Bundesinstitut für Berufsbildung (BIBB)

Occupation-specific tertiary programmes and advanced training programmes

The above-cited rate of 21 per cent was calculated on the basis of the number of graduates from education programmes that are classified as Level 5A in the ISCED 97 system (see UNESCO 2006) (see Table 1). These include theoretically-oriented programmes that enable entry into professional research programmes and professions with high skill requirements. In Germany, these are university (university or university of applied sciences) programmes and programmes that end with a bachelor's or master's degree. However, graduates of tertiary courses that fall under the ISCED 97 Level 5B were not taken into account in the OECD report. In Germany, this group counts graduates who have earned a diploma for the occupations medical assistant or nurse, a diploma from a trade or technical school or a degree from master craftsman training or technician training and persons who have completed a three-year programme at a university of applied sciences (see OECD 2008, Annex 3, p. 29). Germany reports an above-average graduation rate at Level 5B: In 2006, it was 10.8 per cent compared to the OECD average of 9.1 per cent. Adding the graduation rates for the Levels 5A and 5B results in a graduation rate of some 32 per cent for the entire tertiary section in 2006, compared to an average of some 46 per cent for all OECD countries.⁰¹

Thus, including Level 5B programmes in this calculation does not substantially reduce this gap.⁰² However, individuals who have passed examinations in recognized advanced training programmes such as Fachwirt (business administrator) and Meister (master tradesman/craftsman) are not necessarily enrolled in the formal school system and therefore were not counted in the Level 5 graduation rate. Other advanced training programmes that are offered pursuant to Section 53 of Germany's Vocational Training Act were also not included in the OECD's calculation.

Should comparable under-reporting be less significant in other countries, it is conceivable that this is the explanation for Germany's underperformance in its tertiary graduation rates. Filtering out of Germany's long list of recognized advanced training programmes those that can be attributed to the tertiary education sector would however involve a certain degree of arbitrariness. One way of determining which of these programmes are to be considered tertiary could consist of using the criterion of eligibility for assistance as defined by the Upgrading Training Assistance Act. However this definition appears to be too broad because it also covers measures that competent bodies (such as chambers of commerce and industry) have developed themselves pursuant to Section 54 of the Vocational Training Act. At the same time, not all of these programmes are comparable with tertiary programmes. Therefore, an upper limit and lower limit for this effect have been calculated here for the purpose of assessing the influence that taking advanced training programmes into account would have on the percentage of tertiary graduates in Germany. The lower limit is comprised only of the Meister examination (master tradesman/craftsman) and the Fachwirt examination (business administrator). The upper limit consists of all advanced training examinations conducted by competent bodies as defined by Section 71 of the Vocational Training Act (such as middle-level commercial clerk, business manager, Fachkraft für Datenverarbeitung (specialized data processing clerk) Fachkraft für Schreibtechnik (specialized office clerk), Fachkraft für Fremdsprachen (specialized multilingual office clerk) and other commercial or industrial/technical advanced training examinations). It can be assumed that a useful approximation of this effect lies somewhere between these two values, possibly closer to the lower limit.

Some 265,000 students completed their first degree at a German university in 2006 (see Federal Statistical Office 2006). The same year, approximately 17,700 persons passed the Fachwirt (business administrator) examination held by one of the competent bodies defined by Section 71 of the Vocational Training Act. Some 8,900 passed the master examination for certification as a master tradesman in industry or as a master tradesman in another field. In addition, 21,100 master craftsmen completed their training. Another 30,200 persons passed other advanced training examinations for commercial occupations (middle-level commercial clerk, business manager, specialized clerk, etc.) and approximately 14,000 persons passed other advanced training examinations for an industrial or technical occupation. There are a further 4,500 advanced training examinations that are not covered by this system (see Federal Statistical Office 2006). When, for the purpose of simplification, the same relevant age cohort is used as for university graduates, the German tertiary graduation rate increases by some four to eight percentage points depending on which advanced training examinations are taken into consideration above and beyond the master craftsman/tradesman and Fachwirt (business administrator) training programmes. This effect decreases to the extent that the corresponding examinees are already counted under the formal tertiary education system because they are either enrolled in a vocational school in preparation of their examination or because they are additionally completing a tertiary programme (such as studies at a university of applied sciences). Nevertheless, a substantial part of the gap between the OECD average and Germany's graduation rate could be explained by the fact that the above-cited advanced training programmes in Germany were not taken into consideration in the OECD report. Correcting the graduation rate in this way would raise it to between 36 and 40 per cent.

