3. Guiding and incentivising skills choices in Luxembourg

As Luxembourg seeks to build a more resilient and adaptable skills system that can respond not only to the immediate challenges of short-term disruptions, such as with COVID-19, but also to the longer run impacts of megatrends, greater focus needs to be placed on guiding and incentivising skills choices. Specifically, individuals need to have access to the support and guidance services needed to make better decisions about their career development and learning through different life stages. Some of these services can exist in terms of information, counselling and advice. However, there is also a range of financial and non-financial incentives that help to overcome barriers to learning, offer support and motivate individuals to continually develop the skills needed for successful careers and fulfilling lives.

Disruptions from short-term, unexpected shocks and long-term megatrends, such as globalisation, digitalisation and demographic and climate change, as outlined in Chapter 1, are having a major impact on the industrial structure of national economies – and Luxembourg is no exception (CEDEFOP, 2020[1]). Indeed, such forces of change are challenging notions of “jobs for life”, modifying ways of working and driving fluctuations in employment, which are evident in cycles of job growth and decline as well as changing skills requirements (OECD, 2019[2]).

More complex portfolio careers are transforming traditional career pathways, opening up new and varied options for work and learning, and increasing the complexity of career decisions and choices people must make throughout their lives. More and more, these are lifelong processes pursued by adults rather than something constrained to initial education and the choices of young people. As Luxembourg’s skills system evolves from a “front-loaded education” approach (where individuals’ learning is focused on their early life before leaving the education system) to a “lifelong learning” approach (where learning takes place throughout life), there is a need to reform the support that is made available to adult learners. This applies to both guidance services and the financial and non-financial incentives used, whether that is, on the one hand, to inform individual choices about future career options and adult learning opportunities, or on the other, to facilitate the take-up of those opportunities.

Career guidance are vital services provided across many OECD countries (OECD, 2019[2]) to help individuals successfully navigate a constantly evolving labour market and skills system. Through such advice, individuals get help in: identifying suitable career opportunities; understanding their training needs to secure work and progress in their careers; and navigating the many education, training and employment offers available (OECD, 2021[3]). Targeted career guidance services are also crucial in the context of increased unemployment resulting from the COVID-19 pandemic and restructuring in the economy to encourage those workers most at risk of displacement (especially those who are low-qualified and in low-skilled roles) to upskill and reskill before they become unemployed (CEDEFOP, 2020[4]).

Firms can also use such information to plan their management strategies and guide their approach to people management and working practices for their existing and future workforce (e.g. the provision of training, recruitment and succession planning). A key goal is to help employers to understand how to get the best out of their workforce through more effective skills utilisation and the creation of good work and then to support individuals in securing those roles.

Besides providing information to guide skills choices, a number of financial and non-financial incentives can encourage greater investment and engagement in skills development and learning. Financial incentives can be designed for and targeted at individuals to steer their participation in adult learning programmes. They can also be directed at employers to encourage investment in skills development within their workforce (OECD, 2017[5]). Both seek to enhance learning and skills development that is high quality and labour market relevant and can therefore enhance economic prospects. Clearly, where financial incentives can be aligned and assume a dual approach, working for both employers and individuals, this provides the basis to overcome the barriers that inhibit participation in learning and skills investments as a whole and can significantly enhance the collective benefits from training – thus producing a sum greater than its parts.

This chapter is structured as follows: the following section provides an overview of current practices in providing guidance and financial incentives in Luxembourg. The next section assesses Luxembourg’s performance in guidance and financial incentives. The last section conducts a detailed assessment and provides tailored policy recommendations in two opportunities for guiding and incentivising skills choices: improving guidance services for adult learning; and improving financial incentives for adult learning.

The assessment of guidance and incentives to better inform skills choices starts with a review of the current arrangements and performance of guidance services and financial incentives. The section first considers guidance and support services and then the nature and role of incentives.

In Luxembourg, while several partners are involved in delivering guidance services to individuals in different stages of their education and working life, since 2008, there have been continual steps to bring the different services together (FO, 2010[6]). This culminated in the regrouping of guidance activities into one structure in 2012 and the establishment of the Maison de l’orientation (MO).1 The MO has aimed to offer a coherent and centralised service for individuals delivered through a national guidance centre or “one-stop-shop” for guidance, with multiple services located in a single building to enhance ease of access.

At a strategic level, the work of the MO is co-ordinated by a range of partners operating through the Forum Orientation (FO), backed by the Government and established in law. The FO has brought together all relevant ministries, including the Ministry of Education, Children and Youth (MENJE), the Ministry of Higher Education and Research (MESR), and the Ministry of Labour, Employment and the Social and Solidarity Economy (MTEESS) as well as key stakeholders (e.g. employer associations, chambers, unions, guidance providers). The FO has functions which include: working as a guidance co-ordination hub for stakeholders; agreeing on where to make improvements to guidance activities; and consulting the government on new initiatives. The MO is primarily funded by the Government of Luxembourg, which helps to ensure continuity in the core service offer.

A central mission of the MO is to deliver lifelong guidance to all individuals, regardless of age, based on individual and personal development needs at any time in their lives. This includes support to identify people’s capabilities, skills and interests, as well as to inform their professional and training activities and career choices, so that individuals become more resourceful in their own career management (CEDEFOP, 2020[7]). The primary guidance services of the MO are outlined in Table 3.1 (Maison de l’orientation, 2022[8]). The analysis considers all services to show how complementary guidance activities might support each other – for example, youth services encourage the take-up of training and learning into adulthood.

In 2021, the MO opened a new "Orientation Space" at its main office to facilitate the co-ordination of guidance services.2 This has provided an opportunity for the MO to repurpose itself after the pandemic as both a physical and virtual one-stop-shop for guidance services and a resource centre for guidance professionals, teachers and individuals. This Orientation Space is organised into five thematic reception counters where individuals are welcomed and then connected more effectively to specialised services based on their needs, regardless of their backgrounds. These counters focus on: the school journey; higher education; youth information; training for adults; and the “universe of training and trades”. The centre supports open access to the public without an appointment. After initial contact, clients are referred to advisers for more personal advice.

There is also a wide range of web-based and physical resources. These can be accessed on site through a new MO multimedia space, provided free of charge. This includes a growing library of resources and documents, computer workstations available for on-site research, and wider preparations for employment, such as writing curriculum vitae (CVs) and developing cover letters. Staff are available to offer support using the resources and equipment.

Various financial incentives are currently available for individuals and employers within Luxembourg to encourage their participation in learning once their career interests and training needs have been established. In addition, significant public support is currently available for adults and companies to incentivise more training in Luxembourg. The responsibilities of different ministries and day-to-day management to specific delivery agents are outlined in Table 3.2. While all schemes have specified eligibility criteria, some are broader and operate nationally with the aim of supporting training opportunities for all. In contrast, others are targeted to specific groups of individuals and employers experiencing more specific and pressing barriers. This section provides an overview of the existing financial incentives3 for individuals and employers.

The range of incentives available to encourage individuals to participate in adult learning falls into three broad types – with reference to the OECD policy toolkit in Table 3.4 (later in this section). The focus has primarily been on financial incentives for individuals (see Table 3.2). First, there are various types of paid study leave, which provides a means for individuals to request time off to pursue different types of learning. These are seen as key in conveying to individuals their rights to training. Second, there are various subsidy-based schemes targeted specifically to certain types of training or for certain groups of individuals. These include: state financial aid for higher education; European grants; assistance in learning the national language; and support for vocational training for job seekers. Finally, there are tax incentives as a further basis to support ongoing professional development. The following section examines the main incentives more closely as a basis to then review current performance and where improvements might be required.

In addition to financial incentives for individuals, there are also financial incentives for employers to stimulate their investment in training (Table 3.3). Significant public support is available to encourage employers to train in Luxembourg, with a wide array of existing incentives. These range from: national subsidies supporting co-funding of individual company training plans; to more targeted subsidies supporting specified workers or directed at specific types of training (e.g. vocational education and training such as apprenticeships); as well as more collaborative measures, such as levies run through sector training funds, working across specific business communities, such as in key sectors.

In reflecting on the conditions for the successful implementation of employer incentives, it is important to consider the role of business representatives, intermediaries and public sector partners (as listed earlier for the individual incentives). As such, this calls upon private and public partnerships involving, in particular, the support of dedicated and well-known industry, employer, trade and professional bodies, wider social partners and business associations. These intermediaries provide vital mechanisms and trusted routes to reach and actively engage employers broadly across different business communities. In addition, these seek to raise awareness of the support available, enhancing the state’s core information and advisory services through their dedicated membership networks, distribution channels and business services.

In Luxembourg, there are five main professional chambers represent social partners in the skills system in Luxembourg. These are publicly backed institutions financed by mandatory membership fees of companies from the sectors they represent. They also access income from the services they provide, including within areas of training. Three chambers represent employers: the Chamber of Commerce (Chambre de Commerce, CC), the Chamber of Skilled Trades and Crafts (Chambre des Métiers, CdM), and the Chamber of Agriculture (Chambre d’agriculture, LWK). Broader social partners capturing the employee perspective are represented by two professional chambers: the Chamber of Employees (Chambre des salariés, CSL) and the Chamber of Civil Servants and Public Employees (Chambre des fonctionnaires et employés publics, CHFEP).

It is also essential to connect to a range of broader business associations within the institutional landscape to extend the reach to wider employer networks through their membership and engagement channels. It is particularly important to engage smaller businesses, including through the wider supply chain. Many are members of the umbrella body, the Association of Luxembourg companies (UEL).4 These represent wide sector interests across a broad range of areas, including skills, and have varying reach. As key sources of targeted business advice for their members, they are also likely to be key players in any future policy reforms.

As for the incentives targeting individuals, the current package of support for employers5 within Luxembourg is described in Table 3.3. It highlights the existing arrangements, their purpose, and the principles of how they are intended to work to assist employers wishing to develop their employees’ skills. The table also describes the key partners and their roles.

Having outlined the current arrangements guiding and incentivising skills choices, the following section reflects on the performance of these services. The intention is to begin to draw from this analysis where there might be more pressing priorities for future improvements.

The earlier assessment pointed to significant public support for guidance services and to incentivise more adult learning in Luxembourg. However, with overall levels of training in Luxembourg lagging the international leaders, and with significant variations in learning patterns by different types of employers and individuals (as outlined in Chapter 2), this raises important implications for the nature of the guidance services and financial incentives moving forward. Lower levels of training among the low-qualified, older people, those working in low-skilled roles, small businesses and low-training sectors must be taken into account. Incentives and guidance need to be sensitive to varying needs to ensure future opportunities for all. This is not least in how these services are accessed and used in Luxembourg.

A first consideration has been the reach and accessibility of the guidance services as a mechanism to promote learning opportunities within Luxembourg and hence to overcome variations in learning. The creation of the MO as a one-stop-shop, and the introduction of online activities, alongside face-to-face support, have aimed to facilitate the co-ordination of guidance and access. Some positive developments are evident in recently collected statistics from the MO. Indeed, in its first couple of years of operation, the number of visits to the centre increased to over 23 000, representing a 36% increase from 2018 to 2019. While this was then affected by office closures during the COVID-19 pandemic lockdowns, engagement with the new online platform has increased by over 50%, from around 84 000 visits in 2020 to 129 000 in 2021 (the new platform was only launched in 2019, just prior to the pandemic).

Yet, the pandemic has interrupted the delivery of guidance services nevertheless, highlighting the importance of ongoing monitoring and promotion to recover levels of engagement. Indeed, while office visits had started to settle into annual rates of around 20 000 with office closures, numbers fell back to 7 000 between 2019 and 2020 (a fall of 62%). While numbers rose again to 16 000 in 2021, they have still not reached pre-pandemic levels. Wider research (OECD, 2021[3]) also highlights the importance of tracking different individuals' background characteristics to ensure services reach diverse communities. Indeed, vulnerable groups are known to be persistently hard to reach, particularly where they lack personal digital devices and access to online digital resources remotely (which was more crucial during the pandemic when the MO offices were closed except for urgent matters).

