Chapter 6. Improving the financing of adult learning
The chapter presents diagnostic evidence on the financing of adult learning in Flanders, the factors that affect the financing of adult learning and specific policies and practices to improve the financing of adult learning. Flanders can improve the financing of adult learning by taking action in four areas. These are: 1) reviewing financial incentives to encourage the participation of marginalised groups in training; 2) repackaging existing financial incentives to provide each learner with a “training backpack”; 3) supporting transitions from job to job and from one employment status to another; and 4) ensuring financing supports flexible modes of learning.
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
Introduction
Why the financing of adult learning matters
Adequate financing is needed to support a strong system of adult learning in Flanders. Currently, most countries spend less on adult learning than on other types of learning (i.e. primary, secondary and tertiary education). However, in the context of technological change and increasingly globalised markets, this spending allocation may need to be adjusted to ensure adequate financing for adult learning going forward. Available data suggests that Flanders spends less on adult learning than other OECD countries. However, cost does not appear to represent a barrier to accessing adult learning, suggesting that the system is well financed overall. Flanders offers many financial incentives for adult learning which help to reduce the burden for individuals and employers, promote cost sharing and reduce under-investment.
However, there are concerns that financing is not reaching the groups who could benefit most. For example, low-educated and older adults are under-represented in applying for career guidance and training vouchers; low-educated adults are also less likely to benefit from employer-sponsored training. Furthermore, learners and firms are not always aware of available financing options as the system is complex and fragmented; this lack of transparency particularly hinders access to financing for low-educated workers and employees in small and medium-sized enterprises (SMEs).
As explored in Chapter 2 on learning culture, strengthening Flanders’ lifelong learning programme is a key component of Vision 2050, which sets out a long-term strategy to position Flanders as an “inclusive, open, resilient and internationally-connected region that creates prosperity and well-being for its citizens” in the context of globalisation and technological change. The Flemish government and social partners have also committed to increase participation in continuing education from 7.5% of the total population (25-64 year-olds) in 2011 to 15% by 2020 (De Coen, Valsamis and Sels, 2013[1]). This will require a well-financed system of adult learning that is capable of reaching marginalised groups.
Overview of chapter
This chapter presents data and evidence to compare financial investments in adult learning in Flanders relative to other OECD countries. It also reviews the factors contributing to the under-representation of marginalised groups in accessing financing, highlights international practices that could be relevant to Flanders, and provides recommendations.
Financing adult learning in Flanders
The cost of training does not represent a significant barrier to adult learning in Flanders
Flanders spends less than other OECD countries on adult learning. Data collection on the cost of adult learning is relatively sparse for a number of reasons: adult learning is financed by multiple actors and in different ways across countries; there are no official statistics on adult learning financing; and there is no commonly-agreed definition of “adult learning” (OECD, 2019[2]). OECD analysis based on the Survey of Adult Skills (PIAAC), labour force surveys, and systems of national accounts data estimates that Flanders spends 4.9% of gross value added (GVA) on adult learning, of which 47% is spent on formal learning, 35% on on-the-job learning and 18% on informal learning (Squicciarini, Marcolin and Horvát, 2015[3]). These estimates rely on an expenditure-based approach whereby investment in training is calculated as a function of the hours that individuals spend in training and of their salaries (i.e. the opportunity cost of training), and of the cost that private entities and/or public institutions incur to provide the training (i.e. the direct cost of training). According to these estimates, spending on adult learning is relatively low in Flanders compared with other OECD countries such as Australia (11.2%), Denmark (11.0%), Canada (9.7%), UK (9.7%) and the Netherlands (8.1%).
However, the cost of training does not represent a significant barrier to adult learning for most groups: only 5.4% of adults who wanted to participate (or to participate more) in training did not do so because it was too expensive (OECD average is 15.9%). This is the lowest share among surveyed countries (Figure 6.1). Non-financial barriers to training-notably, time constraints due to work and family obligations, and the course/programme not being offered at a convenient time or place—represent more significant barriers (OECD, 2018[4]). Low-skilled and low-qualified workers are just as likely as highly skilled and highly qualified workers to say that cost is not a barrier to adult learning. However, the unemployed are more likely to report cost as a barrier, with 16% saying that they could not afford the cost of education and training.
Training also appears to be relatively affordable from the perspective of firms: 20.9% of enterprises report high costs of continuing vocational training courses as the reason for not providing training, much lower than the EU average of 33.6% (Eurostat, 2018[5]).
Note: The OECD average is based on the sample of OECD countries/regions assessed in the Survey of Adult Skills (PIAAC).
Source: OECD (2018[4]), OECD calculations based on Survey of Adults Skills database (PIAAC) (2012, 2015), www.oecd.org/skills/piaac.
A number of financial incentives reduce the financial burden on individuals and employers, promote cost sharing, and reduce under-investment
Given the large private returns from adult learning, many believe that individuals and employers should bear the bulk of its cost (OECD, 2017[6]). However, public financing can be justified by the societal benefits of lifelong learning: higher economic growth, reduced spending on social and unemployment benefits, and higher tax revenues. Public financing can help to address market failures and channel funding towards the most disadvantaged groups (e.g. the low-skilled) and firms (e.g. SMEs) that face the greatest challenges in accessing adult learning opportunities (OECD, 2019[2]). For these reasons, most countries share the costs of adult learning between government, employers and individuals.
