Dr. Awais e Siraj Managing Director Genzee Solutions, A Strategy, Balanced Scorecard, Scenario Planning, Competency Based Human Resource Management Consulting Company

1. Role of Vocational Education Training (VET) Policy in Creating High
Skill Society
Siraj, A. (Managing Director Genzee Solutions, A Consulting Company)
Abstract:
This paper looks at the extent to which a ‘high skills’ society can be created using a VET
Policy by initially describing what VET means to different people. After briefly discussing
the human capital theory and the welfare economics of training, it gives a summary of
various VET classification systems to establish that the meaning of globalization in VET
context is the knowledge system, ICT and social change. The final debate looks at how
various high skills societies have been created eventually concluding that countries
have been successful in creating a high skills economy through VET policy only when
they had a clear strategy for development and competitiveness in the global economy to
suit their environment, institutions and cultures.. The individual models work best in the
owner environment and there have been serious challenges in reaching a universal
model because of differences in common definitions of assessment criteria, legislation,
technology, institutions, skills, culture and priorities.
Introduction:
Vocational training is a learning intervention for a specific work in industry or trade or
agriculture. Vocational education, focusing on future occupations is aimed at advancing
an individual’s general proficiency in manual or practical activities. (Shah et al 2011)
With the rapid growth of economies and dependence on technology, this has become
so important that governments and businesses started heavily investing in it. Whether it
is retail, information technology, tourism, cosmetics, services, cottage industries or
traditional crafts, vocational education has established its grounds extensively.
In the last few decades, political scientists, educationalists, sociologists and economists
have come to believe on the conventional wisdom that economic performance of any
country is directly linked to education and training. (Ashton and Green 1996) Cantor
(1989), OECD (1985), Caillods (1994) and CEDEFOP (1984) drew attention to the
various ways in which education and training is provided in different countries and
classified three different models in operation: First is the ‘dual’ model as practiced in
Germany, Switzerland and Austria, whereby young people enroll in apprenticeship in
continuous vocational education after leaving school. They are not on jobs during this
period. In the second model as practiced in Belgium, Sweden, North America and
Japan, the schools provide vocational education up to the age of 18 and are thus called
‘schooling’ model. In France, however, the vocational schools are characteristically
distinct from the educational schools and in Sweden, vocational and academic
education is provided within one institution. (Green 1991) The third model as practiced

2. in Great Britain, youths are provided vocational education outside the schools in a non-
formal sector. (Furth, 1985)
Human Capital Theory and VET
The relationship of VET with Human Capital Theory (“The set of skills which an
employee acquires on the job, through training and experience, and which increase that
employee's value in the marketplace”. www.investorwords.com) can be traced by its
roots in the ‘liberal’ system which supports the view that individuals may not be left
alone to fight market forces for their education and training and that the state is equally
responsible for providing equal opportunity to workforce to compete in the market. The
other leg of the liberal system, the educationalist system generally ascribes education
and training to economies but cannot categorically connect it to economic development.
Therefore we only take on the Human Capital Theory for further discussion.
Human Capital Theory compares human capital input at an equal level with the physical
capital input except that unless in a slave society, it cannot be liquidated thus providing
a rationale for the need of education and training by individuals.. The cost of investment
is calculated by the individual’s capitalization ability with discounting of income in future.
Thus a ‘general’ training cost is to be borne by the employee and a specialized cost
could be shared. Collecting the sum of its parts, a society as a whole decides it
collective needs for investment in training. The fundamental weakness in this theory is
its description of human beings as ‘things’ thus humbling social relations, invites
considerable criticism but on the whole, this theory has been used for extensively for
policy decision and planning across the world. The theory supports the laws of
neoclassical economics which emphasize, the state needs to intervene, regulate,
subsidize and stimulate vocational education and training if it has to improve national
productivity and national economy.
The Welfare Economics of Training
There are three basic arguments as to who should bear the cost of training:
a. The Employer
b. The Employee
c. The State or Government
There are bright and dark sides of all. The employers see it as ‘investment’ as well as
an ‘expense’. If the employer is imparting training to an individual, it is necessarily
enhancing the skill level of the individual resulting in enhanced productivity. However,
when the productivity of an employee is enhanced, he or she becomes an ‘expensive’
commodity and an employer is bound to raise his salary to retain him within the
organization or else he will be poached by other employers. Therefore some employers