European Labour Market Information (LMI) for Luxembourg (such as that from the Adult Education Survey, AES) highlights the potential challenges that the MO is confronting around reaching diverse groups (Figure 3.1). While the data are dated, trends are consistent with those in other countries and therefore were tested during consultations with stakeholders to ensure their ongoing validity. This LMI reveals that while a higher share of adults in Luxembourg compared to the EU average are receiving guidance overall (which is in line with the growing statistics collected by the MO), there is significant variation in access according to individuals’ background characteristics, particularly by education level, migration status and employment status. The gap in receiving guidance by level of education is the largest, with the share of low-qualified adults falling far behind the highly qualified. This raises a significant risk that guidance activities in Luxembourg are not sufficiently reaching under-represented groups, and in particular, those adults with low motivation to train. This points to a number of priority groups for more targeted activities – an area that the MO has already recognised in progressing their future services.

In addition, it has also been useful to take a closer look at how some of the more significant financial incentives in Luxembourg have contributed to the overall training picture and patterns of take-up. The INFPC provides data on its co-financing programme with employers for adult learning. This shows that, on the positive front, the levels of co-financing with employers have grown over the last decade or so. Indeed, funding exceeded EUR 58 million in 2017 (INFPC, 2021[15]).

At the same time, investments have reached an increasing number of businesses over time (seeing a rise from 878 businesses in 2008 to 2 288 in 2018). As government funding through the co-financing scheme is concentrated in larger employers, the growth in investment has seen a corresponding increase in the potential share of the workforce who could benefit – reaching just under three-fifths of employees nationally in 2018. However, the penetration of the scheme is still fairly contained in terms of business engagement, with the businesses taking advantage of the aid representing only 10% of businesses nationally in the Luxembourg economy in 2018 (INFPC, 2021[15]). The level of employer engagement extent of businesses reached has also plateaued since 2017, which in part reflects a reduction in the level of public funds available from a 20% rate to 15% towards annual training costs, at that time due to changes in the Law of 29 August 2017.6While the programme has retained previous employers, with 80% of 2018 requests involving repeat renewals, it does mean around 20% of businesses did not renew. In a future of work context, where there are increasing calls for continuous training, any declines in engagement could be a cause for wider concern.

A closer examination of the latest data shows that the co-financing grant has amounted to an average of EUR 20 582 per request for employers and EUR 164 per employee (down from EUR 289 per employee in 2017, a 44% decrease when allowing for inflation over this period). However, the public funds are highly concentrated within larger employers and by sector. Of course, this threatens the overall strength of the incentive to stimulate the training behaviour and skills investment among certain employers and hence to tackle some persistent variations in training within the Luxembourg economy (illustrated in Chapter 2). This is further illustrated in how the levels of funding supplied vary by type of employer.

For instance, companies with 250 or more employees capture almost two-thirds of the total funds provided, whereas companies with fewer than 50 employees only receive around 10% of total allocated funds. The more favourable entitlements for smaller businesses, outlined earlier, help to ensure that funds received per employee are higher for the smallest employers – that is, those with 19 employees or less (i.e. EUR 391 per employee for businesses with between 1-9 employees and EUR 219 per employee for businesses with between 10-19 employees). However, the benefit is lost for smaller businesses above 20 employees where the funding per employee is similar to the average rates (i.e. EUR 164 per employee). Also, in the last year for which data are available (2017 to 2018), the decrease in funds per employee has been greatest for those with between 10-19 employees, seeing a decline in funds by 45% between 2017 and 2018, when allowing for inflation, compared to 44% overall (see Figure 3.2).

In addition, while levels of engagement are higher among the smallest businesses as a share of all employers funded, funds still reach a minority of the broader population of smaller businesses (Figure 3.3). So, for example, micro-businesses (with 1-9 employees) form 25% of the training aid recipients, but this accounts for only 3.2% of all micro-businesses in the Luxembourg economy. The funds also reach a lower proportion of businesses, with 10-19 employees and 20-49 employees, as seen in the figure. In contrast, whereas businesses with 250- 999 employees represent only 6.3% of fund recipients, they capture 87.3% of larger employers in this category across the Luxembourg economy.

Furthermore, the take-up of financial support for adult learning differs quite widely by sector (Figure 3.4). There is significant public investment in high-cost, high-skilled areas, such as the financial sector, which has been a strong area of the economy for some time and, more generally, has seen higher shares of training (see the training participation patterns among Luxembourg employers in Chapter 2). Indeed, businesses within financial and insurance activities and professional, scientific and technical activities, in 2018, represented 38.5% of companies requesting public co-financing and received 46.2% of the overall state aid (i.e. EUR 16.4 million). This accounted for 31.7% and 11.9% of all businesses, respectively, in those sectors in the wider economy.

There are lower levels of funding, however, for wider sectors that are also increasingly seen as critical to the future Luxembourg economy, such as construction, the creative industries (including architecture) and information and communication technology (ICT). Indeed, investments reached only 9.7%, 5.7% and 1.2% of all businesses in these sectors, respectively, in the wider economy. Furthermore, large employment sectors are also low recipients, such as accommodation and catering, with funds reaching only 1.2 % of businesses in this sector in the wider economy. This could also be a challenge in the context of raising learning aspirations in these areas. These patterns are reinforced when the share of employees that the funds reach within these businesses is considered. Indeed, coverage is as high as 74% of the workforce in finance and insurance and 84% in professional, scientific and technical activities, but only 11% in real estate and 21% in the creative industries.

The MENJE has also provided data on the composition of take-up of the Individual Training Leave scheme (Congé individuel de formation or CIF) to give a sense of the performance of one of the central incentive schemes for individuals, alongside the employer data from the co-financing scheme. The most recent information indicates that individuals submitted 3 104 requests for training leave in 2021, which amounted to around EUR 2.5 million in funding (Figure 3.5). Over the last 13 years, the number of applications has increased by nearly 100%, and the cost per day refunded has also seen growth over the same period (an increase of around 29% or 9% adjusting for inflation). Indeed, it reached an average of EUR 225 per day in 2021, up from EUR 175 in 2008. However, the programme's take-up has slowed in recent years, with applications reaching a high of 4 086 prior to the pandemic in 2019, but with a funding peak of around EUR 3.4 million in 2014. By 2021, applications had fallen back to current levels at around 3 000 – a fall of just under 30% between 2019 and 2020. This means penetration remains quite low at less than 1% of the total workforce in the Luxembourg labour market. The use of the scheme is also much lower than the main financial incentive scheme for employers – in terms of levels of funding and its economic reach.

A closer examination of the composition of applicants to the CIF shows that, as with the co-funding scheme, take-up is quite concentrated. Most applications are from Luxembourg residents (around two-thirds), with the remaining third split evenly between residents living in Belgium, France and Germany. The majority come from employees (97%) rather than the self-employed and are male (55%) (Figure 3.6). While the scheme operates from a philosophy of supporting all individuals for a broad range of training, in reality, most of the applications that secure support fund sector-specific training courses, recognised by industry, for younger people, earlier in their careers. There is also a high concentration in high-skilled sectors, with the financial, insurance and accountancy sector being the most dominant. The scheme, therefore, seems to have a closer connection to career pathways in higher-skilled areas. Indeed, 69% of applicants are younger, being aged 34 or under, half of the applicants are within the finance and insurance sector, and just under three-fifths of applicants have pursued sector training requirements leading to a recognised sector qualification (with less than 10% respectively funding broader continual education and training and/or formal education opportunities, such as a bachelor’s degree).

So, with the limitations to the reach of some of the key financial incentive schemes, some groups are clearly missing out, especially those working in low-training sectors, smaller businesses and the self-employed and people who face multiple and severe barriers. While historically, that has included the low-qualified, older workers, those from lower socio-economic groups and working in low-paid and low-skilled work, it increasingly also captures those in jobs exposed to the risk of displacement from automation and/or wider processes of industrial decline, where training may be more limited. With skills-biased innovations connected to the future of work, much of this future employment demand will increasingly be more highly skilled (OECD, 2021[17]). Consequently, it appears that while the Government of Luxembourg has developed a comprehensive range of guidance support and financial aid to incentivise more adult learning over the last decade or so, given divisions in the balance of learning that persist, there is clearly more to do. Indeed, in this context, the analysis has started to signal priority areas for improvement.

Luxembourg's performance in guiding and incentivising skills choices reflects many factors. These include individual, institutional and system-level factors, as well as broader economic and social conditions in the country. However, two critical opportunities for improvement have been identified based on a literature review, desk analysis and data and input from officials and stakeholders consulted in conducting this OECD Skills Strategy.

Luxembourg’s main opportunities for improvement in the area of guiding and incentivising skills choices are:

  1. 1. improving guidance services for adult learning

  2. 2. improving financial incentives for adult learning.

Career guidance services are arguably growing in importance in skills systems to help individuals successfully navigate a constantly evolving labour market and skills landscape at different stages of their lives, with an increasingly complex set of potential options and pathways available to them. New research has started to quantify that change (OECD, 2021[3]), highlighting a rising demand for career guidance among adults and young people. Indeed, four out of ten adults recently reported that they had spoken to a guidance advisor in the previous five years. This is clearly recognised in Luxembourg with the moves to better co-ordinate guidance services for individuals of all ages through the establishment of the MO. The importance of career guidance has also particularly increased during turbulent labour market conditions, such as that created by the COVID-19 pandemic, where industrial restructuring has been intensified, and there is a greater risk of job displacement (CEDEFOP, 2020[4]). Through such advice, individuals may need a range of help to make the best skills choices in a complex ecosystem: assess their interests; build individual resilience; and respond to changing employment and skills requirements. As Luxembourg’s skills system evolves, this inevitably calls for a change in guidance services to ensure that they are working sufficiently for adults and young people. In particular, Luxembourg could improve the evaluation and regular updating process of the central guidance services’ content, the co-ordination and delivery of consistent guidance services, and access to guidance services.

The most effective guidance services regularly evaluate and update the content of advice to keep abreast of developments in the labour market and learning programmes. This is to ensure guidance services not only draw on high-quality, timely, labour-market-relevant and user-friendly information regarding growing future careers and learning opportunities but are also responsive to robust evaluative research and feedback on the effectiveness of different guidance services (OECD, 2021[3]). This points to the need for a guidance research programme to ensure that guidance practices and products are sufficiently evidence-based. It also highlights the benefits of active stakeholder engagement to fully make use of such evidence in a way that enhances its value and application. This section considers how the Luxembourg guidance service can work to ensure the content of guidance is informed by the strongest, most current sources of LMI, industry insight and objective evaluative research, including feedback from a broad cross-section of its clients, partners and stakeholders.

Crucially, high-quality LMI is most needed to keep abreast of ongoing labour market changes, to consider the full breadth of opportunities and to direct individuals to areas of work with growing and good labour market prospects (CEDEFOP, 2020[7]). One primary goal, therefore, is to use robust LMI that is objective, well-coordinated, up-to-date, sufficiently granular and effectively contextualised by industry, providing trusted insight about a broad range of careers of the future (OECD, 2016[18]).

Since the strengthening of the MO’s strategic objectives in 2017, there has been a common commitment to ensure that the guidance and advice provided by different arms of the overall service within Luxembourg connects to the labour market. This is exemplified through the development of MO’s new website, launched in 2019, providing web-based employment and skills information through a single site. For instance, the website (https://maison-orientation.public.lu/fr/monde-du-travail.html) offers insights through the “I discover” section (Je découvre) about key professions and trades where individuals could work. On the labour market side, there are links to a variety of employment sites and portals.

Two core guidance portals accessed via the MO platform include an employment platform developed in Luxembourg largely for young people (Beruffer-Anelo platform, https://beruffer.anelo.lu/fr/) and ADEM’s JobBoard facility (see Chapters 4 and 5 for further information).

  • The Beruffer-Anelo platform has been designed to facilitate the transition of young people from education into their chosen careers. Information is provided in a variety of forms, making full use of multimedia and an extensive occupational database. It also combines job information with a range of self-help tools, including: promoting self-assessment; developing an e-portfolio, enhancing job interview skills; highlighting youth projects, training, apprenticeships and opportunities for employment and voluntary work.

  • The JobBoard offers more real-time information about active vacancies in the Luxembourg labour market for those active job seekers ready to take up employment.

