Torino Process Report Analyzes VET Trends in Eastern Europe

TORINO PROCESS
REGIONAL REPORT
EASTERN PARTNERSHIP COUNTRIES
AND RUSSIAN FEDERATION
DRAFT NOVEMBER 2012

The contents of this draft paper are the sole responsibility
of the ETF and do not necessarily reflect the views
of the EU institutions.

© European Training Foundation, 2012

TORINO PROCESS
REGIONAL REPORT
KEY TRENDS AND ISSUES FOR
FURTHER VET DEVELOPMENT IN THE
EASTERN PARTNERSHIP COUNTRIES
AND THE RUSSIAN FEDERATION
Draft prepared by Manfred Wallenborn
ETF, November 2012

The Torino Process is a participatory process leading to an evidence-based analysis of
vocational education and training (VET) policies in a given country. In 2010 the European
Training Foundation (ETF) launched the first round of the Torino Process, in which 22 of its
29 partner countries participated. In May 2011, the ETF organised a conference entitled ‘The
Torino Process – Learning from Evidence’, which brought together over 250 stakeholders
from all ETF partner countries, EU institutions, EU Member States and the international
community. In the final declaration of this conference, the participants welcomed the Torino
Process approach, endorsed the findings of the first exercise and encouraged the ETF to
build capacity in evidence-based policy making. In addition, partner countries confirmed their
interest in taking part in the next round of the Torino Process, which is being carried out in
2012.

The Torino Process was launched in order to build consensus on the possible ways forward
for VET policy and system development. This includes the determination of the state of the art
and vision for VET in each country and an assessment of the progress that countries are
making in achieving the desired results. The Torino Process embeds VET within the socio-
economic context and ensures that the analysis is informed by relevant evidence and takes
place through a structured policy dialogue leading in all participating countries to a Torino
Process country report 2012.

This regional chapter analyses key trends for further VET system development in seven
countries of Eastern Europe. The countries are covered by the European Union’s (EU)
instrument of European Neighbourhood Partnership East (ENP E) and comprise Armenia,
Azerbaijan, Belarus, Georgia, Moldova and Ukraine. The Russian Federation is also included
in this report. The chapter draws on two finalized country reports from the region drafted
under the 2012 ETF Torino Process. Other countries sent already advanced drafts. However,
some country reports are not received yet in their final version. Moreover, this regional
chapter used recent ETF Human Resource Development reviews on the different countries,
as well as other relevant literature. Previous reports of the Torino Process 2010 are also
considered.

Four of the seven countries underwent a self-assessment using the analytical framework for
the Torino Process designed by the ETF. An ETF led assessment has been undertaken in
1

Armenia, Georgia and Moldova using the same framework. This regional report builds on the
five building blocks of the analytical framework and the results of the assessments carried out
in the respective countries.

EXECUTIVE SUMMARY
Since 2010 all seven Eastern European countries have developed VET policies and
introduced systemic changes, which focus strongly on the national context. This positive trend
has triggered country specific profiles of education systems, labour market structures, laws
and regulations. Ongoing discussions about vision (overall policy priorities) and reform tend to
connect societal objectives for socio-economic development with the potential VET
contributions to such progress. European policies and approaches play an important role: all
countries have either adopted or are creating national qualification frameworks (NQF).
European quality assurance approaches are used and approaches for the validation of non-
formal and informal learning are under consideration.

These positive developments have been accompanied by new legislative frameworks and
considerable stakeholder involvement (mostly employers) in strategic discussions and in
national/regional VET councils. Employers participate in defining new professional standards,
promoting NQF and revised curricula which are introduced in a growing number of
rehabilitated VET schools.

Less demand of the learners caused by demographic decline is currently influencing the
education systems and the population trends in nearly all countries. Population trend has
been in the period between 1990 and 2008 in Armenia (-13.2%), in Azerbaijan (21.2%), in
Belarus (-5.0%), in Georgia (-21.1%), in Moldova (-16.7%), in Russia (-4.3%) and in Ukraine
(-10.9%).

All countries have experienced a positive economic growth in the past years except for the
slowdown around 2009, which was followed by a further recovery. In 2011, the GDP growth
ranged between 1.0% in Azerbaijan to 7.0% in Georgia. The two larger countries (Russia and
Ukraine) plus Belarus are more comparable in their development than the smaller countries.
These three countries still have, apart from a rapidly growing service sector, an important
industrial sector which operates mainly with ISCED 3 and 4 qualifications. The smaller
countries go, variably, in different ways. Even the capital intensive oil sector in Azerbaijan
employs only 1.5% of the national labour force. The smaller countries still have a huge
agricultural sector, which serves as a buffer in case of structural problems towards more
unemployment.

The employment level in the Eastern European countries is rather high (between 50.1% in
Belarus to 62.7% in the Russian Federation in 2010), except for the Republic of Moldova with
the employment rate of 39.4% in 2011. The unemployment is relatively low, especially in the
two larger countries and Belarus. A different situation can be seen in Armenia and Georgia
where 18.4% and 15.1% of the labour force were unemployed in 2011. Russia still attracts
migrants to cover existing labour demand and demographic decline. Consequently, it’s the
only country in the region with a negative balance of the in and outflows of remittances.

All countries are still discussing substantial VET reforms. In Belarus the strong relations
between VET schools and enterprises contribute to effective employment of VET graduates.
A well skilled labour force is constantly required, because the country loses 40,000
inhabitants every year due to the aging phenomena. All other countries have problems with
the labour market relevance of many VET programmes and hence, with employability. Labour
2

market information and analysis is still minimal. In the past sporadic education and business
cooperation has been a way to cope with this problem and there is an overall awareness and
tendency towards more cooperation.

The four smaller countries face serious employment problems and additionally extremely low
employment rates, most of all Moldova – a situation partly explained by high emigration. This
is not the case in the other countries where the activity rates are 60% and beyond. In the
smaller countries the regional trend towards higher education does not necessarily imply
employment after university graduation. Consequently, a high percentage of university
leavers is unemployed or works on a lower level even in the informal sector.

The declining number of VET students and the increasing share of university graduates in the
last decade had serious consequences for labour markets: over-education in the countries
with minor employment problems (Belarus, Russia and Ukraine) led to a crowding out effect.
Many university graduates are employed in jobs, which could be executed by lower skilled
(VET) graduates. Simultaneously, the employers in these countries complain about skill gaps
which hamper economic growth and enterprise development because a well qualified work
force with middle level qualifications is hardly available. The reason for these gaps is
questionable educational streaming and the current VET system performance. However,
experts of the region report, recently, an increasing demand for VET programmes.

Over-education and simultaneous skill gaps are the consequence of the learner’s demand for
higher education. The learners react on certain signals from the labour markets: As long as
the returns and reputation of university education are in general higher than for middle level
qualifications and crowding out recruitment strategies are used by employers, there will be
strong demand for university education. In general countries lack attractive options for VET
graduates to continue studying for post-secondary or higher professional vocational education
and training or at a later stage in Continuing Vocational Training. Awareness campaigns,
more permeability and attractive careers for ISCED 3 and 4 achievers could be an instrument
to influence educational streaming.

In previous years all countries have concentrated funding on general and higher education
taking into account that per capita costs of VET are higher than the costs in general
education. Modest resources for VET are a prevailing trend in all countries, hampering the
increase in quality, most of all in modern and capital intensive manufacturing and crafts
professions. However, recent developments reveal an increasing demand for VET caused by
the high unemployment rates of higher education graduates and structural adjustments of the
economies. Hence, the share of students enrolled in VET education at the upper secondary
level is rather high in bigger countries, such as Russia (48.5% in 2009) and Ukraine (28.6% in
2010). On the other hand, in countries such as Georgia and Armenia, VET plays a rather
minor role with 1.2% (2008) and 6.4% (2010) of students attending VET programmes at the
upper secondary level.

Apart from the financial problems which include serious restrictions for updating technical
equipment/buildings and a more efficient use of existing resources, there are three common
and interrelated areas for further reforms in all countries: governance, better linkages of VET
to the economy in involving the business sector, and quality and relevance of the training
programmes. Also entrepreneurial learning is an area in development. Moreover, there are
country specific challenges.

Although there is an increased involvement of social partners in policy dialogues in several
countries, coherent and well working multi-level governance modes are missing despite
efforts towards decentralization and more involvement by stakeholders. The countries are
3

either still on their way to new governance modes or do not opt for the participation of all
stakeholders. Additionally, transition means more democracy and transparency, which is a
long lasting social process rather than a ‘decision today’ in order to introduce better
governance tomorrow. However, many countries are convinced of the advantages of new
governance modes and consider ways to give greater responsibilities to schools and try to
step ahead, a process which should be further supported by policy dialogue.