There are a range of financial incentives in place in Flanders to promote cost sharing and reduce under-investment in adult learning. These include: paid education leave, training vouchers, training credit, sectoral training funds, and grants for companies. Some of the main incentives that target individuals are summarised in Box 6.1, while Box 6.2 summarises the main incentives targeting employers. Together, these incentives reduce both the direct costs (e.g. course registration fees, transportation costs) and indirect costs (e.g. lost wages, time off from work) associated with training for individuals and employers.
Although currently under reform, the existing set of financial incentives can be summarised as follows:
Paid education leave (Betaald Educatief Verlof): Paid education leave entitles employees in the private sector (including part-time and contract employees who work sufficient hours per week) to up to 180 hours of paid leave per year to participate in officially-recognised training and education programmes. The number of hours depends on the type and length of the programme, with the maximum 180 hours reserved for vocational training in shortage occupations, or for obtaining a first secondary education degree. Training should be at least 32 hours/year. Under new legislation, up to 16 hours of paid education leave may be used towards skills validation processes. Employees must request permission of their employer to take the leave and agree on when to take it. During the employee’s absence, the government compensates employers the wage cost to a maximum of EUR 21.30 per hour.
Training credit (Opleidingskrediet): In Belgium, employees can work reduced hours for up to two years and receive replacement income (max. EUR 500/month) from the government for a variety of reasons, including training. When this time is taken for training, Flemish employees are eligible for a training credit (EUR 180/month for full-time absence). Training must last at least 120 hours and only training courses recognised by the Flemish government are eligible. Extensions of the credit beyond the two year maximum are possible for training in shortage occupations, based on VDAB’s list of bottleneck professions.
Training vouchers (Opleidingscheques): Flemish employees (including part-time and contract workers) can pay for recognised training or education programmes with training vouchers, which they purchase from the public employment service (VDAB). The Flemish government covers 50% of the cost, with a maximum subsidy of EUR 125 per year. Employees from all sectors are eligible for the training voucher, provided that they do not yet have a tertiary degree. Training vouchers can also be used for skills validation processes.
Registration fee exemptions: Registration is free for adults who enrol in courses in Centres for Adult Basic Education (CABE) and second chance education. Registration fees are waived for some vulnerable learners (e.g. jobseekers in an approved VDAB trajectory, immigrants, prisoners) and for those without a secondary diploma who enrol in courses in Centres for Adult Education (CAE).
Career guidance vouchers (Loopbaancheques): Employed and self-employed workers can apply to VDAB for career guidance vouchers, which offer 4 hours of subsidised career guidance with a mandated career coaching centre of their choice.
The various financial incentives contribute to a good mix of co-financing by employers, individuals, and government. Based on a survey of adult learning participants in Flanders, 86% had received funding from their employer for at least one (formal or non-formal) learning activity (PIAAC, OECD average is 77.2%). Flemish employers also invest a high share of their total investment money in training activities (12.4% compared to 9.7% OECD average). Available data suggest that individual contributions to adult learning in Flanders are comparable to other OECD countries: 21.5% of adult learning participants had paid to take part in non-formal learning activities, compared with the OECD average of 20.6%. Regarding government contributions, internationally-comparable data on government spending on adult learning are limited and tend to refer mainly to public spending on training in the context of active labour-market policies (ALMP) targeted at the unemployed. In Flanders, public expenditure on ALMP training programmes represents 0.16% of gross domestic product (GDP), which is on par with the OECD average (0.14%). However, public expenditure on ALMP training per participant is only 1.17% of GDP per capita, which falls below the OECD average of 2.7% (OECD, 2019[2]).
The SME Wallet (KMO-portefeuille) is targeted exclusively at SMEs and is designed to help them grow and become more competitive through skills investments. The SME Wallet covers 30-40% of training costs, depending on the size of the enterprise. SMEs can apply for subsidies online to receive a direct transfer. Employers determine their own training needs and there is no targeting element (OECD, 2017[6]). A recent impact assessment determined that participating firms achieved higher growth than a control group.
The Strategic Transition Support (Strategische transformatiesteun) covers 20% of employers’ training costs for strategic transformation projects in the Flemish region (up to EUR 1 million per year and per firm), provided that at least three firms participate in the training.
Previously, all Belgian private employers were obliged to spend 1.9% of their wage bill on training activities for their employees. Under new “Workable Work” legislation, this financial obligation was replaced by an obligation to provide five days of paid training per full-time employee each year.
In Belgium, the self-employed are eligible for tax deductions for eligible professional expenses (beroepskosten), including office rent, business travel expenses, and training expenses, provided they can show that the training is necessary to perform the job.
In Belgium, employers pay a levy on the wage bill which goes towards a sectoral training fund. The levy amount varies by sector, from 0.10% to as much as 0.60% of the gross wage. Sectoral groups use these funds to develop training policies for their sector.
Financial incentives have been designed with labour-market needs in mind
Financial incentives can play a role in helping governments promote more and better investments in skills to achieve a better match between the supply and demand of skills. Chapter 3 on skills imbalances considers the role of financial incentives to steer investments in initial education, and argues that the education system could be more responsive to changing skills demand.
