Are institutions the same for all? VET in large and small manufacturing employers in three European countries.

This is a Centre for Employment Relations Innovation and Change (CERIC) seminar taking place at Leeds University Business School on Wednesday 14 November 2018

Dr Chiara Bennassi joined King’s College London as Lecturer in HRM and ESRC Future Research Leader fellow (2016-2018) in October 2016. Previous to her appointment at King’s, she was Lecturer in HRM at Royal Holloway, University of London and Postdoctoral Fellow at the Max-Planck Institute for the Study of Societies in Cologne. She held visiting positions at the Free University in Berlin, at the University of Milan and at the Institute for Economic and Social Research in Bologna.

ABSTRACT

Manufacturing production is increasingly organised along fragmented supply chains as large firms externalise tasks and functions to small and medium-sized enterprises (SMEs). Consequently, production in the latter has become specialised and complex, and the availability of appropriate skills is now of paramount importance to large employers and SMEs alike. Yet, the salience of this issue differs across our countries of study – Germany, Italy and the UK.  Thus, we seek to answer the following question: why has the availability of skills for SMEs been a hugely salient issue in the UK, while it has not in Germany and Italy? More specifically, why do British SMEs find it extremely difficult to secure the skills they need, while their German and Italian counterparts are not faced with this problem?

We have selected three countries characterised by distinct vocational training regimes: the Italian system is school-based and state-funded, the UK VET system is a (quasi)market system and the German dual vocational training system is based on employers’ contributions and collaboration between the social partners (Hall and Soskice 2001). Data collection relies on interviews with over 40 interview partners including HR managers, employer representatives, union representatives, training providers and government officials; two participant observations in open days and six visits to training centres; companies’ and government reports; descriptive statistics from national employer associations and research institutes.

Our findings suggest that institutional arrangements vary in how they enable large and small employers to access the skills they need.  Where forms of non-market coordination prevail, relatively less powerful and less resourced SMEs have easier access to the skills they need. In Italy, this is guaranteed by state coordination in the form of professional and technical schools providing skills that large employers and SMEs can access alike. In Germany, the availability of collective employer-led institutions (such as the network-based VET called Verbundausbildung) helps SMEs secure the skills they need even in the context of large employers adopting an increasingly ‘segmentalist’ position (Thelen and Busemeyer 2012). In the UK, on the contrary, a marketised system characterised by poor employer coordination prevents SMEs from building the economies of scale necessary to develop a high-quality apprenticeship programme and to influence the offer of (private) training providers. In this context, only few large employers have attempted to take charge of organising training for themselves and their suppliers, establishing forms of hierarchical coordination. These findings suggest that a market-based ‘employer-led’ VET system like the UK system is less ‘democratic’ than nonmarket-based alternatives as it does not serve the interests of all employers.

The paper contributes to the political economy literature on vocational training, which has mainly looked at employers’ cleavages in terms of their preferences for and commitment to skill formation, and at their role for institutional change processes (Culpepper and Thelen 2008; Busemeyer and Trampusch 2012). Research on how VET institutions enable and constrain employers’ strategies has typically had – implicitly or explicitly- a large-employer bias. Our analysis shows, in contrast, that coordinating institutions are more important for SMEs than for large employers, who have the resources to develop the skills they need in different contexts, because non-market coordination helps SMEs to achieve economies of scale or equalizes the costs of training among employers.

We look forward to seeing you there.