Significant growth in apprenticeships over the past 25 years…

7Apprenticeships and professionalisation contracts, which fall under the heading of work-based vocational training, have been growing in France for around thirty years. Graph 1 shows that the number of people in work-based vocational training rose from 440,000 to 540,000 between 1990 and 2013. However, this number has fallen significantly since 2011. This decline can be explained by a number of factors: the abolition of the fixed compensatory allowance (see box 1) for businesses with more than ten employees (subsequently reintroduced for businesses with up to 250 employees) in 2014; the expansion of the ‘jobs for the future’ government-sponsored programme, which may have been at the expense of apprenticeships; the replacement of the Diploma of Technical Studies (National Vocational Qualification Level 2) in 2009 with the professional baccalaureate, which stipulates an apprenticeship of three years’ duration, rather than the previous two years; the decline in economic activity in certain sectors, such as construction, which traditionally offered a large number of apprenticeships.

1

Number of trainees under apprenticeship and professionalisation contracts^a, in thousands

Number of trainees under apprenticeship and professionalisation contracts^a, in thousands

Note: ^a Also includes ‘contracts of qualification, orientation and adaptation’ until 2006.

2

Expenditure on work-based vocational training programmes aimed at youths under 26 in thousands of constant 2012 euros

Expenditure on work-based vocational training programmes aimed at youths under 26 in thousands of constant 2012 euros

8The growth of apprenticeship schemes witnessed in the last ten years is the result of generous government, regional, and business funding, which rose by 51% between 2000 and 2012, as shown in graph 2. Expenditure on professionalisation contracts, on the other hand, fell by around 600 million in constant euros between 2000 and 2012.

9The growing apprenticeship numbers of the last twenty years have not however bridged the gap with other countries: the number of people in work-based vocational training (apprenticeships and professionalisation contracts) remains much lower than in those countries where young peoples’ labour market entry into the is smooth and where work-based vocational training plays an important role, as shown in graph 3.

3

Number of employees pursuing work-based vocational training courses per 1,000 employees in 2008-2009

Number of employees pursuing work-based vocational training courses per 1,000 employees in 2008-2009

… that has benefitted the highest qualification levels

10Apprenticeship numbers have witnessed a sharp growth since the 1990s. However, the scheme’s share has stagnated among those with the lowest qualifications (CAP, National Vocational Qualification level 1), while increasing sharply among those with higher qualifications. Thus, in 2011, two thirds of young apprentices had already acquired other qualifications before embarking on the apprenticeship programme, compared with one in two in 1992 (graph 4). Over the period 2004-2010, the overall increase in apprenticeships hid a growing number of higher education apprenticeships (+ 24%) and a 6% drop in apprentices at CAP level or below (graph 5). Higher education now contributes over a quarter of total apprentices in France, compared to virtually none in Germany. While those in higher education may well benefit from undertaking an apprenticeship, the existing literature shows that apprenticeship schemes have a much greater impact on those young people who lack formal education (box 2).

4

Inflows of apprenticeships per year and per educational entrance level

Inflows of apprenticeships per year and per educational entrance level

Theoretical justifications for public intervention

11Taking an economic efficiency perspective, one can put forward three arguments to justify public intervention in work-based vocational training.

12First of all, without public intervention, practical skills (such as English-language proficiency or accounting skills), which are valued in various sectors and businesses, could fall to unsatisfactory levels. Indeed, in a world of flexible markets, employees will benefit most from acquiring a set of general skills: labour market competition will then ensure that they reap the benefits of such skills in full, as reflected in their salaries. However, with a large share of employees earning the French minimum wage, the acquisition of general skills does not necessarily translate into a higher salary, with the additional risk that credit market imperfections will impede personal investment in undertaking further training. As for firms, they have an incentive to fund specific training courses that are relevant to their own line of work; conversely, they will shy away from investing in their employees’ general skills set, in particular if it contributes to their employees securing employment with rival companies. The positive externalities generated by acquiring general skills (the dissemination of knowledge, greater employee mobility resulting in lowering the heavy drain on public finances that is unemployment) plead in favour of using public funds to subsidise training courses in the form of apprenticeships. [2]

13Secondly, both business and employee have an interest in jointly financing the acquisition of specific skills (such as mastering the chemistry of haircare or the machining of metal parts): these skills are in the main useful in the business or sector in which they were acquired. To optimise the investment, employer and employee must nevertheless first come to an agreement on how to partition both costs and benefits. If no such agreement is found, one of the parties may have an incentive to under-invest for fear they will not recover their investment. [3] Securing these personal investments therefore renders public intervention worthwhile.