As such, key goals have been to provide information on some selected careers (i.e. professions and trades) from a broad directory of jobs and to improve matching between skills and jobs once individuals have made decisions about their career pathways. Of course, being online, these can equally be used by adults and young people. Given the significance of cross-border working in Luxembourg, there are also links to a range of international employment portals highlighting career opportunities in other countries, including Austria, France and Germany. For example, two platforms offer employment and training details based in Austria (www.whatchado.com/en/stories and www.berufslexikon.at/) and three sites pertinent to the French system include www.onisep.fr/Decouvrir-les-metiers, www.cidj.com/orientation-metiers and www.studyrama.com/formations/fiches-metiers.

The MO platform has already had some success in terms of use since, according to the European Centre for the Development of Vocational Training (CEDEFOP) (2020[7]), the Beruffer-Anelo platform is deployed more frequently than other sites on the platform. This success is confirmed by the engagement statistics of the MO collected since 2019. These point to an increasing use of the new MO platform since it was launched (as above), which proved essential during COVID-19. Indeed, the closure of the MO office due to nationally enforced public health measures, for instance, is believed to have encouraged access to the platform.

Consulted stakeholders highlighted, however, the challenges of guidance services and tools, such as the portals, making full use of detailed LMI on a continuing basis and keeping labour market insights up to date in a dynamic, ever-changing labour market. As more fully reported in Priority Area 4 (see Chapter 5), there were recognised challenges within the skills system relating to co-ordinating LMI nationally to give a consistent economy-wide picture, which inevitably was seen to complicate the systematic deployment of regularly updated LMI in guidance services. It was noted that some sectors do not routinely produce their own research, timeframes for updating labour market research vary, and there are gaps in industry insight as a result, which inhibits a consistent LMI coverage and assessment across the Luxembourg economy. This raised calls for more LMI to be provided for guidance services in the future on: employment and skills requirements by different jobs and sectors; transversal as well as technical skills; current as well as future demands; career pathways and hence progression opportunities; trends over time (what jobs were in decline or growing); and working terms and conditions, including pay. Stakeholders also wanted to see more transparently how existing research is being used through, for example, featuring references and industry endorsement on guidance products, such as the portals.

Other countries are using LMI in online career portals in ways outlined by stakeholders; one example is seen in Denmark (Box 3.1).

With recommendations to better co-ordinate LMI nationally in the future within the Luxembourg skills system (see Chapter 5), there was interest in the MO reviewing how to make better use of a consistent, robust, impartial baseline of LMI to enhance the labour market relevance of the guidance service. It was acknowledged that a dedicated research programme, designed by the MO to develop guidance products using the nationally co-ordinated LMI, could facilitate access to and use of such information as soon as it is updated (i.e. clarifying data collection and analysis methods in guidance products). Indeed, as well as providing richer insights and information for the website portal, it was seen to have value in other applications as a routine resource for guidance interviews and as a reference source for use directly by visitors to the national orientation centre.

The dedicated research programme could supplement robust national LMI sources by pooling and synthesising wider sector research, where it is available, to further bring careers to life. For example, this could add depth, richness and context to the consistent nationwide common baseline in different careers and sectors – such as highlighting more detailed skills needs and the use of the latest digital technologies and innovations in ways of working and career pathways. As discussed in Priority Area 1 (Chapter 2), various industries within Luxembourg are regularly researching changes in their respective sectors’ employment and skills requirements, such as in the finance sector (Luxembourg’s Banker’s Association [ABBL], the construction and crafts sector (CdM) and in the industry sector (through the Federation of Luxembourgish Industrials [FEDIL]). ADEM also contributes to national labour market insight, largely through analysis of some of the key vacancy data it holds. Recently, its Future Skills Initiative7 has been undertaking studies on key growth sectors aligned with the new innovation clusters that are thought to present critical skills and careers of the future in high demand.8 Such LMI clearly has an important future role, too, alongside national sources in better informing the MO and its advisory process moving forward.

At the same time, regular evaluations of guidance services can also enhance the relevance of guidance as part of this dedicated research programme. Evaluations often consist of soliciting regular feedback from clients and stakeholders on the value of different guidance services, changes in the orientation process and their impacts. This usually involves putting in place systematic processes for data collection and reporting. A core aim is to support regular monitoring of activities through a blend of either self-evaluations and/or external evaluations or audits managed by an independent research body (OECD, 2021[3]). In a context where the MO has taken active steps to improve the collection of statistics and management information, it would also be useful to review its approach to evaluative research, working with its partners, such as through the FO.

International research shows that regular evaluations are important in providing independent insights on different aspects of guidance delivery and their effects, thus supporting the conditions for continuous improvement (OECD, 2021[3]). Some evaluations seek to review the benefits career guidance services can bring to individuals’ employment and training outcomes (such as whether the individual has pursued training, acquired new skills or knowledge, secured a job, enhanced wages, etc.). In addition, many evaluations assess clients’ satisfaction levels with different activities and services, and the tools they have deployed and their impacts (e.g. exploring whether the advice provided was accepted and perceived as high-quality, etc.). This might also extend to reviewing the psychological benefits of career guidance, such as higher self-esteem, self-confidence, sense of well-being, and/or a stronger awareness of future opportunities and direction (Brown, 2016[20]) and/or transversal skills and increased resourcefulness (Maguire, 2004[21]).

Since 2018, the MO has been continually improving guidance services. This could provide a basis to more systematically evaluate the effectiveness of providing skills diagnostics; building career management skills; developing personalised careers and training plans; providing information through portals; implementing job-matching processes; and conducting activities to enhance employability levels. The MO has taken steps centrally to improve data collection, and evaluation activities are being introduced to assess schools against the National Reference Framework for schools. Stakeholders agreed, however, that there would be benefits in widening and deepening evaluation activities more generally to more systematically support guidance service improvements.

Key objectives for the MO have been to ensure that any guidance and referral system: is well co-ordinated overall; efficiently directs individuals with and without appointments to the help they need; is sufficiently customised to the individual’s personal goals; and enhances the individual’s outcomes, in the form of access to training and employment opportunities, for example. The five thematic areas in the Orientation Space and the location of service experts under one roof at the national office are key inputs into the orientation process, for example. This means giving advisors the space and time to collect personal information on and assess individuals’ unique skills and experience, personal objectives, strengths and interests. It also requires a connection to developments within different jobs and ways of working using LMI, as seen earlier. Evaluative research can be an effective basis for examining the uses of different approaches and how this varies across different parts of the services and client groups. The research could include assessments of what is working well in different guidance services and focus on different client groups at different career stages – including the unemployed, adults pursuing career changes, vulnerable individuals with more complex health and social issues, as well as students.

The Luxembourg system deploys various diagnostic tools for assessing skills, including a mix of interest and personality tests, psychometric tests and vocational aptitude tests. Many of the tools are available for self-assessment on line and, therefore, complement assessments delivered personally and face-to-face through meetings and interviews with counsellors, such as in ADEM. For example, several online self-assessment tools are available in multiple languages to enhance access and use by cross-border workers, non-residents and Luxembourg residents. These include: the RIASEC (Realistic, Investigative, Artistic, Social, Enterprising, and Conventional) profile (in French, www.monemploi.com/riasec and English, https://openpsychometrics.org/tests/RIASEC/); Berufskompass (in German, www.berufskompass.at/berufskompass); the Oriane platform (in French, www.oriane.info/node/956); Check-U (in German, www.arbeitsagentur.de/bildung/welche-ausbildung-welches-studium-passt); and Berufsinteressentest (in German, www.berufsinteressentest.at/). In addition, professional chambers offer schemes such as TalentCheck (www.talentcheck.lu/de/tutor/talentcheck.html) managed by the CC and Basic-check (www.basic-check.lu/) delivered with the CSL and the CdM.

Crucially, where adults are involved in the process of developing their own career development roadmap, action plan or training plan, this can be a powerful tool to motivate them to act on their learning and career aspirations and to seek to find solutions to overcome individual and multiple barriers they may face (OECD, 2021[3]). A programme of evaluative research overseen by the MO with its partners could be deployed to assess whether the guidance services in Luxembourg have been able to operate in practice in a way that inspires greater commitment and motivation for individuals to act.

There is also the question of whether the guidance interviews, such as the use of more personalised career and learning plans and diagnostic tools, are being consistently delivered and used in different parts of the guidance services and at different individual life stages, particularly in a way that improves individuals’ self-motivation and, in turn, employment prospects – that is where assessments identify individuals’ personal strengths and interests and support them to connect to the most relevant career opportunities. The MO has introduced regular meetings among the guidance community, and advisors are encouraged to share insights and ideas. However, independently conducted evaluative research could add substantial value to knowledge exchange, encouraging peer-to-peer learning and reflection more formally on how activities are working in an impartial and systematic way.

There are also the effects of the COVID-19 pandemic to consider. While the MO has recently taken steps to enhance activities with, for example, the new orientation centre, enhancing the physical space for guidance, these developments have clearly been affected by the COVID-19 pandemic and placed more emphasis on wider activities, such as online services, including virtual interviews with clients, telephone inquiries and self-assessment tools. For instance, the office closure due to nationally enforced public health measures saw a marked fall in office visits, with numbers decreasing by nearly two-thirds. While numbers have increased during 2021, they are not back to levels seen in 2019, so it appears there are some lasting effects. CEDEFOP research has drawn attention to the impacts of the pandemic on guidance services internationally, with the risk that those individuals displaced from the labour market and who have lost their jobs may be harder to reach through traditional methods. This highlights an important contribution for a focused programme of evaluative research within the Luxembourg guidance system to formally review and learn lessons from any changes in the delivery of guidance services as a basis to directly shape the balance and blend of future delivery and guidance services and the activities permanently taken forward.

Other countries, such as Scotland (United Kingdom), provide a useful reference source for developing regular research programmes to enhance the quality and relevance of guidance services (Box 3.2).

In a changing labour market, it is also important that guidance services also draw regularly on key stakeholders’ insights in making sense of LMI; employers, employees, and their representative bodies can play an important role in this interpretation. Wider research of the OECD points to more positive employment outcomes where career guidance is closely linked to the world of work through the insights of employers and employees and a range of industry bodies, business associations, trade unions and professional bodies (OECD, 2021[3]). In short, the employer and employee perspectives are needed to turn LMI into labour market intelligence both nationally and locally for the guidance community and the individuals they serve. This provides the basis to better inform individuals about “what are the real employment opportunities in their local area, country and/or adjacent countries close to where they live”. This can add substantial value to help guidance advisors and their clients navigate the wealth of LMI and draw out consistent messages and implications about important future career opportunities and critical skills needs in high demand in the Luxembourg economy.

At a national level, within Luxembourg, industry is formally engaged in the work of the MO, as described earlier, through the professional chambers, which work with other guidance stakeholders through the FO. However, the OECD has also highlighted the importance of engagement at a local level (OECD, 2021[3]). This, therefore, places an onus on the work of the local networks of the Luxembourg guidance community.

The local guidance offer for adults is largely delivered through ADEM, particularly through its vocational guidance service. This provides the basis to connect to local businesses for vocational training, placements and work experience, as well as managing employment opportunities. The MO encourages collaboration between ADEM, schools and the National Youth Service (SNJ) to co-ordinate local activities for younger adults, especially in their transitions from school to work. The MO has developed with partners a National Reference Framework for educational and vocational guidance to enhance the nature of advice and counselling delivered locally by secondary schools and to ensure they meet a minimum level of activity. With the backing of legislation, each secondary school is now expected to establish a guidance unit (Cellule d’orientation) to organise guidance activities for young people and their families. The activities of this unit are organised by a unit co-ordinator who also advances partnerships working through the MO community, such as employer and employee representatives.

There are examples of several guidance partnerships with stakeholders ranging from company visits, careers days, internships and industry mentoring to broader job fairs. Some projects have aimed to enhance individuals’ understanding of different careers and professions, developing dedicated career brochures that provide more detailed information about opportunities. This has particularly focused on emerging areas of employment and skills, such as in science, technology, engineering and mathematics (STEM), the digital sector and the green economy. One example is the Discovery of Trades and Professions project, which was produced by a partnership between MENJE, including its Service de Coordination de la Recherche et de l’Innovation pédagogiques et technologiques (SCRIPT), the Luxembourg Science Centre, the CdM and the MO. This offers deeper insights to students about the relevance of science to specific jobs and professions. This is available on the MO website.

