Economic Policy and Vocational Training in the UK - Essay Example

Economic Policy and Vocational Training in the United Kingdom Economic Policy and Vocational Training in the United Kingdom Goes Here Institutional Affiliation Goes Here Abstract This paper explores vocational education in the United Kingdom as compared to other European nations. Reasons for current level of investment in education of 16 year old students who 'stay on' vs. those who leave school and go directly into work are examined. European Union educational policies and programs are examined as well as United Kingdom's compliance with EU policies. The Lisbon strategy and other educational/vocational initiatives are explored as well. Finally, recommendations for policy changes will be detailed and explained. Executive Summary In comparison to other countries in the European Union the United Kingdom lags in literacy and numeracy rates. At age 16 the 'staying on' rate for students transitioning into vocational education is below desired rates with the majority of students not 'staying on' being from poorer or minority families. The United Kingdom's attempt to change the course of decline in educational outcomes has met with limited success. The United Kingdom has made three major policy changes that should affect literacy rates and staying on rates. The U.K. has chosen to lengthen the compulsory education mandate from 5 to 16 to 5 to 18. The U.K. has also mandated a 'literacy hour' each day where students and teachers focus only on literacy education. The United Kingdom has also mandated that public schools follow the National Curriculum so that all students are educated using the same standards. The desired outcome of these changes are higher literacy rates, increased staying on rates, and standardization of curriculum across the U.K. The long term outcomes of policy changes would ideally give the United Kingdom a competitive advantage in the E.U. marketplace. If the United Kingdom continues with current trends businesses in the U.K. may look elsewhere in the E.U. for qualified workers thus taking business away from the U.K. Introduction The end of World War Two and the creation of the European Union have brought changes to how children are educated in the European Union. This paper examines those changes and evaluates current policies in place in the United Kingdom. For the purpose of this study three member states and their educational systems have been examined. The United Kingdom is the focus of this paper while data and educational programs in Germany and France have been examined for comparison. All three countries have compulsory education laws that require children attend school during certain years of childhood. All three have tracks that children can follow with some transitioning into vocational education while others transition into higher education (university study for example). And, all three are European Union member states. How these member states prepare their 'human capital' is important to the European Union as a whole. The move toward open borders, open markets, brings forth the need to have qualified workers in all sectors of the economy. It only makes sense to prepare future workers in the European Union in a similar way with those performing the same jobs having attained the same qualifications. This was not so important pre World War Two when each country had its own isolated economy. The completion of the Chunnel connecting France and England and the completion of the land bridge connecting Sweden and Denmark further opened borders to more commerce. Countries are responsible for preparing their 'human capital' to function (work) in the global market place. As the European Union moves closer to social and economic cohesion it is more important than ever for it is for workers to be trained or educated to function in this new marketplace. Human Capital Human capital is best understood as "the physical means of production" (Becker, G 1993). Investing in human capital is much the same as investing in equipment. The equipment desired to complete a job would be equipment designed, and in good working order, for completing the job. Investing in human capital is investing in the training of the workers as well as investing in the social welfare of the workers. Investment in human capital begins long before the workers are ready for work. It begins in early childhood and consists of logical steps through a preparation process that should meet the needs of the students as well as the state they ultimately work in. Investment in human capital also consists of funding continuing education programs or qualification/certification programs. Companies benefit from having employees with advanced certifications while the workers gain by being compensated (higher wages) for maintaining a high level of proficiency. General training in all jobs/firms has the effect of raising productivity in all jobs/firms. With general training the labour market becomes more competitive: W=MP. Specific training is training unique to one firm. This has the effect of raising productivity within that job/firm. The United Kingdom sets itself up for failure if it does not adequately fund vocational education programs that educate and prepare students for the labour market. If the labour market falls short of workers then production of products and services provided by companies will fall short as well. With the advent of the European Union and open borders it is imperative that the U.K. educate its workforce or stand to lose business to other member states in the European Union. Without a qualified workforce the United Kingdom will see companies either bringing in qualified foreign workers or moving the company to another member state with a qualified workforce. Market failure leads to economic failure which leads to high unemployment and increased crime rates. The United Kingdom is responsible for making sure that its Human Capital are adequately trained and prepared to work in a competitive environment. Not focusing on development of human capital can result in