14Finally, teaching methods vary greatly between apprenticeship schemes and the formal school system, with the former valuing skills that are more directly operational, be they general or specific. As such, apprenticeships can be suited to young school drop-outs, earning them a title or qualification and facilitating their labour market entry. However, as businesses have no reason to internalise this phenomenon, government authorities must intervene to develop apprenticeships aimed at young people with few or no qualifications inasmuch as dropping out of school, which is a factor in unemployment, has significant social costs. [4]

5

Number of incoming apprentices by their entrance qualification level as a % of the total incoming number

Number of incoming apprentices by their entrance qualification level as a % of the total incoming number

A large share of apprenticeship tax revenue is not used to finance apprenticeships

16In 2010, 38% of revenue from the apprenticeship tax was allocated to non-apprenticeship vocational and technological training [5] through the “out of quota” system; through this system, businesses are free to allocate part of the proceeds from the apprenticeship tax to either the apprentice training centre (CFA, Centre de formation des apprentis) or the training institution of their choice, provided that this institution is on prefectural lists. Earlier, we emphasised that many businesses have little interest in funding apprenticeships: this means they use the “out of quota” system for other purposes.

17Recourse to the apprenticeship tax is an opaque way of financing higher education and research, and diverts resources away from apprenticeships. As part of a broader reform, institutions of higher education and research must be financed via means other than the apprenticeship tax, provided, of course, that existing levels of funding are maintained. With the “Sapin law” of 5 March 2014, the “out of quota” share fell to 23% of apprenticeship tax total revenue, down from 31%; [6] while this does cut funding to higher education, it is a positive development for apprenticeships. The fact remains however that state subsidies, allocated to employers at the regional level so as to boost apprenticeship numbers, are not earmarked towards those with lower qualifications: indeed, expenditure allocation is not in any way qualification-based. [7] A first step was taken with the 2014 Finance Act, as the 1,600 euros tax credit granted to employers is now exclusive to apprentices studying towards qualifications and titles equal to or below Bac + 2 (two years of Higher Education);this first step remains nevertheless insufficient. [8]

Complex governance

18Figure 1 presents an overall view of funding mechanisms for apprenticeships in 2010. It provides a glimpse of the complexity of the system, characterised by a large number of stake holding agents and intermediaries, resulting in high management costs and an inefficient allocation of resources. [9]

19The “Sapin law” has helped reduce this complexity, lowering the number of bodies in charge of collecting the apprenticeship tax (OCTAs) from 140 to 40. However, the workings of the system, its overall management and its quality control procedures are far from transparent due to the continued large number of intermediaries. Regional authorities allocate part of the revenue collected through the apprenticeship tax and provide funding of their own; yet their work is not sufficiently coordinated, be it between themselves or with local businesses and social partners. Some regions, for example, promote apprenticeships for low qualification levels while others promote those for higher education, yet the rationale behind these preferences remains unclear. Governance differs from region to region: in some cases, a predominant role is played by the partnership between the Regional Council and state services, while in others the partnership is between the Regional Council and social partners. These differences in governance influence the range of professional training options available and the opening and closure of apprenticeship structures. [10] Moreover, having multiple disparate sources of funding within a given region is not conducive to an efficient allocation of resources between the training institutions. This wide variety of situations, together with the lack of coordination between regions, renders the implementation of a national government policy on apprenticeships very difficult, if not impossible.

