SMEs provide the bulk of vocational training in Germany

• High demand for labour has led to first increase in traineeships and apprenticeships since 2011
• Around 90% of trainees and apprentices undergo training in small and medium-sized enterprises
• Women choose other training occupations than men – and are paid less

Continuing high demand for labour in Germany has also given the labour market a boost. In 2017 the number of trainees and apprentices grew for the first time in six years. Companies concluded 515,700 new in-company training agreements, 5,700 (1.1%) more than in 2016. There are currently around 1.32 million trainees and apprentices across Germany and some 90% of them are training for an occupation in an SME. That means the bulk of dual training is taking place in the 3.71 million small and medium-sized enterprises. “I expect further moderate growth of around 1% in the numbers of trainees and apprentices for the 2018 training year that has just started”, said Doctor Jörg Zeuner, Chief Economist of KfW Group. This estimate is based on the training plans of businesses in the representative KfW SME Panel. “However, the current moderate increase is likely to be temporary because of declining numbers of students and their growing inclination to pursue tertiary studies.”

Even if SMEs in their entirety provide most vocational training, by far not every small or medium-sized business in Germany has trainees or apprentices. Of the 3.71 million SMEs, 470,000 were last offering training – a rate of 13%. The general rule is that the smaller a business is, the less likely it is to have trainees or apprentices in its workforce. Only around 6% of micro enterprises with fewer than five employees provide training, but 73% of those with more than 50 employees.

As part of the current special evaluation of the KfW SME Panel on the topic of education, KfW Research has also analysed gender differences in career choices for the first time. The finding was that in-company training in SMEs is sought after mainly by young men. Across all sectors, the share of women is only 38%. “Dual training is a male domain”, said KfW’s Chief Economist Zeuner. “Young women are more likely to pursue school-based training courses that teach primarily healthcare, educational and social occupations. Nearly 80% of the approximately 175,000 newly enrolled students at technical and vocational education and training schools are women.”

Career preferences also lead to significant differences in in-company training. The KfW SME Panel shows that female trainees and apprentices are uncommon in the construction and manufacturing sectors (female shares of 14% and 27%), while their share is far above average in the service sector, at 50%. This is because women continue to prefer service and administrative over technical occupations. One female trainee or apprentice in four trains as a dental or medical assistant or office management clerk. Women complete their training in micro-businesses with remarkable frequency. Here the share of women is 47%, in firms with five or more employees it is on an overall average level. One reason is that the service sector is not just dominated by women in general but also by a large number of very small businesses.

The concentration of young women in particular occupations, sectors and business size classes leads to wage disadvantages. In 2017, female trainees and apprentices earned an average collectively agreed monthly salary of EUR 860, EUR 25 (3%) less than men. The actual wage disadvantage, however, is likely to be slightly higher because not all trainees and apprentices are paid collectively agreed salaries. This applies to micro-businesses most of all – and hence to women in particular. “Career choice already accounts for part of the gender pay gap”, commented Doctor Jörg Zeuner. “What is also clear, however, is that the greatest part of the wage disadvantage emerges at a later stage along the different career paths of young men and women.”

The current special analysis of the KfW SME Panel is available (in Germanonly) at: www.kfw.de/kompakt