In all countries there is room for improvements in pre- and in-service teacher education and
for better professional teacher careers, a core issue for better quality in education. Labour
market relevance requires (from teachers and VET schools) new forms of cooperation with
the private sector in order to maintain quality and update training programmes in time. There
are already successful modes of cooperation in the region which could be extended towards
systemic consequences for initial and continuing VET in a lifelong learning perspective
updating, as well, the existing post secondary VET offers as a viable alternative to higher
education and offering more entrepreneurial learning for different target groups.

The policy dialogue and applied research promoted by the Torino Process 2012 should stress
further the need to design VET policies which build on evidence and on solutions derived from
country specific contexts and commonly agreed objectives. Simultaneously, the capacities for
implementing reform and innovation must be strengthened. Good practice from Europe could
contribute to improvements as it has already in the past and measures for capacity building
should complement policy design and implementation.

1. CONTEXT THAT SHAPES THE DEMAND FOR KNOWLEDGE
AND SKILLS BY EMPLOYERS AND INDIVIDUALS – SOCIO-
ECONOMIC CHARACTERISTICS
The region consists of five small countries (with between 3 million and 9 million inhabitants)
and two large countries (Ukraine and Russia, with 46 million and 142 million inhabitants,
respectively). The total population is around half that of the EU population of 2009. The
proportion of the population made up of people of working age is higher than the EU average
of 67% in all the countries. However, the region also has a shrinking and ageing population
and is rapidly becoming one of the ‘oldest’ regions in the world (World Bank, 2007). Although
the shrinking population of young people provides some relief in relation to the financing of
the education system, both initial and continuing vocational training provision face serious
difficulties in coping with skills mismatches.

Armenia, Georgia, Republic of Moldova and Ukraine belong to the lower-middle-income
countries, whereas Azerbaijan, Belarus and Russia are upper-middle-income countries. Until
the global crisis, their economies were developing extremely rapidly, with growth in gross
domestic product (GDP) above 8% in 2007 (except in the Republic of Moldova and Ukraine).
It even reached 25% in Azerbaijan, as a result of the country’s vast oil revenues and a
constantly increasing oil price.

However, the income levels of these countries represent major constraints in terms of public
investment in education in general and in vocational education and training (VET) in
particular, with new demands on VET systems. Learners are more likely to invest in higher
education rather than in VET, which has led in many countries to an uncontrolled expansion
of the higher education sector and unbalanced demand on the labour markets described
below.

4

The seven countries share a common past as part of the former Soviet Union, where VET
was centrally planned and structures were very similar. Following independence, they all had
to cope with tremendous changes and with the heritage of a central approach to VET
governance. Over the past 20 years substantial progress has been made and the countries
have established their own VET identities in the specific national context. This process is not
finished because serious problems in the VET systems remain unsolved as described in the
following chapters.

Since the societies and education systems tend to favour academic education over VET,
academic drift in education has become more marked. VET has also been negatively affected
by education policy choices over the past two decades and education and businesses remain,
in the majority of the countries, separated worlds (ETF, 2011). As a result, there is a major
problem with skills mismatches, and in particular there are pronounced skills shortages,
further exacerbated by labour migration, whether from lower- to upper-middle-income
countries in the region, or to high-income countries outside the region. This has a further
negative impact on skills supply, particularly in the lower-middle-income countries.

More attention has been paid in the reform process to initial VET rather than continuing VET
(CVET). This focus had well justified reasons. However, the Torino Process 2010 revealed
that the transformation of the economies and the demographic trends have generated strong
demands for training and retraining of employed and unemployed adults, which have
remained unaddressed and which have generated an ETF regional project on CVET in
Eastern Europe.

All countries suffered a ‘lost decade’ with high social costs in the previous century
characterized by economic stagnation/decline, industrial restructuring, emerging informal
sectors (OECD, 2009) and high figures of hidden and registered unemployment. From 2000
onwards, the countries passed a remarkable and constant period of economic growth and
consolidation of public and private institutions suddenly interrupted by the crisis in 2008 and
2009. However, economic recovery is back since 2010 (as the following table reveals).

TABLE 1 GDP GROWTH (%), 2008–11
2008 2009 2010 2011
Armenia 6.9 -14.2 2.1 4.6
Azerbaijan 10.8 9.3 5.0 1.0
Belarus 10.3 0.2 7.7 5.3
Georgia 2.3 -3.8 6.3 7.0
Republic of Moldova 7.8 -6.0 7.1 6.4
Russian Federation 5.3 -7.8 4.3 4.3
Ukraine 2.3 -14.8 4.1 5.2
Source: World Bank (http://data.worldbank.org/indicator/NV.AGR.TOTL.ZS, accessed 20 August 2012)

While there has been substantial economic growth in all the countries, the drivers of growth
vary according to national characteristics (e.g. the export-oriented oil and gas sector in
Azerbaijan, and exports to Russia in Belarus). The structure of the economies indicates an
ongoing trend to an expanding service sector in nearly all countries. Azerbaijan’s huge
industrial sector is country specific and related to the oil sector. Economic restructuring is not
yet finished. However, the key trend towards more services reveals an ongoing and
substantial transition towards market economies.

5

TABLE 2 SHARES OF AGRICULTURE, INDUSTRY AND SERVICE SECTORS AS % OF
GDP, 2008–11
2008 2009 2010 2011
A I S A I S A I S A I S
Armenia 18.4 43.5 38.1 18.9 35.8 45.3 19.6 36.0 44.5 20.7 37.1 42.2
Azerbaijan 6.0 70.2 23.8 6.6 61.1 32.3 5.8 64.7 29.5 5.8 66.8 27.4
Belarus 9.8 44.3 46.0 9.4 42.3 48.3 9.2 43.9 46.9 8.1 41.0 50.9
Georgia 9.4 21.9 68.7 9.4 21.9 68.8 8.4 23.2 68.4 7.2 18.2 74.6
Republic of
10.7 14.3 75.0 10.1 13.1 76.8 14.3 13.2 72.5 13.5 12.4 74.2
Moldova
Russian
4.4 36.1 59.5 4.7 33.7 61.6 4.0 36.7 59.3 m.d. m.d. m.d.
Federation
Ukraine 7.9 33.6 58.5 8.3 29.6 62.1 8.2 30.9 60.9 8.3 31.4 60.3
Notes: m.d. = missing data; ‘A’ = agriculture; ‘I’ = industry; ‘S’ = services.
Source: World Bank (http://data.worldbank.org/indicator/NV.AGR.TOTL.ZS, accessed 20 August 2012).

Special attention must be given to the small and medium sized enterprise (SME) development.
The countries are using different criteria for the definition of SME. However, the data in Table 3
reveals that the SME are the backbones of the national economies, with the exception of Russia.
VET policies must take into account the relevance of (informal) SME for employment
opportunities and the specificities, which SME might have in terms of professional standards,
qualification profiles and gaps in entrepreneurial competences. However, awareness about these
skills needs and the demands they pose to education and training is increasing in the countries.

TABLE 3 PERCENTAGE OF SMEs OF ALL ACTIVE BUSINESSES
Armenia 97.7 (2010)
Azerbaijan 94.0 (2011)
1
Belarus 97.0 (2010)
Georgia 93.1 (2008)
Republic of Moldova 97.7 (2009)
Russian Federation 33.2 (2010)
Ukraine 99.4 (2011)
Notes: Armenia – the value refers to registered entities only; SMEs are entities with up to 249 employees in Armenia,
the Republic of Moldova and Ukraine; and with up to 100 employees in Georgia and the Russian Federation;
Azerbaijan – SMEs are entities with up to 5 to 40 employees depending on a sector.
Sources: Small and Medium Entrepreneurship Development National Centre of Armenia
(www.smednc.am/?laid=1&com=module&module=menu&id=189, accessed 4 September 2012); Ministry of Economic
Development of Georgia (2009), Entrepreneurship in Georgia, Tbilisi.; National Bureau of Statistics of the Republic of
Moldova (http://statbank.statistica.md/pxweb/Dialog/Saveshow.asp, accessed 4 September 2012); Russian Federation
Federal State Statistics Service (2011), Russian Statistical Yearbook, Moscow.; State Statistics Committee of Ukraine
(www.ukrstat.gov.ua/, accessed 4 September 2012); The State Statistical Committee of the Republic of Azerbaijan
(2012), Statistical Yearbook, Baku.

The activity rates of the population are quite different in the region, where Belarus but most of all
Moldova reveal very low rates, not only compared with EU targets of 70% but as well with other
countries in the region. This could be explained by the fact that emigrants are classified as
inactive by the national statistics because they work abroad. Russia has high activity rates, which
explains the migration trend to the country. Ukraine and Azerbaijan are performing on similar

1
The figure for Belarus is derived from OECD et al. (2012a). SMEs in Belarus include enterprises up to
250 employees.
6

levels. In Armenia and Georgia, a big share of activities in the informal sector and in the rural
economy is included in the activity rates.

