Bundesinstitut für Berufsbildung (BIBB)

Countering the trend: fostering continuing training in times of crisis

The continuing training behaviour of companies in Germany is generally described as pro-cyclical, even in the absence of incontrovertible empirical evidence to back up such a statement (PFEIFER 2008, p. 27). This means that many companies save money by cutting back on continuing training for their staff when revenues are falling. In order to counter this pro-cyclical continuing training conduct, the Federal Government is currently funding several individual employee continuing vocational training initiatives within the scope of its Economic Stimulus Package II (cf. http://www.konjunkturpaket.de). These measures particularly include extensive funding of training for employees on short-time work or with temporary employment contracts and for those who have not participated in continuing training for a number of years. Companies should use times where they have spare capacities to adapt the skills of their staff to current and future requirements and thus invest in fields of business which show promise for the future. Using the time to alleviate the shortage of skilled workers in some branches would also demonstrate foresighted action. This would then put companies in a better position when the economy returns to growth.

Federal Government funding provision and a higher degree of investment in training for those in work could be of direct benefit to the continuing training branch. The plural and institutionally heterogeneous nature of structure of the continuing training sector, however, means that no uniform picture may be assumed with regard to the independence of continuing training providers from economic developments. The supposition must be that differences will exist depending on the respective sorts of funding and types of institution. The 2009 wbmonitor survey provides us with initial findings in this regard.

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Effects of the economic crisis on the ability of continuing training providers to maintain their market position

Every year, BIBB uses the survey results of the wbmonitor survey as the basis for calculating the wbmonitor Climate Index, an indicator of the economic situation of continuing training providers (FELLER 2007). Although economic influences affecting the overall situation are discernable within the Climate Index, these cannot be observed in isolation from other institutional or institutionally specific influencing factors. For this reason, the main thematic focus of the 2009 wbmonitor survey also investigates the direct influence of the current economic situation on the ability of an institution to maintain its market position. Maintenance of market position is taken to mean an institution's capacity to hold its own and act in an economically successful manner within a continuing training sector which is largely organised along the lines of market structures. In the questionnaire, the influence of the overall economic situation on maintenance of market position was surveyed by means of a five-level scale (from "positive ++" to "negative - -"). In the interests of a clearer representation, the following will combine the two positive and the two negative categories into single categories.

wbmonitor

wbmonitor is a nationwide online survey of continuing training providers, which takes place every May and is jointly conducted by the Federal Institute for Vocational Education and Training (BIBB) and the German Institute for Adult Education - Leibniz Centre for Lifelong Learning (DIE). The main components of the wbmonitor survey feature main thematic focuses which change annually as well as posing identical questions each year on the economic situation and on the structures of the continuing training providers. 1,525 continuing training institutions took part in the 2009 wbmonitor. This represents just under ten percent of the total number of continuing training providers known to exist by wbmonitor at the time the survey was conducted (16,200). The information provided by those who participated in the survey was weighted and extrapolated to the total statistical population. The thematic focus of the 2009 survey was "Current strategies for success", the main concentration being on issues related to the ability of continuing training providers to maintain their market position.

In overall terms, the continuing training providers assess the influence of the economic crisis on maintenance of market position more negatively (34%) than positively (25%) (cf. Table 1). Nevertheless, the largest proportion of continuing training providers (41%) views the effects to be neither positive nor negative. If, however, we undertake a differentiated consideration of the spectrum of providers according to the funding sources from which 50 percent and more of revenues or grants are drawn, clear differences become apparent. Whereas a high proportion of continuing training providers funded by employment agencies provide a positive evaluation of the effects of the economic crisis on maintenance of market position (42%), a more negative picture prevails amongst those providers who are funded in different ways, especially amongst providers which are company funded. The following will now undertake a differentiated consideration of the results stated for the various main sources of funding. Because of the heterogeneous nature of the continuing training sector, consideration will also be accorded to differences between types of provider.

Table 1
Influence of the overall economic situation on the ability of an institution to maintain its market position

* The balance represents the difference between the proportion of "positive" and "negative" evaluations.

