More vocational education and supplementary training through equalization of costs? An analysis of a training and development fund in the Netherlands

In a market economy, individual employers are confronted with several dilemmas when they have to make long-term investments in (re)training and HRD. Especially in small and medium-sized enterprises (SMEs), these dilemmas can easily lead to under-investment in education and supplementary training, unless institutional arrangements are created to reduce the risks of those investments. Since the mid-1980s, sectoral training funds, which operate on the basis of the principle of equalization, have been providing such an institutional arrangement in The Netherlands. They are jointly administered by representatives of the trade unions and employers' associations. In this article we investigate, on the basis of empirical data, if the most important goal of a sectoral training fund (i.e. to provide sufficient volume and professional quality in the workforce of the sector, by stimulating both the initial vocational education and the supplementary training) is actually achieved. We conclude that the desired effects of the equalization instrument are not achieved. This results in five challenges to prevent underinvestment in – and to continue to stimulate – education and training. Key words: Sectoral training fundscost equalizationeffectiveness Acknowledgements The help of dr. J. van Hoof and dr. H. van den Tillaart, who commented on an earlier draft of this paper, is gratefully acknowledged. Notes 1 The experts interviewed were representatives of the Max Groote Expertise Center (a research institute of the University of Amsterdam, specializing in vocational education), the training fund for electrical installation (OFE), the fund for the metal industries (A + O) and the federation of Dutch employers' associations (VNO-NCW). 2 The process of training a craftsman begins in the initial vocational education (the primary segment). This is secondary education that is sub-divided into the preparatory intermediate vocational education (VMBO) for 12 – 15-year-olds and the intermediate vocational education (MBO) for 16 – 20-year-olds. The intermediate vocational education has two variants: the first variant emphasizes classroom training and the second (dual) variant emphasizes practical training by apprenticeship. The VMBO and the MBO are both organized and paid for by the government. The post-initial vocational education (the secondary segment), which is concerned with the continuation of professional training, is mainly organized and paid for by the branch itself (via the training funds). 3 The CLA (collective labour agreement) determines which domain is assigned to which fund. Installation technique has been assigned to the fund studied here. There are forty different vocational training programmes that are relevant to installation technique. We therefore classify these programmes as belonging to the domain of this fund. There are students who follow a non-installation technique programme, but are employed by a company associated with the fund: these students are assumed not to belong to the CLA domain. 4 Research has shown that firms and employers are more actively (re)training, which can be reconstructed on the basis of the funds' subsidy administration. Previous research demonstrates that one third of the schooling efforts are not registered in the funds' administration (Aalders, Citation1994; Onstenk, Citation1997; Warmerdam and Tillaart, Citation1997). In addition, it is known that actual schooling by firms and employees is related to workloads in those firms. If the workload is high, then less time is invested in schooling and schooling arrangements are often annulled. 5 See www.loopbaanplanner.nl for the distribution of educational resources by specialty and level. The fund has, since 2000, classified the educational offering into technical (with a specialization) and general education. The type of education is registered when subsidies are given. 6 Previous research has indicated that there is a direct relationship between schooling and the duration of employment. More schooling leads to a longer relationship between employee and employer. A differential effect for technical versus non-technical (re) training has not been found (Beilsma, Citation2002).