BIBB REPORT Edition 10/09
Unfilled training places - Why enterprises do not succeed in filling them
Findings from the BIBB Vocational Training Monitor survey
Naomi Gericke, Thomas Krupp, Klaus Troltsch
Respondents in company surveys generally cite a lack of the capacity to perform and insufficient educational qualifications among applicants as the primary reasons that training places remain vacant. The following analysis shows that some of the causes for unfilled training places are to be found among the firms offering them. The trainee placement process is a field of research that has not been sufficiently studied to date. This process exhibits a number of sizable deficits. They make it difficult for training place providers and training place seekers to come together. This is substantiated by the findings from the 2007 and 2008 Ausbildungsmonitor (Vocational Training Monitor) surveys conducted by the Federal Institute for Vocational Education and Training (BIBB).
Unfilled training places - A new challenge for Germany's dual vocational training system?
According to a study by the Institute for Employment Research, in 2004, 16 per cent of the firms in Germany's western states and nine per cent in the country's eastern states could not fill all of the training places they offered. In all, nearly one out of every ten training places on offer remained unfilled. Smaller businesses and firms in the private services field, trade, the transport, storage and communication sector and in manufacturing were particularly unsuccessful in filling the training places they offered (cf. Bellmann/Hartung 2005). The annual company surveys on in-company vocational training conducted by the Association of German Chambers of Industry and Commerce (DIHK) have registered a growing trend in this direction in recent years: The share of enterprises with unfilled training places has grown steadily from 12 per cent in 2004 to 21 per cent in 2008. This trend was particularly evident in the hotel and restaurant business and among banks and insurance companies (financial intermediation sector). The findings from the latest survey also indicate that the situation in Germany's eastern states is serious - 30 per cent of the firms surveyed said they could not fill their training places (cf. DIHK 2008/2009 and Diagram 1).
Even federally-funded projects aimed at supporting regional training place markets have not been spared these problems, according to the latest surveys conducted among JOBSTARTER funding projects (cf. Liebscher/Tschöpe 2008). The Ausbildungsmarktstatistik vocational training market statistics issued by the Federal Employment Agency show that the number of unfilled training places has grown steadily since 2004 even though this trend is not yet very pronounced on the whole. The number of unfilled training places nationwide grew from 12,636 in 2004 to 19,507 in 2008 (as of 30 September). Although the year 2000 marked the peak in the last decade with 25,690 unfilled training places and the portion of unfilled training places out of the total number of training places offered by enterprises has remained relatively constant at 2.6 to 4.1 per cent since 1997, a regional breakdown also shows that the portion of unfilled training places in Germany's eastern states has increased six-fold in just the last ten years. This represents a serious development.
Theoretically, the failure to balance supply with demand in Germany's 'dual' vocational training system (which combines part-time vocational schooling with practical work experience) can be ascribed to four systemic imbalances which, individually or in combination, increase a company's risk of not filling all of its training places (Niederalt 2004). A qualificational mismatch between the education and skills the applicants already have on the one hand and the skill requirements for the training place that is to be filled on the other hand emerges when an imbalance between the level of qualification on the supply side and the level of qualification on the demand side develops in, for example, the wake of structural economic change. This is usually the primary reason for unfilled training places. However, an occupational mismatch is also possible. In this case, there is a discrepancy between the youth's desired occupation and the type of in-company vocational training being offered by firms. This is evident from the training programmes that report a particularly large portion of unfilled training places (Uhly et al. 2008). Another type of imbalance is the information mismatch which arises because not all training place seekers have information about all the training places on offer and not all enterprises have knowledge of all the applicants who would be suitable for the training places they offer. And lastly, a lack of regional mobility, the composition of the local applicant pool, the local infrastructure and the question of how attractive the region is can lead to a regional mismatch between supply and demand.