Note: the information provided in the table is based on an extrapolation to the total statistical population (N = 16,200). Since not all continuing training providers are subject to market mechanisms and because some values are missing, the information is valid for a total of approximately 13,600 providers.

Source: BIBB/DIE wbmonitor survey 2009

For continuing training providers which are largely funded by participants and people paying for their own training, the influence of the economic crisis on maintenance of market position is somewhat more negative than for continuing training providers overall, although there are considerable differences between various types of provider. Adult Education Centres and institutions run by major social groups (charitable associations, churches, trade unions, political parties and similar) paint a particularly pessimistic picture. The main task of both these sorts of providers is the provision of general continuing training. 57 and 50 percent respectively of these types of institutions perceive that they are being negatively affected by the overall economic situation. Vocational schools, universities of applied sciences and institutes of higher education, on the other hand, are twice as likely to take a positive view of the economic effects (40%) than other providers which are mainly participant funded. These results indicate that people cut back on spending on general continuing training during times of crisis and are prepared to forgo attendance at Adult Education Centre courses, for example. By the same token, demand increases for long-term vocational training courses at vocational schools and at universities of applied sciences and institutes of higher education which lead to certified vocational qualifications. The supposition is that employees are currently investing in their own qualifications in order to maintain or increase their competitiveness on the labour market.

Companies represent a relatively new source of funding for continuing training providers and have only become a relevant target group in significant numbers over the past ten years. Particularly during the initial years following the restructuring of continuing vocational training in the wake of the Modern Services on the Labour Market Act ("Hartz Reforms"), companies were in many instances viewed as potential compensation for the reduced volume of entries to funded continuing vocational education training schemes (LOEBE/SEVERING 2005). This year, however, company funded providers in particular take the most negative view of the influence of the financial crisis on maintenance of market position (44%).

Appeals for anti-cyclical continuing training are only partially effective

This result strengthens the assumption that companies are behaving in a pro-cyclical manner with regard to continuing training. Appeals for anti-cyclical continuing training seem to be accepted only by a minority of companies⁰¹. 
The category of company funded continuing training does not, however, include continuing training for employees where funding is provided within the scope of the Economic Stimulus Package II. These costs are fully or largely borne directly by the employment agencies. Continuing training institutions which are primarily financed by the employment agencies adopt a considerably more positive view of the correlation between the overall economic situation and maintenance of their own market position, over 42 percent evaluating this as positive. This is 17 percentage points more than providers in general and more than twice as high as the figure for continuing training institutions which are largely financed by companies or by participants. The highest positive proportions are indicated by company and trade and industry related institutions (69%) and by private commercial providers (50%). Employment agency funded continuing training institutions are clearly able to benefit from the anti-cyclical employment and continuing training policy being pursued by the Federal Government.

Publicly funded providers (financed by local government, federal states, the Federal Government or the EU) display a mixed picture. In overall terms, the proportions of positive, neutral and negative effects of the general economic situation on the maintenance of market position roughly correspond to the quotas stated by the totality of the continuing training providers. If we differentiate according to types of provider, in the same way as participant funded continuing training the overall economic situation affects maintenance of market position particularly negatively amongst Adult Education Centres (45%). Vocational schools, universities of applied sciences and institutes of higher education, on the other hand, experience a positive influence (45 %).

Most institutions which are predominantly provider funded have been neither positively nor negatively affected in terms of maintenance of market position by the economic crisis (51%). No further differentiation according to type of continuing training institutions can be undertaken due to the low number of continuing training institutions which are mainly provider financed.

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Change in the economic situation of continuing training providers compared to the previous year

A positive or negative effect of the economic situation on maintenance of market position is not, however, necessarily reflected in a change to the economic situation of the institution. For this reason, the following will take participants who have taken part in the wbmonitor over more than one year as the basis for investigating the extent to which changes in the economic situation compared to the previous year correspond to the degree of influence exerted on maintenance of market position by the economic situation.

The following remarks are based on information provided by 585 continuing training providers who took part in the wbmonitor in both May 2008 and 2009 and who have answered questions on their current economic situation in both years⁰².  Only minor structural differences exist between these participants and all those who took part in the 2009 survey⁰³.  Information provided by participants who have taken part in the survey in more than one year can also be weighted and extrapolated against the longitudinal weighting to the total statistical population of all market dependent continuing training institutions recorded in the wbmonitor.