In adult learning, many of the financial incentives in Flanders have been designed (or are being reformed) with labour-market needs in mind. For instance, employees participating in training have the right to paid education leave of up to 180 hours per year; the maximum leave (180 hours) is reserved for workers attending vocational training in shortage occupations and those studying towards their first secondary education degree. Similarly, workers who take time off from work to train or retrain can receive a subsidy, called a “training credit” (Opleidingskrediet) for a period of up to two years, which may only be extended if the training is in an occupation deemed to be in shortage based on the VDAB’s list of bottleneck professions (OECD, 2017[6]). Since 2011, the training vouchers (Opleidingscheques) may also only be used if training can be shown to have a labour-market orientation. A recent review concluded that the rules for identifying “labour-market oriented” training programmes are vague, resulting in poor targeting on training that will have the most impact on the economy and employment outcomes. Under new legislation that will come into force in September 2019, a single database for labour-market relevant training will be created and paid educational leave and training vouchers will only be applicable to training opportunities identified in this database. The government will conduct an annual evaluation of labour-market relevance to update this database. Eligible courses will fall under one of three categories: basic skills (e.g. literacy, official languages, attainment of secondary education degree), job-specific skills (shortage occupations), and general labour-market skills (e.g. communication, information and communication technology (ICT), teamwork, entrepreneurship, career management and social dialogue).
The Education Qualification Pathway (Onderwijskwalificerende trajecten met VDAB-opleidingscontract, OKOT) is a training programme for jobseekers launched by VDAB in 2011. The programme aims to increase the chances of jobseekers finding sustainable employment by training them in the skills needed to fill postings in shortage occupations. The programmes are offered by different education providers (CAE, secondary vocational schools, and higher educational institutions) and allow jobseekers to obtain a diploma (European Qualification Framework 4, 5 or 6) through different training programmes that have a duration of 1 to 3 years. Each provincial VDAB office decides the training offer based on a provincial labour-market analysis. Under the training contract, adult learners keep their unemployment benefits, provided that the training is in a field for which there is strong labour-market demand. They may also receive a relocation allowance and a childcare allowance. From the second year onwards they are encouraged to combine training with part-time work, and in subsequent years a greater focus is put on work-based learning to avoid prolonged absences from the labour market. In 2017, 4 467 jobseekers started an OKOT programme. Three months after completing the training programme, 76% of students had found work.
Source: VDAB ((n.d.)[7]), Educational qualifying courses with VDAB Training Contract, www.vdab.be/sites/web/files/doc/infobrochure%20OKOT-VDAB.pdf.
Much of the training financed and provided by VDAB for jobseekers has a labour-market focus. Under the Education Qualification Pathway (OKOT) programme, jobseekers in Flanders may, in some cases, continue to receive their unemployment benefit while in training, provided that the training is in a field for which there is strong labour-market demand (Box 6.3).
Financial incentives have been designed to reduce deadweight losses
Given that advantaged groups (e.g. high skilled, high income) are likely to invest in their own skills without the help of public subsidies, governments can reduce the deadweight losses of incentives programmes by targeting such schemes at those who need them most. An important trade-off in the design of financial incentives for adult learning is between simplicity (and therefore lower administration costs but possibly higher deadweight loss), on the one hand, and better targeting (which increases administrative costs and possibly reduces take-up but cuts deadweight loss) on the other (OECD, 2017[6]).
Flanders has made some attempts to target training vouchers at those who need them the most. The system was reformed in 2015 to target low and medium-skilled adults, although those with a bachelors’ degree or higher could still access training vouchers if advised that training is needed after receiving career guidance. Previously, almost half of the beneficiaries were highly educated workers while middle- and low-skilled people were under-represented. Flanders also focuses financial incentives at SMEs (e.g. SME Wallet, tax deduction for the self-employed), which face particular barriers to providing training (e.g. lower economies of scale, lack of training expertise).
Marginalised groups are under-represented in accessing financing for adult learning
As is the case in most OECD countries, high-skilled workers in Flanders are more likely to receive employer financial support for education and training than low-skilled workers (Figure 6.2). In Flanders, 52% of low-skilled employees receive employer financial support for education or training, which is lower than the average for low-skilled employees across the OECD (53.3%) and much lower than for high-skilled employees in Flanders (68.4%).
Some groups are also less likely to apply for financial incentives targeted at individuals. In 2017, 24% of all training voucher users were low-skilled, compared to an average of 14% of low-skilled workers in employment in Flanders (Table 6.1). Low-skilled workers are thus no longer under-represented in accessing training vouchers since the system was reformed in 2015 to make them the target group. However, low-skilled workers continue to be under-represented in their application for career guidance vouchers: only 5% of career guidance voucher users in 2017 were low-skilled, relative to 14% in employment (Table 6.1). Older workers are also under-represented in applying to financial incentives for training. The proportion of elderly workers (55+) among training voucher users was 12.4% in 2017, below the share of 16.3% of elderly workers in total employment. During workshops, stakeholders provided anecdotal evidence that adults from other marginalised groups (e.g. those with low attachment to the labour market, migrants, adults with caring responsibilities, people with disabilities and the long-term unemployed) also face difficulties accessing financing for adult learning.
Notes: 1. High-skilled adults score at level 5 or above in literacy and/or numeracy, while low-skilled adults score below level 2 in literacy and/or numeracy. 2. The OECD average is based on the sample of OECD countries/regions assessed in the Survey of Adult Skills (PIAAC). Source: OECD (2018[4]), OECD calculations based on Survey of Adults Skills database (PIAAC) (2012, 2015), www.oecd.org/skills/piaac.
