The FINANCIAL -- In Central Europe, vocational and educational training (VET) has a tradition that reaches back to medieval times. To become, say, a baker in 14th century Germany, one had to go through an apprenticeship of two years, working and learning in an existing bakery, where one was guided and supervised by a meister (master craftsman). The apprenticeship was standardized and – if successful – ended with the conferment of a certificate and admission to the baker’s guild.
Not only skills were acquired in the apprenticeship (e.g., kneading the dough) but also theoretical knowledge. In particular, baker apprentices learned what was allowed and what was not allowed when making bread. For example, before quality standards were established, it was not unusual to dilute the bread with wood shavings. This practice was outlawed by the guilds, which punished transgressions draconically: the photograph shows a so-called bäckertaufe, a cage in which a baker who had violated the quality standards was submerged into the sewer (unpleasant, but without seriously harming the culprit). The earliest known list of quality standards that were taught to apprentices can be found in the historical archive of the city of Cologne and dates back to 1182. Famous is the Reinheitsgebot of German beer (the beer purity law) which since 1516 states that beer may only contain hops, malt, and water. The establishment of quality standards is one of the side benefits of the system, an important historical reason for Germany’s success in manufacturing, and something that is sorely lacking in Georgia.
In the late 19th century, the theoretical content that had to be known by a craftsman became too comprehensive and complex to be taught by a meister alone. Hence, the practical learning in the workshops was complemented by times in school. This marked the beginning of the dual educational system, where until today apprentices are taught practical skills at their workplaces and theoretical knowledge in schools.
Dual vocational education is now generally acknowledged as a great success and was adopted by many countries. Recently, also Georgia has turned towards this model. In February 2016, the Prime Minister of Georgia, Giorgi Kvirikashvili, announced an initiative to implement the dual educational model in Georgia, aiming at a rate of 60% of the learning to take place in companies and 40% in schools.
Yet, does Georgia offer the right conditions to set up a dual education system successfully?
Who will invest in Georgian apprentices?
The Central European labor markets are characterized by very low labor mobility. Traditionally, workers in Germany, Switzerland and Austria work their whole lives for the same employer. Until recently, changing employers was not part of a typical labor biography, and was usually considered undesirable. A manager like Jürgen Schrempp, who led the Mercedes Benz carmaker from 1995 to 2005, started to work for Mercedes Benz as an apprentice mechanic and stayed his whole life with his employer. While there are new developments towards more flexibility, particularly in certain segments of the job market (e.g., academia and journalism), permanent employment is still the norm. In 2013, 78.6% of German employees had a permanent labor contract, and it is not even allowed to employ somebody repeatedly on a temporary basis. Temporary contracts can only be renewed three times, and the total time span must not be longer than two years. Afterwards, an employee in Germany is entitled to get a permanent contract, which can be enforced at the court.
Because workers are not mobile, businesses are not discouraged from participating in the system despite high costs. The firms have to pay meisters who devote considerable shares of their time to educating apprentices, they have to provide training facilities and pay apprentice salaries. In 2013, the total annual cost for educating a trainee was estimated to be more than 15,000 euro on average, which did not deter German companies to offer more than 450,000 positions to apprentices. Yet, as pointed out by Acemoglu and Pischke (1998) (“Why Do Firms Train? Theory and Evidence”, The Quarterly Journal of Economics, 113: 79-119), the firms are willing to make this investment because it is unlikely that the apprentice will change to another employer after receiving education.
In countries such as Denmark and Ireland, which have higher labor market mobility, firms cannot be confident that they will harvest the fruits of their vocational training efforts. To circumvent the free-rider problem, it is necessary to redistribute training costs between employers, independent of whether they host apprentices or not.
In Georgia, on the other hand, almost all people are employed on temporary contracts. Even the government and big firms do usually not offer permanent labor contracts. With the resulting high labor market mobility of the workforce, the benefits of training will often not accrue to the firms that invested in apprentices, and there are incentives to just hire trained personnel on the labor market without doing the training themselves.
A system similar to Denmark and Ireland, where the cost is (partly) shared by all companies, will therefore be indispensable in Georgia. Maybe more realistically, the training costs could be covered by the government or international development aid, at least in the beginning.
Will Georgians like to be blue collar workers?
Another problem is the mentality of many Georgians who shun non-university education. In 2013, about 60% of German high school graduates opted for vocational education, which illustrates that vocational education is the default educational path for the majority in each cohort of young Germans. Accordingly, becoming an apprentice is a choice that is highly respected in the society.
This is different in Georgia. In the Soviet Union, VET was thought to be the choice of unsuccessful and untalented high school students, and nobody wanted to belong to this group. Entering a VET institution was associated with failure, and this attitude still survives in the Georgian society. According to a survey in the 2015 VET Development Strategy of the Government of Georgia, 73% of the respondents would like their children to enter university.
In 2015, the number of Georgians graduating from university was 22,324, while only 11,728 completed a vocational training program. However, these numbers do not only reflect the low prestige of vocational education but also the low value of education one can currently obtain at Georgian VET colleges. These have usually not adopted a dual system but offer primarily theoretical instructions, often of a low quality.
Yet, this is the good news! There is still a huge space for improvements, and if Georgia will manage to set up vocational education that promises good returns in the labor market, it is likely that the contempt for this kind of qualification will gradually fade away.