The impact of Bologna to the German labour market: competition or complementarity of vocationally and academically qualified employees
The presented results derive from a project focusing on the competition between vocational and higher education. Qualification and skill utilization of the respective educational programmes shall be evaluated regarding occupational status, positions and income.
Germany expects deep changes in the educational system and on the labour market due to the introduction of three year, vocationally qualifying bachelor programmes. Two central arguments constitute the substitution or even erosion of apprenticeships and firm-based trainings: due to changes in recruitment patterns of firms, vocationally trained persons could be competing with academically trained bachelor graduates for the same positions and students leaving school with a higher degree allowing them to go to a university could increasingly flow into bachelor programmes instead of taking up an apprenticeship. The new bachelor programmes have a comparable duration to apprenticeships (leaving aside the possibility of shortening VET programmes for high-performance trainees), but promise a higher prestige and a higher wage classification as well as giving access to a broader set of follow-up programmes (cf. Baethge et al. 2014; Dobischat/Fischell/Rosendahl 2008; Severing/Teichler 2013).
Further trainings regulated by public law can be linked to three levels of the German National Qualification Framework (GQF). The first level (“Fachberater”) is linked to level 5, master craftsmen and comparable vocational degrees (“Meister” and “Fachwirte”) are linked to level 6 and the third group (“Betriebswirte”) is linked to level 7. This means they are equivalent to bachelor (level 6) and master (level 7) degrees. Changing recruiting strategies of firms to favour academically trained graduates would cut traditional vocational career paths and thus the attractiveness of VET as a whole. Commercial and theory oriented occupations are expected to experience high competition between vocationally and academically (especially in bachelor programmes) trained graduates, unlike industrial and skilled manual occupations (cf. Weiß 2007).
Up to now, several surveys among companies have been conducted to learn more about the acceptance of, experiences with and partly (first steps) of bachelor graduates‘ career paths. Results differ and show relatively high acceptance and positive employment prospects of bachelor graduates (cf. Konegen-Grenier/Placke/Schröder-Kralemann 2015; Briedis et al. 2011; DIHK 2011) but also dissatisfaction due to bachelor programmes being out of step with actual practice. (cf. DIHK 2015).
This paper analyses data from the BIBB/BAuA Employment Survey 2012 and focuses on employees’ income. From an individual perspective the monetary outcomes of persons with equivalent qualifications are compared. Equivalence of qualifications refers to the GQF. To find comparable occupational positions the national classification of occupations which includes information on qualificational requirements is used.
Following human capital theory and the approaches of skill-biased technological change and task-based technological change (Autor/Handel 2009) different qualifications will lead to different wages. Segmentation theory (Doeringer/Piore 1971; Piore 1978) shows that longer job tenure will bring employees in more secure segments of firms’ internal labour markets. This would result in competition regarding positions, not tasks, with longer job tenure. Beside these the project draws on the signaling and screening approaches.
In the former (Spence 1973, pp. 355 ff.) reduction of information asymmetries is achieved by using signals. The side with better information will act first and give a signal indicating a non-obvious characteristic. In the latter approach (Stiglitz 1975) the side with less information acts first. Traditionally the education system is viewed as an important screening institution, where screening is a secondary function: „providing knowledge (skills) and guiding individuals into the right occupations“ (Stiglitz 1975, p. 294).
The main research question in the project is whether bachelor graduates increasingly replace candidates qualified in the VET system on the labour market. The presented paper investigates income differences between those groups.
To answer the research questions the project overall follows a mixed method approach. Corresponding vocational and academic qualifications will be examined by means of document analysis under consideration of the classifications of the German Qualifications Framework. An analysis of job offers in the media with regard to the respective company positions and activities will be carried out as well. In addition, the recruitment strategies of the enterprises in different industry sectors and the criteria relevant to them will be examined more closely by means of case studies and a company survey. Finally there will be a follow-up survey to the 2017 BIBB/BAuA Employment Survey which is expected to deliver insights into the usability of vocational and academic qualifications on the job market, in particular from the individual point of view.
The results of this paper derive from using the so called shortcut-method (cf. Psacharopoulos/Ng 1994) to denote the private return to investment in education (cf. Kopatz/Pilz 2015, p. 314f.). This serves as a first approximation to the usability of qualifications on the labour market. Using this method one can compute gross income differentials with the employment data, restricting the analyses to persons with their highest education being either academic or vocational training. Four levels are differentiated: academic training (including all academic education except for bachelor’s degrees), bachelors’ degrees, further education and initial vocational education and training. The following formula will be used to compare income gain due to academic training to an average income in this training period for individuals with a vocational training: r_i=(Y_ia ̅- Y_iv)⁄(d_ia^'* Y_iv), with r_i := return to investment in education in occupation i; Y_ia̅ := average gross income in occupation i for those with academic training; Y_iv := average gross income in occupation i for those with vocational training and d_ia^' := (estimated) average duration of academic training for occupation i.
The data source used to find the presented results is the current BIBB/BAuA Employment Survey 2012, where 20,036 persons, between 15 and 65 years of age, having paid work of at least 10 hours per week have been surveyed in a computer-assisted telephone interview. Topics of the survey include qualification careers (up to five completed qualifications), tasks performed at, skills used in and knowledge needed for the current job, requirements of this job, physical and psychological stresses and more.
In the German case the analyses show that academic qualified employees on average achieve higher incomes than employees qualified in further educational programmes (r=2.78%). This is particularly the case in legal, management and economic science occupations (r=3.98%). But if instead of all academics only bachelor graduates are compared to persons who have completed further education the positive effects clearly decrease respectively turn negative (for all employed persons r=-0.85%).
The results are even clearer when using apprenticeships as standard of comparison. Compared to employees whose highest qualification is an apprenticeship academic qualified as well as further trained employees achieve higher incomes (r=8.24% for academic training; r=7.14% for further education). It is noticeable that the income advantage of employees who hold a bachelor’s degree is considerably smaller than that of further trained and academic qualified employees (r=4.8%). Taking apprenticeships as standard of comparison interesting differences between different occupational fields become apparent. Here, the negative effects of further training and bachelor’s degrees in the legal, management and economic science occupations are especially mentionable (r=-1.13% for further education; r=-3.98% for bachelor degrees).
Overall results for Germany implicate that academic education as well as further education lead to higher incomes, which means a positive return on investment in post-secondary education above apprenticeship level. But the results also show that this slightly positive effect is related to the occupational field as well as the concrete post-secondary educational programme. Here employees who hold a bachelor’s degree take the lowest monetary advantage out of their qualification. This might be due to still relatively few employees with these degrees on the labour market and hence employers only having little experience with bachelor’s degrees expected work capabilities. In general, the results show how educational attainment determines professional and social opportunities.
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