3. see it as lose-win situation and refrain from spending on training of its employees.
Logically an employer will only pay for training when it is expected to bring more return
than the investment. An exception to this would be a ‘monopsonic’ situation where the
firm trains the people for its short term benefits but cannot hold them for a long time in
employment because of their inability to afford higher wages whereas some other firms
can exploit the same and poach the employees with higher wages.
Becker (1964) has argued that firms will not bear the cost of training if they cannot reap
the benefits. It is the individual who reaps the benefits. He can sell his services for more
if he is sure of his enhanced productivity and therefore should pay the cost.
If the state wishes to increase the overall productivity and competitiveness of society
and nation, it must take the burden of training. This issue has been much debated
around the argument that ‘market failures’ (Annexure I) should take a decisive role in
whether the state should or should not spend on training and if it does, it should
necessarily be equitable.
The law of diminishing returns also applies on training. If we consider the investment on
training as a cost, then the rate of return on the additional money spent decreases
considerably if major investment has already been done. If the initial investment is low,
the rate of return can be high.
In all other situations, the trainee is expected to bear the cost of training and production
lost since he is benefitting the most. In case of inefficiencies and inequitable income
distribution emanating from market failures, the state can bear total or substantial cost
of training. Therefore we also see differences in reading the same model because of
different perceptions.
Classification and Differences between Systems
It is worth noting that there is no uniform system for classifying the vocational education
and training system. Various international agencies, institutions and researcher have
used their own models to analyze national systems, economies and political systems.
Noteworthy among them is the neo-classical theory used by international agencies like
ILO primarily because they have been largely funded by United States and thus echo’s
its power as well as political strength. The question therefore stands valid whether there
is only one (the neo-classical) system for economic growth or there are more. The
range starts from a ‘Cooperative’ group in Austria, Germany, Switzerland and many
Latin American Countries where cooperation comes from employer organizations, state
and trade unions to “Enterprise Based” in Japan featuring low labor mobility and long-
termism. UK and US where institutional pressures to impart training are low, are labeled
as the ‘Voluntarist’ group. The state driven groups are further divided into two: The
“Demand Group” of countries like Hong Kong, S. Korea, Singapore, Taiwan and China

4. where the state identified the growth strategy and developed the skilled workforce to
meet challenges. The second is “Supply-Led” group where government takes
responsibility for training but is in under no pressure from employees or employers. This
is prevalent in many developing countries of Asia and Africa.
Unfortunately, we still lack the basic understanding of these areas to theorize properly.
We are not sure yet how perfect world market looks like. We are also not aware of the
nature of these work systems and also not clear about the relationship of labor and
state with the capital. Politicians sometimes take the central role in outlining the funding
for VET and their approaches vary from place to place. Classically they look at some
historical data, culture, existing institutions, future requirements and the overall growth
strategy of an economy vis-à-vis its competitors. There are differences in approach
‘within’ societies rather than differences ‘among’ them which makes analysis and
uniformity even more complicated.
Ashton et al (2002) have looked at the evolution of Education and Training Strategies in
Singapore, Taiwan and South Korea. They established that all three countries first
developed their industrialization strategies and then delved into generating distinctive
education and training needs. These governments established conditions in which they
could manage the relationship between labor and capital to exploit their human
resources and maintain growth by selecting specific industries with high value – added
product markets and distinct competencies. Although the three countries adopted
different strategies for growth and development, the result was the same: The demand
of skills only came from their trade and industry policies. The education and training
planning and implementation was also different from other economies in that while all
others looked at the past trends and extrapolated future demands, these states
anticipated only the strategic demands of global markets and created a skilled
workforce that would be suitable to deliver as per the requirements of future. While the
state provided a platform for industrial success and growth to key organizations, it also
made sure that appropriate and skilled workforce was ready to take up these
challenges. This model was successful because all three countries were under external
threat so great that they were near extinction. The second reason for success is that the
entire economy is committed to long – term and strategic direction and the politico –
economic policies remained geared towards a common goal, common vision and
common perception.
The experience of high skill societies of Germany and Japan is highly appreciated by
politicians, policy makers and governments across the world as it provided more
economic growth with high return on investment and new market opportunities. Its key
offering of a better paid job made it attractive for the working as well as the middle
class. However there were some differences in the mental models of those thinking on
the line of a ‘free market’ economy. They thought that high skills society could be