TABLE 4 ACTIVITY RATES (%), 15+, 2008–11

2008 2009 2010 2011

Armenia (15-75) 59.5 59.2 61.2 63.0
Azerbaijan 63.5 63.9 64.3 m.d.
Belarus 55.4 55.1 55.5 m.d.
Georgia 62.6 63.6 64.2 65.2
Republic of Moldova 44.3 42.8 41.6 42.3
Russian Federation (15-72) 67.8 67.8 67.7 m.d.
Ukraine (15-70) 63.3 63.3 63.7 64.3
Notes: m.d. = missing data; data for Belarus and Azerbaijan are ILO estimates.
Sources: National Statistical Service of the Republic of Armenia (2011), Labour Market in the Republic of Armenia,
2006-2010, Yerevan (www.armstat.am/en/?nid=80&id=1305); KILM database
(http://kilm.ilo.org/KILMnetBeta/default2.asp, accessed 28 August 2012); Geostat
(www.geostat.ge/index.php?action=page&p_id=146&lang=eng, accessed 29 August 2012); National Bureau of
Statistics of the Republic of Moldova (http://statbank.statistica.md/pxweb/Dialog/Saveshow.asp, accessed 24 August
2010); Russian Federation Federal State Statistics Service (www.gks.ru/bgd/regl/b11_36/Main.htm, accessed
10 May 2012); State Statistics Service of Ukraine (www.ukrstat.gov.ua/, accessed 10 May 2012).

The employment structure of the main economic sectors also varies; in 2007, while
agriculture still played a key role in absorbing employment in Georgia (53%) and Armenia
(39% in 2010), industry in Belarus (34% in 2011) and both industry (21% in 2011) and
services (62% in 2011) in Ukraine continued to be very important. Furthermore, most new
jobs created between 2000 and 2007 were in the informal sector. In Armenia, for example,
the informal sector now makes up 50% of total employment (ETF, 2010) in Moldova about
one third of the employment. Across all countries employment opportunities in the agricultural
and the manufacturing sector decreased while new employment opportunities emerged in an
expanding service sector, claiming for different skills than in the socialist economy.

Armenia and Georgia have particularly high unemployment rates. This indicates that
economic growth is not necessarily linked to more employment opportunities. Georgia’s
country specific way of deregulation of the labour market was ineffective in terms of
increasing employment rates and renewed Government’s attention towards unemployment
claiming unemployment as problem number one in the country (Government of Georgia,
2
2012) . Azerbaijan, Russia and Ukraine are recovering after the crises as table 5 reveals.

2
Unemployment of higher education graduates is higher than the shares of unemployment of graduates from other
education levels (Castel Branco, 2012).
7

TABLE 5 UNEMPLOYMENT RATES (%), 15+, 2008–11
2008 2009 2010 2011

T M F T M F T M F T M F

Armenia (15-
16.4 14.4 18.6 18.7 17.8 19.9 19.0 17.0 21.2 18.4 m.d. m.d.
75)
Azerbaijan
6.1 7.1 4.9 6.0 5.2 6.9 m.d. m.d. m.d. m.d. m.d. m.d.
Belarus
(16-59 for
0.8 0.7 0.9 0.9 0.8 0.9 0.7 0.7 0.7 0.6 0.6 0.6
males, 16-54
for females)

Georgia
16.5 16.8 16.1 16.9 18.1 15.4 16.3 17.9 14.5 15.1 16.7 13.1
Republic of
Moldova 4.0 4.6 3.4 6.4 7.8 4.9 7.4 9.1 5.7 6.7 7.7 5.6

Russian
Federation
7.0 7.5 6.4 8.4 9.0 7.8 7.5 8.0 6.9 m.d. m.d. m.d.
(15-72)

Ukraine (15-
70) 6.4 6.6 6.1 8.8 10.3 7.3 8.1 9.3 6.8 7.9 8.8 6.8

Notes: m.d. = missing data; data for Azerbaijan are ILO estimates; data for Belarus refer to administrative data only.
Thus, only those people who are registered with public employment services are considered as unemployed. Since
many people may decide not to register, the unemployment rates may be underestimated. On the other hand, the
employment is still largely guaranteed in Belarus, as, for example, a compulsory job allocation of graduates in
publicly financed HE and also VET is exercised, which guarantees a first job for young people.
Sources: National Statistical Service of the Republic of Armenia (2011), Labour Market in the Republic of Armenia,
2006-2010, Yerevan (www.armstat.am/en/?nid=80&id=1305); KILM database
(http://kilm.ilo.org/KILMnetBeta/default2.asp, accessed 28 August 2012); Geostat
(www.geostat.ge/index.php?action=page&p_id=146&lang=eng, accessed 29 August 2012); National Bureau of
Statistics of the Republic of Moldova (http://statbank.statistica.md/pxweb/Dialog/Saveshow.asp, accessed 24 August
2010); Russian Federation Federal State Statistics Service (www.gks.ru/bgd/regl/b11_36/Main.htm, accessed
10 May 2012); State Statistics Service of Ukraine (www.ukrstat.gov.ua/, accessed 10 May 2012).

Massification of higher education led in nearly all countries to more unemployment of higher
education graduates, which do not differ significantly from secondary education
unemployment rates. In the case of Georgia they are even much higher than for secondary
education graduates. The crowding out effect in Russia and Ukraine is a reason for avoiding
higher unemployment rates for university graduates.

8

TABLE 6 UNEMPLOYMENT RATES BY EDUCATION (%), 15+, IN THE YEAR 2011
Russian
Armenia Republic
Azer- Federa- Ukraine
Georgia (2010, 15- of
baijan tion (2010, (15-70)
75) Moldova
15-72)

Primary 3.5 4.5 4.0 5.4 19.8 -

Basic 10.4 15.1 12.2 7.2 16.8 6.9

Secondary general 13.7 19.0 4.2 7.7 11.6 8.8

Primary vocational/
vocational (Armenia)/
10.3 20.3 5.7 7.2 7.9 -
secondary professional
(Moldova)

Secondary vocational/
specialised secondary or 7.2
incomplete tertiary 13.4 20.3 7.1 5.2 5.8
(Armenia, Moldova, (basic/full)
Ukraine)

Higher 20.5 19.5 6.2 6.0 4.0 6.7

Total 15.1 19.0 5.4 6.7 7.5 7.9

Note: Data for Belarus are not available.
Sources: Geostat (received directly from Geostat); National Statistical Service of the Republic of Armenia (2011),
Labour Market in the Republic of Armenia, 2006-2010, Yerevan; National Bureau of Statistics of the Republic of
Moldova (http://statbank.statistica.md/pxweb/Dialog/Saveshow.asp, accessed 24 August 2012); Russian Federation
Federal State Statistics Service (www.gks.ru/bgd/regl/b11_36/Main.htm, accessed 28 August 2012) (ETF
calculation); State Statistics Service of Ukraine (2012), Economic Activity of Population in Ukraine 2011, Kiev.

Armenia has a considerable share of long-term unemployed among the population. This
might be an indicator that new skills required in a market economy were not achieved by a
certain segment of the population. Moreover, the agricultural sector, which is a buffer in times
of structural change and reform, expanded as well in the country. On contrary, Azerbaijan and
Belarus have low shares of long-term unemployed. Georgia doesn’t have an employment
service collecting correspondent figures.

9

TABLE 7 SHARE OF LONG-TERM UNEMPLOYED AS % OF ALL UNEMPLOYED (%),
2008–11
2008 2009 2010 2011
Armenia (15-75) 64.2 54.6 60.2 m.d.
Azerbaijan 4.1 3.4 3.0 3.0
Belarus (15-59 men; 15-54 women) 8.2 6.2 6.4 5.8
Georgia (15+) m.d. m.d. m.d. m.d.
Republic of Moldova (15+) 31.3 27.9 30.8 32.6
Russian Federation (15-72) 33.3 28.7 29.9 m.d.
Ukraine (15-70) 28.7 18.4 33.9 28.4
Notes: Long-term unemployment refers to the unemployment longer than 12 months; data for Belarus and Azerbaijan
refer to administrative data; Armenia – the calculation based on the length of unemployment from the termination of a
job; Russia – the calculation based on the length of job search; m.d. = missing data.
Sources: National Statistical Committee of the Republic of Belarus (2012), Labour and Employment in the Republic
of Belarus, Minsk; National Bureau of Statistics of the Republic of Moldova
(http://statbank.statistica.md/pxweb/Dialog/Saveshow.asp, accessed 4 September 2012); State Statistics Service of
Ukraine (www.ukrstat.gov.ua/, accessed 4 September 2012); National Statistical Service of the Republic of Armenia
(2011) Labour Market in the Republic of Armenia, Yerevan.; State Statistical Committee of the Republic of Azerbaijan
(received from the country); Federal State Statistics Service (www.gks.ru/bgd/regl/b11_36/IssWWW.exe/Stg/d1/01-
62.htm, accessed 4 September 2012).

