Cost-benefit analysis for Companies in (Dual) VET

The Donor Committee on Dual VET is currently organising a series of Expert interactions on topic related to Dual VET. Today, I joined the discussion on Cost-benefit analysis for Companies led by Prof. Dr Stephan Wolter. You can read his paper the economics of apprenticeship training Seven lessons learned from cost-benefit surveys and simulations here >> https://www.bertelsmann-stiftung.de/fileadmin/files/BSt/Publikationen/GrauePublikationen/LessonsLearned_2019_EN.pdf

There are many aspects to determining the cost-benefit for companies and #TVET. Here are my 5 key takeaways from this discussion with suggested further reading recommendations :

1. #PostCOVID19, engagement of Companies for vocational training, hinges on the economic recovery. Governments must factor this in the economic stimulus packages and find ways to incentivise participation of firms in #TVET . In April 2020, Cedefop community of apprenticeship experts took the initiative to launch an internal consultation about how European countries are managing apprenticeships under the current global health emergency due to the COVID-19 crisis. The report on 'How are European countries managing apprenticeships to respond to the COVID-19 crisis?' had similar results.

1. Theoretically, the cost - benefit and ROI models of (dual) TVET can be applied in short-term training as well. In most traditional dual systems however the model is designed around the time the apprentice needs for learning something which is a minimum of 2-3 years. If the time is readjusted (shortened) then it also has an effect on productivity and the returns on investment is naturally impacted.

1. Cost-benefit approach can be used for both - initial and continuous VET - where companies are actively involved in imparting the training.
2. Overqualification needs to be taken in account when calculating cost-benefit. It will generate the benefit by reducing the net costs required to train the person. But for these companies it might be cheaper to hire these resources directly. For example, companies in the spain prefer to hire overqualified university graduates over hiring young apprentices and then losing them to competitors. 
3. Of the many factors affecting Cost-benefit of TVET, the following most certainly impact long term ROI

• Regulatory frameworks also differ and impact the cost - benefit
• Qualifications of trainers 
• Competing options in the education systems - apprenticeship vs alternate training models 
• Apprentices’ salaries: Apprentices’ salaries are usually up to 50% of gross -costs. In many countries it is pre-fixed based on minimum wages agreed by the rules of the land. Differences between firm sizes and branch of training are not factored in such cases when the apprentices wage is determined based on the minimum wage. Market forces have to be allowed to decide the salaries based on labour market negotiations . In Kosovo, for example, companies have been allowed to decide the compensation levels. These initiatives are good but one needs to be prepared /alert about the dangers of short-cuts affecting both for companies and apprentices.

In the end the purpose of these cost-benefit models whether through evaluation, case study or simulation methods is to create a win-win-win for all three stakeholders - companies, trainees and government.

Write to me at [email protected] if you'd like to share about your experiences and how your Company is coping with the shifts in world of work due to #COVID19.

Further readings :

1. 'How are European countries managing apprenticeships to respond to the COVID-19 crisis?' www.cedefop.europa.eu/files/cedefop_community_apprenticeship_experts_synthesis_how_are_european_countries_managing_apprenticeships_to_respond_to_the_coronavirus_crisis.pdf
2. Cost-benefit of dual training systems in Philippines https://www.bibb.de/dokumente/pdf/PCCI_costbenefit-10172016_print.pdf
3. Cost-benefit of company-based training in Vietnam https://www.bibb.de/en/49208.php
4. Why companies invest in vocational training?https://www.slideshare.net/poojagianchandani/why-companies-invest-in-vocational-training

Connect with me on twitter.com/theskillspundit  for #TVETChat

Views expressed by the author are their own and do not represent those of any institution/s she is associated with.