5. achieved through a free market economy because the market itself will adapt, adjust
and attract high skills. Conservationists, on the other hand were of the view that high
skills society cannot be achieved by market forces alone and that government
intervention is required to make it happen. They were of the view that free market forces
would only create a small high skilled group of elites who would then take charge of the
market, leaving the low skilled far behind this creating a disequilibrium of a small group
of highly skilled and very large group of low skilled moving towards even lower skills
leading to inequitable distribution of wealth in the societies.
Another comprehensive classification given by Keating et al (2002) in their study of
three regions (Europe, East Asia, America) and nine countries (France, Germany, UK,
China, Japan, Singapore, Chile, Mexico, US) puts social, historical and economic
factors at the center of their focus and look at current developments in these countries
in the context of political pressures and economic changes at the national and regional
levels. The analysis however drills down to the desire for higher productivity and the role
of VET in reducing unemployment. For some countries like Germany and Singapore,
this was a surprise because they never considered that VET can reduce unemployment.
What brings this study in a neo-classical framework is its focus on the generic
workplace and industry specific skills.
Ashton et al (2000) attempted initially to give a brief account of earlier approaches to
comparative analysis of training and skill development system. Furth (1985)
distinguished “the education and vocational training of different countries according to
the post-compulsory vocational training arrangements”. He also identified the ‘schooling’
model, the ‘dual’ model and the ‘mixed’ model. Green (1991) put forward the ‘employer-
led’, the ‘education-led college based model’ and ‘education-led college based system’.
Calloids (1994) positioned these systems according to institution, enterprise and dual
system. Alfthan and de Castro (1992) incorporated cultural values in the VET analysis.
These analyses and a variety of others formed the basis of later studies conducted by
OECD, ILO and World Bank.
The first model suggested by Ashton et al is “The Market Model” in which they
established the relationship between state, capital and labor mainly led by the British
and US firms utilizing the colonial roots of British and the capitalistic over-influence of
US over economies. Economies like Germany, Austria, Switzerland, Netherlands and
Denmark which could not easily break into the world trading system dominated by
British and US companies adapted “The Corporatist” model whereby the state and the
government actively used the education system to acquire appropriate skills for driving
the process of industrialization. Countries which felt ‘left-out’ from the first two models
(blocks) realized that they have neither the capital, nor the natural resources to join the
race. They therefore resorted to “The State Model” to convert cheap labor into human
capital. Initially they were successful in developing a low skilled workforce which

6. produced low-value added production but later worked aggressively towards high value
– added production. Last but not the least, economies that had major challenges with
their financial systems were grouped into “The Neo-market” model. These were the
countries which relied on exporting primary products and importing value – added
products. These states did not have the necessary financial infrastructure. Through
centralization of education and training, they thought of taking charge of the market
initially and when the foundation was set for the growth, the sectors were decentralized
subsequently and in steps.
Whatever the system of training is in any given economy, the importance of a high –
quality education based on analytical and social skills is considered to be of paramount
importance followed by the reward systems. Inefficient economic systems will lead to
low yield on training investment. Finally, all stakeholders, the government, employers
and worker have to be involved and engaged in the system with heart and mind to reap
maximum benefits thus improving performance and efficiency.
Impact of Globalization, ICT and Knowledge Economy for High Performance Work
Organizations
Globalization means different things to different people. However for our intent and
purpose, global economic change would be the main driving force for an enhanced
activity in VET at policy level. (Keating et al 2002) Widely thought of as a continuous
economic process, globalization in strictest terms it is a “social process” at all levels of
the world.
The traditional organizations required their employees to specialize in certain skills and
continue doing the same for the rest of their life. (Smith 1888) This phenomenon is
rapidly changing in the new work practices of globalized world. Employees are not only
expected to be the proficient in production but also need to contribute in training,
customer relations, administration marketing and innovation. The new high performance
work teams require a great degree of judgment, versatility and social competence or the
so called ‘soft skills’ because they have to undertake the responsibility organization of
input supplies, understanding financial and accounting procedures, training of new
recruits and evaluation and supervision of their peers and subordinates. A ‘well-
rounded’ personality is the preferred over an ‘expert’. The new management challenges
like “Total Quality Control”, “Just in time” and “Lean Manufacturing” are a ‘mind-set’ first
and processes later. High performance teams have decentralized the process of
decision making and have brought the workers close to top management through active
engagement. Last but not the least, the salaries and wages are now directly linked to
business and much emphasis is placed on the ‘soft’ side of performance.