Just under half of the continuing training providers had experienced no change in the economic situation compared to the corresponding period of the previous year (cf. Table 2). A third found that the economic situation had deteriorated and 20 percent that it had improved. The overall balance is, therefore, that the continuing training sector is not benefiting from the present economic crisis and that its business situation is slightly worsening.

*The balance represents the difference between the proportion of values "better" and "worse".

Note: the information provided in the table is based on an extrapolation to the total statistical population (N = 16,200). Since not all continuing training providers are subject to market mechanisms and because some values are missing, the information is valid for a total of approximately 13,700 providers.

Source: BIBB/DIE wbmonitor surveys 2008 & 2009

If we contrast the change in economic situation as compared with the previous year (Table 2) with the current influence of the economic crisis on maintenance of market position (Table 1), we largely find correlation of the balances of positive and negative proportional values in the case of continuing training providers which are funded by participants, companies and the public purse. This means that influence of the economic crisis on maintenance of market position seems to be directly reflected in a more negative economic situation in the case of providers which mainly draw their funding from these forms of finance.

In contrast to this, the economic situation of providers which draw 50 percent and more of their funding via employment agencies is broadly stable and has not improved despite the positive economic influence on capacity to maintain market position. The comparison of the economic effect (Table 1) with the change in economic situation from 2008 to 2009 (Table 2) shows that these institutions exhibit a conspicuously high difference of around 30 percentage points in their balance. One explanation for this discrepancy may be that the statement of the overall economic influence on ability to maintain market position may also have been informed by expectations of future development.

The evaluations of the institutions with regard to the expected economic situation in one year's time provide appropriate indications in this respect. 51 percent of continuing training providers which are largely funded by employment agencies expect an improvement in this area. 29 percent believe that the economic situation will remain constant over the course of the next year whereas only 20 percent expect a deterioration. This indicates that the high proportions of positive overall economic influence on maintenance of market position experienced by continuing training providers whose main source of funding is provided by employment agencies have their basis in optimistic expectations for the future. Continuing training funding provided within the scope of the Economic Stimulus Package II may only begin to exert a discernable positive effect in the economic situation of the providers over the course of the coming months. We may also assume that the expected increasing numbers of unemployed, and an attendant rise in the figure of unemployed persons entering funded training measures, have had a role to play in the evaluation of the economic influence.

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Mixed financing helps alleviate economic fluctuations

The results indicate that, in overall terms, the continuing training sector has thus far only been relatively slightly affected by the economic crisis compared to other branches. Notwithstanding this, considerable differences are exhibited in some areas depending on primary source of funding and type of provider.

Those mainly able to benefit from the economic crisis are vocational schools, universities of applied sciences, institutes of higher education and continuing training providers which mainly draw their funding from the employment agencies. The training requirements of the Economic Stimulus Package II have, however, exerted very little effect hitherto on the economic situation of the last mentioned. Providers mainly funded by employment agencies expect that their economic situation will only begin to improve in the next few months. Vocational schools, universities of applied sciences and institutes of higher education are benefiting from the fact that employees are using the recession as an opportunity to invest in their own employability skills.

The financial crisis is, on the other hand, exerting a negative effect on continuing training providers which are largely company funded and on Adult Education Centres. In the case of the latter, an obviously discernable negative aspect is that people are spending less on general continuing training provision due to the insecurity of the recession. Providers which mainly draw their funding from companies are feeling the effects of the pro-cyclical continuing training behaviour of their customers.