2 DO KNOWLEDGE AND SKILLS MATCH THOSE
DEMANDED BY EMPLOYERS AND INDIVIDUALS?
After more than 20 years of transition nearly all countries (exception Belarus) have
considerable problems with a skill mismatch (ETF, 2011a, 2011b, 2011c, 2012b, 2012c,
2012d and 2012e) and/or employment. Belarus reveals excellent figures for the transition of
VET graduates due to the government’s responsibility to find a first job for all VET graduates.
All other countries have a serious problem with ‘over qualification’ and partly a high demand
from the business sector for skilled workers of ISCED 3 and 4 levels, which led in Georgia
already to higher enrolment rates in VET institutions. The quality of the skills that are currently
provided at these levels is frequently unsatisfactory in the view of employers, a reason why
higher enrolment rates should be linked to quality enhancement.
3
The structural misbalances on the labour markets are partly triggered by learner’s demand
and correspondent educational policies which historically neglected the VET system in
4
previous years. Even the required fees for higher education could not reduce the demand .
These fees are obligatory in many countries because the public offers only a restricted share
of free enrolments. Between 1990 and 2008, enrolment in Russia in higher education tripled
almost from 2.82 in 1990 to 7.42 million in 2008 with the consequence that many work places
which require middle level skills are today covered by higher education graduates. In nearly
the same period the number of graduates from ISCED 4 VET programmes decreased from
1990 (100%) to 42.3% in the year 2009 (ETF, 2011a). The structural misbalance is linked with
an overall decreasing quality of educational services, also affecting higher education, which
has seen in the past the over multiplication of institutions in the absence of quality criteria.

3
Students which enrol in Russia in higher education are not obliged to go to the two years military service.
4
In Azerbaijan 60% of higher education students are paying fees (Deij, 2011).
10

Russia is a good example for these misbalances in nearly all countries of the region. Data in
table 7 provided by the union of VET school directors compares for Russia output and
5
demand for different education levels and for the year 2010 (Umarov, 2011, p 31) :

TABLE 9 EDUCATIONAL OUTPUT AND LABOUR MARKET DEMAND, 2010 (%)
Higher VET ISCED 4 VET ISCED 3
No qualification
education level level

Output of the
60 13 18 9
education system

Labour market
35 22 37 6
demand

Ukraine – the second largest country of the region – reports similar misbalances on the labour
markets. 44.4% of the employers stated that the shortage of qualified blue collar workers is
the biggest obstacle for the country’s enterprises to grow further (Sondergaard, 2012). The
high enrolment rates in higher education and decreasing VET enrolment led to crowding out
effects: 62% of professionals (which are blue-collar jobs) are filled by university graduates
(ETF, 2011b) and employers complain that newly contracted staff is missing technical and
6
non-technical skills required in the world of work .

Belarus meets country specific targets of VET driven labour force development quite well in
terms of employment, because the country still has the mechanism of compulsory first jobs for
VET graduates. However, Belarus employers complain as in Moldova and Georgia about
similar problems of skill gaps also as in Russia and Ukraine. 41.5% in Moldova and 26.5% of
Georgian employers identify inadequately educated workforce as a major constraint and
obstacle for enterprise development (Sondergaard, 2012) and ‘although many companies
across all sectors have been trying to find new employees in the past 12 month, only about
half of them have succeeded’ (Ministry of Economy and Sustainable Development of Georgia,
2012). The reasons are the same: poor quality of VET and consequently low enrolment rates,
insufficient CVET and ‘over qualification’ of university graduates with labour market irrelevant
certificates caused structural misbalances on the labour markets.

Big companies usually have the option to further train their staff. A forthcoming report (ETF,
2013) however reveals existing problems of CVET in the region. The countries have
highlighted the obsolescence of the existing legislation, the lack of cooperation between
public and private sector, the insufficient expertise to carry out training need analyses, the
lack of quality criteria, funding issues etc. as key factors that negatively affect CVET.

Looking at employer’s opinions on the relevance of human capital for enterprise development
the above mentioned results are confirmed und documented in the graph below: In the three
larger countries – Belarus, Russia and Ukraine – around 50% of employers indicate that an
inadequately trained workforce hinders company performance and development
(EBRD/World Bank, 2010). Employer perceptions deteriorated in all countries except Georgia
between 2005 and 2009 (Figure 1).

5
There are however, different explanations for labour market shortages. Gimpelson et al. (2012) write that imperfect
labour market mechanisms impede the reallocation of better skilled workers in the Russian manufacturing sector.
6
The permeability of the education system is well used by the learners, because ‘two thirds of all students complete
general secondary education alongside their vocational education’ (ETF, 2011d) and many of them enrol after
graduation in higher education.
11

FIGURE 1 AN INADEQUATELY EDUCATED WORKFORCE AS AN OBSTACLE TO
COMPANIES (%), 2005–09

100% 7
12
16
90% 24
29 27
33 34 37 39
80% 43
49
43
55
70%
60%
50% 94 81
85
40% 73
71
71
67 66 63 61 54
30% 55
49
42
20%
10%
0%
A zerbaijan 0 5

A zerbaijan 0 9

A rmen ia 05

A rmen ia 09

G eo rgia 05

G eo rgia 09

Belarus 05

Belarus 09

M oldova 0 5

M oldova 0 9

Rus sia 0 5

Rus sia 0 9

U krain e 05

U krain e 09
DK/ NA It is not an obstacle It is an obstacle

Note: The 2005 and 2009 data are not fully comparable owing to methodological changes.
Source: EBRD/World Bank (2010).

However, since the returns to education correlate in Armenia (Corradini, 2012), Georgia and
Moldova (ETF, 2011c) and most likely as well in the other countries positively with the level of
education the propensity of many learners and their families is to enrol in the higher education
sector, regardless if the fields of study are labour market relevant or if the graduates need to
accept employment opportunities on a lower level, which could equally be covered from lower
skilled graduates. This issue is not necessarily complemented by lower unemployment rates
7
of the better educated and ‘in Armenia and Georgia […] one-fifth of highly educated people
were unemployed’ (ETF, 2011e, pp. 185-186).

The Russian and Ukrainian case reveal that the misbalance of over qualification and skills
8
gaps on ISCED 3 and 4 levels is typical for the labour market (ETF, 2012) and not
unemployment per se. Russia still attracts migrants from other countries and Ukraine has
moderate unemployment rates. Another case is Moldova with the lowest employment rate in
the region of only 38.5% in 2010 (ETF, 2011c). Consequently, micro enterprises in the
informal sector and as an alternative against poverty are mushrooming. Similar trends are
notable in Georgia with serious employment problems and in Azerbaijan, where the booming
oil and gas ‘sector is good for two thirds of GDP, but employs less than one in seventy
workers’ (Deij, 2011), which means approximately 1.5% of the workforce.

7
In Georgia, the unemployment rates of higher education graduates are higher (Castel Branco, 2012) than
unemployment rates from graduates of other education levels, a consequence of the previous deregulation of the
higher education sector which is meanwhile amended due to a more severe accreditation policy for higher education
institutions. This does not undermine the country specific trend to create an education system based on credibility
and quality, including private providers on all levels and the elimination of corruption.
8
‘Skill gaps appear in periods of economic restructuring when the new jobs created require different types of skills to
those destroyed, before the education and training system has been sufficiently updated to match the pace of change
(ETF, 2011d, p. 187).
12

The limited availability of jobs in the smaller countries, modest wages in poorly functioning
labour markets and the subsequent poor quality of life have meant that labour emigration and
the associated brain drain have become major features of the region, contributing in Armenia
in 2011 with 12.1% to the GDP (Corradini, 2012). On the contrary, Russia absorbs the largest
number of migrants (in 2005, 1–2 million from Ukraine, around 1 million from Azerbaijan and
nearly half a million from Armenia), followed by Europe. Ukraine has the highest number of
emigrants abroad: more than 6 million in 2005. The highest share of emigrants has Moldova,
where they represented 25% of the workforce in 2010. Although skills range across all levels,
many migrants are young (aged 20–40 years) and educated.

However, most migrants work in low-skilled or unskilled jobs abroad and there is a common
pattern of skills wastage. The net labour migration in 2010 is presented in the table below and
confirms the trend towards Russia which attracts most of the migrants and the employment
problems in Armenia, Georgia and Moldova.