7. This transition is generally attributed to Information and Communication Technology.
Though it is difficult to directly measure how prevalent is ICT within the organizations,
systems and societies but whatever data is available suggests a significant shift.
Suggestion systems and survey feedback are adopted by 90% of large organizations in
the United States. (Askenazy 1999) Matrix structure (Business Units) exist in 60% of the
companies 78% organizations have self managing work teams. This phenomenon has
also led to labor shortages, acute at both ends of the spectrum of labor market i.e.
among the highly skilled as well as the unskilled, in some parts of the Europe.
(European Commission 2000) The assumption that only computer specialists are
required is no longer valid. Expertise in different applications of computer is in great
demand across industries like tourism, hotels, electricity, electronic production,
agriculture and construction. (DEWRSB, 1999)
Next to ICT, knowledge has now taken the center stage for social activities and
economic development in organizations. (Dosi, OECD 1996b) The demand for
employees that generate knowledge and ideas increase in the emerging economic
system. Wolf and Baumol (1989) categorized occupations into ‘information’ and ‘non-
information’ groups. Information groups are further divided into data workers
(manipulating information) and knowledge workers (generating information). The
knowledge workers include those involved in generating knowledge and creating ideas
and have expertise which not readily transferable. The demand for knowledge
employment is on the rise substantiated by the fact that the number of knowledge
workers in OECD countries rose by 30% (5.5 million) between 1992 and 1999. Between
1992 and 1998, about two million knowledge workers resulted in 14% of the net
employment during the period. However it could not be established that all knowledge
workers had to have a university qualification to prove their worth in this economy as
about half to one third of these workers did not have a university degree.
“Workplace learning has become increasingly important during the last decade.”
(Ashton 2000) As a consequence of globalization, the high performance work
organizations developed, benefitting the employers in terms of higher levels of
profitability and productivity while bestowing challenging work and higher earning for
employees. The key reasons behind this are the rapid growth of knowledge economy,
ICT and the high performance work practices. The combined consequence of this has
been the increase in the share of working population who, in their everyday work, apply
and dominate knowledge. High performance work organizations on the other hand
provided opportunity for the so called the ‘junior’ white collared and manual workers, an
opportunity for life-long learning leading to relatively higher earnings and better
opportunities. (Eraut et al, 1998)
The introduction of high performance work organizations is transforming the ways of
working of not only the ‘knowledge worker’ but also that of craft workers, semi – skilled

8. and unskilled workers in the manufacturing as well as service sector. Despite the fact
that they have never received a so called ‘academic ‘ exposure and learning opportunity
through text books and class rooms, they are now forced to update their existing body
of tacit knowledge to stay abreast with the developments in their respective industries.
Certain professions like calligraphy became outdated in certain parts of the world and
replaced with computers. Calligraphers were either forced to learn the use of computers
or find a new profession.
This transformation from Taylorist or traditional thinking to high performance work
organizations had not been easy. Traditional production or assembly lines followed a
rigid control and command. The division of labor was highly specialized characterized
by several levels of authority whereby knowledge rested with technical specialist or
senior managers. The workers were not allowed to contribute towards innovation as
their assignments were clearly defined and restricted to task completion. Training on
such traditional jobs was only through on the job learning. These restrictions had a
profound impact on the personality of workers. (Ichniowski and Shaw 1995) On the
other hand the workplace in the high performance work organizations is designed to
improve organizational performance through the development of employee abilities by
exploiting emotional capital and tacit knowledge. The technical skills are enhanced
through multi-tasking, problem solving, team-working and cross functional
communication. The emphasis is on the development of self confidence and flexibility
rather than rigidity.
There are some consequences related to the changing work environment. We have
said above that the changing organizations now have a decentralized system of
decision making, greater number of self-managed high performance teams, quality
circles, kaizen improvement and so on. These new ways of working have a strong
bearing on the employee to learn these skills as quickly as possible in order to perform
better. Thus the VET systems are now focusing on these new soft skills like team-
working, communication skills, conflict management, creative thinking and problem
solving and decision-making skills in addition to their focus on a variety of technical
skills. The names may differ like in UK they are called Key Skills while in Singapore they
are called “Critical Enabling Skills”. The definitions and components of each module
may differ from country to country and culture to culture. Green et al (2001) have put
forward the argument that out of the new skills of computing, team-working and
communication, only computing can be learnt at its best in the classroom whereas other
are only best learnt in an on job setting. In any case, the demand for ‘soft’ skills is
growing day by day across organizations.
Achieving the High Skills Society/Economy