The high wbmonitor Climate Index values of largely company financed continuing training providers over the course of recent years show that companies represent an attractive target group for continuing training providers when economic times are good. During periods of crisis, the anti-cyclical policy which finds its expression in the Economic Stimulus Package II provides a certain compensation for the decrease in revenues from companies across the whole of the continuing training sector. At the level of individual providers, however, the intended effect of the state is hampered by high bureaucratic hurdles for market entry into employment agency funded schemes. Certification via the Recognition and Accreditation Ordinance for Continuing Training (AZWV) in particular is costly and time consuming and easier to achieve for large institutions than for their smaller counterparts. Even though this process takes place in pursuit of the goal of quality assurance, the current structure also creates unequal competition conditions. Continuing training providers are obviously able to counter economic fluctuations better if they are able to obtain mixed funding from various target groups and adopt main areas of focus according to their respective market position. In order better to facilitate this for the providers, entry to the employment agency funded continuing training market also needs to be made easier. This could take place via such mechanisms as certification requirements which are staggered according to volume of participants.

The results presented contain reference points for the initially formulated assumption of a pro-cyclical continuing training behaviour on the part of companies. It seems that those who primarily receive continuing training during these times of crisis are employees whose continuing training is funded by the employment agencies within the scope of Economic Stimulus Package II: employees on short-time work or with temporary employment contracts and those who have not participated in continuing training for the past four years. Even though companies from the trade sector and other service branches are also affected by short-time work, the main area of focus continues to lie in production and manufacturing industry, especially in the metal/metal products branch and in engineering/electro-technology/vehicles
(HECKMANN et al. 2009, p. 6). The concentration of short-time work in these sectors suggests that those working short-time tend to be men with certified qualifications (GIESECKE/WOTSCHAK 2009, p. 6). Those with temporary employment contracts are more likely to have a low level of qualification and be younger (ibid., p. 3). The assumption is that employees who have not participated in continuing training for four years are likely to be localised in less knowledge-intensive branches. In branches where continuous updating of skills is indispensable, such as information and communications technology, it is, on the other hand, improbable that participation in continuing training would not occur over a four-year period. Company continuing training activities during the economic crisis thus appear to be concentrated mainly on certain groups of employees who are entitled to receive funding. Use of the economic crisis to enable those in regular employment outside the branches stated to obtain new qualifications or update their skills seems to be insufficient. Despite the falls in revenues and the strained nature of their budgets, companies would be well advised to take advantage of the current under-employment of many staff for this purpose. Firstly, this enables investments to be made in new business areas which offer promise for the future. Secondly, the contraction of the economy means that qualifications required do not have to be procured via the external labour market at a high price, even assuming that they are available in the first place. In order for this to be achieved at a greater level than before, information deficits will need to be reduced and support opportunities created, especially at small and medium-sized companies.

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Literature

• FELLER, G.: Ein Klimaindex für die Weiterbildungslandschaft. In: Report Zeitschrift für Weiterbildungsforschung 30 (2007) 3, pp. 61-74
• GIESECKE, J.; WOTSCHACK, P.: Flexibilisierung in Zeiten der Krise: Verlierer sind junge und gering qualifizierte Beschäftigte. WZBrief 1. Berlin 2009.
  - URL: http://bibliothek.wzb.eu/wzbrief-arbeit/WZBrief-Arbeit012009_giesecke_wotschack.pdf (Status 1. 10. 2009)
• HECKMANN, M. et al.: Wie Betriebe in der Krise Beschäftigung stützen.IAB Kurzbericht 18 (2009).
  - URL: http://doku.iab.de/kurzber/2009/kb1809.pdf (Status 1. 10. 2009)
• LOEBE, H.; SEVERING, E. (Eds.): Bildungsträger werden Bildungsdienstleister.Bielefeld 2005
• PFEIFER, H.: Weiterbildungsteilnahme in Deutschland und dem Vereinigten Königreich - eine Frage des individuellen Nutzens? In: BWP 37
  (2008) 5, pp. 25-29
  

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footnotes:

01 This applies to companies which engage the services of continuing training providers to deliver in-company continuing training and other services.

02 In the interests of accuracy of findings, this panel comparison is preferred to a comparison between the wbmonitor Climate Index values from 2009 and 2008 since the latter was calculated for the whole statistical population rather than at the level of individual providers.

03 Participants taking part in the survey over a number of years tend to comprise older and larger providers. The proportion of continuing vocational training providers is also slightly higher than is the case in with respect to all 2009 participants. Only three of the providers which took part in the 2008 survey were no longer in existence when the wbmonitor 2009 was conducted.

Last modified on: July 29, 2010