Factors behind under-representation of marginalised groups in accessing financing for adult learning in Flanders
Several factors help to explain why marginalised groups are under-represented in the use of financial incentives for adult learning.
Employers are less likely to invest in the skills of lower-skilled workers. Employers may be reluctant to invest in adult learning for low-skilled workers because they expect this investment to generate lower returns than for high-skilled workers (Groenez, 2009[9]).
Furthermore, the system of financial incentives is complex. While there are a range of financial incentives in Flanders to support adult learning (more than in most European Union [EU] member states), this variety comes at the cost of complexity. Understanding the system can be challenging, particularly for lower-skilled workers, SMEs, and adults with barriers to accessing the relevant information, e.g. language barriers faced by migrants. Furthermore, as noted by stakeholders, a multitude of training providers make it difficult to navigate the system and find the best training offer.
The rules governing financial incentives may also limit the participation of some groups. The existing set of financial incentives do not support career transitions, either from one sector to another, or from one employment status to another. Training vouchers, paid education leave, and the training credit are only eligible to employees. This means that jobseekers and workers with a weak attachment to the labour market face barriers to accessing financing.
Furthermore, sectoral training funds create incentives to limit training investment to within a sector. As a result, workers in surplus occupations, or those at risk of automation, may not be able to access financing to transition to occupations or sectors with better labour-market prospects. As noted in Chapter 3 on skills imbalances, Flanders is among the countries where workers employed in surplus occupations have the lowest training participation relative to workers employed in shortage occupations. Similarly, workers in jobs with a high risk of automation are much less likely to train in Flanders relative to workers in jobs with a low risk of automation (OECD, 2019[2]).
Some sectors do not have well-funded or organised sectoral training funds. Information about the financing of sectoral training funds is not centralised and there is no publicly available record of the amount of funding available to each sectoral fund (Cedefop, 2008[10]). An employer’s required contribution to sectoral training funds varies by sector, from 0.10% to as much as 0.60% of the gross wage (Cedefop, 2008[10]). While workers in well-funded sectors have access to opportunities to upskill and retrain within the sector (see care sector example in Box 6.4), those in less well-funded sectors lose out.
Institutional arrangements also play a role in financing adult learning. Under new legislation (Vlaams Parlement, 2018[11]), the institutional financing of CAEs and CABEs is being reformed. Previously, adult education centres had little incentive to target vulnerable groups. However, under the new decree, additional resources will be allocated to centres based on participation of vulnerable target groups, including those without a secondary education certificate, non-working jobseekers, and prisoners. The centres will also receive a “qualification bonus” when participants successfully complete the programme and obtain their certificate. The qualification bonus is intended to incentivise centres to provide tailored guidance to students to help them complete their certificate, as well as to grant students exemptions on the basis of previously acquired competences. The government expects these reforms to improve the targeting of adult learning resources at more vulnerable groups.
In response to shortages in professional care occupations, Familiezorg, a family care provider delivering in-home care to over 100 000 families in Flanders, introduced Project 3030. Employees in the health-care sector who currently do not work as care professionals (e.g. cleaning staff, logistical assistants) can train to become a polyvalent care worker or nursing assistant while maintaining their salary. The training is one year full-time and results in recognised certifications in the industry. The project started in 2009 and is a joint initiative with the social partners, the Flemish Institute for Training and Education (Vlaams Instituut voor Vorming en Opleiding, VIVO) and VDAB. It currently trains 40 full-time employees per year on a budget of approximately EUR 1.3 million. The social Maribel fund, which is the employment fund for the family care industry and coordinated by the sectoral training fund for the care sector, covers all costs. The goal of the fund is to fill jobs in the social profit sector to cope with needs in this sector, to reduce working pressures, and to improve the quality of the service. For services related to family care, the annual budget is approximately EUR 40 million.
Sources: Vlaamse Social-Profitfondsen ((n.d.)[12]), The Social Maribel Fund 318.02 for the Family Care services of the Flemish Community, www.vspf.org/sociale-maribel-318-02; VIVO (2018[13]), Project 3030, www.vivosocialprofit.org/project-3030.
Policies and practices to address the under-representation of marginalised groups in accessing adult learning financing in Flanders
Addressing the under-representation of marginalised groups in accessing financing for adult learning is possible through relevant policies and practices. This section is based on input from the stakeholder workshops, bilateral meetings, site visits and OECD analysis of international and national data sources and literature.
During the two OECD Skills Strategy workshops in May and September 2018, stakeholders in the groups assigned to the topic of financing adult learning discussed a wide range of issues and proposed recommendations. The OECD has carefully considered each of the perspectives and recommendations and prioritised and elaborated those viewed as most important in this section. A comprehensive list of the proposed ideas can be found in Annex A.
Review financial incentives to encourage the participation of marginalised groups in training
Some groups are under-represented in accessing financing for adult learning. At least two comprehensive reviews of financial incentives for training have been carried out for Flanders (Sels, 2009[14]; De Coen, Valsamis and Sels, 2013[1]). Both of these studies conclude that employees in the Flemish labour market are already adequately supported financially for training through various channels. The reviews argue that there is no need for additional incentives as there is already a wide range of initiatives that is broader than in most other EU member states (De Coen, Valsamis and Sels, 2013[1]).