Other projects support a range of internships for young people, usually in the form of taster days or one-day internships, such as the dayCARE and Digital Challenge projects. Recent initiatives have been developed in collaboration with CARE Luxembourg and Inspiring More Sustainability (IMS) Luxembourg. Whereas dayCARE encourages employers to offer young people a one-day internship in the company of their choice on one set day of the year, projects like the Digital Challenge project are focused on specific sectors. As such, students interested in digital careers are invited to a careers day where they aim to understand the sector better by working with digital employers and employees in host organisations on real digital problems facing the business and aim to develop solutions. There is also an industry mentoring programme for young people called M-Proj. This has been running for 10 years and has supported 550 pupils in 10 schools. A range of industry mentors is appointed to hold around six meetings of one or two hours each with a pupil as an additional source of information on careers in their chosen sector.

While current local activities are highly valued, stakeholders showed interest in exploring ways of enhancing partnership opportunities, extending their coverage and promoting them to ensure it is clear what industries are involved in guidance work. There was an interest in focusing especially on adults and young people, and several activities were identified, such as: industry projects and career guidance products, work experience, inspiration and work placement activities. These can positively present job opportunities and careers of the future more generally for the working population, particularly given the uncertainties in the labour market following COVID-19. Interestingly, the use of digital, online tools and portals, which have been particularly enhanced through the COVID-19 pandemic, was felt to have facilitated the means for professional advisor communities to engage with employers, greatly enhancing the efficiency, reach, ease and cost of extending engagement activities. This might point to more efficient and lasting ways to engage with some industry partners.

Wider international experiences provide a useful reference point to reflect on the potential development areas to extend future activities for adults, working more comprehensively with employers and employees across key sectors. Employer engagement in guidance services for adults in other countries can take a wide range of forms. Of course, the mechanisms finally deployed will need to align with different priorities. Generally, engagement activities of stakeholders for guidance services could include: information exchange through activities such as research/policy and consultation interviews, workshops, and surveys and various forums for policy/training development/co-design; guidance-focused/provider-based activities, such as industry projects, employer talks, industry competitions and careers fairs; and in-workplace activities, such as workplace visits/taster days, work experience and inspiration placements, job shadowing and internships. Where career advice can be linked to broader skills policy priorities, this can also greatly enhance the advice given, especially where this might be connected to enhanced funding opportunities. For example, users of career guidance in Belgium’s Public Employment Service receive up-to-date information about careers in high demand in the labour market based on publicly commissioned sectoral development plans, which more quickly connects individuals to areas of growing opportunity (OECD, 2021[3]). Further sources of innovation around engagement are seen in Australia (Box 3.3).

Many national skills systems draw on the expertise of a variety of partners to tailor services to the needs of different age groups of clients, as in the Luxembourg approach. This includes the public employment service, dedicated public career guidance agencies, social partners, education and training institutions and private providers (OECD, 2021[3]). This highlights the importance of systems and processes for co-ordination to ensure consistent and high-quality delivery across guidance services for individuals of all ages; reduce duplication and gaps in provision; and support progression at different stages of an individual’s career. This section considers how the MO can reinforce its governance and processes within Luxembourg to create the conditions to ensure consistency in what guidance services are offered to a diversity of clients and in a way that supports continuous quality improvement within the guidance community. The need to continually consider ways to improve services has arguably been particularly heightened given the service interruptions due to the COVID-19 pandemic.

Luxembourg clearly has some strong foundations in place to strengthen the co-ordination of its guidance services. For instance, the MO, established as a dedicated agency to oversee guidance activities in Luxembourg, is in a good position to provide leadership over the guidance system nationally. Furthermore, its role has been enforced by legislation, with its co-ordination responsibilities formally recognised in law since 2017. It seeks, therefore, to ensure consistency between guidance activities of different services in different parts of the country and individual life stages. Crucially its remit covers individuals of all ages – adults and young people.

However, in a climate of ongoing change, whether externally in the labour market or regular policy developments in the skills system, the co-ordination of guidance services must always be reviewed and scrutinised. Many countries wrestle with the practicalities of ensuring guidance is of a consistent high quality (OECD, 2021[3]). Indeed, with current governance and delivery responsibilities in Luxembourg split between multiple ministries of labour and education, between young people and adults, and with different partners involved nationally and locally, any potential risks of inconsistency in grassroots service delivery and fragmentation will need to be proactively managed. This is especially the case following the substantial disruptions in delivery due to the effects of COVID-19 and changes to delivery methods. For instance, partners such as SePAS and SNJ, and/or the higher education information service of MESR will be attuned to different policy goals working with young people in education, to advisors in the public employment service in ADEM dealing with the vocational training and employment needs, largely of adults. International research on innovations in guidance services provides an important source of information on how to handle any co-ordination challenges moving forward and manage risks of fragmentation (CEDEFOP, 2020[4]).

Research by the OECD (2021[3]) highlights a range of mechanisms that can be used to support better governance and co-ordination of guidance services maintaining consistent quality and mitigating risks to service delivery from fragmentation in what is offered. There is much that governments and their agencies can therefore do. This has been distilled into a strategic framework (Figure 3.7). The framework is not prescriptive, and the dimensions will need to be given varying emphasis as appropriate for local country contexts and varying cultures. However, it is nevertheless important that all dimensions are covered, as outlined below.

OECD research (2021[3]) suggests that one of the most effective tools for strategically setting the right conditions for co-ordination is developing a committed career guidance strategy. Whether this is stand-alone or part of a broader national skills strategy, it is vital in steering career services. This includes, for instance: setting out the vision for the guidance system; defining guidance services across different contexts and quality assurance processes for consistent delivery; setting clear goals and agreeing on outcome measures; and providing leadership to various partners involved in the guidance system and a steer on how they should work together. The strategy can then form a basis for agreeing on an action plan and hence ensure the strategy can be delivered. For instance, the strategy and, in turn, the delivery plan, will usually have been the product of a process of consultations with many stakeholders. This can then provide a means for active engagement and ownership by partners.

In the context of developing a future Luxembourg Skills Strategy, this review, therefore, provides an opportunity for the Government of Luxembourg with the MO and its wider partners to also take stock of its own guidance service. As part of a formal response to the COVID-19 pandemic, this could consider whether there is a need to modify its guidance approach moving forward. It could also include reviewing the National Plan for Careers Guidance to ensure its vision, strategic priorities, governance and delivery methods are relevant for the future skills system. The former National Careers Strategy in Ireland could serve as inspiration (Box 3.4). Within Luxembourg, the MO works through the strategic FO (established by law as outlined earlier), which includes representatives from the national government, professional chambers and schools (see above). The FO should set the strategic direction for guidance services through social dialogue, considering the needs of employees and employers. This, therefore, could play a key role in consulting on the way forward.

As part of this review, it will be important to reassess the quality assurance processes across the guidance service as a whole. International research points to a wide range of tools connected to career strategies that can help with implementation and ensure consistent, high-quality service delivery. For example, quality standards, reference frameworks and guides set minimum delivery requirements and provide information and advice about how they can be implemented. These quality standards will vary in different national systems but might cover the following areas: core requirements for service delivery (i.e. assessment methods and diagnostic tools, information and guidance, personal planning techniques, equipment); skills requirements of the guidance community (i.e. ongoing commitment to training, continuing professional development and networking); management and governance of the guidance process (i.e. organisational missions, structures, working relationships, processes, resources, equipment, etc.); and specification of outcomes to ensure diversity and inclusion (i.e. monitor and evaluate services, build in client satisfaction, regular feedback, etc.). In addition, rigorous monitoring of career guidance strategies enables countries to assess their performance against qualitative or quantitative targets and to make course corrections as needed (as highlighted earlier).

Within Luxembourg, the MO has worked with partners to establish a National Guidance Reference Framework to outline minimum common guidelines and raise quality standards for service delivery to be met in delivering educational and vocational career counselling, which was introduced in 2019 (MENJE, 2019[25]). However, this is focused primarily on secondary schools. According to CEDEFOP (2020[4]), there is no standardised quality assurance process to guide the customisation of services for different client groups more generally, and as such, each service only follows general standards. Stakeholders consulted by the OECD for this study raised questions about variation within Luxembourg in the guidance services in practice from one service institution to another and if there was the right balance between education and employment issues, young people and adults, and vocational and professional careers. There was interest in strengthening quality standards across the guidance community. This included additional consideration being given to the guidance services provided by private providers, who currently operate outside the public system overseen by MO. Given the scale of training delivered by private providers, it was thought to be important to consider ways in which they might work more closely with the MO in the future. The German model (Box 3.5) offers useful insights in this regard, from which to learn.

International research (OECD, 2021[3]) shows that the aforementioned mechanisms for establishing quality standards are often closely associated with several co-ordination mechanisms to build a climate for knowledge exchange, the sharing of ideas, quality improvement and professionalism within the guidance community. While career advisors are not generally regulated professions, many countries define minimum training and qualifications requirements for employing advisors and use these frameworks to form the basis of professional certifications and to guide continuing development programmes. An example of establishing quality standards for career guidance advisors can be found in Germany (Box 3.5).

Since 2018, an early priority of the MO has been to standardise training for career guidance advisors as a further basis to professionalise the guidance community. As such, the MO has worked in association with experts such as the National Education Institute of Training (Institut de Formation de l’Éducation nationale), the Centre for Psycho-Social and Educational Accompaniment and the University of Education in Lower Austria (Pädagogische Hochschule Niederösterreich)9 to develop a series of training courses and study visits to professionalise career orientation within the Luxembourg guidance community. The first wave of training took place in 2019, primarily focused on practitioners in schools to ensure a common baseline capability around understanding current issues in guidance and developing the skills of students for adult life. A second wave was then implemented in 2020, also directed at schools to further advance modules on careers education, as well as thinking about the changing labour market and educational pathways. This was called Train the Trainer: Careers Education and Guidance in Schools. The latter higher education course consists of 10 ECTS equivalent to 200 hours of training over 2 years, and advisors are encouraged to follow continuous training for at least 8 hours per year. The programme is at an early stage of implementation and still needs to promote ongoing take-up across the school guidance community to secure more universal coverage.

CEDEFOP has raised the fact that there have been no higher education courses specifically for educational, vocational or lifelong guidance across all guidance services, and many practitioners acquire their specific skills in-service and through day-to-day experience (CEDEFOP, 2020[7]). While the Euroguidance Network10 has recognised that most advisers working in Luxembourg are highly qualified with either bachelor’s and/or master's degrees, these tend to be in general fields, such as social and educational sciences and psychology. They report that many teachers and wider community workers may work as guidance practitioners simply because they show a personal interest and/or are nominated, for example, by a head teacher, as part of their wider responsibilities. No more than two dedicated advisors are required in each school. In addition, advisors employed as civil servants operating within the Adult Education Service, for instance, or ADEM, can access a full range of training as part of a three-year internship for new civil servants. This gives access to the post-graduate public administration study programme developed by the National Institute of Public Administration (INAP). INAP provides initial and continuing training for all public officials across the state, offering a wide range of technical and general training that is not restricted to guidance work.

Yet, it was recognised that many career advisors and co-ordinators were managing daily competing pressures on their time, whether working as civil servants and/or public professionals, teachers, lecturers, psychologists and community workers, which posed risks to their guidance roles in practice. In such a context, there may be a case to update training requirements across all professional guidance advisors, including developing further modules with experts such as the National Education Institute of Training as part of testing a new competency framework and putting guidance training on a stronger footing. As a result, this might provide a basis to review opportunities for accelerating and promoting development opportunities across the guidance community as a whole. Given the additional challenges for advisors from the recent pandemic, further support may be necessary to ensure guidance responsibilities are sufficiently prioritised and advisors' skills and knowledge continue to be advanced.

Other countries, identified through the work of CEDEFOP and the OECD, again provide useful insights about where improvements in the professional development of the guidance community might be made. For example, some countries have experimented with blended learning approaches to facilitate continuing professional development for advisors (Bimrose and Brown, 2019[26]). Off-the-job training modules have been updated in dynamic areas, such as helping the guidance workforce to be well-connected to transformations in the world of work and tracking more complex career pathways and transitions. For instance, career guidance advisors in France receive regular training sessions to encourage the active use of LMI. This is seen as a vital way to stay up to date with economic and labour market changes, innovations and digital transformations affecting ways of working, workforce composition and job profiles. Furthermore, advisors in Mexico’s Employment Support Programme are offered continuous training on developments in local and national labour markets, drawing on insight from industry representatives, so that they can tailor their support accordingly.