9. A high skills economy is defined as “an economy with a wide distribution of workforce
skills where these are fully utilized to achieve high productivity across a wide range of
sectors, at the same time producing high wage rates and relative income equality”.
(Green 2001). Four types of High skill strategies can be categorized:
a) United States and United Kingdom: High Skilled Elites and skills polarization
b) Germany: High skill elites, skills polarization and relative income equality
c) Japan: Wide Skills Distribution, Labor intensity and cooperation, relative income
equality
d) Singapore: Uneven but rapid skill formation with discipline and high labor
intensity
The end of second world war was the beginning of major change for all great
economies like UK, USA, Germany and Switzerland though the trade models of all were
different. UK and USA relied heavily on high value, high price industries as well as labor
intensive low price industries as their markets were far and wide. UK banked on its
colonial outreach and US exploited its capitalistic wings. Germany and Switzerland
shifted their policies towards high-value, high priced industries and started developing
expertise that was difficult to replicate by others so easily. They thought of creating a
competitive advantage in industries where the new industrial economies could not easily
compete viz. the knowledge intensive and higher value-added industries which required
high level of skill from their employees but also delivered high wages.
Countries like Singapore, Malaysia and South Korea while attempting desperately to
take their citizens out of poverty and unemployment through rapid industrialization,
initially followed the low-cost, low value addition route requiring relatively unskilled labor.
They focused on mass production. However, some countries that started off as low
labor cost, low value-added and low-skilled economies started moving quickly in the
direction of high skilled, high value-added economies (Ashton et al 1999).Thus the new
industrial economies started moving in the direction of older economies following the
high-skilled route.
Meanwhile new knowledge intensive, and high value-added jobs began emerging in US,
UK and South Africa relating to Information Technology and computing. In the Silicon
Valley, new businesses emerged the beginning of which was a sudden swell in the
Research and Development spending by the US defense department. It seemed
obvious that well paid jobs in a highly skilled industry have been created through the
market forces. Britain joined the race.
Routes to High Skills Society – The Successes and Failures
The achievement of a high skills society was not a hallmark of only the old industrial
economies. Emerging low skills societies like Singapore, Hong Kong, S. Korea and