However, one challenge highlighted in these reviews is that training incentives are not successful at reaching some groups. De Coen et al. (2013[1]) find that the low-skilled and older workers are under-represented in their application for training vouchers, despite targeting that excludes highly educated adults.
An important consideration is whether Flanders’ existing scheme of vouchers is best placed to target marginalised groups, or if alternative mechanisms (e.g. individual learning accounts, loans or tax incentives) could perform better. Based on a recent review of the literature on financial incentives for education and training (OECD, 2017[6]), it seems that the challenges of deadweight loss and difficulty targeting marginalised groups are not unique to vouchers, but are instead equally or even more associated with individual learning accounts, loans and tax incentives (Box 6.5). Therefore, instead of revising the current mix of financial incentives in Flanders, efforts should be aimed at improving their design and expanding outreach efforts to improve take-up, in particular by marginalised groups.
Subsidies (including vouchers, scholarships, grants, bursaries, allowances, training cheques) are the most direct way of providing financial incentives to individuals to invest in education and training. Most subsidies for vulnerable workers focus on the individual as the main beneficiary (rather than the employer). Access to programmes can be restricted based on characteristics such as age, skill level, presence of children, disability or minority group status.
Individual Learning Accounts (ILA) are schemes that attach training rights to individuals, rather than to jobs, to fund future education and training activities. These include accounts where time and/or savings for training are accumulated over time. ILAs are receiving renewed attention for their potential to make training rights more portable between jobs and to support career transitions. In this way they have the potential to broaden access to training rights to vulnerable groups, including those in non-standard forms of employment. France, for example, introduced personal training accounts (Compte Personnel de Formation) in 2015, which allow individuals to accumulate entitlement to training hours. The accrued entitlement is transferable between jobs and employment status. A serious drawback with ILAs that have a savings component is that they are more likely to be used by high-skilled rather than low-skilled individuals, owing to poor financial literacy and a lack of access to information.
Loans are seen as a cost-effective way of helping adults overcome temporary liquidity constraints. While loans are important funding tools for initial formal education, they are used less often in the context of adult learning, although some OECD countries do use loans for this purpose. For instance, in England, Advanced Learner Loans allow adults to upskill and re-skill. Repayments are due at the end of the course, but only if the trainee earns more than GBP 25 000 a year. However, it has been argued that loans are less effective than vouchers in encouraging individuals on low incomes to invest in education and training, in part because of their higher debt aversion.
Tax incentives may be designed to encourage investments by individuals in adult learning, and can come in the form of a tax allowance (i.e. deductions from taxable income) or tax credits (i.e. sums deducted from the tax due). Evaluation evidence suggests that tax incentives carry high deadweight losses, since they tend to favour groups who already have access to education and training. They can also only reach workers, leaving out vulnerable groups like the unemployed or those with low taxable income. In the Netherlands, evaluation has shown that the tax deduction (aftrekpost scholingsuitgaven) was used primarily by highly skilled individuals. As a result, the Netherlands is replacing tax incentives for education and training with direct subsidies.
Source: Adapted from OECD (2017[6]), Financial Incentives for Steering Education and Training, https://dx.doi.org/10.1787/9789264272415-en.
Access to vouchers is frequently restricted based on a number of characteristics, including age, employment status, skill level, income and wealth. The reform to the Flemish training voucher system in 2015 restricted access to low- and medium-skilled workers, and resulted in better targeting of the voucher at those who most need it. As part of Canada’s Targeted Initiative for Older Workers, subsidies are limited to those aged 45-64. The Netherlands is currently defining the target group for their new system of public vouchers, with a possible focus on low-skilled workers and SMEs (Box 6.6). During the Skills Strategy workshops, some Flemish participants advocated for a quota for specific groups to ensure that the incentive measures benefit those most in need.
Allowing training vouchers to be used for indirect costs of training (childcare expenses, transportation costs) by low-skilled or older workers could also help to improve their participation. Training vouchers may currently only be applied to the direct costs of training, such as registration and course materials. Extending training vouchers to indirect costs like childcare and transportation could make adult learning more compatible with family obligations for marginalised adults. VDAB already offers allowances for childcare (kinderopvangvergoeding) and transportation (verplaatsingsvergoeding) for jobseekers who participate in training.
In September 2018, the Dutch government launched a strategy to move away from tax incentives in favour of direct subsidies for financing skill investment, known as “learning accounts.” Skill investments by employers are currently deductible from the corporate income tax base in the Netherlands, however from 2020 onwards this will no longer be the case, and the EUR 218 million that will become available due to the abolition of the tax incentive will be invested in public learning accounts. The Netherlands is planning to target groups that need the subsidies the most; if the subsidies were divided across all workers then each employee would receive only EUR 20 a year for training. Discussions are still underway, but the Netherlands is considering targeting the subsidies at low-skilled workers and those working in SMEs.
If individuals are unfamiliar with training and financing options, then even targeting subsidies or extending them to indirect costs of training might not help to increase the training participation of marginalised groups, unless such aid is accompanied by other interventions such as information, advice and guidance. When many training providers are involved as in Flanders, adults and employers require easy access to information about the quality of these providers and their programmes. As was discussed in Chapter 3 on reducing skill imbalances, Flanders should track the labour-market outcomes of training programmes and disseminate this information centrally.