Other forms of learning have encouraged active networking, peer-to-peer learning and knowledge exchange to augment advisors’ continuing professional development activities once in post, as well as more formal delivery methods to ensure their skills and knowledge can stay up to date with the labour market, policy and training developments. Networking has also been a good way to: support common messaging and actions around national and local skills priorities; understand, debate and agree on key labour market trends and changing requirements across the guidance community; promote common high-demand skills, training and employment; and document and share new ideas. It can also create an environment that supports innovation, experimentation and enhancements. These advantages are especially noted where such forums also include wider social partners and professional and industry bodies in supporting career guidance advisors and hence their connection to the broader world of work. For example, in the German guidance system, there is a range of dedicated manuals, core guidance and central resources being developed to provide an ongoing reference source for the advisor community in areas such as guidance services for young people, the long-term unemployed and individuals with complex social and health needs (CEDEFOP, 2020[7]).

The new physical location of the MO has been important in setting a climate and aspiration for stronger collaboration among partners across the guidance system as a whole, beyond the FO. The latest Orientation Space provides a resource for workshops and collaborative sessions. These are offered to the professional community to support knowledge exchange around service improvements, housing 40-60 participants at a time. Guidance training and workshop sessions are also organised in schools. Furthermore, the MO has maintained international partnerships, representing Luxembourg in the European lifelong guidance policy network and Euroguidance activities as an additional source of insights around new guidance practices and dealing with guidance challenges connected to the future world of work.

These are important developments and provide a fertile platform on which to take forward any new development and quality assurance activities in the area of guidance. Indeed, as the skills system and, in turn, the guidance system ramps up again following disruptions during COVID-19, this may present a good time for the review of quality standards and tools, and associated training activities for the guidance community, to support the delivery of a high-quality service moving forward.

The effectiveness of career guidance and counselling also depends on how well services are customised and promoted so that different target groups are not only aware but are encouraged to actively take up those services as a basis to pursue more positive employment and skills outcomes. Crucially, this means overcoming any potential inequities in access among different individual groups. The international evidence shows (OECD, 2021[3]) that the most common and successful approaches are those that directly draw on the expertise of different guidance advisors. This either involves deploying their own outreach and engagement activities to promote their services or referring to another relevant, trusted partner and/or expert acting as an intermediary (OECD, 2022[27]). This section considers what steps can be taken to ensure guidance services in Luxembourg sufficiently customise awareness raising, referral and engagement activities to the needs of diverse groups so that they actively participate and are motivated to progress their career plans and learning.

Research by the OECD (2021[3]) has highlighted the important potential role of career guidance in tackling inequality and enabling different vulnerable individuals’ access to training and employment opportunities. However, one of the challenges confronting many countries, including Luxembourg, is that those people with the greatest need, who already face labour market disadvantages, and low-training participation, are often the least likely to be aware that services exist and how they can access them. This includes workers in occupations at high risk of automation (OECD, 2019[28]). This is a pattern seen earlier in the context of Luxembourg. So, those groups of individuals least likely to access guidance in other countries are similar to those in Luxembourg. Even though the data from the AES is a little dated, the groups experiencing more problems with access tend to persist over time. This was confirmed by stakeholders for this project. Those least likely to access guidance are: low-qualified adults; non-EU migrants (e.g. immigrants and refugees without strong language skills); women (e.g. especially those who have left the world of work to manage caring responsibilities); older people (age 55+) and the unemployed (especially unemployed young people with limited life experiences).

International research (OECD, 2021[3]) has aimed to understand what guidance services and promotional activities might better raise awareness, reach and support such individuals. A recent survey of adults conducted by the OECD suggested that of those who had been alerted to the guidance service: 20% had been informed by the public employment service; another 18% received the information from their employer; 17% from a friend or family member; 7% were informed by their education provider; and about 10% found the information independently through Internet searches. The last data from the AES, while pre-dating the establishment of the MO, suggest that in Luxembourg, those institutions that have played the biggest role with adults in providing guidance information in the recent past have been skills and learning providers, followed by employers or employer bodies, trade unions and professional bodies and the employment service. Furthermore, these data also suggest that most individuals accessed advice on learning and did so remotely and/or independently through the Internet or leaflets without directly seeking the support of an advisor. Thus, it will be important to consider whether and how the recent work of the MO has changed these patterns.

While the same OECD research found that another more indirect way of reaching adults is to deploy general information, advertising and marketing campaigns, this had one of the lowest levels of impact on individuals. Furthermore, the OECD report that there is little evidence that such general campaigns are successful (OECD, 2019[29]). As such, they are rarely thought to be effective alone. They need to be backed with more targeted events and the use of promotional and awareness-raising activities linked to dedicated guidance and learning services and advice (OECD, 2019[2]). As a result, more countries have been considering how they can provide more personalised career guidance, and hence support, to disadvantaged adults and with that, more customised promotion and awareness-raising activities, too, so that one set of activities reinforces the other and individuals become more motivated to actively pursue their careers and learning. Moreover, early action is beneficial to avoid longer-term displacement from the labour market and detachment from motivation to learn and work. These issues are of particular interest in Luxembourg with regard to enhancing the future accessibility of guidance, as its remit has broadened to cover adults as well as young people.

In the context of the guidance services in Luxembourg, there are already positive developments that align with wider international good practices supporting vulnerable groups. Indeed, there has been significant public investment through the MO to bring guidance services together. For example, the new Orientation Space has been reorganised into thematic areas to ensure individuals who visit the national office can be more quickly directed without an appointment to tailored support provided by the different services. Through a range of orientation diagnostic tools and techniques (outlined earlier), this seeks to support individuals to analyse and identify their personal strengths and individual interests, enhancing motivations to learn and work. This includes special support for the long-term unemployed and those with special health needs.

For example, ADEM has already developed a more personal advisory offer adapted to diverse clients, whether they are unemployed, economically inactive, with disabilities and health needs, older clients and/or non-Luxembourg nationals. These services have been strengthened through partnerships with some community groups, such as the foundation CASA (Centre d’Appui Social et Associatif), reaching out to the Portuguese-speaking community, for instance. Such activities clearly offer learning to personalise support more generally across guidance services.

Discussions with stakeholders during the OECD review have pointed to potential areas where additional activity can be undertaken, especially to provide extra guidance and support to those at risk of disadvantage. In particular, there is interest in enhancing the provision of targeted and dedicated services in line with developments in other countries to increase the customisation of services to more closely meet the requirements of specific vulnerable groups. Many of these individuals experience multiple challenges, and a more targeted approach to advice provides the basis to better understand and help resolve varying needs (OECD, 2022[27]). This might include additional dedicated resources for guidance services for targeted client groups and to increase the number of dedicated teams of personal employment and training advisors and caseworkers who can specialise their expertise, advice and support to those experiencing greater disadvantage. International insights also highlight the value of broadening the range of host sites in the community through civic buildings, such as libraries, town halls, shopping malls and museums, as well as mobile outreach centres (e.g. pop-up centres). These are known to break down barriers and fears individuals may face visiting official government buildings (OECD, 2022[27]). An example of activities to widen access to guidance can be found in the United Kingdom (Box 3.6).

Guidance services in Luxembourg have also increasingly emphasised connecting to more excluded, hard-to-reach people and places and ensuring access through the national and local institutional infrastructure. In particular, this includes a focus on local networks and guidance units through the schools’ network and the local arms of ADEM’s employment service, for instance, in Esch-Belval and Diekirch, which are seeking to reach out to individuals within the community. That said, with significant variations in access to such advice reported among different vulnerable groups (as discussed above), which closely aligns with patterns of participation in learning, this area will require continued attention in the future.

In particular, the MO raised interest in exploring the feasibility of extending physical sites beyond the local schools’ guidance units, the SNJ and ADEM’s regional agencies, and providing additional local outreach guidance services. A core aim would be to increase the number of one-stop-shop facilities for advice and guidance in localities, offering a range of activities in a number of physical places. In Luxembourg, various local community organisations are already established, serving the needs of local groups that the MO might work with in the future, building on existing partnerships such as through ADEM. Working with trusted role models and community organisations is an effective way to reconnect to excluded groups and build positive attitudes to encourage re-engagement with learning and work. This would include non-governmental organisations (NGOs), such as Ons Heemecht, which supports refugees in integrating into the local community and the Liaison Committee of Associations of Immigrants (Comité de Liaison des Associations d'Étrangers or CLAE), which supports wider migrants in settling in Luxembourg. As the MO learns lessons from adaptations to delivering guidance services in its national office, it can build more personalised offers in wider locations moving forward.

The MO has also been working with partners at the national, regional and school levels to foster ways to promote and communicate learning and employment opportunities to young people and adults through social media channels, career events and fairs. Doing so can build on existing information services, such as ADEM-OP’s detailed statistics shared with secondary schools about apprenticeship offers and placements. Two of the most significant events from which to draw wider lessons for the future are organised with and around schools and are:

  • Schoulfoire11 is funded by MENJE and is largely organised by MENJE’s SCRIPT and the Department of Vocational Training, working with wider partners, including WorldSkills Luxembourg. It intends to promote the full range of education and vocational trainings on offer and inspire youth on a wide variety of trades and professions they can pursue. It focuses on pupils in Cycle 4 of basic education and those in the lower and upper classes of secondary education. The event is large, extending over an area of 17 000 m2, with more than 1 000 “discovery” workshops and occupying 3 exhibition halls at the Luxexpo-The Box. The event incorporates other activities, such as Léierplazendag and Lux Skills.

  • Léierplazendag is an event organised twice a year in collaboration with RTL Radio, ADEM, the Chamber of Commerce, the CdM and MENJE. It aims to promote the full range of vocational training opportunities, such as apprenticeships for young people and adults. At the event, individuals looking for training have the opportunity to meet employers, find out more about the opportunities on offer, what is involved and how to apply for training on site. In addition, wider representatives and training consultants from ADEM, the Chamber of Commerce, the CdM and MENJE are available to provide advice about employment requirements and applications for training, especially in sectors and jobs in high demand and where opportunities are difficult to secure.

In reviewing its local activities in the future, it would be beneficial for MO to extend the reach of its services to wider and more diverse groups of adults. This might involve running a programme of tailored social and cultural events, placements, work experience and inspirational activities for these groups. This can combine with networking activities involving trusted role models and community organisations in the design, promotion and delivery to enhance their success.

International research (OECD, 2022[27]) also provides further insights about enhancing and complementing guidance services for disadvantaged groups by extending the range of tailored career guidance reference materials made readily available. While digital platforms and career guidance portals play a key role in a modern digitally-enabled world, they can also extend to information resources, books and self-help tools that are easily accessible physically. This is because where client groups lack access to digital resources, this can raise their dependency on public and community-based guidance centres housed in schools and education institutions, employment agencies and public libraries. These increasingly seek to complement face-to-face advice. As seen earlier, in the absence of outreach services, there has been a substantial demand for such materials. In the recent past, most individuals in Luxembourg have accessed such information and guides independently of advisors. This demand is expected to continue to be significant in the future.

Given these needs, the MO has developed multiple channels to widen access to a range of information, including an online platform and a careers information centre and multimedia space for wider resources at its national office, where individuals might not have a computer at home. As outlined earlier, this has been of particular value through the COVID-19 pandemic, where economic lockdowns stimulated moves to virtual and digitally-based advisory solutions. Nevertheless, it has been important to maintain telephone advisory services for those digitally-excluded individuals who cannot easily deploy digital tools without support and/or public sites for Internet access. This has been vital for those harder hit by the pandemic who have experienced more challenges in employment and greater risks of displacement from the labour market and unemployment (as highlighted in Chapter 1). As uncertainties remain uneven in a post-COVID-19 recovery, it will be important in developing customised services for vulnerable groups to maintain the delivery of multiple services for multiple groups. The evaluative research programme will provide one vital mechanism to track such activities and monitor their use and effectiveness.