The level and development of the aggregated mismatch can be seen in a Beveridge curve(01) that shows the connection between the number of unfilled training places and the number of unplaced training place seekers during the period 1993-2008 (Diagram 2)
The hard core stocks of unfilled training places and unplaced applicants are identifiable over the entire period under investigation. At no point in time was it possible to place all of the applicants who were officially registered with a branch of the Federal Employment Agency (= zero).(02) All in all, four structurally different mismatch phases could be identified. Starting in the early 1990s, enterprises were not able to fill all of the training places they had on offer due to demographic developments. Following on this, the years 1997 through 2000 saw a marked decline in the stocks of unfilled training places and unplaced applicants due to a short phase of economic recovery. By contrast, the years 2001-2005 exhibited increasingly difficult conditions for training place seekers. Companies brought the number of training places on offer even further into line with their employment situation during these years (Troltsch/Walden 2007). The balance between supply and demand has taken on a new quality since 2006. In 2008, training place applicants encountered relatively favourable conditions - similar to those seen between 2000 and 2002. As a result, the curve has taken an inward turn - in other words, there has been an improvement in matching efficiency. In comparison, there has been no sign of a shift to the right - which would normally happen in the event of a growing mismatch (Ochsen 2004).
Analyses of the BIBB Vocational Training Monitor survey results
According to a study conducted in 2008 for which two Internet-based surveys were conducted in the spring and autumn of 2007 in which 1,049 enterprises were asked about various aspects of in-company vocational training, nearly one out of every seven training companies (companies that provide in-house vocational training) had training places that they were still not able to fill even during the already ongoing 2008/2009 training year (Table 1). Compared to the previous year, the share of enterprises with unfilled training places remained stable at 14.8 per cent. In this study, unfilled training places represented 10.5 per cent of all training places offered by the companies surveyed(03), whereby only 56 per cent of these unfilled training places had been reported to an employment agency as being available for placement.(04)
Structural attributes of the enterprises surveyed and trends seen in unfilled training places
In 2007, medium-sized enterprises that were willing to provide in-company vocational training appeared to have particular problems finding applicants for the training places they offered (Table 1). More than one out of every four small and medium-sized enterprises with 10 to 49 employees and nearly one out of every six enterprises with 50 or more employees reported having unfilled training places in 2007. This was particularly the case among enterprises in the Transport, Storage and Communication sector, the Hotels and Restaurants sector and in the so-called Other Service Activities sector. Trade and Repairs, and Financial Intermediation reported smaller-than-average shares of unfilled training places. Enterprises that belonged to a chamber of industry and commerce exhibited very large shares of unfilled training places whereas enterprises that fell under the purview of a crafts or agriculture chamber had smaller-than-average shares of unfilled training places.
Only very small enterprises with less than ten employees had a harder time filling all their training places for the 2008/2009 training year as compared to the previous year. The figures in all other company size categories were slightly below average. A breakdown by sector reveals a different picture. With just one exception, the 'stock' of unfilled training places grew in all sectors between 2007 and 2008. Although the situation had improved in trade and industry, the number of unfilled training places in the skilled trades and agriculture increased, in some cases substantially. A breakdown by region shows that the share of enterprises in the western half of the country that reported unfilled training places in 2008 shrank slightly. However, the share of their counterparts in the eastern states increased noticeably, from ten per cent to more than one third. The DIHK confirms this figure.
As in other surveys, when asked about the reasons for their difficulties filling training places, the vast majority of companies surveyed said they did not find suitable applicants or that the youths they had chosen had cancelled at short notice. Nearly one out of every five enterprises suspected that the training places they offered were not attractive enough. One out of every six enterprises - particularly in Germany's eastern states - did not receive any applications. This was probably due to the demographic crunch in the eastern half of the country.
Supply-related factors behind unfilled training places
The following findings (Table 2) show that the type of training place planning used, company recruitment methods, selection criteria and other company-specific conditions have a strong influence on a company's chances of being able to fill the training places it offers.(06)
Planning in-house vocational training offerings
Enterprises that gear their training plans to their short-term needs for young skilled labour or to the applications they receive from young training place seekers are much more likely to have unfilled training places. By contrast, enterprises that are able to fill all their training places decide at an early point in time how many training places they will be offering for the coming year or offer the same number every year. Thus these enterprises are in the more favourable situation of being able to conclude training contracts continuously over the course of the placement year, according to the applications they receive and the demand for training places. They can thus avoid unfilled training places thanks to the relatively long-term approach they take when planning the number of training places they offer.