The insufficient flexibility and quality control of the available range of professional training courses

20The French Ministry of Education plays a central role in shaping the apprenticeship system, a uniquely French characteristic that has been reinforced by the “Guichard law” of 1971. [11] Apprenticeships offered at apprenticeship training centres fall within the jurisdiction of both regional and Rectorate education authorities; the cumbersome certification procedure [12] acts as a brake on the growth of apprenticeships, in particular at the lower qualifications levels. The heavy emphasis placed on the formal academic curriculum, with courses such as French and mathematics featuring prominently in the examination, in particular at CAP level, further complicates matters and partly explains the very high dropout rate in vocational training (around 40% at CAP Level [13]). The French Ministry of Education, being too far out of touch with businesses, appears to have neither the means nor the inclination to offer young people professional training that sufficiently values practical and rapidly operational skills combined with cross-sector transferable knowledge that need not be general in the academic sense. In those countries where apprenticeships play an important role, it is businesses, organised along sector or industry lines, that design most of the structure and content of professional training courses.

1

Financial flows for apprenticeship schemes in 2010

Financial flows for apprenticeship schemes in 2010

21In addition, quality control procedures vary widly, with diverging criteria across regions [14] and across types of training courses (diploma, title, professional qualification certificate, CQP). In France, professional training courses are registered with the National Professional Certification Commission (CNCP) [15] and recorded in the National Directory of Professional Certifications. Qualifications granted by the French Ministry of Education and titles granted by the Engineering Accreditation Commission are extended automatic recognition and registration in the directory, which also includes qualifications granted by professional or private bodies. However, the Quality Evaluation of professional training courses and apprenticeships is unsatisfactory. In the case of apprenticeship qualifications granted by the French Ministry of Education, this Quality Evaluation is conducted by the Academic Services’ Apprenticeship Inspectorate (SAIA, Services académiques d’inspection de l’apprentissage). The quality of other titles and certifications is evaluated by the National Council for Lifelong Training (merged by the “Sapin Law” with the National Employment Council to create the National Council for Employment, Training, and Professional Guidance). However, this entity sorely lacks proper means of investigation. [16]

Running the risk of being insufficiently attractive for both apprentices and businesses

22Cultural factors unique to the French Ministry of Education, [17] added to apprenticeship opportunities being below expectations in a number of sectors, have meant that pursuing an apprenticeship is a choice too seldom made. Training courses designed by businesses and industries alike, and which lead to CQPs, are left out of the apprenticeship framework, meaning that they cannot avail of the preferential treatment of apprenticeship schemes. They also suffer from being perceived by potential students as being too specific and offering rather limited training content (as little as 15 % of total time, cf. box 1). Finally, the inflexbility of wage-setting mechanisms for trainees’ salaries (rising with age and qualification level (see box 1)) can act as a deterrent to employers. They will shy away from recruiting comparatively older individuals with no professional experience, and who as a result suffer from low employability. [18]

Simplifying tax collection and consolidating support grant mechanisms

25Both apprenticeships and professionalisation contracts have their strengths and weaknesses: the former are inflexible and too formally academic in content, while the latter can be inadequate in terms of training provided. It would be desirable to merge them into a single system, both from the point of view of funding and from that of the standard of training provided. This would simplify the system and prevent abusive overuse of professionalisation contracts.

26In the long-term, the apprenticeship tax should be levied through the existing network of collecting bodies (known as URSSAF), rather than through a specific body (the current OCTAs). All forms of funding for apprenticeships (apprenticeship premium, tax credits for apprentices, and bonuses for exceeding the quota of employees in work-based vocational training) should be consolidated into a single support grant that focuses on promoting apprenticeships. This grant could be easily fine-tuned so as to encourage employers to hire apprentices with few qualifications. The OCTAs would draw upon their skills in terms of training courses to conduct evaluations (see below).