Career guidance vouchers are available to subsidise the cost of career guidance for all workers (see Chapter 3 for more on career guidance). However, these vouchers are taken up disproportionately by high-skilled workers, despite a financial stimulus package (stimuleringsfinanciering) which rewards guidance counsellors if they reach a quota of 30% participants from target groups. Guidance campaigns such as the Leerwinkel and Leerkansen programmes (see Box 3.2 in Chapter 3) help to increase beneficiaries among marginalised groups by reaching out specifically to low-skilled workers and other marginalised groups and disseminating information and counselling about the training incentives available. As mentioned in Chapter 3 on skills imbalances, some thought could be given to extending the use of career guidance vouchers to education guidance, as currently there is no central financing of education guidance services and this has resulted in unequal access to these services across regions. Engaging trade unions can also be an effective way to reach out to low-skilled and older workers about training. In the United Kingdom, Unionlearn receives public funding to train union learning representatives within companies to promote the value of learning within the company and reach out to older and lower-skilled workers to support them in identifying their training needs and arranging training opportunities (OECD, 2017[15]).
In addition to low-skilled and older workers, employees in SMEs may also face particular barriers in accessing financing for adult learning. In Flanders, paid educational leave allows employees in the private sector to keep receiving their wages while they train for a maximum of 180 hours, and the government compensates the employer the lost wages while the employee is absent. However, during Skills Strategy workshops participants noted that SMEs may be less inclined to grant permission for paid educational leave, as it can be difficult to plan and cover absences in small firms. In some OECD countries (Denmark (Box 6.7) Finland and Portugal), job-rotation schemes provide the employer with temporary replacement (usually an unemployed worker) for the employee during their training (OECD, 2019[2]), which reduces the burden on the employer.
The government should consider how training incentives can help to overcome barriers to training (financial and otherwise) and how they could be better targeted both at the learners who most need the support (including the low-skilled, older workers, and those working in SMEs) and at the type of training that will have the most impact on the economy and employment outcomes. The government should expand programmes to reach out to marginalised groups with information, advice and guidance about training. The government should also disseminate information about available training incentives to a wide range of stakeholders, including guidance counselling services, adult learning providers, VDAB, non-government organisations (NGOs) and the staff responsible for training within companies (VTOs).
Job rotation, first introduced in the 1980s in Denmark, allows a firm to send its workers on training while taking on someone without a job to provide cover. At their high point there were 80 000 full-time participants in job-rotation schemes, but as unemployment levels fell during the 1990s the schemes were gradually rolled back, and today there are around 1 100 full-time participants. Under the scheme, employers receive a hiring subsidy for every hour an employee is on training and an unemployed person is employed as a substitute. The replacement person is provided by the local jobcentre. Costs are shared equally between the municipality and the national government (EUR 23.4 million in 2012). The jobseeker often receives training (a few weeks or longer) in order to fill vacant jobs. A recent Danish evaluation of the scheme focused on the effects on the unemployed: it showed that job rotation, on average, makes participants enter into regular employment two to three weeks faster than they otherwise would have, and income and employment effects are strongest for unskilled jobseekers.
Job rotation is dependent on close cooperation between a business and the job centre in order to find unemployed people with the right skills to fit as job rotation replacements.
Sources: Madsen (2015[16]), Upskilling unemployed adults. The organisation, profiling and targeting of training provision: Denmark., www.nordiclabourjournal.org/i-fokus/in-focus-2013/nordic-hunt-for-solutions-to-youth-unemployment-1/article.2013-05-21.0258264149; Kora (2018[17]), Effects of being employed as a substitute in a job-rotation project, www.kora.dk.
Repackage existing financial incentives to provide each learner with a “training backpack”
Learners and firms are not always aware of available training incentives because the system is complex. This lack of transparency particularly hinders access to adult learning for low-educated workers and employees in SMEs. Skills Strategy workshop participants were enthusiastic about the idea of repackaging existing financial incentives to provide each learner with a “training backpack,” which is essentially an individual learning account that allows individuals to accumulate training rights over their working lives. In theory, this could consolidate the three Flemish training incentives (training voucher, paid educational leave, training credit), the right to career guidance, and federal rights such as sectoral training levies.
The idea of a training backpack is not new in Belgian discussions around adult learning. For example, De Coen et al. (2013[1]) refer to a training backpack (rugzak) that both the employee and employer would contribute to and which would be fully portable between employers, and enjoy tax sheltering from the government.
In France, the Compte Personnel de Formation (Individual Training Account, CPF) offers something similar. The CPF allows workers to accumulate time credits towards future education and training investments (Box 6.8). All direct costs for eligible training are covered by social partner organisations or by the firm. A unique feature of the CPF is that training rights are preserved upon job loss and transferable between employers, thus supporting career transitions and workers in non-standard forms of employment.
To reduce complexity and facilitate access to training incentives, the government should consider over the long run grouping all existing training incentives for individuals (paid education leave, training vouchers, training credit, career guidance vouchers, and possibly sectoral training funds) into a single learning account, similar to France’s Compte Personnel de Formation. Key features of the learning account could include: training rights that are portable upon job loss and transferable between employers, targeted at accredited labour-market oriented courses, and more training hours allotted to low-skilled than to high-skilled workers. The learning account should also be accompanied by programmes to reach out to vulnerable groups with information, advice and guidance.