Placement in day-to-day practice, selection process and expectations
Companies with unfilled training places also take advantage of a certain range of recruitment options. However it is also evident that they make somewhat less use of the information channels available to them. The most important methods used by this group of enterprises - and by the control group as well - for finding applicants include reporting unfilled training places to employment agencies for placement assistance, waiting for unsolicited applications, posting information about available training places on the Internet and informing the relevant chamber and their own employees. By contrast, enterprises that do not have unfilled training places consider short work placements to be the most important tool for finding applicants for the training places they offer. Such enterprises are also noticeably more active when it comes to conducting informational events at general secondary schools and exhibiting at education fairs. In the process, these firms not only reduce the negative impact of an information mismatch, they also establish direct contact with potential applicants in the world they live in. In light of the success these enterprises have filling training places, this approach is apparently the right one.
The distribution of the selection methods used is relatively similar in both groups. Enterprises with unfilled training places however assign considerably more importance to written applications. Noticeably more firms from this group assess samples of their applicants' work. This would seem to indicate that they apply somewhat higher technical or practical standards. Looking at selection criteria, enterprises with unfilled training places make - in some cases extremely - high demands on applicants' qualifications. Youths seeking a training place with such firms apparently have to conduct themselves from the outset as if they filled the role of 'Employee of the Month' in all areas of competence including core skills and the so-called secondary virtues. It is striking here that contrary to official reports, scholastic performance - which is frequently lamented and considered poor - does not play an important role when companies select applicants for their training places. The individual youth's interest in the occupation he/she has chosen is of much greater importance to these firms. On the whole, there is probably a special type of qualification mismatch at work in this connection, in which enterprises have unrealistically high demands and thus end up not being able to fill the training places they offer. Further, the presumption that the focus in such cases is more on recruiting workers who can be deployed immediately and less on training youths cannot be dismissed. It should be noted however that there is a strong connection between company size and the type of planning used and choice of selection process. These connections will have to be examined separately.
The data from the Vocational Training Monitor survey reveal yet another aspect of failed efforts to fill training places: More than half of the respondents that planned to provide in-company vocational training and still had unfilled training places in the autumn of 2008 did not expect to still be able to fill them - but also did not make any further efforts in this direction. Enterprises in the Agriculture, Hunting and Forestry; Mining and Quarrying; Electricity, Gas, Steam and Hot Water Supply; and the Construction sectors accounted for the largest share - nearly half - of this group. Looking at company size, small firms represented the lion's share with just under 70 per cent. These are apparently latent training places that would be filled if suitable applicants turned up but who enterprises are not actively recruiting because these firms have either given up following earlier attempts to fill them or they perceived the costs of a continued search to be too high given the unfavourable market situation (Scherl 2005). All in all, the share of these enterprises with 'hidden reserves' out of the total number of enterprises with unfilled training places appears to be very large based on the findings from this study.
Skilled labour requirements and employment structures
Decisions on offering in-company training places for the next year are also related to the individual firm's needs for skilled labour in the coming years.(05) Companies with unfilled training places and companies that have been able to fill the training places they offer exhibit little difference in their assessments of future placements (Table 2). A large share is more or less certain that it will need skilled workers. The differences in training needs and recruitment strategies are substantially greater. Enterprises with vacancies say that they need comparatively few workers with formal vocational qualifications or a university degree and more unskilled workers instead. This is also reflected in these firms' employment structures. Such companies employ not only more unskilled and semi-skilled workers and fewer university graduates, the share that unskilled and semi-skilled workers represent out of their total work force is also larger. Firms that do not have any employees with formal vocational qualifications account for a markedly above-average share of enterprises with unfilled training places. For example, two-thirds of the enterprises with unfilled training places employ unskilled workers. By contrast, only some 43 per cent of the companies that have been able to fill all their training places employ unskilled workers. Only 20 per cent of enterprises with unfilled training places employ university graduates. This figure is 42 per cent for enterprises that have filled their training places. Nearly 30 per cent of the companies with difficulties filling their training places reported that none of their employees have formal vocational qualification. This is the case among only four per cent of the other enterprises. Differences can also be seen with regard to trainees: Only 62.8 per cent of the enterprises with difficulties filling their training places have trainees, while more than 80 per cent of enterprises with no unfilled training places have trainees.