market failure. The answer to the question "Who bears the costs" is a bit complex. The government bears overall responsibility for keeping the United Kingdom competitive in the European Union. Companies in the United Kingdom share some of that responsibility as they cannot function with out a properly prepared workforce (Human Capital). The shortage of skilled workers in the U.K. effects how competitive the country is in the European Union. Shortages affect the overall wellbeing of the people of the U.K. Demand for people with certain qualifications acts to raise the compensation provided to those qualified workers. As more workers become qualified the compensation will decrease. Those workers in demand receive higher wages and enjoy a higher standard of living. Those workers also benefit from social cohesion, and effective democratic participation. Social Cohesion is a major goal of the European Union. Education in the United Kingdom A child's education, and future, begins when the child goes to nursery school and begins to learn how to function as a member of a greater society. Compulsory education in the U.K. begins at the age of 5 and ends at age 16. Most students attend public school and are educated using the National Curriculum mandated by the Education Reform Act of 1988. In primary school students are taught many subjects by one teacher. When they move on to secondary school at about age 11 they are taught by subject specific teachers. At secondary school the students are streamed according to ability levels. It is at this level that the schools begin the process of preparing students for one of three choices: sixth form (college), vocational schools or apprenticeships (National Vocational Qualification Programme, NVQM), or they choose to leave school and enter the working world. After sixth form students who 'stay on' enter college or universities. There is some variation in preparation for higher education in Wales, Scotland, and Ireland but for the most part students are prepared for higher education in much the same way throughout the United Kingdom. For students that don't go on to university, there is another option that they can choose. This option is the United Kingdom's Modern Apprenticeship (MA) program. Unlike continental European countries that arrange an apprenticeship agreement between students and employers, the U.K. student needs to seek an employer that offers an apprenticeship program. This can be done by looking for an employer who advertises their need for entry level workers or by going thru their local and enterprise council.(Steadman, 2001) Students are most often directed to a training provider who trains the students. Interestingly, apprenticeships in European countries are offered to students with the better grades. It may be that students that do not excel in academics would be better suited for apprenticeships programs. Most students that do enter apprenticeships in the U.K. are 16 years of age. Most students in France and Germany enter apprenticeship programs at the age of 18+. The extra two years of preparation may position the German and French students for success. (Steedman, 2001) Problems with the educational system in the United Kingdom will be addressed later in this paper. Education in France Free and secular education became available to all children in France in the 1880's. Education is compulsory for children from age 6 to age 15. Many children begin their schooling much earlier by attending kindergarten at age 3. Although attendance is mandated at age six those who delay entry until age 6 deprive their children of the first year of reading instruction which begins at age 5. Children progress through primary school and move on to Collge (Junior High) by age 11. The next level, Lyce, begins at age 15. Despite the fact that compulsory education ends at age 16 most students in France 'stay on' and sit for the Baccalaurat Gnral which is equivalent to the U.K. A levels. By completing this level of education students are eligible to apply for university. University education is not free but low cost and subsidized by the French government. Vocational training in France consists of "three routes: general, vocational and technological education. The last two deliver diplomas from the CAP (level V) to the qualification of engineer (level I) via the BTS. They may be obtained through educational establishments, as part of apprenticeships or through block release contracts." (France Diplomatie) Most vocational education is provided via employers as on the job training. Students are paid while they attend the vocational training program and transition into the workforce as they complete their training. Education in Germany A state paid for education is available for children in Germany. Many parents opt for one of the many different private schools for their child's kindergarten and elementary schooling. Children are all given four options when they reach about age 10. They can continue on with an elementary style school until grade nine, enroll in middle school, enter gymnasium until grade 12/13, or opt to attend a comprehensive school that includes all the above options. Like France and the United Kingdom compulsory education begins at 6 and goes until age 16. Unlike France and The United Kingdom, a student in Germany can change their mind late in their education and follow another chosen track. After attendance at a secondary school students can either go to university or opt for a vocational/apprenticeship training regimen. What differentiates German schools from those in France and the United Kingdom is the longer school day and the greater opportunity to explore occupations and change ones mind if so desired. Similarities and Differences These three countries share the desire to provide an adequate education to their young (human capital). They all mandate compulsory education and for the most part have a smooth transition through the educational system with eventual university study or vocational training. The major difference, and shortfall, that the United Kingdom experiences are the low 'staying on' rates of its 16 year olds. Current figures indicate that the 'staying on' rate is only 50% with poorer and minority students opting to join the workforce rather than continue on with their education and obtaining a better job. Staying on rates for the cohort measured in 1996 were 61% for poorest, 71% for middle income, and 86% for high income.