10. Taiwan of the 1970’s moved towards high skill societies in the 80’s and 90’s. (Ashton et
al 1999) Therefore the argument that societies become trapped in a perpetual low skills
equilibrium stands controversial. It is not that important to study the high skills or low
skills equilibrium but what is more important is the path these societies have taken to
move from low skill to high skill societies.
The Anglo-Saxon model assures the most degree of flexibility as compared to the
Continental European and Japanese models of capitalism. Since flexibility is good for
economic growth (Casey et al 1999) the Anglo-Saxon model of ‘individualism’ and
capitalism was considered the best. However, the debate has somehow concluded that
despite being ‘better’, the Anglo-Saxon model has variations in practice between
countries and also within them. Thurow (1994) and Reich have strongly suggested that
the long – term source of competitive advantage within the developed world is ‘skill’.
This concept formed the foundation of national policy making in UK and USA. Coupled
with this is the concept that high performance is an outcome of ‘a virtuous circle of
partnership, high trust relations and skill development’ (Keep, 2000:11) However the
research of Keep et al has strongly suggested that the key elements of Anglo-Saxon
model of capitalism rather have a propensity to limit the investment of enterprises in
skills and thus restrictively adapt the high performance workplace model.
The first reason, as put forward by Keep et al for a weak adaptation of high performance
model is the disconnect between people management policies and business strategy.
Policy makers normally refer to HRM and Business Strategy text books which suggest
that Human Resource Management is about integrating and supporting strategic
business objectives with people management system thus linking training and skills with
the business plan and strategy. However the reality, as put forward by Purcell (1989) is
that ‘skills are normally a fourth order issue’ in a majority of UK organizations. First,
second and third order is taken up by strategy, operations and HRM respectively.
Moreover, skills and training issue have rarely been part of senior management agenda.
In a landmark study done by Coopers and Lybrand in 1985 suggested that ‘few
employers think training sufficiently central to their business for it to be a main
component in their corporate strategy; the great majority did not see it as an issue of
major importance’ (1985: 4)
The second reason why high skilled, high performance workplace model lands into
trouble is that in order to be productive, its range of practices should be bundled into
interlinked, coherent and mutually supporting package. (Huselid, 1995; Pil and
McDuffie, 1996) This is a major undertaking and requires long term commitment
whereas senior management is under pressure to demonstrate performance through
short term achievements and bottom-line results. Under such circumstances, an
unpredictable and risky process required for reshaping work practices is often
neglected.

11. Streek (1989) has argued that enhancing the cost of labor and giving the rights of
consultation and information to representatives of labor can help defy the cost-based
competitive strategies as this will bring the employee skills issue to the center of senior
management attention. Awareness of such rights by the employees may also lead to
better skill usage through better job designs and high involvement work systems
requiring workforce training. But this needs legislation and labor market regulation.
Unfortunately UK and USA stand last in OECD labor market regulation. In another study
carried out by van de Velden and Wolbers (2001: 8), UK again hold the last position in
employment protection. This flexibility in legislation coupled with has allowed the
employers to exploit the employees in terms of employment security, non-standard
forms of employment and training & development. The worst form of exploitation was
seen with for the ‘peripheral’ workers who received least or almost no training at all
thereby decreasing their skills yet further. (Falstead, Ashton and Green, 2001: 22)
National Competitiveness and Productivity (Total Factor Productivity including labor
productivity) has been coined as reference point terms for policy discussions on high
skills. Sadly however, there is no common consensus among countries, societies and
researchers. Different factors are thought to contribute to national competitiveness with
varying degrees of contribution of each. Skills are also one of the many factors
considered to contribute to competitiveness but their role varies from across
organizations and industrial sectors. A comparison of different countries on Total Factor
Productivity reveals that the US tops in the world because of its capital productivity and
productive labor across many sectors of the economy. The capital productivity of
Germany may be low but its manufacturing sector has high productivity. Likewise, the
banking sector of Japan is not fully developed but is compensated by the manufacturing
sector in TFP which is moderately high overall. Strong work ethics and immense
capability for cooperation in Singaporeans helps them in ranking fairly high on the TFP
table despite the fact that their labor productivity is lower than Japan, Germany and
United States. The capital productivity came to rescue UK (higher than Germany and
France) offsetting the low labor productivity which was considerable lower than Japan,
Germany, Singapore, France and United States.
The pressures of globalization on skills and VET forced the stakeholders to find a
common ground for recognitions and acceptance of various ‘qualifications’ and
expertise imparted by the system. This was however an uphill and difficult task because
the ways in which these systems work across boundaries and economies vary greatly.
Firstly, the schools and their qualifications did not cover many occupations at the basic
level especially in UK and USA. Secondly, it was difficult for US and UK to recognize
the work – based expertise and competence because of a lack of universally accepted
curriculum as there was none. But the same situation in Germany was simple and
different because of the apprenticeship system that incorporated and integrated school