The assessment of learning patterns in the Luxembourg economy highlights significant variation among different groups of individuals and by different types of employers. It also highlights the prevalence of some persistent skills shortages, inhibiting economic prospects (see, for example, the shortages discussion in Priority Area 3). This has affected Luxembourg’s relative training position with other leading nations and its learning performance lagging EU targets. Indeed, lower levels of training can be observed among lower-qualified individuals, those who are older, and who work in lower-skilled jobs, in smaller businesses, and in low-training sectors, for example. If patterns of learning and skills investment are to be addressed, it is important to understand what market failures have led to employers and individuals under-investing in skills to the detriment of their long-term economic prospects. Across OECD countries, various financial incentives exist in the “potential” policy toolkit (see Table 3.4) to overcome barriers and incentivise greater skills investment in adult learning to enhance individual and business opportunities and prosperity.

It has been useful to reflect with stakeholders on the different financial incentives used in Luxembourg and how they seek to encourage more training. The challenge is that different obstacles will be prevalent in different work and business contexts, and multiple barriers often occur, with barriers changing over time, which may still limit the effectiveness of any financial incentives overall. Having reflected on the issues raised, several proposals for improvement within the Luxembourg skills system are offered. These aim to enhance the targeting of current financial incentives to varying individual and employer needs and hence their sensitivity and strength as incentives to inspire greater learning. By so doing, the over-riding aim is to ensure financial support is targeted in the best way and improves the shape of learning moving forward, creating greater opportunities for all in the Luxembourg economy. As such, it seeks to better fulfil a key strategic aspiration of the Luxembourg skills system. In particular, Luxembourg could improve targeting better financial incentives to individual and employer needs.

In the context in which there are still some significant barriers to all individuals adopting lifelong learning in Luxembourg’s economy, which undoubtedly threatens future recovery and inclusive growth, there are some important issues to consider around the design and use of financial incentives moving forward. The problems are particularly accentuated for certain vulnerable groups, who often experience multiple barriers and therefore are under-represented in training. This section reviews the current array of individual financial incentives within Luxembourg and puts forward proposals on where there is a need to further enhance training opportunities for all. Key goals are to strengthen incentives by personalising the offer to respond more effectively to the barriers different individuals face and to test the feasibility of bolstering the individual’s choices and motivations to train by tying individual rights more closely to the individual’s needs.

It is first necessary to ensure that the current financial incentives better support all types of adults to learn, including vulnerable groups under-represented in training. With ongoing megatrends and economic shocks, polarising labour markets and changing skills requirements in the Luxembourg economy, there is an increased need to understand the underlying divisions and inequities in accessing learning among the working population, which will only worsen if left unaddressed. The effects were outlined in Chapter 2, particularly among some vulnerable groups. These groups are less likely to participate in adult learning programmes. They, therefore, are more exposed to ongoing economic changes and, in the absence of support to reskill and upskill support, the growing risks of unemployment, labour market exclusion and long-term periods of economic inactivity. Such individuals include, among others, young people, women, the low-qualified, older workers, the self-employed, those in lower-skilled roles, smaller business and low-training sectors and those already unemployed. This pattern is replicated across OECD countries and therefore offers the potential for wider learning in Luxembourg (OECD, 2021[30]). COVID-19 has also accentuated social and economic divides and, as such, has amplified existing inequalities in labour market outcomes, skills and opportunities, with many of these groups working in low-skilled roles and sectors that have been hard hit by public health measures and social distancing.

Training can offer a pathway to career progression and individual prosperity but not when individuals face a range of obstacles and barriers (see Figure 3.8). If not addressed through policy interventions, such as financial incentives, for example, these barriers can impede individuals’ long-term progression. While somewhat dated, existing evidence from the AES shows that individuals in Luxembourg report a wide range of obstacles that inhibit their learning. The problems are particularly accentuated for certain vulnerable groups, who often experience multiple barriers. Cost is a significant obstacle to training and is ranked in the top three barriers most frequently reported by individuals, for example. In the current light of cost-of-living pressures in Luxembourg, it is likely that this is a continuing trend, or may even have increased, given the effects of external global shocks, such as the pandemic and Russia’s war against Ukraine. Financial incentives will thus play an important role in helping to alleviate such cost pressures.

The challenges people face, however, are more wide-ranging than financial issues and vary by individual characteristics and in different stages of their lives as their personal circumstances change. Indeed, barriers created by family responsibilities and a lack of flexibility are significant, too, especially for those in employment, among prime-age workers and women more than men. This is exemplified with reference to low-qualified individuals who report higher concerns about family responsibilities, a lack of flexibility and issues due to health and age. There are also substantial variations in motivations to learn, with levels of motivation being significantly lower for low-qualified individuals who have not systematically developed learning habits. Therefore, if policy incentives are to be effective in encouraging more lifelong learning in the future, they must respond effectively to differences in individuals’ personal circumstances and support them in overcoming key challenges. Clearly, in such a context, there is room to revisit the shape and features of the current “incentives offer” for individuals across the skills system in Luxembourg, particularly the range and nature of policy instruments and how they work for different groups.

The OECD has undertaken this review with reference to the wider potential OECD policy toolkit (see Table 3.4). Demand-side incentives for individuals bring varying benefits and opportunities, which need to be weighed against several implementation and design challenges, costs and risks. This is important in considering the changes that might be made in the Luxembourg system moving forward and how and where the different instruments might be best deployed. The most common instruments available in most countries are subsidies, training and study leave and tax measures. However, their take-up and effectiveness vary, depending on different design features and variations in implementation, which will need to be borne in mind to effectively draw lessons for the use of incentives in Luxembourg (OECD, 2017[5]). In contrast, instruments such as Individual Learning Accounts (ILAs) have remained fairly uncommon (OECD, 2019[31]), with the only current “pure” example existing in France (e.g. the Compte personnel de formation12). The design considerations are outlined more fully in Table 3.4. This means that the final selection and design of what policy instruments will eventually be used will require trade-offs to be made in practice.

Whilst there are a number of existing individual incentives in Luxembourg, as presented earlier in the chapter, there are questions about the balance of instruments and the specificity and agility of the Luxembourg approach to change to meet changing individual needs. The review has highlighted issues about how well the incentives are supporting those individuals currently under-represented in training and facing barriers to their participation

First, many of the instruments have entitlements that are connected to current employment and hence prioritise training relevant to the existing employer. In principle, these policies seek to reinforce the relevance of the training, assuming that if training is connected to current employment, it will be relevant to the needs of employers. However, these approaches have some limitations. For example, such incentives may limit the potential to train for those individuals working in low-training environments where conditions are less likely to be conducive for training. This includes, for example, small businesses, low-skilled work and certain low-training sectors.

In addition, the connection to current employment is unlikely to stimulate opportunities to pursue training in new and growing parts of the economy rather than existing jobs. As the labour market changes and restructures, more individuals may want to train to prepare for new careers and to support in-work transitions away from declining areas of employment. This is seen, for example, with the tax reimbursement scheme. This is intended to facilitate ongoing skills development in a current profession; thus, it largely supports training in an existing role.

Although access to schemes such as Individual Training Leave (CIF) and unpaid leave is designed to encourage training for all individuals in all types of training (whether formal, non-formal or information), this is often not what happens in practice. Evidence from the consultations reviewed, alongside the participation rates reported by MENJE, suggests that the current design risks limiting the training individuals can pursue if any training at all. For example, these incentives seek the employer's support and compensate the employer financially for the individual’s absence. While employers cannot refuse a training application, they can express a negative opinion if they perceive that the employee's absence negatively threatens the operation of the company. The training can be deferred, which may be enough to limit take-up in reality.

Second, while financial incentives overall in Luxembourg work from the basis of supporting training opportunities for all types of individuals, in practice, with limited targeting of entitlements, many, in reality, work better for those relatively highly educated and pursuing training. This risks higher deadweight effects, where public funds support individuals who would have pursued training anyway. As a result, it was felt by some stakeholders that this limited the reach of incentives, particularly those in low-skilled jobs, with low-training employers and multiple barriers to training to overcome, including low motivation, as observed earlier.

The risks of deadweight, favouring the more highly qualified, can be seen, for example, with the tax reimbursement scheme, which facilitates ongoing training and professional development in a current role and progression in an existing career. However, this relies on individuals being able to fund their own training upfront, reimbursing training expenses at the end of the tax year. As such, it is more likely it will favour those individuals on higher salaries who are more able to personally subsidise such costs for a year. In addition, subsidies, such as loans and grants for higher education, while they are means-tested to provide financial support for those on low incomes, they are intended to enable those individuals already with an initial level of education to progress their skills and to continue a pre-existing education pathway.

In terms of the CIF, the funding aid from the government largely reimburses employers through a wage compensation instrument. Although the individual is supported in accessing their salary while training, they do not receive additional financial support to cover training costs and/or expenses. These may be perceived as more considerable for those in low-paid and low-skilled jobs and/or who experience fluctuating employment patterns in and out of work, including atypical workers. There are also limits with the CIF to the amount of training leave individuals can request within a certain timeframe. This amounts to 20 days in 2 years and 80 days over a career. While these limits help to contain the costs and impact of training leave for employers, they may constrain individuals with more significant training needs, such as the low-qualified. Furthermore, CIF only funds one-third of training time and individuals must train for at least 24 hours in one spell. When training is pursued outside work at weekends and evenings to manage learning opportunities around or beyond existing work, individuals report barriers, such as conflicts with family responsibilities and scheduling, as observed earlier, which provides further challenges to take-up. The combination of these kinds of barriers results in market failures and individual under-investment in adult learning, to the detriment of their long-term employment prospects. Therefore, these types of instruments provide weaker incentives in their current form, especially to motivate lower-skilled and qualified groups without established learning habits in low-training sectors.

Third, most instruments are voluntary, meaning neither the individual nor the employer is forced to act. Therefore, their decision to engage will, in part, rely upon the effectiveness of communication and promotion activities and marketing materials encouraging take-up. Not only will this need to raise awareness, but it will need to include compelling information and hence a strong and persuasive case presented to potential participants that demonstrates the benefits of investing in skills and the value of learning. This will clearly be more important for those individuals undertaking less training and those with lower motivation to learn. Much of the marketing information that is presented on different portals currently, such as Guichet.lu (https://guichet.public.lu/en/entreprises/financement-aides.html), the INFPC learning portal (www.lifelonglearning.lu/Accueil/en) and ADEM’s site (https://adem.public.lu/fr.html) focuses on how the financial incentives will reimburse and support training costs as a primary means of engagement. The information is also quite factual, with less reference to compelling case studies, selling the advantages from a personal perspective. As such, where there is limited information about the benefits, this will weaken the potential impact of the incentive, especially where face-to-face, personalised support is also limited.

The OECD assessment and discussions with stakeholders have highlighted areas where refinements to current instruments could strengthen the individual incentives to train in Luxembourg, especially for the low-qualified, vulnerable groups presently under-represented in adult learning. These perspectives have helped to shape the concrete recommendations presented in this report. The CIF scheme, in particular, was identified as a primary area of focus, given its central importance as a mechanism to support individuals’ right to training. In general, there has been a desire to prioritise any improvements to contain the complexity and costs associated with change, given that many of the recommendations are likely to require changes to legislation (i.e. the Education [Code de l’Éducation nationale]13 and Labour Code [Code du Travail]).14

Given the nature of participation in the CIF scheme, one key area of focus concerned the CIF entitlements. In particular, the assessment considered whether they could be more personalised for certain targeted groups, such as the low-qualified, to enhance the strength of the incentives. While it was felt the 80 days entitlement to state support of continuing professional development over a career was enough generally for individuals who already had acquired a basic foundation of education and an initial platform of skills and qualifications, it could be insufficient for those less skilled and qualified and with lower motivation to learn. It was suggested that there might be benefits in allowing more flexibility as to when the 80 days training leave can be accessed over a career in the CIF scheme (suggesting more flexibility in the first and second years, for instance, beyond 20 days). For example, if a low-qualified individual could access more training leave days earlier in their career to undertake training (such as key entry programmes into sectors), it might be a more effective way to strengthen their training habits, transition into a new career pathway and by doing so improve long-term labour market prospects. There was also an interest in cutting the minimum timeframe as to when employees could apply for the scheme. Currently, an employee has to have worked for a business for at least six months. In the context of the COVID-19 pandemic and greater disruption in employment, especially for individuals in many low-skilled and low-paid services jobs, it was felt there could be significant benefits in considering requests for training, even for shorter spells of employment, to help individuals retain a foothold in the labour market. Other country examples, such as Belgium’s (Flanders) Paid Educational Leave (PEL), referred to in Box 3.7, offer insights into how such schemes can be made more flexible.

