Vocational training increasingly shifting into SMEs

• The number of trainees in Germany has been declining for years
• SMEs are bucking the trend and keeping their trainee numbers constant at the very least
• Making training more appealing should prevent skilled labour shortages

According to the findings of a current analysis based on the representative KfW SME Panel, on-the-job training is continuing to lose its popularity and, at the same time, is increasingly shifting into SMEs. Indeed, trainee numbers in Germany have been declining for years and currently stand at 1.36 million (as of 2014, compared with 1.61 million in 2008). However, small and medium-sized companies have succeeded in keeping their trainee numbers at a constant 1.2 million, or even improving on this figure, over the last five years. Consequently, the proportion of young professionals completing their vocational training in a small or medium-sized company has now reached the record-high figure of 85%!

“As pupil numbers decrease while interest in studying grows, SMEs are finding that they not only have to compete with large corporations for high school graduates, but increasingly with universities too,” explains Dr Jörg Zeuner, Chief Economist at KfW. “The fact that they have succeeded in bucking the macroeconomic trend and are keeping their trainee numbers constant at the very least is essential for their survival. After all, on-the-job training is the main tool that small and medium-sized companies use to secure skilled specialists!”

According to the current KfW analysis, around two thirds of SMEs which provide training believe that offering more appealing traineeships is an important competitive strategy. Indeed, 28% have already introduced measures to this effect, while a further 35% have plans to do so. And the companies have come up with a number of ideas as to how they can make vocational training attractive for young people. For example, they are using social media for HR marketing purposes, are offering part-time training opportunities or are incorporating additional course content. They are also making use of material incentives such as bonus payments, rent subsidies, job tickets or work mobiles.

“As demographic change takes hold, there will be fewer and fewer school-leavers available to the German economy. So, in parallel to companies’ efforts to attract trainees, it is important that we make the training system future-proof with a view to mitigating the impact of impending skilled labour shortages in non-academic professions,” adds Dr Zeuner. The approaches he suggests companies might take include implementing an improved competence ascertainment procedure, or allowing young people who have no vocational qualifications, as well as migrants, to become qualified at a later stage. “Breaking down more of the barriers between academic and vocational training is another essential aspect. After all, the high level of interest in studying goes hand in hand with friction losses, since more than one in four students studying for a Bachelor degree drops out of university.”

The current study is available at

www.kfw.de/research