TABLE 10 NET LABOUR MIGRATION, 2010
Armenia -75,000
Azerbaijan 53,264
Belarus -50,010
Georgia -150,000
Moldova -171,748
Russian Federation 113,5737
Ukraine -40,006
Source: World Bank (http://data.worldbank.org/indicator/NV.AGR.TOTL.ZS, accessed 4 Sepbember 2012)

Labour migration is also indicated in the negative or positive balance of the monetary inflows
and outflows of remittances, such as Armenia +839, Azerbaijan +471, Belarus +485,
Georgia +756, Moldova +1,275, Russia -13,532 and Ukraine +5,583 (in millions USD in
9
2010) . Russia is the outstanding attractor of human capital from other countries, followed by
Azerbaijan which a decade ago exported labour.

3. VISIONS AND DEVELOPMENTS IN VET
New visions and VET policies/strategies have emerged throughout the region that
endeavours to respond to country specific socio-economic challenges. They even relate to
the CIS development strategy 2009–11, which includes science, innovation and education as
important areas of cooperation. The strategies of all countries recognize the importance of
VET for the economic and social development and all countries (with the exception of
10
Belarus ) are using the word ‘reform’ in the context of their policies for VET system
development. Some of the countries claim VET even for sustainable development and private
sector contributions in terms of funding and VET delivery.

Initially, many of these initiatives for designing visions and VET strategies have been driven
by donors. Today, the situation is different: the tremendous decline of VET enrolment rates in

9
http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTDECPROSPECTS/0,,contentMDK:22759429~pagePK
:64165401~piPK:64165026~theSitePK:476883,00.html (accessed 16 October 2012)
10
The key words in this country are ‘innovative development and competitive growth’ in increasing by 30% the share
of highly skilled VET graduates.
13

11
nearly all countries, the lack of skilled blue collar workers with negative consequences for
employment and the growth of enterprises (Sondergaard, 2012) and the ‘over qualification’ of
the (unemployed) university graduates claim for suitable long term solutions in the education
system which better support the increasing demand for VET.

The specific vision of VET, however, varies by country according to national priorities. Most
countries link their new strategies to both competitiveness and social agendas; some also link
their vision to additional objectives (Armenia to national security goals and sustainability,
Belarus to socio cultural goals and Ukraine to sustainability). Countries have started to put
VET higher on their national policy agendas. The Moldova National Development Strategy
2020 has the alignment of skills to the labour market through better quality of education and
training at the top of the priorities. The support to the SME Sector Strategy is similarly
indicating competence and human capital as one key objective. In Azerbaijan, however, VET
policies are still being reformulated. The country is aware that the booming export of oil and
gas with spill over effects to the rest of the economy requires well skilled human capital on
secondary and post-secondary VET level. Consequently, objectives to formulate a national
and non-donor driven VET strategy are currently high on the agenda.

All countries made efforts in order to further develop their VET systems and their articulation
to the environment. Positive results are notable, mainly in three areas:

• legislation,
• strengthening institutions, and
• the involvement of employers.

The policies and strategies of all countries recognize the added value of systemically
implemented stakeholder involvement and explicitly the relevance of qualification frameworks
and their compliance to the EQF. These frameworks stimulated the quality discussion in VET
and a more systematic stakeholder involvement as well. However, only in Armenia and
Georgia is a national framework already in place and the other countries are still working to
close the gap between visions, policy design and the implementation in the countries’ reality
which does not work through mere adoption of regulations although is driven by longer lasting
social processes on which regulations can build. But care needs to be taken to ensure that
frameworks are, at least at the outset, simple and affordable.

All countries have developed new VET strategies and laws. In addition, specific legislation
refers mainly to the development and implementation of national qualification frameworks, the
new design of professional standards/curricula, quality assurance, decentralization efforts and
in the case of Georgia liberalization towards an educational market in higher education and
VET, which is today steered by accreditation and quality control instruments.

All countries reformed VET departments in ministries, created national VET agencies/councils
and are in the process of rehabilitation of the existing VET schools. Schools have been partly
closed in order to support and concentrate available resources on centres of excellence
according to the needs of different regions. The further training of school directors and
teachers is an ongoing process to support quality and to improve professional careers. The
business sector contributed to the equipment of schools and specialized national (VET)
agencies have been set up to manage accreditation, teacher education and quality control.

11
This transition problem is less dramatic in countries with higher shares of well qualified VET graduates. Belarus
reports that employment for VET graduates is increasing achieving 99.05% (Umarov et al., 2011). However, Russia
with a high share of VET students has a growing shortage of skilled manual workers and technical specialists,
because many VET students continue in higher education programmes (ETF, 2011a).
14

The sporadic and unsystematic involvement of the business sector is a characteristic of the
fast changing realities in market driven economies. Involvement ranges from participation in
national VET councils to consultancy and advice in curriculum development, participation in
school and assessments boards (ETF, 2011). Trade unions are hardly involved in VET
activities. The involvement of stakeholders is an ongoing social process which might lead as
well to more relevant and systematic consequences for the overall VET system, e.g. changing
the character of internships more to longer phases of practical learning in enterprises, which
could be an option for better learning, because many VET schools are not well equipped.

Georgia’s reform process is the most advanced towards the privatization of VET institutions.
Currently, only 14 public VET centres are funded largely through a voucher scheme which
prioritizes professional areas with high demand on the labour markets. Moreover, 71 private
institutions are operating in the country and their offers must be fully covered by tuition fees of
the learners (Castel Branco, 2012). It’s still too early to determine whether such a VET
system, in the future, will cover the human capital requirements.

The structural misbalances on the labour markets in terms of shortages of qualified labour
and so called ‘over education’ are, in all countries, the focus of policy makers triggering
12
serious attention from respective governments . This has led in all countries to more
awareness of the relevance of VET for societal objectives and the formulation of VET policies
which focus on broader development socio-economic goals and on a more demand driven
perspective (learners and enterprises) of the strategies and policy documents – involving
more systematically employers in the outline of VET programmes.

Awareness has been raised through a review in 2011 of the country policies in support of
SME, using criteria inspired by the EU Small Business Act (OECD et al., 2012a). The review
reveals shortages in entrepreneurial learning and in training support for female entrepreneurs.
Several countries meanwhile decided to tackle this issue.

All countries are aware of the importance of career guidance and its contribution in avoiding
future labour market distortions. However, for career guidance, many countries concentrate
new policies and activities too much on initial VET and have not included such services for
13
employed and unemployed adults . This is even more crucial in the larger countries and
Belarus with an aging labour force where these problems could be partly alleviated with more
integration of adults in the work force through vocational guidance and (further) training.

There are three other commonalities among the countries. They still have an initial VET offer
and a ‘secondary’ VET for intermediate qualifications of technicians. A difference exits in the
system’s permeability: VET programmes are, in some countries, dead ends (as in Georgia,
which nevertheless recognizes the problem) but in many countries the possibility still exists to
continue with higher education. However, in practice few VET graduates are continuing their
education after the secondary level. Georgia is advanced in deregulating the VET system, but
encounters severe problems in terms of financing in restructuring the whole sector with public
and private providers.

The issue of lifelong learning is a good example for the importance of vision/policy
development which is not necessarily followed by sustainable implementation and action.
However, Moldova and Georgia have already made systematic efforts in the recognition of
non formal learning. Moreover, lifelong learning is in many countries understood as adult
training. Figures for Russia, Ukraine and Moldova reveal that the shares of adults - employed
and unemployed - participating in training programmes are still modest, such as 5–7% of

12
Moreover, ‘institutional and social dialogue, capacity, and leadership of implementation will be among the key
elements for successful and sustainable reforms’ (Castejon et al., 2011, p. 162).
13
The employment services of Azerbaijan and Ukraine have as well a focus on adult job seekers.
15

adults for Russia, where 1/3 of adult population expressed further education needs (ETF,
2011a), for Ukraine, where the extractive and manufacturing sector provided outstanding
shares of further training with 7,4% and 5,2% respectively (ETF, 2011b) and 0.95% in 2010 of
14
all population between 24 and 64 years for Moldova respectively (ETF, 2011c) .

The lifelong learning issue and similar delays in other policy areas are significant for a serious
gap between policy design and implementation on all levels of the VET systems. Some main
reasons for modest progress in implementation are:

• lack of institutional capacities,
• lack of returns on retraining,
• low motivation and/or resistance against decisions taken in a non participative manner
and top down implemented measures,
• lack of resources and incentives complementing innovation.