12. based learning with work – based experience. Thirdly, the ‘newer’ skills like team-
working, information technology, communication and problem solving, considered now
to be key source of competitive advantage had been missed out. While the ‘outline’ of
problems and solution in all countries may appear similar, the ‘details’ were
characteristically different across countries. In the past few decades, UK and US have
aggressively tried to establish certification and recognition process with limited success
and many complications.
Another key issue relating to vocational qualification was reaching an agreement on a
common currency for understanding and measuring the qualifications. This is quite a
formidable task and a concept of National Qualifications Framework (NQF) was coined.
Young (2003) has identified six assumptions (Annexure IV) that can be the basis for a
unified assessment of an NQF but they could not be implemented in totality. UK
introduced the national framework for vocational qualifications much earlier but the its
extension to all qualifications remained limited in England. (Scotland is an exception). A
two pronged strategy involving colleges on one end and employer bodies combined with
NCVQ on the other, helped Scotland reach its goals much earlier than its counterparts.
Countries currently under study are primarily UK, South Africa, New Zealand, Germany
and France. There is a need however to extend it across more continents. The ‘ideal’
framework as given above may be good in terms of theory, in practice however, national
frameworks vary far and wide in their content, context and execution.
And Finally: VET Policies are not Transferable!
One of the implications of race towards globalization had been that a lot of policy
makers try to find an easy way out to the problems at home by trying to ‘import’ the
policies or ‘best practices’ of others. They tend to forget however that although the
models look attractive and implementable in terms of practices, delivery systems and
training principles, their replication is impeded by cultural, societal and institutional
elements. (Turbin 2001, Young 2003) While studying a major initiative (FORCE –
Formation continue’ en Europe) the impact of societal context on in UK and Germany
on transferability of learning practices was analyzed. It was found out that though the
two societies looked similar from the outside, there were marked differences at the
structural and institutional level that limited the transferability to ‘general awareness’. In
a landmark study (Kearns et al 2000) involving five countries (Britain, US, Sweden,
Germany and Netherlands), it has been revealed that all governments are attempting at
lifelong learning culture by integrating educational, social and economic policies to fight
social exclusion and improve competitiveness. The importation of policies from other
countries has not been successful.
Conclusion:

13. We have seen above that for the last 70 years, various countries have adopted various
strategies to reach one goal – the achievement of a high skills, high value added society
through VET. Each country, however, adopted a unique strategy and model to suit their
environment, institutions and cultures. The key reason for success was an overall
commitment of all stakeholders (Industry, Government and Trainees) in defining and
consistently following a comprehensive and competitive strategy. The idea of a
universal VET model is still hanging in the balance because of challenges in reaching
common definitions of assessment criteria, legislation, technology, institutions, skills,
culture and priorities.
References:
1. Acemoglu, D. (1993), ‘Labour Market Imperfections, Innovation Incentive and the
Dynamics of Innovation Activity’, Paper presented to conference, The Skills Gap
and Economic Activity, Center for Economic Policy Research, London.
2. Arnal, Elena; Ok, Wooseok & Torres, Raymond (2001), Part B & C of
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Education, Employment, Labour and Social Affairs, Employment, Labour and
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3. Ashton, D. and Sung, J. (2000) The Growing Importance of Workplace Learning,
Extract from Chapter 1 in Supporting Workplace Learning for High Performance
Working, Geneva ILO: pp 11 – 22
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17. Annexure 1: Sources of Market Failure
The main sources of market failures are:
1. Capital Market Imperfections: When the social discount rates are much lower
than private discount rates for individual decisions on training, there can be
serious difficulties faced by firms for borrowing finance to invest on human
capital.
2. Risk: The uncertainty of return on training dissuades investment on training. To
minimize the risk, it is sometimes proposed to spread the risk over the pool of
taxpayers.
3. Misperceptions: If the parents of the trainees were untrained, they may expect a
lower rate of return on training investment and thus abstain.
4. Externalities of Market Size: Abundance of trained people relevant to a specific
industry can help substantial growth of that industry an improve its
competitiveness in the marketplace.
5. The Tax System: has the capacity to make the social rate of return on education
substantially higher than the private rate of return.
6. Unemployment of Less Skilled Workers: The chances of an unskilled labor
staying unemployed are more than an skilled labor. This increases the burden on
state which loses on productivity as well as unemployment. But there are strong
arguments against training of such a force through tax finances. Nevertheless, an
equitable system to provide training to everyone is supported.
7. Monopsony: This is where the firms hiring and training employees cannot retain
them because of their deficiencies in capacity to retain the trained workforce and
exploit their true potential. These trained people are then used by other firms for
their benefit.