The strategies used to meet skilled labour needs also differ. Many more enterprises with difficulties filling their training places want to hire skilled workers with or even without occupational experience. Enterprises with unfilled training places cite hiring their own trainees as a strategy less often than do enterprises with no unfilled training places. It is also striking that they rely more on providing continuing training for unskilled or semi-skilled employees and that nearly one out of every four enterprises fears that they might not be able to fill their vacancies. This provides an indication of the problems and consequences of occupational mismatches which will be discussed in the next section.
Training places that are not attractive
One out of every five enterprises cited as a reason for their difficulties in filling their training places - in addition to the fact that applicants did not meet their requirements - that the training places they offered were not sufficiently attractive. An analyses of the open-ended answers regarding the reasons for unfilled training places underscores this assessment: "shift work", "work on weekends", "preference for large companies", "poor accessibility", "crafts and skilled trades not attractive" and "the media produce a distorted image" were cited. "Health reasons" that lead to the termination of a training contract could be a pointer to working conditions at the particular company or to unusual stress. Further, these enterprises also indicated that the occupations they offered were "little known" or seldom mentioned by vocational guidance services. All this indicates that there are enormous differences between the occupations that youths would like for themselves and the occupations that enterprises offer them.
The theory that the training places on offer are not sufficiently attractive is also supported by the fact that - based on a direct comparison - enterprises with difficulties filling their training places also had to accept substantially more training contracts being terminated than enterprises with no unfilled training places did. The share of enterprises which had training contracts terminated was 20 per cent during the first half of the year. This figure rose to 53.8 per cent during the second half of the year. Only six per cent of enterprises with no unfilled training places had a contract terminated during the first half of the year and 6.7 per cent during the second half of the year. The reason most frequently cited by the enterprises surveyed was that the particular individual had reoriented his/her focus and decided to learn a different occupation. Enterprises felt that preference for a different company and other unspecified reasons on the part of youths played a major role. As a result it is not possible to assume that terminations were due solely to the particular occupation's lack of attractiveness. An examination of the reasons did not reveal any substantial deviations between enterprises with and enterprises without unfilled training places. Over time, agreement with the statement that the youths had terminated their contract in favour of a different occupation or company dwindled markedly in some cases and the enterprises surveyed said that operational reasons were increasingly important for the decision to terminate a training contract. All in all however, the emphasis clearly remained on the youths. It must however be noted here that this is an unweighted analysis of the responses. As a result, it cannot make a claim to being representative (Table 3).
Application process and applicant structure
In quantitative terms, the ratio between applicants and training places
on offer was relatively similar between enterprises with unfilled
training places and enterprises with no unfilled training places.
Enterprises with no unfilled training places received the bulk of their
applications during the first half of the year. On average they received
11 applications for every training place they offered. In keeping with
the way they planned their recruitment activities, enterprises with
unfilled training places received most of their applications during the
second half of the year. In this case, they received an average of nine
applications per training place. Looking at prior schooling however, it
becomes clear that the formal prerequisites offered by applicants to
enterprises with unfilled training places were in part not quite as
good. The differences were not very marked during the first half of the
placement year. Only the share of companies that had applicants with no
school leaving certificate was somewhat larger among enterprises with
unfilled training places. However, a breakdown of enterprises with
vacancies during the second half of the year reveals a significantly
larger share of enterprises that received applications from lower
secondary school pupils and a markedly smaller share of enterprises that
received applications from intermediate secondary school pupils. At the
same time, there was also a larger share of enterprises receiving
applications from upper secondary school leavers.
Looking at the training contracts signed by enterprises with unfilled training places, it must be mentioned that during the first half of the year - in those cases where contracts were signed - a comparatively larger share of such enterprises signed contracts with school leavers from intermediate or upper secondary schools. Compared to enterprises with no unfilled training places, this group of enterprises reported signing a larger share of training contracts with lower secondary school pupils and a smaller share with school leavers from intermediate secondary school during the second half of the year.
So far, this report has examined individually the supply-side and demand-side factors influencing the stock of unfilled training places without regard to their correspondence. There are of course connections between them. For this reason, the following section will supplement the foregoing descriptive part with a multiple correspondence analysis to sum up the survey's findings.
Multiple correspondence analysis
Correspondence analysis (Blasius 2001) is a multivariate method for the visualisation of complex data tables. It is applied primarily to qualitative variables where similar attributes are mapped very closely to one another within one single space. Structures can be made transparent using this method.(07) In the model here, the variables company size, region and placement success are used to create a two-dimensional space onto which these variables are projected (see Diagram 3).