27The tax collected through the URSSAF network will be paid into a pooled fund and paid out to certified courses of workbased vocational training. To achieve this, support will be available from the National Fund for the Development and Modernisation of Apprenticeships (FNDMA, Fonds national de modernisation de l’apprentissage) and from the network of regional funds for apprenticeships and continuing professional training. [19]

28Recommendation 1. Merge apprenticeships and professionalisation contracts; consolidate funding into a single qualification-based grant; and simplify tax collection by replacing the OCTAs with the URSSAF network

Developing a common market for the certification of professional training courses

29In countries where apprenticeships are commonplace, employers take on apprentices for two reasons: to avail of labour that is both cheap and trained on-the-job and to eventually recruit qualified company-trained employees upon the end of their apprenticeships. In these countries, companies play a leading role in the choice of training courses and of their content. This goes hand-in-hand with the need for a rigorous certification process, as the basis upon which the benefit of government grants depends. This principle should apply to the whole French system of initial and continuing professional training; at present, the reality is that the educational and financial assessments to which training providers are held do not in any way preclude their continued approval. Therefore, the objective is to put in place stricter criteria that are based in part on the labour market entry and labour market advancement of trainees.

30Insights can be drawn from existing certification systems in other sectors (the auditing and certification of accounts, balance sheets, and financial products) [20] or in other countries for professional training (box 3). An effective certification system must in particular enforce the following principles:

• Public authorities must oversee the quality and contents of training courses on offer, having at heart the general interest and not vested interests;
• Businesses within each professional sector, and alongside other agents, must partake in content definition, given their privileged understanding of the demand side;
• Training content must take into account sectorial demand, yet also reflect sector-specific trends and encourage the acquisition of knowledge expected to prove necessary in the future.

31Figure 2 describes a system that could satisfy these principles in the French case:

• Training providers receive a fixed-term (for example, three years) agreement from a certification agency, a prerequisite to qualifying for government subsidies. The aim is to put in place criteria that are partly based on trainees’ labour market entry and advancement. Under this system, all training courses certified by an agency can qualify for government subsidies;
• Certification agencies can be either public or private. These agencies could be established by the tax-collecting bodies (OCTAs and OPCAs, Organismes paritaires collecteurs agréés) inasmuch as their personnel have the skills required to process certification claims. These agencies would themselves be accredited for a given period on a national level by a national commission made up of the following stakeholders: professional bodies, the French Ministry of Education, the Ministry of Labour, fully-qualified independent experts able to assess the needs of the labour market and the educational quality of training courses. The national commission could draw on support from the administrative structure resulting from the merger of the CNCP with the CNEFOP;
• For all certification requests, the national commission appoints an accredited certification agency. These agencies, whether they be public or private, compete with each other and their services cannot be requested several times in a row for the same case. Upon having been appointed by the national commission, the certification agency is remunerated by the training provider using a regulated price scale and in any case prior to delivering the certification decision. [21] Once certified, a training course is automatically eligible for government grants. This system greatly expands evaluation capacities (thereby speeding up the process) and prevents collusion between certifying bodies and training providers;
• Certification agencies could also collect data, in particular with regards to the placement rate and labour market advancement of trainees, thus providing the national commission with crucial statistical information that would help determine the skills required in the labour market.

2

A new way of organising work-based vocational training

A new way of organising work-based vocational training

Interpretation: Blue arrows indicate financial flows; CNEFOP: National Council for Employment, Training, and Professional Guidance; CNCP: National Professional Certification Commission

32The new system described in figure 2 has a number of advantages over the current one: tax collection and grant payments are greatly simplified, a nationwide accreditation commission acts as a national-level steering committee and businesses see their role bolstered by the French Ministry of Education losing its monopoly over the certification criteria for apprenticeships at lower levels of qualification. National-level steering is based on decentralised quality controls and on apprenticeships that no longer rely on the regions, but on certification agencies. In this context, regional authorities remain in charge of grant distribution to certified training courses via the regional funds for apprenticeships and continuing professional training. Moreover, certification agencies monitor the quality of training provided both within the framework of apprenticeships, but also within that of adult-focused training courses.

33Recommendation 2. Introduce a single system for the certification of work-based vocational training through agencies contracted by a national commission that brings together all stakeholders (professional bodies, the Ministry of Education, the Ministry of Labour, and independent experts). This commission would be responsible for setting forth the schedule of training specifications and for formulating a genuine national policy for initial and lifelong professional training.