France has a long history of using time accounts to incentivise training. The current Compte personnel de formation (Individual Training Account – CPF) replaced the previous Droit individual de formation (Individual Training Right – DIF) on 1 January2015. Under the CPF, the account of each full-time worker is credited with 24 hours each year during the first five years, and with 12 hours per year during the subsequent three years, up to a maximum of 150 training hours in total (with part-time workers accumulating credits in proportion to their hours worked). These training hours, which are preserved upon job loss and transferrable between employers, can be used to acquire recognised qualifications or basic skills, or to take up a list of training courses selected by regional councils, social partners and professional associations, which often reflect foreseeable economic needs. If the training takes place during working hours, then the employee needs to obtain permission from his/her employer, who is then obliged to continue paying the full salary. All direct training costs are covered either by social partner organisations or directly by the firm if it spends at least 0.2% of its wage bill on the CPFs of its employees.
The Labour Law of August 2016 (Loi n °2016-1088 du 8 août 2016 relative au travail) extended the use of the CPF to the self-employed and all youth aged sixteen and over. In addition, workers without qualifications now accumulate 48 hours per year (compared to 24 hours for other workers).
Under the CPF, the number of approved training spells increased significantly, from just over 200 000 training spells in the first year, to more than 800 000 at the end of February 2017. As of October 2016, 40% of CPF training spells were taken by the unemployed, and 36% of all CPF training participants had educational attainment below the Bac level.
Reforms to the CPF were recently announced (Loi n °2018-771 du 5 septembre 2018 pour la liberté de choisir son avenir professionnel) which would convert the time accounts into money accounts. Workers with a qualification would receive EUR 500 per year for training, while those without a qualification would receive EUR 800 (up to a limit of EUR 5 000 and 8 000, respectively). Individuals would also no longer be required to request permission from an employer or the public employment service to make use of the training credits.
Sources: OECD (2017[6]), Financing Incentives for Steering Education and Training, https://dx.doi.org/10.1787/9789264272415-en; OECD (2017[18]), Getting Skills Right: France, https://dx.doi.org/10.1787/9789264284456-en.
Support transitions from job to job and from one employment status to another
Current financial incentives in Flanders are closely tied to job and employment status, which limits their capacity to support retraining for a new job in a new sector or occupation, or for transitions from one employment status to another. Sectoral training funds in Belgium have built-in incentives to promote retraining for jobs within a sector, but do not generally support sector-to-sector job transitions. In France and the Netherlands, several initiatives were recently introduced to finance the retraining of workers to new sectors (Box 6.9).
Retraining from one employment status to another (e.g. from jobseeker to employment), could potentially involve partially converting an employees’ severance pay into a fund to finance necessary retraining for a new job (e.g. Voka (2017[19]), De Standaard (2013[20]), and most recently De Morgen (2018[21])). The idea is that when a worker is fired, he or she would be offered a set of services (e.g. training, counselling) to find a new job. Lithuania offers this type of training for workers who have been given a notice of dismissal: they may benefit from up to eight months of vocational training (Profesinis mokymas) during which they receive an education grant of 0.6 times the monthly minimum wage (OECD, 2017[6]). Historically, this idea resonates well with employers in Flanders but less well with trade unions, who would prefer that workers receive money for training in addition to severance pay. Strong social dialogue would be needed to push this proposal forward.
The use of such a fund need not be limited to retraining and counselling, but could also be used to validate existing skills. During workshops, stakeholders raised the importance of validating an employee’s skills when he or she loses a job. This could make the worker’s skills more visible, and improve their chances of finding new employment, which is especially important for older workers who may have worked in an occupation for many years without ever having obtained a formal qualification. In Australia, for example, workers who are displaced due to large-scale industry-specific closures (e.g. automotive manufacturing, mining, forestry) are eligible for government assistance, including incentives to have their skills assessed. Given the success of this programme in facilitating transitions for displaced workers, it is being expanded to regions affected by structural change (OECD, 2018[22]).
The Flemish government should work closely with employer organisations and trade unions to explore options for financially supporting transitions from job to job or from one employment status to another. As discussed in Chapter 3 on skill imbalances, using sector covenants to support the sharing of sectoral training funds between sectors is one possibility, as is the retraining fund mentioned above.
France: The Employment and Skills Development Actions programme (Actions de Développement de l’Emploi et des Compétences, ADEC) is an agreement between the national or regional government in France and a sector (relevant stakeholders such as employer organisations, trade unions, or regional councils) to support employers in training their employees. The programme targets sectors adversely impacted by structural economic, social and demographic change. The state offers aid to promote targeted training actions that focus on preventing the risk of skills obsolescence, support mobility and professional development, maintain and develop skills, and provide access to a recognised and transferable qualification. An ADEC agreement can also support retraining for sector-to-sector transitions. For example, an ADEC agreement was signed in the Île-de-France region with employers in the automobile sector, and involved support for retraining to other sectors or occupations.
Netherlands: Sectoral training funds in the Netherlands are a key pillar of the financing system for adult skills development. However, as concluded in the OECD Skills Strategy Diagnostic Report for the Netherlands, the funds insufficiently support the reallocation of skilled workers across sectors. To address this issue, several initiatives were recently introduced, including transition centres, job placements, and transition funds. Transition funds facilitate mobility by providing employees with a personal budget to buy employment services. They are based on collaboration between the Dutch public employment service (UWV) and employment agencies, with transition centres as the central information broker between employers and individuals searching for a job. Most participants are currently employed, but some receive social benefits. More than half of the current participants are from the construction or care sectors.