Recruitment at larger enterprises
The right half of this diagram lists the types of enterprises / company attributes which were given when all the training places an enterprise offered could be filled. As indicated by their proximity to the respective attribute, they tend to be found in Germany's western states and involve larger enterprises which are more or less certain that they will have a need for skilled labour in the coming years. In this connection, the provision of in-house vocational training appears to represent an investment-oriented strategy and constitutes an integral part of company culture (Franz 2000). This is because these enterprises frequently also cite hiring their own trainees as one way - alongside providing continuing training for their unskilled employees - to meet their skilled labour needs. This is a sign for how important the provision of in-house vocational training and an internal familiarisation and instruction culture are for personnel training. Correspondingly, training in such firms is planned on a regular basis on fixed dates. Further, a variety of recruitment channels are used. These range from newspaper advertisements, ads on the Internet and short-term work placements to unsolicited applications and informing one's own employees all the way to conducting informational activities at schools or participating in training fairs. These channels evidently have a significant effect on the applications received.
These enterprises reported that they receive "between 10 and 19" or "more than 20" applications during the first half of the year. This figure falls to just five to nine applications during the second half of the year. The applicant structure varies. During the first half of the year, there are enterprises that receive applications primarily from lower secondary school pupils as well as firms that receive the bulk of their applications from intermediate secondary school pupils and upper secondary school leavers. Training contracts are likewise signed with all three groups of school leavers. Structural differences between applicant groups and training contracts cannot be discerned in this connection. Relatively traditional, standardised methods are used for the selection process. The written applications are evaluated; hiring tests and interviews are conducted. It is clear from this diagram that training contracts are also terminated at such enterprises. However contracts tend to be terminated during the first half of the year. The long-term approach these enterprises use for their planning makes it possible to deal with such events and thus to avoid having unfilled training places.
Recruitment at small and medium-sized enterprises
Compared to the above-described group, enterprises with vacancies - which tend to be located in the left half of the diagram - exhibit a number of differences in their strategic approach. The firms in this category are primarily enterprises located in Germany's eastern states and small-to-medium-sized enterprises which tend not to expect or definitely do not expect to have any skilled labour needs in the coming years. Consequently, the provision of in-company vocational training could likely be attributed to theoretical production interests. In any event it is striking that these enterprises tend not to use a wide range of recruitment channels. In these cases, registration with the local employment agency and notifying the respective chamber are apparently the most typical methods used to find applicants.
Two focal issues can be identified in the problems facing enterprises with unfilled training places. On the one hand, the upper section of the diagram contains enterprises that - due to their small size and probably also because of their corresponding market strength - are able to plan on a short-term basis according to their needs and the supply available to them, and employ few university graduates. The lack of a long-term approach when hiring trainees is apparently connected to the fact that the number of youths who apply to these firms actually tends to be small. Only one to five applications are received during the first and during the second half of the year, primarily from lower secondary school pupils who also constitute the primary clientele for training contracts. The fact that enterprises with unfilled training places plan their training activities at short notice also leads to a situation in which a possible consequence of signing training contracts at a late point in time is that any terminations will come at a correspondingly later point in time, in other words, during the second half of the year. At that time however it is indeed difficult to fill newly vacant training places. The fact that enterprises with unfilled training places also tend to be companies that have no trainees underscores that such firms do not provide in-company vocational training every year and therefore do not have specific structures for providing training.
Enterprises that have unfilled training places, are likely to have highly qualified employment structures and recruit school leavers from intermediate or higher secondary school constitute a contrast to this problem. In this case, the reason for their problems filling vacant training places appear to have less to do with limited planning options than with the high demands these firms place on young school leavers. Typical selection methods used by these enterprises to find suitable youths for their training places include assessment centres, samples of the applicant's work and trial work days. These enterprises do not offer in-house vocational training with the aim of subsequently hiring their trainees. They do however require applicants to offer qualities that would them qualify them for employment. This fuels the impression that they are particularly interested in being able to deploy trainees in their production processes. This approach is becoming increasingly important in in-company vocational training in Germany according to Dionisius et al. (2009). Since the youths who apply apparently do not fulfil these requirements, the training places remain unfilled even though these enterprises generally receive a sufficient number of applications during the second half of the year.