Representatives for employers, such as the chambers of commerce and trade, commented on the need to manage any negative impacts of increased training leave on employers in the form of higher costs, reduced staff capacity and increasing workloads. As such, there was an interest in modelling more generous options for wage compensation above one-third of the training time for targeted groups. The intention was that this could offset the costs associated with increases in the periods of training for employers and would therefore help mitigate such effects.

To overcome barriers to individuals’ ability to take up their rights to train through the CIF, some stakeholders suggested that additional “wrap-around services” and support might be needed. This was felt to be necessary to empower all individuals to make choices, especially those experiencing multiple barriers that are more difficult to overcome, including challenges managing family issues, such as caring responsibilities, difficulties achieving flexibility in their work schedules and managing health conditions. Additional measures put forward included broadening financial incentives through the CIF scheme to cover wider costs and/or expenses related to training participation, such as managing family responsibilities and health issues, for example. It was felt that these could be targeted to those individuals in most need based on personal characteristics, such as their income and/or qualification levels. In addition, there was thought to be value in linking the promotion of the CIF to more targeted and customised guidance, coaching and mentoring to help these individuals develop a personal route map to overcome their personal barriers, see training as part of a longer-term and career plan and put together CIF applications to facilitate the take-up of such opportunities.

In the context of concerns with a general lack of awareness around the different incentives, stakeholders also suggested the need to revisit and improve the promotion of the financial incentives available. While it was acknowledged that information was freely available on a range of portals and public platforms, it was felt more could be done to more proactively draw attention to the range of support and facilitate take-up. Multiple communication channels were identified, not only making full use of online tools and different social media channels but enhancing messages and communications deployed by key partners in the skills system to reach individuals within their different communities and networks. This included the MO and its partners in delivering the guidance services.

Furthermore, stakeholders also underlined the importance of evaluation and obtaining better data on the take-up and use of the incentive schemes. It was felt that evaluative research needed to focus on assessing the impact and benefits of the incentives to individuals and their future earnings and careers. Crucially, it was considered important to differentiate between different characteristics of individuals to identify where public investments had the greatest impacts. Not only would this be valuable in enabling future refinements and improvements to the scheme, but it would help enhance information on the value of investments, which would aid future marketing.

In the context of ongoing megatrends and changes in future employment requirements, there is an urgent need to reform the existing package of financial incentives within Luxembourg and consider the potential for new measures that more proactively respond to and support urgent upskilling needs. This is especially important in the context of new, emerging and rapidly transforming parts of the economy, where new incentives can inspire individuals to pursue learning more proactively in high-demand skill areas and support employers in meeting growing employment demands. Improvements to the package of financial incentives can be made to stimulate the take-up of training in these high-demand skills areas, especially among adults. By encouraging earlier take-up, they can allow for training lead times and hence work to ensure the system has sufficient time to prepare for the future and avoid growing skills shortages.

The Luxembourg economy is seeing significant transformations in jobs and, in turn, employment and skills requirements (as highlighted in Chapter 1). The adoption of skills-biased technologies and workplace innovations is increasing employer demands for high- and medium-skilled workers in critical skills in Luxembourg’s economy and potentially also increasing demand for transversal and technical capabilities in the future. CEDEFOP forecasts for Luxembourg suggest a continuing growth in high-skilled workers from 44% of the labour market to 54% by 2030, extending roles in areas such as professional, scientific activities, ICT and finance and insurance (CEDEFOP, 2020[1]). However, forecasts also point to growing demand in middle-skilled roles, such as in skilled trades, technicians and associate professionals, and highlight risks of growing deficiencies.

This is already materialising with industry bodies (professional chambers and others, such as the Federation of Artisans [FDA] and the Federation of Luxembourgish Hospitals [FHL]) reporting recruitment difficulties in middle- and low-skilled jobs due to rapid economic growth and an ageing workforce (discussed further in Chapter 4). Indeed, it is forecast that over three-quarters of the new jobs up to 2030 will be created by replacement demand due to people leaving their roles through retirement, for example. CEDEFOP questions whether the scale of growing demands can be fully met by sourcing international, cross-border workers. This places an equal focus on reskilling, upskilling and lifelong learning within the existing workforce (CEDEFOP, 2020[1]). Those workers who are low-qualified, with outdated skills, and/or who do not keep their skills up to date, become more at risk of displacement within the labour market and, with that, detachment and long-term exclusion. While the CEDEFOP forecasts rely on the Labour Force Survey and hence do not consider the extent of cross-border workers moving to Luxembourg for work, they do highlight some underlying tensions within the Luxembourg economy that need to be addressed, nevertheless.

At a time of continuing industrial restructuring and economic transformation in the future labour market, there is a strong case to deploy new financial incentives to help shape the training response to economic shocks, not only including the recent effects of COVID-19 but as a regular response to ongoing megatrends and/or future events. As Luxembourg improves the co-ordination of its LMI, potentially via a regular national skills needs survey (see more in Recommendation 4.4 in Chapter 5), this can help to more systematically track and identify skills in high demand over time. This, in turn, can drive more responsive and labour-market-relevant adult provision, as outlined in Chapter 2. The Government of Luxembourg has already recognised the urgency of understanding and addressing future labour market changes. This is demonstrated by the government’s Research and Innovation Strategy, for example, and its work to support innovation and growth through a number of industry clusters, including the digital economy, the creative industries, advanced manufacturing and the green economy (MESR, 2020[33]).15 It has also been an important dimension of the work of ADEM’s Future Skills Initiative (as presented earlier), which has sought to start investigating the most pressing skills needs of careers of the future in some of these key priority sectors and how they might be met in the years ahead.

Where there is better use of LMI to signal those skills in high demand, this, in turn, raises issues about how the package of financial incentives for individuals can be adapted to better support the take-up of training and transitions to these areas. It is possible that targeted subsidies, such as vouchers, could be developed and used in the future once high-demand skills areas have been identified to encourage individuals to take up training in these growing skills. Where there is under-investment by low-qualified individuals working in low-skilled roles in sectors with low-training provision, targeted vouchers would “empower” individuals by encouraging them to take responsibility for their own education and training choices. Such a scheme can help cover the additional costs of training, which are persisting as a significant impediment through wider current incentive schemes (as shown earlier). Given that the voucher for skills in high demand would be identified and therefore backed by the government and industry through issuing the vouchers, it would provide a basis to put an individual on growing employment pathways with stronger prospects. This, therefore, could serve the dual prospects in enhancing individuals’ future prospects and helping to meet industry needs, too. Schemes are being run internationally that offer insights about how financial incentives might be designed to work with the broader, targeted packages of support within Luxembourg. Some of these, like the WorkAdvance scheme in the United States, have been delivered through dedicated recruitment and guidance agencies to more proactively identify and recruit individuals to critical skills career advancement programmes in high demand and hence to ensure vouchers are effectively deployed (Box 3.8). Active recruitment has also been a good way to raise the motivation and engagement of individuals.

In recognition of the challenges of incentivising sufficient take-up in adult learning and tackling persistent variations in training across the economy, stakeholders were also interested in investigating the potential of ILAs (or compte personnel de formation) in the future skills system. This aimed to explore the feasibility of piloting an ILA scheme to amplify individual choice and hence to further strengthen individual rights to train. In a future economy where individuals are more likely to change jobs, the ILAs, in principle, by linking rights to the individual, have the potential to “empower” individuals to choose their own training. In turn, this can enable them to consider areas outside of their current employment, thus allowing greater portability between jobs. In addition, where there have been problems within Luxembourg with varying quality standards for adult learning programmes, the ILA can act as an additional incentive to training providers to raise the quality of their training. This is usually because the credits and entitlements earned through the ILA scheme are often activated when individuals pursue high-quality, industry-endorsed and government-backed training programmes. Providers are then likely under such a scheme to be more incentivised through the ILAs to seek recognition to deliver these high-quality accredited training programmes, raising the platform of skills delivery more generally.

However, when practical implementation issues were more fully considered through the evidence and discussed with stakeholders during this project, it became clear that the ILA could not be seen as an immediate priority within Luxembourg. International research provides an assessment of such schemes' strengths and weaknesses, and there is much complexity attached to their design, implementation and development of the wider infrastructure to support delivery (OECD, 2019[31]). The assessment pointed to particular challenges in agreeing on sustainable funding mechanisms and appropriately targeted individual incentive instruments, which are crucial to get right to ensure even participation in the scheme. For example, ILAs have a poor track record of reaching low-qualified individuals, especially where co-financing schemes are deployed. Furthermore, stakeholders in Luxembourg noted the tendency for over-representation among higher-skilled individuals, risking replicating existing schemes' trends (as highlighted above). Where countries have moved towards ILA schemes, the most common model has involved using vouchers targeted at individuals, so that they can still empower individual choice but contain the costs and difficulty of managing and administering a fuller scheme. The OECD found very few examples of the pure scheme currently in use; consequently, the ILAs are still uncommon (OECD, 2019[36]). Given that wider recommendations within this current strategy can provide a basis to put in place important foundation stones for a future ILA scheme (such as the centralised training register providing data on training participation patterns of individuals, Recommendation 4.7 in Chapter 5), it is recommended that it is not progressed as an immediate priority, but that its potential is kept under review (that is if and when to run a pilot) as a future action within the long-term strategy for adult learning (see Recommendation 1.1 in Chapter 2).

Given the scale of the skills investment needed to boost lifelong learning in the future, this OECD review has also considered how financial incentives targeted at individuals are working alongside those targeted at employers. Improvements in the co-ordination of policy instruments targeting individuals and employers offers much potential by combining their individual effects and creating more positive conditions to enhance engagement in training overall – that is, through the actions of both employers and individuals. With training provision varying significantly by sector and size of employers (see Chapter 2), this section reviews the current array of financial incentives for employers within Luxembourg and puts forward proposals on where there is a need to go further to tackle employers’ under-investment in skills. Without attention, this limits business development and their culture for learning and risks undermining businesses’ productivity and long-term economic prospects, as well as those of their employees. There is a need to strengthen current incentives so that they are more targeted to the needs of different employers and can more effectively work to overcome market failures and barriers to training. This includes testing the feasibility of new incentives to support greater business networking and collaboration in response to ongoing challenges in the future of work and, by so doing, extending the scale and reach of impact.

It is first necessary to ensure that the current financial incentives for employers are sufficiently encouraging all types of businesses to train, which is a central strategic goal of the current Luxembourg skills system. This includes considering how they are working, particularly for smaller businesses and those in low-training sectors that have traditionally under-invested in skills. Any steps to optimise skills investment within businesses will need to start from understanding variations in employer training patterns in the Luxembourg context and the specific barriers and market failures inhibiting investment within Luxembourg businesses. This perspective may then help to revisit the shape and features of the current “incentives offer” for employers across the skills system in Luxembourg and how it might also be improved alongside individual incentives.

More specifically, this suggests that higher levels of investment in sectors such as finance and healthcare services, where there are strong training traditions in the economy (as outlined in Chapter 2), will require a different response to businesses where training is lower in areas such as construction, ICT, wholesale, retail and hospitality. Considerations will also be needed with regard to differences in training investment by business size, with smaller employers reporting significant challenges in Luxembourg inhibiting their training intentions and behaviour. Finally, wider research offers a broad framework for reviewing the incentives, drawing attention to the range of market failures that exist in principle. See, for example, Table 3.5 (UKCES, 2009[37]).

For low-training employers in Luxembourg, various barriers and market failures have led to a persistent under-investment in skills and training that undoubtedly risks their long-term productivity. Employer surveys, such as the Continuing Vocational Training Survey (CVTS), provide a sense of the main barriers affecting employers in Luxembourg where they saw no need for training and where training investments were limited – at least below the optimum, they wanted to and/or should provide. Figure 3.9 outlines the range of barriers inhibiting training reported by employers in Luxembourg.