Higher education benefited most from educational policies during the transition phase.
Secondary VET was often neglected at policy level and managed with outdated governance
modes. This process was reinforced by the demand of the learners, which are even ready to
pay high fees for university graduation (ETF 2011a, 2011b). The growing demand led most
countries to opt for liberalised higher education policies by opening up to fee-based public
and private universities. Most enrolment is in academic higher education (ISCED 5A);
enrolment in vocational higher education (ISCED 5B) has been decreasing since the early
2000s (in 2008, the rates ranged between 12% in Republic of Moldova and 27% in
Azerbaijan). Professional areas such as engineering, manufacturing and construction (which
play a prominent role in the EU New Skills for New Jobs agenda) have seen the lowest
increases and even decreases in enrolment compared with other fields (UNESCO, 2010).

The four smaller countries (Armenia, Azerbaijan, Georgia and Moldova) have limited research
capacities in the VET sector and hardly funds for complementing VET system development
with targeted research carried out with national resources, which would create more evidence
15
for further decisions and would support the design of new visions/policies . On the contrary,
Belarus makes efforts in skills forecasting and the larger countries have better developed
research capacities.

4. ARE INSTITUTIONAL ARRANGEMENTS, CAPACITIES AND
BUDGETS ADEQUATE FOR BRINGING ABOUT THE DESIRED
CHANGES IN VET?

4.1 VET governance on different levels

Despite the existing planning traditions and the emerging development of VET strategies in
most countries, the accountability of stakeholders from civil society is still weak. There are
difficulties in implementing long-term visions/policies in VET pilot projects and mechanisms
are missing for extending the pilots to the overall system level. One reason for that is
outdated governance modes, which still operate the VET system. The MoE’s planning

14
Crossover the region the private sector should have a stronger voice and incentive driven further training schemes,
which should be linked to qualification frameworks and sound accreditation policies for providers (Bodewig et al.,
2011).
15
Azerbaijan is an exception in the small countries. Several times publicly financed research was launched on
different VET issues.
16

16
traditions in Russia, Ukraine and Belarus (ETF 2011a, 2011b, 2011f) impede a more flexible
and accountability driven development of VET institutions. Public entities still decide in a
central manner and intervene a lot into the content and structure of training programmes
instead of involving private sector initiatives, which would articulate demand according to the
17
requirements of the enterprises . Here, Georgia is more advanced. However, the duties,
rights and obligations of the National VET Council are not well defined.

An important step was taken in Russia towards further decentralization of VET governance
and administration and the foreseen ‘implementation of regional TVET development
programmes’ catches up the decentralization paradigm (Umarov et al., 2011) for Russia’s
VET system whereas the federal centre of VET will only be strengthened in order to regulate
better the emerging market for education and to enhance the quality and transparency in
education and training.

In Armenia recent VET policy documents, which have been prepared with the support of
international experts, are not yet owned by policy makers. However, and in order to stimulate
implementation, the Ministry of Education and Science, the Armenian Union of Employers and
the Chamber of Commerce signed a memorandum of understanding on VET cooperation, to
define the involvement of employers in VET development and provision. Ukraine has
established an inter-agency working group in an effort to shape educational planning in line
18
with the demands of the economy .

Where social partners especially employers become involved the situation changes and the
advantages of modern governance modes are increasingly discussed. In Ukraine the 2012
law on ‘Professional development’ lays the basis for CVET according to the needs and with
participation of the social partners. In Moldova various sector committees are working on
these issues. Federal and centralized governance modes are questioned in the entire region
and decentralization at least suitable for huge countries like Russia and Ukraine. The raising
awareness includes in Russia legal issues, where regional legislation is gaining ground
against the previous centralized model.

In Russia, a law from 2007 opened the door for the involvement of employers in VET policy
formulation and in the recent years the Russian Union of Industrialists and Entrepreneurs
(RUIE) contributed more systematically to VET system development. Moreover, the future
systemic involvement from employers is codified by an agreement between the ministry and
the Russian employer organization.

In Ukraine, in spite of the active recent involvement of employers in developing and
modernizing VET, the implementation of reforms and initiatives is constrained by the lack of
technical capacities (such as expertise in competence based and occupational standards and
modern quality assurance mechanisms) and both institutional and financial resources. The
ongoing crisis has affected the implementation of the National VET Development Programme
for 2011-15 because the planned financial resources are not available. As regards the
implementation of the NQF adopted by the government decree in 2011 a number of employer
led pilot projects have been initiated to develop new occupational standards with a view to
developing a model for engaging the labour market actors in competence based standards.

16
The sectoral orientation of many educational institutions has been preserved as well as the orientation to large
enterprises.
17
Belarus’, Russia’s and Ukraine’s educational institutions developed meanwhile first cooperation forms with
enterprises for anticipating demand, in-service practice and training, developing standards etc. (ETF, 2011f).
18
This approach can already build on good practice: ‘the Kiev VET school of jewellery works in close cooperation
with the Jewellery Association to provide training for workers from all regions, offering 100% employment for all
graduates’ (ETF, 2011e). There is as well a legal base that experienced workers can move to VET institutions as
teachers.
17

However, the lack of technical competences and the absence of a single coordinating
qualification agency is a serious impediment for boosting and scaling up the NQF
implementation. Solutions are sought through new legislative initiatives (Draft Law on
Professional Qualifications) and funding mechanisms (an initiative on the establishment of a
national training fund is under discussion).

Hence, most countries are today on the way in modifying the system of governance on two
different levels: the system level itself which might include in the future e.g. instruments like
independent external evaluation for better and more informed governance. The second
aspect is the institutional level of schools, which should operate in the future with more
degrees of freedom. The third aspect is the progressive involvement of the social partners.
Also the MoE of Belarus cooperates today more systematically with employers. The strong
awareness of Belarus employers for human capital investments for maintaining the
competitiveness of the manufacturing sector is supporting this process.

There are some common problems left in all countries. This is predominantly capacity building
for stakeholders involved in new governance modes. This includes in a multi-level
governance model not only the federal level but also sector and regional organizations and
the VET schools, where teachers and school directors must be further trained in order to
assume different tasks and more accountability towards the learners and the local economy.
Pre service and in service teacher education and training is per se a crucial and critical issue
19
in all countries . In the future, policy makers, trainers, teachers and school managers must
be prepared in their educational careers for such new governance approaches.

There is very strong case for greater school autonomy especially as it is much discussed (and
even agreed) but little implemented. The case is intertwined with the question of
decentralisation / ‘de concentration’ either to municipal or school level. Decentralisation
implies financial responsibility at local level but requires national uniform technical guidelines
in areas such as occupational standards, vocational qualifications and core curricula. It also
needs to address the local/regional involvement of the social partners. Decentralisation can
also signify delegation by ministries of technical responsibilities to bodies at national level
(standards/qualifications/finance etc.).

Concerning local commercial activities, if the school has greater autonomy, then it needs to
be spelled out either in legislation or regulation or in the school’s own statutes that the school
can engage in commercial activities and that it can retain the income (and what the limitations
are).

There might well then, be a regulatory framework for schools to become more autonomous in
the light both of their responsibility for income generation and their need for responsiveness to
the local market and enterprises, taking into account the obligations of school boards and
management committees.

4.2 Resources and budgets

In the last 20 years of transition, the policy makers and the learners gave priority to general
secondary and higher education – including corresponding budget resources. Combined with
the low attractiveness of VET the learners’ preferences influenced negatively initial training
and the modest efforts in further training, because governments spent more money on
general secondary and higher education. Hence, many countries have low shares of VET

19
Ukraine established meanwhile a compulsory in-service training for teachers. Every five years they must assist to a
further training programme.
18

students compared with the number of students in all programmes on the same education
level and funding is linked in all countries to the educational streaming towards different
educational sub systems.

TABLE 11 TOTAL NUMBER OF VET STUDENTS COMPARED TO THE TOTAL NUMBER
OF PUPILS AND STUDENTS BY EDUCATION LEVEL
Armenia Azerbaijan Belarus Georgia Moldova Russia Ukraine
2010 2010 2010 2010 2010 2009 2010

Lower 193,364 666,277 468,270 166,586 207,720 6,403,704 2,289,065
secondary
(ISCED 2) n.a. n.a. n.a. n.a. n.a. n.a. n.a.

210,649 131,625
88,060 396,397 99,899 3,209,844 843,907
Upper 5,433 1,580
secondary 5,618 176,337 35,513 1,556,758 241,706
(ISCED 3) (2.6%) (1.2%)
(6.4%) (44.5%)* (35.4%) (48.5%) (28.6%)
(2007) (2008)

108,991 6,076
Post sec. 37,367 1,861 134,750 182,607
n.a. 108,991 6,076
non
37,367 1,861 134,750 182,607
tertiary
n.a. (100%) (100%)
(ISCED 4) (100%) (100%) (100%) (100%)
(2007) (2008)

153,696 179,579 601,352 102,710 128,240 9,178,199 2,599,426
Tertiary
29,986 34,659 166,637 6,403 17,048 1,665,080 354,226
(ISCED 5)
(19.5%) (19.3%) (27.7%) (6.2%) (13.3%) (18.1%) (13.6%)

Notes: The first figure shows the number of students in all programmes for a specific education level, the second and
third one the number of VET students at a corresponding level and as a share of the first figure respectively.
n.a. = not applicable; (*) According to national data and calculations in the Torino Process country report for
Azerbaijan, the share of VET students at the ISCED 3 level has been estimated at the level of 11.2%, which is much
lower than the UNESCO estimates.
Source: UNESCO Institute for Statistics
(http://stats.uis.unesco.org/unesco/TableViewer/document.aspx?ReportId=136&IF_Language=eng&BR_Topic=0,
accessed 10 May 2012).

