Regional matching problems and establishments with declining training places

The development in recent years has shown that, despite employment growth and a high demand for skilled workers in the German economy, the number of companies participating in the dual system of vocational education and training is in constant decline and the number of newly concluded training contracts has dropped sharply. Against that background and taking regional differences in the trends regarding newly concluded training contracts into account, the article examines whether the different training place markets exhibit differences in the training situation of the establishments and the matching problems between supply and demand. The examination is based on the BIBB Training Panel data and also incorporates data taken from official statistics.

Increasing matching problems

For a couple of years the number of newly concluded training contracts has been declining. In the year 2013, the number of training contracts concluded by companies in Germany with young people was 95,000 lower than the number back in 2007 (cf. ULRICH et al. 2014).

 The decline has been particularly pronounced in the last two years: In 2012, the number of training contracts dropped by approximately 18,000 compared to 2011, and in the year 2013 there was a decline by 20,500 compared to 2012 (ibid.). The first explanation suggesting itself is that the number of new contracts is steadily decreasing due to demographic developments and the falling number of school graduates.
However, this explanation is somewhat simplistic, given that there are still substantial numbers of training place applicants who are unable to find a training position (ibid.). At the same time, companies face growing difficulties in filling the training positions they are offering (cf. TROLTSCH/GERHARDS/MOHR 2012; TROLTSCH/MOHR/GERHARDS 2013).

The declining number of new contracts could thus also be due to matching problems between supply and demand - for example, companies offering positions for training occupations that do not correspond to the career aspirations of the young people or training place applicants who do not possess the qualifications demanded by the companies.

Using data gathered in the establishment survey of the BIBB Training Panel, we will examine the training situation of establishments and possible matching problems related to the supply of company training places and perform a regional comparison.
To start with, official statistics will be used to differentiate between regions with different trends in relation to the decline in newly concluded training contracts. In the second step, we will show how the training situation of the establishments varies in these regions. Finally we will discuss the question whether the matching problems vary between these regions as well.

Underlying data

The study is based on the data from the 2012 survey wave of the BIBB Establishment Panel on Training and Competence Development (BIBB Training Panel).¹ The BIBB Training Panel is a repeated survey of establishments in Germany. The majority of the data are gathered via computer-assisted personal interviews (CAPI). The establishments are selected via a sample from the population of all establishments with at least one employee subject to social insurance contributions (cf. GERHARDS/MOHR/TROLTSCH 2012). Since 2011, 2,000 establishments have participated in the survey each year. Apart from information on the participation in providing training and the supply of training places in the establishments surveyed, the data set contains detailed information on the training occupations for which the establishments provide training or in which they have offered positions and on the school qualifications of the training place applicants. Data are gathered for the current training year, i.e. the 2012 survey wave has gathered data for the 2011/2012 training year.

In order to take the general regional conditions into account, information from statistics of the Federal Employment Agency, the Federal Statistical Office and the BIBB is used.

Regional differences in the development of the number of new contract

According to the BIBB survey on newly concluded training contracts for the period up to 30 September 2012², an average of 3.2 per cent fewer new contracts were reported over the preceding year (cf. FLEMMING/GRANATH 2013). There were, however, clear regional differences in the development of the number of new contracts. In the following evaluations we will therefore distinguish between regions with a strong or a weak decline and those with an increased number of new contracts.

These regional clusters are based on the 176 employment agency districts in Germany.³ For each of these districts, the percentage difference in the number of new contracts compared to the previous year (i.e. the year 2011) is determined by way of the BIBB survey on newly concluded training contracts for the period up to 30 September 2012. The purpose of this determination is to group comparable districts into regions, so that the training situation of establishments in these regions can then be compared in a second analysis step. The regions are separately classified into East and West due to the pronounced differences between the training place markets in Eastern and Western Germany.

All in all, five regions were formed this way (cf. Table). The first region combines Western employment agency districts in which the number of new contracts has increased or remained unchanged. This includes 14.2 per cent of the 176 districts. The corresponding Eastern region is omitted since no increase was registered in any of the Eastern German districts. In districts with declining numbers, a distinction was made between those with a strong decline and those with a weak decline in the number of new contracts. Here the distinguishing criterion was the mean value of the decline in per cent, calculated separately for Eastern and Western Germany. For the Western districts the average decline was 3.6 per cent; for the districts in the East it was 7.6 per cent. The region "Western districts with a weak decline in new contracts" accordingly includes districts in which a decline of up to 3.6 per cent was registered. In the region "Western districts with a strong decline in new contracts" the number of new contracts decreased by 3.6 per cent or more. For the Eastern districts the average of 7.6 per cent was decisive in forming the regions.

The table shows the distribution of the total of 176 employment agency districts across these five regions. The establishments from the BIBB Training Panel, which have been assigned to the five regions according to their location, show a similar distribution.

Training situation of establishments by regions

But how did the establishments surveyed actually differ in their participation in providing training during the 2011/2012 training year in the five regions? The results in Figure 1, based on a first indicator, show that the training company rate, i.e. the proportion of companies providing training in the total number of companies, is significantly lower in the East than in the Western regions. While training is provided by 16.1 per cent of the companies in Eastern districts with a weak decline in new contracts, only 13.2 per cent of the establishments provide training in Eastern districts with a strong decline. One striking result is that the training company rate does not differ much between the three regions in the West.

The second selected indicator specifies the proportion of establishments which offered training places during the 2011/2012 training year. It turns out that in the Western districts, the share of companies offering training places in the region with an unchanged or increased number of new contracts is almost the same as in the region with a strong decline (18.5% compared to 18.4%).

In the Eastern districts with a strong decline in new contracts, the share of companies offering training places is higher than the share of companies actually providing training (16.9% compared to 13.2%), which indicates that many establishments in that region are unable to successfully fill the training places they are offering.