(Machin, S 2006). The United Kingdom has recognized this disparity and addressed it by paying an Education Maintenance Allowance (EMA) to students between 16 and 19 who choose to 'stay on' an additional 3 years. (Machin, S 2006). A means test is required to qualify with poorer students benefiting. It is assumed that these students would otherwise opt out at 16 because of the economic gain they represent to their families. This short term decision by the 16 year old to work has long term ramifications as the student gets older and is thus no longer eligible for state funded education. They end up staying in low paying positions for the long term. Another pressing issue for the United Kingdom is that a worker who went through the U.K. apprenticeship program and attains the NVQ3 qualification is often unqualified to work in other European countries. And, those trained in other E.U. countries, in programs supposed to be equivalent to the U.K.s program, often are qualified to receive a higher rating in the U.K. "French policy is interventionist and includes an employer training levy. British policy has abandoned levies and emphasizes individual initiatives by workers and employers. Despite contrasting policies, the character of training provision is similar in both countries, being mainly arranged and financed by employers. Differences are that the French system offers both higher public subsidy and cost-sharing between training and non-training employers. Training provision is higher in France and occurs earlier in the working life-cycle. British policy could usefully reconsider employer levies for solving training under-investment".(Greenhalg, 1999) Problems specific to the United Kingdom As stated earlier one of the major problems that the United Kingdom faces is the 'staying on' rate of its 16 year olds with poorer and minority students disproportionately opting out of further education. The United Kingdom faces another potentially serious problem: low numeracy and literacy rates compared to other European Union member states. "The United Kingdom has a low skill base compared with competitor nations."( Crowley-Bainton, 1997) Low literacy rates lower the number of individuals ready for vocational training. A comparative chart follows: Numeracy Rates (Machin, S 2006) 16-25 26-35 36-45 Germany 96% 95% 94% United Kingdom 78% 80% 81% Literacy Rates (Machin, S 2006) Germany 91% 88% 86% United Kingdom 83% 82% 83% At risk of embarrassing the United Kingdom the much higher rates for Belgium, Switzerland and the Netherlands were left out! It is no secret that the United Kingdom is struggling with educating its youth. That's not to say that the United Kingdom is not tryingthey are. There are plans in the works that would change compulsory education to 5 to age 18. The change in policy is designed to eliminate the problem of too many students not staying on past age 16. This policy change offers the United Kingdom the opportunity to raise numeracy and literacy rates. It is understood that many students are not university material (or not interested) but these students need to be drawn toward vocational/apprenticeship training that would offer them a higher standard of living than opting out and getting a low paying job at age 16. It is also important to note that it is vitally important for the United Kingdom to create and maintain a qualified workforce that can compete in the European Union. Otherwise the country faces losing jobs to more qualified workers in other E.U. member states. The United Kingdom has also mandated a 'literacy hour' be taught to all primary school students. These Literacy and Numeracy Strategies undertaken by the United Kingdom aims to improve basic literacy amongst U.K. students. As these students move into the workforce the adult literacy rate will rise. There are worrisome indicators in the United Kingdom when it comes to educating its youth. A headline in The Times of London read "Further education trainees fail to meet literacy standards" (Blair, 2007-1-19). The headline is an alert but the content of the article is nothing short of startling: "The training of some further education teachers is being held back by their inability to read, write, or use ICT right" (Blair, 2007). Imagine a teacher that can't read or write! The United Kingdom has actively pursued solutions to its educational dilemmas. The BBC reported on April 1st that more than 5m has been awarded to a group of seven schools in Lincolnshire planning to build a new college. What's most important about this college is that it will focus on vocational education by offering courses in construction, car maintenance, hair and beauty, travel and tourism, and hospitality and catering. This college will offer non-university bound students with vocational training that gives them a better long term outlook career wise and the college will offer the United Kingdom more qualified vocational workers. In this article Councillor Christine Talbot was quoted as saying "we have supported the schools in their commitment to work collaboratively to help provide the best opportunities for young peoplethis project will transform the range of education for learners in the area". The United Kingdom's greatest challenge will be maintaining their market presence in the European Union. As a member state the U.K. benefits from E.U. policies. The European Union developed the "Lisbon Strategy" in March of 2000 to address education and economic development in Europe. Some would argue that the Lisbon Strategy is far behind its goal of being "the most competitive and dynamic knowledge-driven economy by 2010".