system of vocational
education training programs that connect theoretical and practical training. On the
other hand, there are four-year vocational training programs with a low share of the
practical training. The framework of vocational education is divided between the
“short professional profile”, most of which are less attractive due to poor promotion
opportunities and the “long vocational profile” which mainly aim to continue their
education and their content is too often focused on theory.

3. VET education: chance for the youth employment

VET is frequently perceived as a solution to improving the opportunities of the
youth who lack the resources, skills or motivation to continue with higher educa-
tion. It provides useful skills to prepare the youth to enter into the labour force and
improve their chances of a successful professional career. Figure 3 presents the role
of VET in the youth employment.
Therefore, the young people in countries with strong VET systems, with a close
connection between school and work-based components, are much more likely to
be employed than their general education counterparts and to benefit from a faster
transition to the labour market.
Factoring in differences in national labour market institutions and policies
suggests that success or failure of education programme orientation depends on a
complex interaction between policies and institutions that are particular for each
national context.
It is generally found within cross-country comparisons that those maintaining
a substantial dual apprenticeship system, such as Germany, Austria and Denmark
exhibit a much smoother transition from school to work (CEDEFOP; 2013).
706 Maja Lamza-Maronić x Ivana Ivančić x Mira Majstorović

Figure 3 The VET and the youth employment

Role of vocational Major features of Major outcomes Main challenges
training vs. general the labour market regarding youth
education
Continental Dominance of dual Relative resilience of Relatively smooth Labour market
Europe, mainly vocational training employment transition from school integration of youths
German speaking to work, low youth failing to enter
countries unemployment vocational training

Mediterranean Some school-based Severe dualization High youth Bringing academic

countries, in vocational training, with fixed-term unemployment, education closer to
particular Spain but general education contracts, subsidized mainly unstable jobs the labor market,
tends to dominate, forms of employment for young people strengthening
problem with early apprenticeships,
school leaving prevent youth
exclusion
Anglo‐Saxon Clear division In general, relatively Strong youth Ensure better general
countries between school flexible and volatile unemployment schooling completion,
based education and labour markets increase during the establish links
learning on the job economic crisis between schools and
world of work
Transition Dual vocational Ageing issue, Youth often in volatile Expand existing
countries (Croatia training declined, moderate economic positions vocational training to
included) now mostly school- growth, low include employers
based, expansion of employment
tertiary education protection, poor
enforcement of labour
laws
Source: adapted according to Biavaschi et al. (2012; 22)

For the case of Germany, study by Deissinger (2007) shows that participation
in the dual apprenticeship has a particular advantage compared with other options
of the vocational schooling system of improving an early labour market attachment
and a faster and more structured integration into the labour market.
Dual VET aims to combine general, transferable skills acquired during class based
VET with structured learning on the job and actual work experience within a train-
ing company. In a world of technological change, a dual VET system is expected to
be less prone to problems of an educational mismatch early in the career, with firms
expected to timely adapt their training curricula to changes in the skills demanded.
THE ROLE OF VOCATIONAL EDUCATION AND TRAINING IN THE YOUTH EMPLOYABILITY 707

