LDN - Business

On-the-job training: A German export hit losing favor at home

[July 27, 2018] By Michelle Martin

WINSEN AN DER LUHE, Germany (Reuters) - Nina Lorea Kley urgently needs young people to train as vehicle builders at her company's factories in northern and eastern Germany. She has enough orders and money to hire 20 this summer but can only find 14.

Feldbinder makes 2,000 customized trailers, railway wagons and containers a year but won't be able to keep that up without new recruits, especially because many employees are due to retire in the next few years.

"If we don't manage to fill jobs that become free we'll have to think about which orders we can fulfill," said Kley, 41, a managing director at the firm her father co-founded four decades ago. "We simply wouldn't be able to take on certain orders anymore due to a lack of staff."

Feldbinder is not alone. More than a third of German companies could not fill all of their training places last year while almost one in ten received no applications for such roles, a survey by the DIHK Chambers of Commerce found.

Last year, the number of vacancies for training positions was at its highest for more than 20 years.

Germany's twin-track vocational training system, which involves up to 3-1/2 years of on-the-job learning in firms alongside theory lessons at vocational school, is credited with giving Germany the European Union's lowest youth jobless rate - 6.8 percent in 2017 against an EU average of 16.8 percent.

Widely admired abroad, the training system is being exported in various forms to Europe, Asia, Africa and the United States. But its popularity is waning at home as young people increasingly prefer the higher status of a university degree.

That could hurt growth in Europe's largest economy by exacerbating a skilled labor shortage, which is partly caused by hundreds of thousands of aging employees leaving the labor market every year.

"It's a dangerous trend - Germany is running out of skilled workers," said DIHK President Eric Schweitzer. "At first, orders lie around for longer, then firms have to reject them outright - to the point where entire sectors run into problems."

In response, the government has vowed to strengthen the training system and make it more attractive during this legislative period, which runs to 2021.

It plans to invest in equipment so vocational schools can adjust to the digital age, put a minimum trainee wage into law, boost career guidance at secondary schools, promote part-time training to help people reconcile their work and family life, and reduce the problem of regional imbalances in the jobs market by improving mobility.

EXPORT SUCCESS

The education ministry is working with 16 countries including Greece, China, India, Mexico, Russia, South Africa and the United States to reform their vocational training systems to make them more like the German system.

During her first meeting with U.S. President Donald Trump in March 2017, Chancellor Angela Merkel and company managers spent around an hour discussing vocational training with him, and Ivanka Trump met trainees on a vocational scheme at Siemens during her visit to Berlin the same year.

Foreign interest in the system has grown since the global financial crisis and its success lies partly in the heavy involvement of companies, which ensures it produces workers who can be deployed immediately.

Since 2013 the education ministry has been supporting a project called VETnet whereby German Chambers of Commerce Abroad in 11 countries develop pilot vocational training projects with local companies.

They now offer 45 different occupations, with mechatronics fitter (technology combining electronics and mechanical engineering), tool mechanic and industrial mechanic the most popular. More than 820 companies are involved, with 7,400 trainees in China, Greece, India, Italy, Latvia, Mexico, Portugal, Russia, Slovakia, Thailand and the United States.

"The German government supports the internationalization of vocational training because it guarantees competitiveness, social harmony and economic stability even during crises," Thomas Rachel, the deputy education minister, told Reuters.

But the DIHK's Schweitzer said the system is no longer as highly regarded in Germany as it used to be and it was vital to turn that around by showing young people how good their career and financial prospects are on the scheme.

"We need to ensure vocational training is as valued at home as it is as abroad," he said.

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A worker at German manufacturer of silos and liquid tankers, Feldbinder Special Vehicles, checks rolls of aluminium at the company's plant in Winsen, Germany, July 10, 2018. REUTERS/Fabian Bimmer

University studies are increasingly popular. There were 515,327 new students in 2017, or 41 percent more than in 2005, the education ministry said.

That compared with 490,267 young people who started a traineeship in the dual system last year. Since 2013 the number of young people starting university degrees has been higher than the number starting as trainees, the education ministry said.

A record high total of almost 2.85 million students were enrolled in university degree courses in the 2017/2018 winter semester, according to the statistics office.
Those with university degrees earn more on average over their lifetime than those who do vocational training, a 2017 study by the Ifo institute found. Many believe going to university will ensure better career prospects too.

A government push that started in 2008 to get more young people into university also contributed to the rise in student numbers.

People with relevant professional experience can now study for some degrees despite not having higher education entrance qualifications, thereby widening the pool of people who can attend university.

Companies and industry groups complain that schools focus too much on sending young people to university and should also stress the benefits of the dual system, which offers training for 327 occupations at more than 426,000 companies.

"Of course we need engineers and mathematicians but not only them - we also need very well-qualified skilled tradesmen," said Rainer Dulger, head of Gesamtmetall - a metal industry employers' association.

Many firms are also preparing for a mass exit of experienced employees from 2020 as the post-World War Two baby boomers retire. There are around 300,000 fewer school leavers each year than people going into retirement, the DIHK said.

Kley said Feldbinder would have more people retiring in two to three years than it would be able to replace with its own trainees. Some 10 percent of her 950 employees are due to retire in the next five years.

"That means we'll get smaller, we'll shrink - it's a real problem. We can no longer find people on the market," she said.

MISMATCH

Last year nearly 49,000 training positions, especially in the manual trades, hotel and catering sectors, were vacant - the most since 1995. At the same time, the number of applicants without trainee contracts rose to almost 24,000, highlighting a mismatch between employers and candidates.

In southern Germany, for example, there were far more trainee places on offer than applicants but in Berlin the opposite was true and some sectors like administration and IT were oversubscribed.

Another problem for Feldbinder, Kley said, is that many children no longer grow up in homes with a workbench or repair their own bikes, so they do not get a feel for manual jobs.

Almost half of companies are wooing university dropouts to help cover the shortfall and 16 percent are offering benefits like smartphones, extra holidays, gym membership or better wages to lure new trainees, the DIHK found.

But even firms that do find trainees are not always happy, telling the DIHK that many lack motivation or German and maths skills. A quarter of trainees end their contracts early, according to the education ministry.

At Feldbinder, Kley is trying to prevent costly dropouts by offering internships to make sure young people like the work before getting hired. She hopes to find more trainees by inviting schools to visit her company, sponsoring a carnival club and attracting more females.

The company hires one or two female trainee vehicle builders a year and would like to employ more, but many girls do not think of the traditionally male-dominated job when considering their options, Kley said.

"If we could attract girls, we'd suddenly have 50 percent more potential applicants," she said.

(Reporting by Michelle Martin; Editing by Giles Elgood)

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