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'Graduation rate' indicator

The use of the graduation rate as an indicator in the above considerations however presents a fundamental problem. Graduation rates measure the inflow and not the stock of persons with the particular educational level. Graduation rates can cause an upward bias in the OECD average because countries that are in the process of catching up with the technological frontier might temporarily generate higher graduation rates than countries that already report a high average level of education. However it is the average level of education that is the relevant indicator for assessing an economy's technological capabilities and productivity. In this respect, an international comparison of graduation rates among young age cohorts generally cannot provide information about whether the education inflow is sufficient to maintain the stock of human capital at the requisite level dictated by technology. A look at, for example, the share of persons with tertiary attainment levels in certain age cohorts shows that the share of persons among 45-to-54-year-olds and among 55-to-64-year-olds who have attained tertiary education is higher in Germany than the OECD average (see OECD 2008, Table A1.3a, p. 44) and that Germany apparently led the other countries in terms of inflows of highly-qualified workers until 20 years ago. Therefore, the below-average graduation rates seen in the last 20 years could be assessed not only as a step backward but also - at least in part - as an adaptation phenomenon. The share of persons who have attained tertiary education out of the working-age population - in other words, 25-to-64-year-olds - offers precise information on the actual size of the human capital stock. Tertiary attainment here (see box) is 24 per cent in Germany compared to the OECD average of 27 per cent. The concern that tertiary-equivalent training programmes or advanced training programmes are not taken into consideration in Germany is unfounded because the Microcensus asks about the highest level of education attained. Using the ISCED classification system it is possible to conduct an international comparison of this value (see www.oecd.org/dataoecd/22/37/39317657.pdf). Based on this, Germany falls short of the OECD average but this gap is considerably smaller than the difference seen in the graduation rates.

Table 1 Referencing of German education levels to Levels 3 to 6 of UNESCO's ISCED 97 system

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Differences in labour market structures

The following section examines whether the remaining gap in the tertiary attainment rates can be explained by the structure of the German labour market. A look at, for example, the share of jobs with high skill requirements (skilled jobs) shows Germany ranking in midfield among OECD countries (42% in comparison to the OECD average of 40%; see OECD 2008, Table A1.6). Having a smaller share of skilled jobs is not to be assessed negatively per se. This can be a sign for an economy's specialization which puts its comparative advantages to use in the international arena. For example, the service sector in Germany is only average in size. Just under 68 per cent of the workers in Germany worked in the tertiary sector in 2007. The OECD average was 67 per cent and Great Britain led the ranking with 76 per cent. Not only does the service sector contain a larger share of skilled jobs, it also appears that it is more likely for secondary programmes to be substituted by tertiary programmes in the service sector than in the manufacturing sector. Accordingly, it would seem that a service-oriented economic structure increases the importance of tertiary education. This could be a partial explanation for tertiary attainment being lower in Germany.⁰³ An actual shortage would be indicated only when the number of skilled jobs exceeded the number of workers with corresponding levels of education. The question of whether such a gap exists cannot be easily assessed on the basis of the tables in the OECD report because the share of skilled jobs refers to gainfully-employed 25-to-64-year-olds whereas the share of persons who have completed tertiary education is based on the entire population between the ages of 25 and 64 (see OECD 2008, Chart A1.1, p. 28). Consequently, it is necessary to multiply the share of gainfully employed persons holding skilled jobs (ISCO Levels 1-3; see Table 2) by the labour market participation rate of the respective country in the age class 25 to 64 (see OECD, Stat Extracts).

Table 2 International Standard Classification of Occupations (ISCO-88)

ISCO 1 Legislators, senior officials and managers
ISCO 2 Professionals
ISCO 3 Technicians and associate professionals
ISCO 4 Clerks
ISCO 5 Service workers and shop and market sales workers
ISCO 6 Skilled agricultural and fishery workers
ISCO 7 Craft and related trades workers
ISCO 8 Plant and machine operators and assemblers
ISCO 9 Elementary occupations
ISCO 0 Armed forces

This method produces the number of skilled jobs per capita of the population between the ages of 25 and 64. This value can be compared with the reported tertiary attainment rates for the same group of persons. Countries with a higher proportion of skilled jobs normally report higher tertiary attainment as well. The correlation coefficient in the sample of OECD countries is 0.63. The bar graph (see chart) suggests that in most countries the number of persons who have completed tertiary education exceeds the number of jobs that correspond to ISCO Levels 1 to 3. The same applies to Germany. However, the surplus is smaller in Germany than in other countries. Assuming that a certain amount of surplus is necessary due to inefficient job matching, it is not evident whether the relatively small surplus in Germany is large enough to meet demand. Nonetheless, this observation does not offer any direct indication for an existing shortage of university graduates. It is particularly striking that the variance in attainment rates is considerably higher than the variance in skilled jobs. This is a sign that countries do have leeway in their choice of education strategies for meeting the needs of the employment system. It is therefore important to determine whether the surplus that the chart shows for Germany is enough to be able to fill the jobs that require high skill levels.

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Who holds these skilled jobs?