(EurActive, 2007) Others would argue that there is slow progress being made and the strategy need not be abandoned. For the United Kingdom this strategy offers guidance in "investing in people and combating social exclusion" (EurActive, 2007). The Lisbon Strategy's focus on the 'learning economy' provides a model for the U.K. to emulate. Conclusion and Recommendations Strategic priorities in the United Kingdom include "the State aiming to devote significant resources to fund training for those who need it, are unable to pay and are unlikely to be adequately supported by employers. This includes, in particular, young people and those who have been out of work for some time." (Crowley-Bainton, 1997) The United Kingdom's main problem is not the lack of funding but the lack of students choosing to continue with their schooling that would lead to National Vocational Qualification (NVQ). The United Kingdom is on par with other E.U. countries in moving students from a purely academic environment to a vocational training environment at age 10 to 11. Students are streamed according to ability levels. The reason Germany and France do not have the problem of students dropping out at the end of their compulsory education period is primarily due to cultural differences. Education or vocational training is a priority in these countries and their cultural norms do not support the idea of dropping out. In the United Kingdom, the goal of many students is not to stay on longer but to leave school at age 16. Compared to other European Union member states the United Kingdom is lacking when it comes to vocational training of its youth. The low 'staying on' rate for poorer and minority groups remains a problem. Literacy and numeracy in the United Kingdom lags behind countries such as Belgium, Sweden, and Germany. Lower literacy rates and lower rates of students 'staying on' for vocational training put the United Kingdom's place in the European Union marketplace in jeopardy. If the United Kingdom fails to further invest in their human capital businesses requiring workers with vocational training will find workers elsewhere in the European Union. The ease of transporting goods in the European Union make the competition to keep businesses in communities that much harder. The United Kingdom needs to take steps to boost their levels of students choosing to 'stay on' past age 16 and attend vocational training. The mandating of compulsory education from 5 to age 18 may boost literacy rates in the United Kingdom in the long run. Real success could be measured in the numbers of students moving on to vocational training that would otherwise opt out at 16. It will be critical for the United Kingdom to continue to provide EMA to poorer students despite the fact that 'staying on' until age 18 will be mandated. The poorer students would still be at risk of dropping out because of perceived economic gains they could provide to their families. It is hard for teens to see past next year and many don't understand the ramifications dropping out could have for them in the long term. Informational programs targeting at risk youth encouraging them to continue on with their education (university or vocational) and EMA provided to the students may be what it takes to keep these students in the academic arena a little longer. The ideal situation would be all eligible students moving into university or vocational training. Partnerships between schools and industries that require workers with specific vocational skills should be encouraged. Programs marketed to youth can provide these students with a clear idea of what path they would need to take to obtain certain jobs while providing businesses with newly trained workers. School/Business partnerships could be a win win situation for some areas. The United Kingdom needs to take advantage of programs that are already available. One organization that could be partnered with is the European Centre for the Development of Vocational training. This organization functions as a clearing house with information about vocational training within the European Union. One of the main goals of this organization is to ensure economic and social development within the E.U. It is not unthinkable to send students to other E.U. member states for vocational training that can not be obtained in the U.K. but would be of great value to the U.K. One of the keys to success of any program is marketing. How the program is presented to the audience (potential vocational students) will dictate participation rates. The United Kingdom would benefit by a survey of what vocations are currently in demand and a forecasting of what vocations would be in demand in the future. Businesses could be surveyed about what they feel they need the most from students/new hires that come directly from vocational training. Partnerships between businesses and vocational schools would benefit all involved. Finally, the United Kingdom would benefit from renewed initiatives to move more 16 year olds into apprenticeship programs and further regulate minimum levels of performance. The United Kingdom would benefit from bringing NVQ in line with other European countries. References American Psychological Association (2001). Publication manual of the American Psychological Association (5th ed.). Washington, DC: American Psychological Association. Blair, A. (N.D.) Further Education Trainees Fail to Meet Literacy Standards. Times, The (United Kingdom), Retrieved Sunday, April 08, 2007 from the Newspaper Source Database. Crowley-Bainton, Theresa. (1997). United Kingdom: Encouraging Employer Investment. International Labour Organisation. Gary S. Becker (1964, 1993, 3rd ed.). Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. Chicago, University of Chicago Press. ISBN 978-0-226-04120-9. Greenhalg, Christine (1999). Adult Vocational Training and Government Policy in France and Britain. Oxford University Press. 1999, Volume 15, Issue 1 EurActiv. (2007) Lisbon Agenda. EU News, Policy Positions & EU Actors Online. Retrieved 2007-04-09 from www.euractiv.com/en/agenda2004/lisbon-agenda/article-117510 France Diplomatie. 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