While the adaptation of school-based education crucially depends on continu-

ous and accurate labour market feedback, firm-based training is expected to lead to
a natural levelling of labour supply and demand. In addition, with the immediate
putting-into-action of acquired skills and the exposure to an adult working life,
the dual system might provide a more beneficial learning and working environ-
ment for practically oriented youths, increasing their motivation and engagement
in training. Finally, by establishing an early contact to firms and work experience,
the youth enter faster into the labour market and learn about the types of jobs and
occupations that they may prefer.
The youth in Southern European countries such as Spain, Portugal, Italy, Greece
as well as Croatia face particular difficulties when trying to enter the labour market,
with these long-standing problems aggravated by the recent economic crisis.
Despite having above-average the youth not in employment, education or train-
ing (NEET) rates, labour market entry is difficult for both low and high skilled
young people. One major factor is the deep segmentation of the labour market
between permanent and fixed-term contracts, which can be attributed to strict
dismissal protection and largely liberalized temporary employment. In these coun-
tries, transition to a permanent position is difficult.
While dual training exhibits advantages from a societal and individual perspec-
tive, establishing an efficient dual apprenticeship system depends crucially on the
willingness of firms to participate. The loss of enterprises linked to schools, par-
ticularly to the lower vocational (typically 3 year) stream, has meant that obtaining
practical work for students has become a challenge. A response was to increase
theoretical and general elements in the curriculum. Both responses were expensive
and risked irrelevance to the new labour market. So drives to promote real work
experience have been a feature in many countries. This is often referred to as ap-
prenticeship, but is probably more correctly described as alternance, since in most
cases there is not a contract of apprenticeship between an employer and an indi-
vidual student. Poland seems to be the only country with a sizeable and distinct ap-
prenticeship sector, accounting for something like 15% of VET students (OECD;
2009).
Smaller apprenticeship arrangements are present in Latvia, Slovenia and Croa-
tia, organized through craft chambers, and half of the Hungarian basic vocational
school students have individual contracts with employers for their work experience.
A number of countries (Estonia, Lithuania and Romania) have recently introduced
708 Maja Lamza-Maronić x Ivana Ivančić x Mira Majstorović

regulations to recognize apprenticeship as an educational form, but so far take-up

seems very limited. Despite these attempts to secure employer involvement in one
way or another, a lot of practical work in the region is still undertaken in, often
poorly equipped, school workshops.
In addition, the results of CEDEFOP (2013b) research indicate that VET is
able to speed up the transition from education to work. Relative to medium-level
general education graduates, VET graduates enjoy a faster transition to work, are
more likely to have a permanent first job, and are less likely to find a first job with
a qualification mismatch. In interpreting these results, it should be remembered
that general education programmes tend to orient their graduates towards further
education. They are more likely to continue studying, with lower participation in
the labour market, particularly in the younger age groups. In contrast, VET gradu-
ates are more likely to participate in the labour market. The report also shows that,
in terms of labour market outcomes, there are substantial cross-country differences
in the returns to VET.

Conclusion
The research reviewed in this paper highlights that VET systems can enhance
employability and increase the chance of entering into a stable job if employers are
involved systematically.
While dual vocational training facilitates a relatively smooth transition from
school to work, international experiences show that attempts at implementing such
schemes often fail. Dual vocational training – and vocational training in general –
only works sustainably if there is significant institutional support and acceptance
by major actors. Dual vocational training can only be effective if employers engage
with this type of structure and systematic training and if training curricula are up to
date. This requires the participation of employers in the design of training schemes
as only they know their current and expected needs. Furthermore, vocational train-
ing only works if it is generally accepted as an attractive option for starting a career
in a given national labour market.
School-based vocational training clearly shares some of the potentials of the
dual model as it can also contribute to the acquisition of occupation specific skills,
but school-based vocational training tends to lack a clear link to current needs of
employers. Problems arise in such a system if it relies on outdated training stan-
dards or on declining sectors. These systems must be adapted to changing econom-
THE ROLE OF VOCATIONAL EDUCATION AND TRAINING IN THE YOUTH EMPLOYABILITY 709

ic structures and new types of occupations and jobs. Hence, vocational schooling
needs to be kept up-to-date by bringing employers in. Otherwise it runs the risk of
become obsolete and unattractive to both employers and youths. Particular prob-
lems arise in countries with a strong expansion of tertiary education where young
people expect to enter the public sector. If this fails, their formal qualification is of
questionable use as their skills are quite detached from private sector needs.
In particular, vocational education provided in the framework of secondary
schooling should be modernized and complemented with phases of practical work
experience, such as internships or passing the final year with an employer. Employ-
ers should also be consulted regarding the design of vocational schooling curricula,
which requires a systematic coordination with networks or associations of employ-
ers. Furthermore, in order to avoid a negative perception of vocational education
as a dead-end option, transition to further education, including tertiary education,
should be facilitated. Finally, reducing vocational education fees can help to raise
enrolment in some countries.
While the recent economic crisis has shown that youth integration into the
labour market is problematic, some countries have been able to maintain stable
employment over the last years, also in times of recession, while elsewhere unem-
ployment rates increased steeply. This clearly shows that institutional settings and
public policies play a prominent role in influencing the transition from school to
work.

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