Chart - Skilled employment (ISCO 1-3) and completion of tertiary programmes among persons aged 25 to 64

If the share of university graduates were to be too small to ensure that skilled jobs can be filled, workers with tertiary education would probably have no problem filling them. In fact, at 89 per cent, the share of the working population with Level 5A education in skilled jobs in Germany exceeds the OECD average (85%). However one would expect this figure to be nearly 100 per cent if there was a shortage of university graduates. Further, persons with Level 5B education experience great difficulty finding a commensurate position in Germany. Only 59 per cent of the working population with this type of education holds a skilled job. The OECD average is 69 per cent (see OECD 2008, Table A1.7, p. 49). Comparably low values are otherwise reported primarily by countries with large surpluses of university graduates and concomitantly strong competition for jobs such as Denmark (61%), Canada (48%), Ireland (50%) and Spain (37%) (see chart). Since Germany does not have such a large surplus of university graduates and skilled jobs have to be filled somehow, this suggests strong competition from persons who have completed lower levels of education. In purely quantitative terms, Germany ranked top among OECD countries in the secondary education sector (ISCED Levels 3A and 3B). Some 59 per cent of the working-age population has completed at least upper secondary or post-secondary education. The OECD average is 42 per cent. The relatively strong competition in Germany could be caused by, for example, the strong post-secondary sector. Here Germany's seven per cent attainment rate exceeds the international average. This sector covers persons who have earned an upper secondary leaving certificate and completed formal vocational training; a large portion of this group probably also comes into consideration for skilled jobs. This phenomenon could conceivably also be explained by the perhaps higher quality of vocational training in the German secondary and post-secondary sector by international comparison. Thus the small surplus of university graduates indicated in the chart is possibly the result of Germany's strong secondary and post-secondary education sector.

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Give national structures greater consideration in international comparisons

To begin with, the university graduation rates for young birth cohorts are in themselves not a suitable measure for assessing a country's technological capability or for developing constructive policy recommendations in this connection. It would be more effective to use attainment rates. This in turn must be interpreted in light of the special structural features of the respective country's education and labour markets. Although Germany's tertiary attainment is slightly lower compared to the OECD average, the above assessment does not provide any evidence that the German labour market is currently experiencing a shortage of university graduates. The share of 25-to-64-year-olds in Germany who have completed tertiary education is only slightly larger than the share of 25-to-64-year-olds who hold a skilled job. However, this can probably be explained by the fact that the German education system also generates correspondingly trained personnel through vocational training programmes.
 
However in light of the low university graduation rates among young birth cohorts and the general shift in qualification patterns in the direction of higher levels of education it is generally feared that there will not be enough university graduates on the labour market in the future. The above assessment puts this concern into perspective because counting graduates of tertiary-equivalent advanced training substantially reduces the gap in graduation rates described by the OECD.

Further, the predictions regarding labour requirements and labour supply published by BONIN et al. (2007) also do not provide any indication that tertiary attainment will not suffice in the future to fill skilled jobs. In the wake of the current demographic trend, the size of the working population will decline in most education levels. Looking at the tertiary level however, the projections calculated by BONIN et al. (2007) indicate that the demand for personnel with a university degree or a degree from a university of applied sciences can be met by the growing number of persons with tertiary education. It must be noted however that these projections already assume that graduation rates will be higher in the future.

In order to avoid the emergence of conflicting developments, the political sector should take steps to ensure efficient conditions on the education market. For example, it would be desirable to improve forecasting so that the anticipated trends in the supply of and demand for graduates from certain programmes or fields of study are also more transparent for school leavers.

Enterprises on the other hand have the means to directly influence the supply of skilled labour. For example, they can create incentives by collaborating with educational institutions or by awarding grants that are organized by their sector and thus encourage young people to pursue a lengthy and demanding course of education in their desired field.

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Literature

• BONIN, H. et al.:
  Zukunft von Bildung und Arbeit - Perspektiven von
  Arbeitskräftebedarf und -angebot bis 2020. IZA Research Report No. 9.
  Bonn 2007
• OECD
  Education at a glance: OECD Indicators. Paris 2008
• OECD: Stat Extracts.
  Online Portal: http://stats.oecd.org/wbos/Index.aspx?DatasetCode=LFS_D
  (As of: 6 October 2008)
• STATISTISCHE ÄMTER DES BUNDES UND DER LÄNDER
  (Statistical Offices of the Federal Government and the State Governments):
  Internationale Bildungsindikatoren im Ländervergleich,
  Federal Statistical Office, Wiesbaden 2008
• STATISTISCHES BUNDESAMT (Federal Statistical Office) (Ed.):
  Prüfungen an Hochschulen.
  Fachserie 11. Reihe 4.2. Wiesbaden 2006
• STATISTISCHES BUNDESAMT (Federal Statistical Office) (Ed.):
  Bildung und Kultur, Berufliche Bildung.
  Fachserie 11. Reihe 3. Wiesbaden 2007
• UNESCO
  International Standard Classification of Education - ISCED-97. 2006
  

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Fußnoten:

1) This method is not quite correct in mathematical terms because the reference value - the age cohort that typically completes the particular level of education - is not the same for both rates (see Statistical Offices of the Federal Government and the State Governments 2008).

2) Post-tertiary programmes leading to research qualification - in Germany 'Promotion' and 'Habilitation' - do not have to be separately considered because this group of individuals has previously completed Level 5A education. Germany's graduation rate at this level is 2.3 per cent compared to the OECD average of 1.4 per cent.

3) This argument admittedly ignores the fact that not all service jobs are to be found in the service sector. Sizable differences between countries can exist here too. Despite this, there is a close correlation between the size of a country's service sector and the share of skilled jobs; the correlation coefficient is 0.83 in the sample of OECD countries for the year 2006.

Last modified on: July 29, 2010