34In order to arrive at a simple, transparent, and controlled system, such as the one suggested here, one must proceed in stages. A first step would be to provide businesses with greater flexibility by allowing professional qualification certifications, CQP (those which pertain to the national register for professional certifications, and therefore benefit from a nation-wide recognised label) to be undertaken within the framework of apprenticeships. This would open up training of an almost exclusively professional nature to apprenticeships, which is not the case at present, except for higher qualification levels. To benefit from the advantages of the apprenticeship framework, these CQPs must contain a minimum level of general training for professional purposes. As suggested in figure 2, the CNCP, which could perhaps be merged with the CNEFOP, could be the body that selects and determines the content of these training courses, with said training being certified by CNCP-accredited agencies.

Optimising the additional financial contribution to apprenticeships

35Besides the apprenticeship tax and the contribution to the growth of apprenticeships, businesses with more than 250 employees pay an additional contribution to apprenticeships (CSA, Contribution supplémentaire à l’apprentissage), the rate of which varies according to the percentage of their workforce in work-based vocational training (see box 1); by going through their OCTAs, these businesses can then freely allocate the proceeds of this contribution to the centres for work-based vocational training and the apprenticeship structures of their choice. By using bonuses and penalties, the CSA aims to encourage businesses to recruit work-based vocational trainees. However, this system does not encourage businesses to choose training courses that will improve the long-term employability of their employees. Linking CSA payments to the labour market situation of apprentices would act as an incentive for employers: for example, their CSA payment could be lowered if they employ the apprentices they have trained, or if their apprentices rapidly find employment with other businesses. [22] The idea is to ensure that businesses will take into account the cost of providing unemployment insurance to apprentices who, upon completing their training, are faced with poor labour market entry prospects. From this point of view, adjustable CSA payments would be part of a broader reform that consists of seeing one’s social contributions vary as a function of the cost that employees impose on unemployment insurance upon their employment termination. Indeed, it would be advisable to set up variable rates for all unemployment insurance contributions. [23] In the case of the CSA, it would also encourage businesses to offer high-quality training to their apprentices.

36However, imposing bonuses and penalties can encourage employers to recruit ‘job-ready’ apprentices, at the expense of those who need the apprenticeship system the most. Tackling this problem would require allocating more generous subsidies to the recruitment of individuals with few qualifications and of the long-term unemployed, encouraging employers to consider profiles that they deem riskier.

37Recommendation 3. Adjust grants for work-based vocational training based on the trainee’s qualifications; adjust employer contributions to work-based vocational training based on their trainees’ labour market entry and advancement.

Increasing resources and providing more extensive apprenticeship support to young people with few qualifications

38Empirical studies suggest that businesses are very cost-sensitive when it comes to recruiting apprentices (cf. box  4), which justifies large government subsidies. Resources allocated to apprenticeships could be increased by reallocating part of the expenditure spent on the ‘jobs for the future’ government-sponsored programme towards work-based vocational training in the business sector; in particular, it could go towards funding pre-apprenticeship training [24] and towards grants geared at lower qualification levels. Moreover, apprenticeship tax revenue must go towards funding apprenticeship schemes rather than training courses pertaining to the technological and professional education system.

39With regards to career guidance, it would be advisable to find ways to encourage local Youth Centres to steer young people towards apprenticeships, [25] as well as to use tutorials to better support apprentices. A controlled experiment shows that tutoring apprentices in France helps limit the number of apprenticeships terminated before completion. [26] The relative importance of formal education courses in vocational training curricula needs also be reduced in order to lower failure rates at lower qualification levels, [27] especially so at the CAP level. [28] One way to solve this problem would be to use a grading scheme that offers only bonus points on general education subjects, with students never being marked down.

40Recommendation 4. Focus government resources on apprenticeships and pre-apprenticeships to promote access to employment for young people with few qualifications. Encourage stakeholders (the French Ministry of Education, Youth Centres) to be proactive in promoting this system. Reduce the relative importance of formal education courses in CAP diplomas, and promote tutoring for apprentices.

41High unemployment among young people with few qualifications in France means there is a need for a complete overhaul of the professional training system. As such, apprenticeship schemes, which have proven their worth overseas, must be thoroughly reviewed to render them more attractive to both young people and businesses. The main, if not the only, objective of a scheme focused on training young people with few or no qualifications must be in securing their labour market entry and in ensuring their lifelong employability.