Sources: OECD (2017[18]), Getting skills right: France, https://dx.doi.org/10.1787/9789264284456-en; OECD (2017[6]), Financial Incentives for Steering Education and Training, https://dx.doi.org/10.1787/9789264272415-en; van der Werff et al. (2017[23]), Interim Evaluation Sector plans, www.rijksoverheid.nl/binaries/rijksoverheid/documenten/rapporten/2017/12/12/tussenevaluatie-sectorplannen-2017/tussenevaluatie-sectorplannen-2017.pdf; OECD (2017[24]), OECD Skills Strategy Diagnostic Report: Netherlands 2017, www.oecd.org/skills/nationalskillsstrategies/OECD-Skills-Strategy-Diagnostic-Report-Netherlands.pdf.
Ensure financing supports flexible modes of learning
The importance of flexibility in modes of training delivery was discussed in Chapter 2 on learning culture. Making training opportunities available through e-learning, blended learning, modular learning, work-based learning and distance learning can make training more accessible and compatible with family and work obligations. For example, when combined with processes for the recognition of prior learning, modular learning allows workers to focus on developing the skills they currently lack through self-contained learning modules. By combining modules they may eventually gain a full (formal) qualification. This type of approach is especially useful for older workers who do not have a formal qualification and have spent much of their career in a sector or occupation with poor future prospects, as it allows them to retrain for a new occupation in less time.
The financing of adult learning should be designed to support such flexible modes of training delivery. Measures have already been taken in this direction in Flanders, for example, a previous requirement of regular student presence in class as a basis for financing was seen to be at odds with the concept of flexible learning (e.g. distance learning), and was removed under reforms (Rekenhof, 2013[25]).
New legislation from the Department of Work and Social Economy also permits the use of paid educational leave towards up to 16 hours of skills validation. This reform supports a modular approach to adult learning: by participating in validation of prior learning, an adult clarifies which skills they are currently lacking and need to acquire. To continue in this direction, financial incentives for adult learning should ideally allow skill sets or modules to be eligible for funding, in addition to full qualifications. In France, steps are being taken to make modular learning eligible for subsidies by splitting all qualifications into “blocs de compétences” or partial qualifications. Adults will be able to use existing financial incentives, which are limited to short-term training, to obtain partial qualifications which accumulate towards a full qualification.
By September 2019, the new single database of eligible training will be introduced in Flanders, as announced in the proposed reform to adult learning. Paid educational leave and training vouchers will only be applicable to training opportunities identified in this database. Policy makers should ensure that flexible modes of training delivery are eligible for financial support under the new database.
As it can be costly for higher education institutions to offer courses in a flexible format (e.g. modular learning, irregular hours), the government may also need to provide financial support to higher education institutions to provide courses for adult learners in ways that are compatible with their work and family obligations.
Summary and recommendations
Drawing on the evidence presented in this chapter, Flanders could consider the following recommendations to the financing of adult learning:
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Group all existing financial incentives for training into a single learning account. To reduce complexity and facilitate access to training incentives, the government should over the long run group all existing training incentives for individuals (paid education leave, training vouchers, training credit, career guidance vouchers, and possibly sectoral training funds) into a single learning account (in Skills Strategy workshops these were referred to as training backpacks or “rugzak”), similar to France’s Compte Personnel de Formation. Key features of the learning account should include: training rights that are portable upon job loss and transferable between employers; targeted at accredited labour-market oriented courses; and more training rights allotted to low-skilled than to high-skilled workers. The learning account should be accompanied by programmes to reach out to vulnerable groups with information, advice and guidance.
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Expand programmes to reach out to marginalised groups with information, advice and guidance about training. The government should consider how training incentives can help to overcome barriers to training (financial and otherwise) and how they could be better targeted both at the learners who most need the support (including low-skilled, older workers, and those in small and medium-sized enterprises) and at the type of training that will have the most impact on the economy and employment outcomes. The government should support programmes to reach out to marginalised groups with information, advice and guidance about training. The government should also disseminate information about available training incentives to a wide range of stakeholders, including guidance counselling services, adult education providers, VDAB, NGOs, and the staff responsible for training in companies (VTO).
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Explore options for financially supporting transitions from job to job or from one employment status to another. The government should work closely with employer organisations and trade unions on this. As discussed in Chapter 3 on skill imbalances, using sector covenants to support the sharing of sectoral training funds between sectors is one possibility. Another possibility worth exploring is converting severance pay into a fund that dismissed workers could use to access a variety of re-employment services, including training, counselling and skills validation. Making VDAB training more widely available to employees who are at risk of displacement would also support a proactive approach to re-employment.
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Ensure that training incentives support flexible modes of training delivery. Given the importance of non-financial barriers to adult learning in Flanders, the government should ensure that training incentives support flexible modes of training delivery, including modular learning, work-based learning, distance learning, e-learning, blended learning, and massive open online courses (MOOCs). This flexibility should be reflected in the new database of eligible training courses that will be introduced in September 2019. Additional support should also be given to higher education institutions to finance education provision in formats that are flexible to the needs of adult learners.
References
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