This is confirmed by the results for the third indicator. Here the share of unfilled training places is calculated for every enterprise offering training places in the 2011/2012 training year and an average value is determined for each region. It turns out that companies in the region "Western districts with unchanged or increased number of new contracts" are least affected by training place vacancies. On average, about four out of five training places offered could be filled in this region and only one out of five training places (22.0%) remained vacant. The share of unfilled training places was significantly higher in the two Western regions where a decline in the number of new contracts was recorded. In the Western districts with a weak decline, one out of four training places (25.9%) was left unfilled in the establishments; in the Western districts with a strong decline it was almost one out of three (31.3%).

A comparison with the situation of the establishments in the East clearly shows that they are much more strongly affected by training place vacancies. However, it seems that in the East, as well, problems in filling training places go along with the trend in the decline in new contracts. For example, approximately half of the training places (54.3%) were left vacant in establishments in Eastern districts with only a weak decline in new contracts. In establishments in Eastern districts with a strong decline in new contracts, an average of more than two thirds (70.0%) of the training places offered could not be filled.

Overall, the results of these descriptive evaluations show that regional differences in the participation of establishments in providing training and in the share of establishments offering training places are observable in the Eastern regions but not in the Western regions. A strong connection, on the other hand, can be shown in both Eastern and Western regions - albeit at different levels - between progressively declining numbers of new contracts and the increasing proportion of unfilled training places. This would seem to imply that matching problems between supply and demand are the main cause. In the following, we will examine this in more detail by taking a closer look at the training places offered by the establishments and the supply of training place applicants available to the establishments.

Matching problems and trends regarding new contracts

In principle, matching problems between supply and demand can have different reasons. A "qualification mismatch" occurs when training place applicants do not have the school prerequisites and qualifications expected by the establishments and when establishments do not fill their training places for that reason; the term "occupational mismatch" is applied when establishments offer training places for occupations that do not correspond to the career aspirations of young people and for which there is thus an insufficient demand (cf. NIEDERALT 2004).⁴

Qualification mismatch

In the following we will examine whether and to what extent qualification-specific adaptation problems occur in the establishments surveyed in the BIBB Training Panel in the five regions. For this purpose, it will be investigated whether the school qualifications of the applicants for training places differ between the regions.

To start with, the evaluation results in Figure 2 show that establishments in the West have received, on average, a significantly higher proportion of applications by young people without any school-leaving certificate or with a lower secondary school-leaving certificate during the 2011/2012 training year than establishments in the East. In the Western regions with a strong decline in new contracts, for example, that proportion is over 50 per cent. For the Western regions it also emerges that the proportion of applicants with a lower secondary school-leaving certificate or without a school-leaving certificate is increasing significantly when the number of new contracts is progressively declining. This suggests that vacant positions and consequently strong declines in the number of new contracts are also recorded because the applicants, from the viewpoint of the establishments, do not have the required school qualifications.

This finding, however, cannot be applied to the establishments in the East, where the skills structure of applicants in regions with a weak decline in new contracts is almost the same as in regions with a strong decline.

Occupational mismatch

Occupation-specific matching problems are assessed using information from the training market statistics of the Federal Employment Agency. This information allows us to determine the average number of unfilled training places per unplaced applicant for each training occupation. Training occupations can consequently be classified according to whether there is a surplus of applicants in the occupation or a moderate or large surplus of training places. A surplus of applicants would indicate an attractive occupation in great demand and a surplus of training places would indicate a not very attractive occupation in less demand.

This information is then added to the data on the supply of occupation-specific training places in the establishments surveyed in the Training Panel. Figure 3 (p. 30) illustrates the distribution of the training places offered by the establishments in the five regions according to this classification. It can be stated with regard to the establishments in Eastern districts with a strong decline in new contracts that every second training place offered (51.0%) concerns a training occupation considered by the young people as not very attractive, since there are significantly more unfilled training places than unplaced applicants. In contrast, only about one in six training places offered (16.8%) concerns an occupation where there is, at least theoretically, a surplus of applicants.

A comparable, if not as clear, picture evolves for companies in the West with a strong decline in new contracts. There the proportion of training places offered for occupations generally considered not very attractive with a large surplus of training places is 45.4 per cent, while only 21.6 per cent of the training places offered are for occupations in great demand where there are more unplaced applicants than unfilled training places.

Initial suggestions for supporting regional training place markets

Although it is impossible to infer statements about causal connections from the results of the descriptive evaluations, they still provide some initial hints about possible connections. The following initial hypotheses for further evaluations can be formulated:

• In the Western regions, both qualification-related and occupation-related matching problems seem to cause declining numbers of new contracts.
• In the Eastern German regions, the connection seems to be mostly one between occupation-related matching problems and declines in new contracts.

These could be some initial hints on how corresponding suggestions for action in support of the respective regional training place markets should look like: In the Western German federal states, and primarily in the regions with a strong decline in new contracts, support for establishments should be strengthened in the training of lower secondary school leavers, but also of young people without a school-leaving certificate. In addition the establishments should receive institutional support in their search for young people interested in training for occupations considered as not attractive. This strategy could also be applied in the Eastern German federal states where the establishments should be supported primarily in their task of winning over young people for the training places offered. Further analyses will show which other influencing factors might be important in redressing matching problems.

SABINE MOHR
Research associate for the “Qualification panel” at BIBB

KLAUS TROLTSCH
Project spokesman for the “Qualification panel” at BIBB

CHRISTIAN GERHARDS
Research associate for the “Qualification panel” at BIBB

Translation from the German original (published in BWP 2/2014): Paul David Doherty, Global Sprachteam Berlin