Countries are now giving the long-neglected topic of vocational education and training (VET) a dramatically increased profile, reflecting a recognition of its economic function and the need to grapple with emerging strains in VET systems. This heightened profile led to the launch of this OECD policy review, which involved reports on the vocational systems of 16 countries.

While many vocational skills can in principle be learnt on the job, firms are often unwilling to invest in training. For these reasons and others, it often makes sense to provide vocational education and training to young people to ensure their smooth transition into the labour market. This report is primarily concerned with initial VET, meaning programmes designed primarily for young people. Its focus is on how VET systems can respond better to labour market needs.

This chapter looks at how the mix of provision in vocational programmes is determined – how many people are trained in different fields – and, within each field, what mix of specific and general skills should be taught.

Three main factors determine the mix of provision – student preference, employer needs and the limitations of existing capacity. It argues that the right balance between these factors depends on issues like who is paying for the training and the age of the student. It discusses the different potential means of assessing employer needs, and points to the practical difficulties of forecasting future skills needs.

Graduates of vocational programmes need occupation-specific skills alongside generic transferable skills to carry them through their working career, including the ability to adapt to fast-changing workplace requirements. Numeracy and literacy skills are increasingly important in the modern workplace, and vocational systems need to give sufficient weight to them.

One way of ensuring that vocational programmes meet labour market needs is to give VET students good guidance. As careers diversify, career choices and therefore career guidance are becoming both more important and more demanding.

To meet this challenge, there needs to be a coherent career guidance profession, with personnel experienced in labour market issues and separated from psychological counselling. Guidance needs to be adequately resourced, with some assurance of pro-active one-to-one delivery of guidance at key career decision points. Guidance personnel need to have an independent base to underpin their objectivity, and be able to call on a wide range of information and web-based material. Strong links between schools and local employers are very important means of introducing young students to the world of work. Guidance initiatives also need to be carefully evaluated.

Workplace learning assumes diverse forms, ranging from short periods of job-shadowing for school students to full apprenticeships. This chapter argues that the workplace has compelling attractions as a learning environment, a good place both to learn hard skills on modern equipment and soft skills by working with people in a real-world context; improving transition from school to work by allowing employers and potential employees to get to know one another; and allowing trainees to contribute useful work. The employer offer of workplace training also provides an important signal of employer need for that variety of skill.

But workplace learning also requires the commitment both of students and employers. This means adequate incentives for employers to offer training places, balanced by effective means of ensuring quality in the training they provide. Countries use many types of financial incentives to encourage workplace training, including direct subsidies, special tax breaks and arrangements to share the burden of training between groups of enterprises.