Typical for initial VET is the ISCED 3 level – an exception is Belarus, which concentrates on
ISCED 4 – where the shares of VET students compared to all students on this level are for
Armenia 6.4%, for Azerbaijan 11.2% (referring to national data and calculations in the TP
country report – ETF, 2012f), for Belarus 2.6%, for Georgia 1.2%, for Moldova 35.5%, for
Russia 48.5% and for Ukraine 28.6%. None of the countries exceeds 50% and in some
countries the shares of VET students are extremely low. Consequently, Armenia which is one
country with low shares of VET students, spent in 2010 only 4.8% of public expenditure for
education on VET (Corradini, 2012) and Georgia will spend 4.1% in 2012 respectively (Castel
20
Branco, 2012) .

20
The share of VET spending out of total educational spending is only available for these two countries. Belarus is to
a certain extend exceptional, because spending for VET infrastructure nearly doubled between 2005 and 2008 (ETF,
2011e). The Georgian figures do not include that in 2012 the share of 13.25% of all VET students pay the full amount
of their training programme, due to the considerable number of private training institutes.
19

One has to take into account that current enrolment in VET does not automatically mean that
the students end up in employment according to their VET qualifications. Countries with
relatively high shares of VET students (like Russia) have a high permeability in the system.
Hence, students enrol after initial VET in higher education programmes. Moreover, the
ISCED 4 level has the potential to meet the demand of both the employers and the students’
expectations and the desire to progress. The enhancement and expansion of the offer of the
post-secondary level should therefore receive attention and investment on part of the
governments.

The overall spending on education remains in four countries considerably below UNESCO
recommendations.

FIGURE 2 PUBLIC EDUCATIONAL SPENDING AS % OF GDP AND % OF TOTAL
PUBLIC EXPENDITURE, 2006 AND 2009

25.0

20.0

15.0

10.0 2009
2006

5.0

0.0
% of % of % of % of % of % of % of % of % of % of % of % of % of % of
GDP gov. GDP gov. GDP gov. GDP gov. GDP gov. GDP gov. GDP gov.
exp. exp. exp. exp. exp. exp. exp.
Armenia Azerbaijan Belarus Georgia Republic of Russian Ukraine
Moldova Federation
Notes: Russian Federation – data refer to the years 2004 and 2008; Ukraine – data refer to the years 2006 and 2007.
Source: UNESCO Institute for Statistics (http://stats.uis.unesco.org/unesco/TableViewer/tableView.aspx, accessed
14 May 2012).

Moldova was outstanding on educational spending – even in the years of the crisis, but still
remains with an inefficient network because of a declining population and low
teacher/students relations, but high maintenance and heating costs. From 2012 onwards the
number of schools will be reduced. This makes educational spending more effective and the
schools should be more intensively used by launching CVET programmes including
entrepreneurs. Five countries increased educational spending. However, the majority remains

20

below the UN recommendation of 6%. Moldova and Ukraine achieved the recommendation in
21
the past – more updated data is not available .

Initial VET is more costly than general secondary education and the reform initiatives must be
seen in the context of available resources. Especially those countries which have not yet
systematically developed education and business cooperation in initial VET have serious
problems in updating the existing infrastructure in schools and in purchasing new textbooks.
Donor support has its limits in VET financing and could even reinforce structural
discrepancies in the countries between the VET institutions. This led in Armenia to the
situation that 12 regional state colleges are relatively well equipped – coping multi functionally
with initial and further training. However, the rest of the VET school remain in the same
situation in terms of infrastructure and equipment (Corradini, 2012). Azerbaijan rehabilitated in
the 2007–12 as well 20 VET schools, which is less than 20% of the school network.

Enormous constraints in terms of technical equipment, school buildings and furniture are a
22
common problem in all countries , which can only partly be solved by the schools running
23
some educational services for clients . The human resources (teachers, trainers and school
managers) need in all countries more and constant updating, linked with more attractive
professional careers.

It is very important to remember that reform strategies cannot exist without a budget line
attached and that, quite simply for each country four key questions need to be answered (ETF
2007):

• What are the current and future sources of finance?
• How will they be collected and by whom?
• How will they be dispersed, by whom and by what criteria?
• What measures are in hand to reform current finance mechanisms?

Preoccupations in each of the countries need to be:

• the capacity of line ministries to continue to steer the system in face of pressures toward
greater decentralisation;
• the decisive role for the overall budget negotiations of the Ministry of Finance;
• the projected role of the municipalities and/or regions;
• the nature of so called school autonomy;
• the role of intermediate bodies (such as an Employment Bureau or VET Council or
Centre) detached from government but still at central level.

5. WHAT FURTHER REFORMS ARE NECESSARY TO
MODERNISE THE VET SYSTEM?
Despite considerable progress made in many areas of VET, there are in all countries crucial
issues remaining for further improvement. This should happen in the context of enhanced
competitiveness and with a better response to the demand of learners and the business
sector, which is already partly outlined in the visions and policies of the countries. Apart from

21
Azerbaijan developed a country specific approach for analysing public educational spending in leaving out the vast
and dominating oil and gas sector in terms of GDP creation. Hence, the net share of education expenditures of the
state budget without this sector amounted in 2010 to 5.5%.
22
The MoE of Azerbaijan stated that still 78 out of 107 VET schools need restructuring (Deij, 2011).
23
Ukraine is on a good way in not creating additional structures for the further training of adults/unemployed. VET
schools are used for this task reinvesting the money in school infrastructure and increasing teacher salaries.
21

constraints with the technical infrastructure and with refurbishing VET schools, all countries
still have problems in three interconnected technical areas:

• a multi-level and stakeholder driven governance of the system including decentralization
in large countries;
• the quality and labour market relevance of the training offers in the initial and in the
underdeveloped continuing VET systems; and
• better linkages between publicly driven VET and the business sector on various levels.

Moreover, future actions in VET system development should better link evidence and the
design and implementation of new policies to capacity building measures for the stakeholders
involved.

These serious problems could be solved in the mid-term by more commitment, timely
stakeholder participation, more cooperation in the region and sticking systematically to good
practice already available in the countries. In many cases, EU policies and good practice from
Europe have been already one of the main drivers of local efforts and could be further
discussed in terms of utility in the national context of the countries.

Thematic platforms for policy dialogue are available at the European level. All countries, with
the exception of Russia, have joined the Eastern Partnership. Dialogue on more effective
migration management and tackling related skills challenges has been launched by the EU
Mobility Partnerships signed by Armenia, Georgia and Moldova which will be continuously
supported by the ETF.

5.1 Complexity requires decentralized action and sound decisions by
competent stakeholders

VET systems have complex relations to their environment. Differently from other educational
sub systems, they are directly affected by changes in technological developments, by non
predictable variations on markets, adjustments of economic sectors, by changes in work
organisation and by migration. The influence on the VET system of such extra systemic
drivers (Wallenborn, 2012) is increasing in a globalized world with shorter innovation cycles
and strong imperatives for rapid adjustments of the human capital stock.
24
Such challenges should have consequences for the governance modes on national and
institutional level and for the self perception of VET experts (teacher, trainers, managers,
decisions makers etc.). Teachers and other VET personnel in the public sector cannot be fully
aware about the relevant changes in the world of work and the consequences for skills
development. Hence, information channels and decision making mechanisms must be
created in a modern VET system which assures that skills acquired in VET fit effectively in
world of work contexts. Moreover, flexibility and short time adjustments of training
25
programmes are outstanding characteristics of effective training .

Such information channels must assure that the voices of the world of work report
authentically about relevant changes and suggest consequences for training in terms of
adjustment of professional standards, curricula and infrastructure. National, regional or sector

24
Georgia already adopted in 2011 a social partnership agreement for VET. However, it does not contain information
how social partnership should operate in terms of activating employers, unions etc. (Castel Branco, 2012).
25
One alternative for better governance on the institutional level of VET providers are school councils comprising
employers, trade unions, teachers, students etc. ETF supported in Armenia the effectiveness of such councils with
capacity building programmes.
22

VET councils could be adequate forums for discussing changes, future challenges and new
measures in order to increase effectiveness and efficiency of VET delivery.