Conclusion - Link the supply side and demand side more closely with one another and improve recruitment and application strategies
The BIBB survey shows that unfilled training places constitute a serious problem for enterprises. All in all, in both 2007 and 2008, one out of every seven enterprises offered training places that it was unable to fill. A total of some ten per cent of the training places offered remained unfilled. According to the enterprises surveyed, the blame here lies with youths who were not able to fulfil the performance standards of the company providing the in-house vocational training. By contrast, BIBB's research shows that the reasons for unfilled training places are considerably more complex and that company conditions and strategies are just as decisive for a company's chances of not being able to fill the training places it offers. There is a significant connection between unfilled training places and recruitment activities that are short-term, little-planned and relatively one-sided. This has already been ascertained with regard to the situation of enterprises in the crafts and skilled trades (Gericke et al. 2008). However the question of whether the particular sector is attractive also plays a role. Different strategies that enterprises have for the provision of in-house vocational training are also of importance.
Both sides have to improve their recruitment strategies / application strategies if existing training capacity is to be better utilised. The most practicable approach appears to be reducing information mismatches. For example, continuing to improve the links between the players, increase awareness of occupations, provide assistance with selection procedures, develop contacts and collaboration between schools, trade and industry and improve communication about fairs, markets, newspaper advertisements and setting up short-term work placements. Enterprises should also be encouraged not to make excessive demands of school leavers. In light of the high contract termination rate, it could also be examined whether the methods the placing bodies use to assign applicants to training places could be improved. Measures to foster the conflict management and social skills of both contracting parties - such as those being tested for the prevention of and intervention in contract terminations (Quante-Brandt 2005) - could also help prevent unfilled training places. In the case of short planning timeframes and the attractiveness of individual occupational fields - in other words, occupational mismatches - the options available to the individual players are probably more limited. Improving the level of information in target groups, conducting image campaigns for individual occupations as discussed by Eberhard, Scholz and Ulrich (2009), renaming occupations and making the content of the individual occupation and earnings potential more attractive would constitute starting points that the institutional side should tackle. However, it would be advisable to rethink promoting occupations of this type when the enterprises that provide training for them do not plan to hire their trainees upon completion of their training.
The problems enterprises face in filling the training places they offer will probably worsen in the near future given the decline in the number of applicants and the forecast shortage of skilled labour. These problems could possibly supersede the shortage of training places on offer as the dual vocational training system's biggest challenge. At the same time however, it also remains to be seen how shifts in economic structures and cyclical trends and possible changes in youths' educational behaviour will impact the training place market.
- 1 The Beveridge curve is used to describe the relationship between unemployment and vacancies. The curve typically runs asymptotically between the two axes (stock of unfilled positions and applicants) and thus shows large stocks of job seekers when there are few vacancies and a large number of vacancies when the number of unemployed persons is small. When the values are located on the angle bisectors between the axes, there is theoretically a balance and for each training place there is a training place seeker who merely has to be placed. Values on the other side of these lines are the result of cyclical economic influences. This makes it is possible to differentiate between frictional and cyclical unemployment with this model.
- 2 Since applicants who have opted for an alternative to in-company vocational training and unplaced applicants from previous years were not taken into consideration when calculating the number of unplaced applicants, it can be assumed that the mismatch is actually considerably larger. Further, not all training places are registered with an employment agency.
- 3 Supply = Number of training contracts signed plus the number of unfilled training places
- 4 In order to examine correlations between the attributes, simple one-dimensional chi-square tests were conducted on the basis of case numbers (Bortz 2005). The connection between structural attributes and the existence of unfilled training places in 2007 was tested for significance in the first and third column. The significance of the change between 2007 and 2008 was tested in the second and fourth column.
- 5 These assessments come from the 2008 spring survey however and thus predate the start of the current financial and economic crisis.
- 6 Since multiple response questions do not meet the requirements for a global chi-square test, chi-square tests based on Pearson were conducted for each individual category.
- 7 For in-depth information: Blasius, Jörg: Korrespondenzanalyse, Munich 2001.
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Imprint BIBB REPORT
Volume 3, Issue 10, October 2009
ISSN Internet: 1866-7279
ISSN Print: 1865-0821
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