18. Annexure II
There are 6 major changes which will have the most impact on Vocational Education
and Training.
1. International trade is growing rapidly. It is estimated that global trade is almost
one fourth of global GDP but all societies are not participating in it equally. The
service sector has recently shown more growth than the manufacturing sector
(UNIDO 2001: 8) which was primarily coming from the developed countries.
Developing countries are also major contributors of manufactured goods but this
is primarily restricted to Asia.
2. The flow of capital (FDI) was mainly towards China because of low cost labor.
Instead of going into new production activities the flow of capital was more
towards mergers and acquisitions.
3. Advances in Information Communication and Technology (ICT) has facilitated the
formation of global markets
4. Non-tariff barriers have been removed and tariff rates have been lowered.
5. Production has been decentralized and moved to different parts of the world.
6. High involvement/performance ways of working have set in.

19. Annexure III
The Impact of Change on a National System – The Case of Pakistan
Pakistan inherited negligible TEVT facilities at the time of its creation in 1947 which
included two few vocational institutions and a couple of engineering colleges. The
education policy aimed at doubling the number of polytechnic institutions, colleges of
technology and vocational institutions from 45, 11 and 400 respectively still cannot
make a big difference in a population of 160 million people out of which about 70% are
below the age of 35 years. (Gillani 1994) According to the constitution of Pakistan,
federal government is responsible for policy planning and overall guidelines to ensure
uniformity in curricula, text books and standards of education. Interpretation and
implementation of these policy guidelines and projects is the responsibility of the
provincial governments. Each institution is independent in its objectives and training
programs and are free to choose the range of duration, content, structure, entry
qualifications and modes of training.
The polytechnics impart training for the technicians by offering a three year post
matriculation (high school – 10 years of schooling) diploma of associates Engineering
(DAE) in different areas of expertise. Another two year course is offered by Colleges of
Technology for these diploma holders. Commercial training institutes are dedicated to
training in commerce and offer one year post matriculation course C. Com and a further
one year leading to D. Com taking candidate to B. Com and M. Com in another 2 and 4
years respectively. As Agro Technical Scheme, prevocational school level training is
offered school level.
The industry, being the end user of the human output of these technical education
systems is not very satisfied with general quality of its students which they attribute to
the poor quality of its teachers. In order to cope this challenge, a network of teacher
training institutions has been established. However, the number of trained teacher still
remains low due to the shortage of resources and the relieving of working teachers by
their respective institutions for long periods of training.
It is estimated 46 per cent of teachers in technical schools have no teacher training.
Remaining 54 percent have training of varying lengths. More than half of the teachers
are teaching students with an equivalent qualification e.g. a diploma holder teaching a
diploma holder. Curriculum is also outdated with little or no exposure to emerging
technologies. Even when the teachers are promoted to administrative and decision
making positions, they are not given any formal training.
The VET system in Pakistan is close to the “institutional Model” whereby the training is
provided by the government without active involvement of the industry. Though industries are
represented at some level, the curriculum is set by a government institution. Simultaneously
there is an informal sector of training, resembling more to the “Market Model”, where markets

20. and the industry train only the much needed skills to the trainees which can potentially have a
quick impact on productivity, output and performance.
In 1973, a “Dual System” was launched in the biggest province of Punjab with basic training in
the Apprenticeship Training Centers and hands-on training in the industry. This worked very
well in the beginning but the results were fairly depressing. There were many reasons for this: It
was difficult for the training institutions to hire trained craftsmen to impart training because the
industry presented lucrative offer for their career. Some industries opted out of this program
because they did want the apprentices to experiment on their expensive machines. Thus Pakistan
was another example of and ‘imported’ VET model failure because of differences in skills,
technology and culture.
Annexure IV

21. Young (2003) has identified six assumptions that can be the basis for a unified
assessment of an NQF:
a) Describe all qualifications against a single criteria
b) All qualifications should be ranked on a single hierarchy
c) All qualifications should be assessed on the basis of ‘learning outcomes’
d) Uniform and transparent ‘credit rating’ system should be introduced
e) Framework should provide a benchmark against other learning and qualifications
It should be an instrument for meritocracy