Decentralization according to training needs in different sectors and regions of large countries
is appropriate for the diversification of training programmes and to cover regional or local
characteristics. Stakeholder involvement on decision making on the operational levels of VET
systems (school boards, sector committees, chambers etc.) are suitable instruments to better
act in today’s complexity where nobody of the experts knows everything, but everybody from
the world of work can contribute authentically with knowledge, relevant for VET system
development, because ‘the basis of organisation (from trade unions and employers) lies at the
level of enterprises or workplaces (ETF, 2012a, p. 10).

The VET systems in Ukraine and Belarus are still largely centralized, which has negative
influence on the flexibility of the training programmes towards more labour market relevance.
Combined with barely existing mechanisms to collect constantly labour market information,
such approaches previously have built on successes of the past rather than on participation
and flexibility required in the future. Wherever possible, the decision about the relevance of
certain training programmes should be shifted to local VET institutions involving stakeholders
of the civil society and the current policy developments in many countries are aiming to
improve new governance modes, relevant for effective VET system development. The ETF
supports such efforts in a region of Ukraine where stakeholder consultation and labour
markets surveys aim at adjusting VET offers to the regional demand.

5.2 Quality and relevance require practical learning and support through
lifelong learning

The countries did a lot to increase the quality of the training programmes: Quality assurance
instruments, national qualification frameworks and the design of new professions and
professional standards are clear indicators for progress. This progress was one incentive for
Russian employers for playing a key role in developing a NQF. Previously they complained
about the low quality of technical and non-cognitive skills of VET graduates being even worse
from 2000 onwards than in the early 1990s (ETF, 2011a). The technological development in
the modern handicraft, manufacturing and service sector differs more and more from the
realities in VET schools. Successful work based learning which covers skills acquirement in
many cases better and which is suitable for professions operating at the technological limits
26
cannot be implemented in workshops of schools . There are structural limits in terms of new
infrastructure and competences of teachers, trainers and school managers to constantly
update school based VET programmes according to technological and economic changes.
Cooperation with the business sector and new learning sequences in the world of work are
urgently required to cover an already existing skills gap.
27
The implementation of new regulations (standards, frameworks , curricula etc.) led in the
past to more stakeholder involvement in the national VET dialogue. It was an opportunity to
think about expectations of the business sector and about learning outcomes. Standards have
been formulated and new curricula designed. A main challenge will be to implement this in the
learning practice and reflect on suitable modes like work based learning, complementing
learning in schools for better pathways and more practical and employment relevant skills.

26
Georgia decided by law to dedicate 40% of all VET curricula to practical training (Castel Branco, 2012).
27
NQFs led in Armenia, Georgia and Ukraine to new legislation and they are expected to generate results in the next
months in Azerbaijan and Russia.
23

However, regulations and standards can only be effectively applied if trainers, teachers and
school managers are sufficiently updated to fulfil new tasks and when outdated professions
are continuously sorted out. Such capacity building of institutions and experts must be
complemented by new infrastructure, textbooks, new methodological approaches and a new
mixture of learning outcomes comprising technical, individual and social skills in order to
respond to the challenges of globalization. There are no sustainable solutions if
correspondent activities stick only to new laws, regulations and constructs like frameworks
and curricula: laws and regulations are only one part of complex VET systems, which must be
addressed holistically. A lot of other VET system parts must predominantly be improved, if
new regulations should work effectively. Hence, well qualified teachers and trainers are key in
the quality discussion, but currently all countries (an exception is Belarus) are lacking behind
28
in staff development including the working conditions for teachers (Umarov et al., 2011), or
in other words: ‘Wage increases are essential in tackling the shortages of highly skilled
vocational teachers and trainers (ETF, 2011e).

Other proposals in the region (Ukraine) suggest to strictly divide educational delivery from
quality control which should be carried out from another authority (Prokopenko, 2008) and
representatives of the world of work should be systematically involved in professional
standard and curriculum development. Russia tends to opt for more external evaluations of
the VET system and the different training programmes. Simultaneously, private sector
representatives will be involved in governing boards of educational establishments (Umarov
et al, 2011). However, such approaches only work well, when corresponding degrees of
freedom and mechanisms for collective bargaining of the different stakeholders are well
defined and institutionalized as a preferred governance model. Independent evaluation per se
might remain ineffective if the ground for innovation and change is not sufficiently prepared.

Wherever possible, lifelong learning activities should be the responsibility of the stakeholders
involved, mainly the social partners. Improved competitiveness and skill shortages in aging
societies require urgently more efforts towards lifelong learning and specifically in continuing
VET. The governments are responsible for suitable legal frameworks, which could include
regulations for financing continuing training. There is good practice in Europe where the
countries might benefit from. Large firms launched already further training programmes for
their employees. However, the SME are still the forgotten majority, which would need better
policies – including CVET - and competent further training providers which offer
comprehensive technical and entrepreneurial programmes (ETF, 2013).

5.3 Close cooperation between VET institutions and business

Increasing and more sophisticated technology in the region, shorter innovation cycles and
more competitiveness on global markets highlighted structural limits of conventional VET
schools towards innovation and change. Financial resources are limited. However, catching
up with technological development in modern crafts and industrial trades would require
enormous investments which are normally not available through public budgets.

Hence, ministries and public VET institutions must understand to use the crisis better (a crisis
which many VET institutions are suffering) as a chance for more cooperation with the world of
work and not as another opportunity to justify outdated VET programmes and mere
educational objectives. Any kind of extension of (supervised) practical learning in the
economy goes in the right direction. Internships and (part time) apprenticeships enhance the

28
Despite of good intentions the retraining system for VET teachers in Azerbaijan has declined (Deij, 2011), mostly
due o bureaucratic reasons.
24

relevance of the skills acquired by learners and compensate missing opportunities for
learners, because the schools cannot create suitable learning environments required in many
newly structured professions.

As examples already reveal in all countries of the region (ETF 2011), many employers are
keen to extend practical training in firms and to enhance their relations with VET schools,
donate equipment and give advice for modified professional standards and curriculum
development. In Ukraine, the employers have been actively promoting the modernisation of
qualifications and the relevance of skills vis-à-vis the labour market demand and the recent
legislative initiatives stipulates employers’ rights to participate in national education policy
formulation and in reviewing the national skills standards.

Well organized firms offer excellent opportunities for continuing training either for employed or
unemployed persons. They could be the first step in ‘shifting away from government-defined
programmes towards a well regulated market of private and public providers that deliver
training services to both working and unemployed adults’ (Sondergaard et al., 2012, p. 14). It
should be avoided to implement new structures either for initial and continuing training. It’s
better to use existing infrastructure in workshops of VET schools and in enterprises for both
29
modes of training , including the post-secondary non tertiary VET programmes, which exist
in all countries and which could be within education business cooperation a sound alternative
to university education.

Whenever possible in terms of legal frameworks, commitment and infrastructure VET
programmes should be delivered in cooperation with the business sector, which leads to
higher foundation skills (OECD, 2012). This is not easy in societies, where educators and
employers approach VET differently: the first argue for more universal profiles, while the latter
‘ask for a closer link between educational and professional standards’ (ETF, 2011, p. 4) – a
clear indicator that the educational debate about functions and perspectives of educational
sub systems in a globalized world is not yet finished in the region. Moreover, post secondary
VET and CVET might play an important role in the policy outlines for more education and
business cooperation fostering vertical mobility of the learners and a diversification of VET
programmes in terms of education levels and technological standards.

Entrepreneurial learning cannot be reduced to formal and/or classroom learning. The
business sector is an excellent learning environment for promoting more entrepreneurial
commitment. Context and sector specific advantages of the business sector should be more
systematically used for this kind of learning, which should address as well the labour force of
the informal economy taking into account that a lot of (micro) business is carried out by
women.

5.4 Policy design should always be based on evidence as
implementation should be linked to capacity building

The complexity of modern societies makes decisions difficult on educational policies. The
interrelations of the VET system with labour markets, technological developments, the
economy etc. require informational support of decisions about mid and long term VET
strategies in the countries. Applied research and correspondent research capacities should
be available to support national decisions with evidence: ‘Evidence can take many forms,
such as experience and evaluation of practice, the results of scientific analyses, quantitative

29
Ukraine could be a reference for such an approach: 300 out of 900 VET schools will be substantially rehabilitated
in order to cover new training needs. Seventy are already reequipped. Moreover, schools are cooperating with the
business sector and offering as well programmes in the CVET area for job seekers.
25

Torino Process Report Analyzes VET Trends in Eastern Europe

Torino Process Report Analyzes VET Trends in Eastern Europe

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Torino Process Report Analyzes VET Trends in Eastern Europe