While training costs are a significant barrier, they have not been the most common issue reported in recent times. Therefore, financial incentives need to be balanced alongside other factors to ensure greater future success. Indeed, more Luxembourg businesses report that they do not train because: they prefer a strategy where the business actively recruits individuals with the required qualifications, skills and competences already (57%); and they have difficulties assessing training needs in the enterprise (31%). With reference to market failures (as outlined in Table 3.5), this suggests a significant share of businesses are avoiding investment in training by relying on recruiting and perhaps poaching already skilled staff from other businesses (confirming some of the earlier stakeholder assessments reported in Chapter 2). These behaviours are indicative of a situation in which those employers that are not investing in training are intentionally benefiting from the spillover effects from those firms that are, without sharing the cost of those investments themselves – thus reinforcing concerns over a climate of poaching. Furthermore, around one-quarter of businesses that are not training report no limiting factors. The range of barriers taken together also point to behaviours and attitudes on the part of employers relating to: challenges with respect to releasing staff for training due to work pressures; potential issues of bounded rationality and short-termism where businesses are not convinced of the long-term business benefits and returns on making investments in skills; imperfect information and co-ordination failure where businesses are not aware of relevant training and do not work together to share what they know; and management capability issues where businesses report challenges assessing their training needs.

With these issues in mind, again, this opportunity examines employer financial incentives in Luxembourg more closely with reference to the wider potential policy measures in the global toolkit (outlined earlier in this chapter). While, in principle, a wide range of measures can be deployed (as seen in Table 3.6), in practice, the take-up of instruments is more limited due to the various considerations around their design and implementation, such as complexity and costs. Indeed, in terms of the global picture, direct subsidies form the vast majority of incentives for employers used across countries and wider measures, such as public procurement tools, tax measures, payback clauses and training funds, are far less common. Drawing insights from the deployment of different tools in other countries has enabled consideration of the varying opportunities and challenges of Luxembourg adopting different demand-side measures for employers in the future to stimulate more optimum levels of skills investment and training (see Table 3.6).

While a number of different demand-side employer instruments in Luxembourg are available, as presented earlier in this chapter, which signals significant state support for employers currently, as with the assessment of individual instruments, a closer examination has highlighted areas for potential improvement. In practice, these improvements have tended to focus primarily on the Co-funding Programme with employers, given its central importance within the Luxembourg skills system to stimulate employer investment in training alongside the CIF.

First, in line with the global picture, most of the instruments offered are subsidy-based. This means a key focus of incentives is to change skills investment and training behaviour among employers by decreasing the costs of training for employers if they meet certain conditions, thus providing a financial incentive to take part. However, where there are limitations in how much schemes are targeted and/or ring-fenced, they have not been able to substantially shift divisions between high and low-training employers over time. This suggests a need to modify the schemes package of incentives more for different business communities. So, in the case of the co-financing scheme, the financial incentives are taken advantage of more by existing high-training employers. Hence, the measures offered are less likely to shift the training behaviour of low-training employers. This points to the risks of deadweight highlighted in Table 3.6, where a share of the funds is being deployed by those who would have trained anyway.

This is perhaps most evident in the higher rates of co-investment going to sectors that are already higher trainers seen earlier, such as finance and insurance and professional, scientific and technical activities, rather than lower training areas such as construction, accommodation and food services, and creative areas like the arts, entertainment and recreation.

Furthermore, looking at the latest data published in 2021 for 2018, while there are more favourable funding caps in the co-financing scheme to preserve more funds for smaller employers to train, many of whom will not have strong traditions of training,16 this is restricted to only micro-businesses with nine employees or less. There is limited differentiation between small, medium and larger businesses (i.e. with ten employees and over). As a consequence, this is not translating into high levels of engagement with the co-financing scheme among smaller employers more generally (as outlined in the INFPC data earlier17) and is doing little to change their levels of training. So, for example, for micro-businesses (with 1-9 employees), training aid reaches only 3.2% of these smaller employers in the economy, although there is some variation across sectors. In contrast, the businesses with 250-999 employees in receipt of the funds represent 87.3% of larger employers in the Luxembourg economy. Furthermore, the recent cuts in the overall subsidy rate from 20% to 15% have aggravated the position of small businesses, as seen earlier. Indeed, the decrease in funds per employee has been greatest for those with 10-19 employees and has exceeded the overall average decline. As such, there is a need to adapt financial incentives for employers to strengthen incentives with low-training employers.

Second, once again, as for the individual incentives, most instruments are voluntary so that employers have discretion about whether or not to take part, and their engagement will be affected by levels of awareness and perceptions of value. This, therefore, places more of an onus on the effectiveness of communication activities, the mechanisms for employer engagement and promotion of the financial tools and business case for investment, and whether these are fit for purpose. Currently, participation in the scheme is dominated by previous, repeat applicants. So, for example, over 90% of applicants are repeat applicants for employers with over 250 employees. While the share of new applicants increases for smaller businesses, it still means that nearly two-thirds are repeat applicants for those businesses with fewer than 20 employees. This is a further indicator of the limits of the reach of the scheme and its ability to broaden take-up.

The OECD assessment and consultations with stakeholders have identified where there is potential to strengthen the current employer incentives to drive future improvements in business investment in skills and training in Luxembourg. The co-funding scheme was the primary area of focus given its importance to date in supporting employers' training within the skills system and concerns to prioritise improvements and contain development costs. A key intention has been that this can shape concrete recommendations for consideration by INFPC in managing the fund in the future.

Given the high concentration of government funding in the co-financing scheme, a significant focus has been on examining the potential for more targeting of the financial incentives, especially to support smaller employers to train. In light of the overall cuts in funding rates from 20% to 15% since 2017 and the disproportionate impact on smaller businesses, it was felt that there was a strong case for raising the state-funded financial incentives for employers with fewer than 20 employees to at least 20% of the cost of the investment in training in any operating year. Overall costs could then be contained for larger businesses at the current rate of 15%. It was noted that smaller employers cannot benefit from the economies of scale that larger businesses achieve and hence cover the administrative and management costs involved. This was felt to be a significant factor behind the low penetration of the fund among small businesses in the wider economy. Although it was recognised that such reforms would require legislative changes, they were thought to offer significant long-term benefits to make such a step worthwhile.

In addition, concerns were also raised around the complexity of administration and associated costs of submitting an application to the fund. It was reported that various phases of the process could act as a deterrent to submitting a full application and add to processing costs. The challenges were thought to be more considerable for smaller businesses without dedicated staff, resources and hence expertise internally, such as specialist human resources (HR) and finance teams to help with the management of the application and wider administration. As funds were not supplied through the scheme until after training was completed, this was thought to be an additional deterrent for smaller businesses needing to financially source and meet the extra costs upfront. It was reported that a few years ago, delays could be over two years. While it was acknowledged that the INFPC was working to simplify and digitise the administrative process, which was welcomed, these developments were known to have a long lead time to delivery and with the first stages of implementation not expected until 2024, it was still felt that parallel improvements in the process and additional support for the smaller businesses would be necessary.

Schemes in other countries provided ideas on improvements that could be introduced within the Luxembourg co-funding scheme. One concrete suggestion involved breaking up the subsidy payments as is done in the scheme in Belgium (Box 3.9). This would involve providing 50% advance payment of the subsidy directly to the small and medium-sized enterprise (SME) upon submission of their training plans and 50% as a reimbursement upon completion of training plans. In addition, it was thought important to consider broader areas to provide extra financial support to smaller businesses, such as broadening the scope of eligibility for co-financing and including wider ancillary costs, such as the costs of completing documentation, developing internal training plans and assessing skills needs, etc.

In the context of concerns about the reach of the programme (i.e. only 10% of the economy on average) and a general lack of awareness among employers around the different incentives, stakeholders also had views on the need to revisit and improve the communication and promotion of the financial aids available. While it was acknowledged that information was freely available on a range of portals and public platforms, such as the Business Portal of the government site guichet.lu (https://guichet.public.lu/en/entreprises/financement-aides/aides-emploi-recrutement-formation/formation-professionnelle-continue/fpc-entreprise.html), INFPC’s site (www.lifelong-learning.lu/Accueil/fr), and ADEM (https://adem.public.lu/en/employeurs/demander-aides-financieres.html), it was felt more could be done to more proactively draw attention to the range of support and facilitate take-up specifically on the practicalities and benefits of training. One key area for improvement was seen to be through extended face-to-face advice for smaller businesses. A key aspect of this related to what INFPC could generally do around promoting and raising awareness of the funds. This needed to extend beyond existing practices. These include regular communication activities, using multiple social media channels, a telephone helpline, and a general training programme for employers working with the House of Training’s Co-financing of in-company training”. In particular, there was also interest in INFPC exploring the means to provide additional funds to offer more customised services. This might include enhancing specialist business support for SMEs on training by sector, tailoring training to different industry needs and providing a more consistent offer across sectors (learning from what works in the future concerning moves to more customised support). Again, it was noted that schemes in other countries, such as Belgium, already provided such services.

With questions about how to improve business advice, this underlined the important role of professional chambers and the range of respected business associations and industry bodies that act within Luxembourg as key business brokers and intermediaries. Much potential is perceived for employer intermediaries to act as champions and distribution channels in the future for information and communicating messages about skills and training priorities to their members and respective communities, particularly with smaller employers who lack resources and time.

Given their different sector expertise and interests, they clearly have a key role to play in tailoring information and advice in a way that can be heard and enhance the value of training. They can also help navigate employers through the skills system to identify incentives that will be the most beneficial and offer wider services, such as undertaking skills diagnostics, developing training plans and finding relevant skills provision. This is particularly relevant for some of the harder-to-reach employers and non-trainers. Certainly, providing information and advice is already a key aspect of the work of the different chambers representing their industry members – the CC, the CdM and the LWK. See, for example, the CdM’s tool for financial aid for businesses (www.yde.lu/aides/aides-aux-entreprises/aide/cofinancement-de-la-formation-continue-d-entreprise) and the CC’s House of Entrepreneurship (www.houseofentrepreneurship.lu/nos-services/), which provides a range of support to smaller businesses. Information and advice also extend, however, to wider business associations, a number of whom have put their backing behind national skills initiatives with key implications for sectors to encourage greater business engagement, such as ADEM’s Future Skills Initiative. These have included, for example, the FDA, the Institut de Formation Sectoriel du Bâtiment (IFSB), the UEL, the ABBL, the Association of the Luxembourg Fund Industry (ALFI) and the FEDIL.

That said, there is believed to be much benefit in extending the specialist training advisory service through more targeted funds and deepening its networking potential and reach. As the financial incentives are adapted and change over time, there is an opportunity for any enhanced advisory network to play a more active role in refining messaging around these tools and keeping businesses abreast of ongoing changes and their implications.

Furthermore, stakeholders also underlined the importance of evaluation and obtaining better data on the take-up and use of the financial incentive schemes. While it was acknowledged that the co-funding scheme did regularly produce information about the nature of take-up of the programme, such as the Public Cofinancing Brief – Formabref, produced by INFPC’s Training Observatory (INFPC, 2021[41]), it was felt that more evaluative research was needed to improve the insights and knowledge about the impact and return on investment of any publicly funded training. This was seen as vital evidence that could strengthen the case for investment and hence promote the value of investing in training to the business community. In particular, this played a key role in underlining the need for co-investment and cost sharing between industry and the state. In addition, there was also the recognition that stronger evaluative information would help understand the effectiveness of any refinements of the scheme and, as such, would provide a better steer on what activities and support were working.

When looking beyond the current financial incentives for employers, there is a wider question as to whether the existing package of incentives could be strengthened to amplify and extend their effects in parts of the economy where there is persistent under-investment in skills within business communities, such as by sector. Indeed, the OECD assessment has found that most of the current employer-facing financial incentives deployed within Luxembourg focus on engagement with individual businesses; there are limited group applications. There is a chance that this may be constraining the full potential of incentives utilising collective policy measures (UKCES, 2009[37]). These seek to promote greater collaboration among business communities over skills, where there are common interests, and as such depend on encouraging the conditions for co-funding, balancing risks and cost sharing between businesses, in communities with common skills needs, rather than competition and poaching. These include a range of collaborative policy levers, including financial incentive measures such as training funds (CEDEFOP, 2008[42]). These are usually co-designed and agreed upon among business networks, offering wider benefits for skills innovations, knowledge transfer and peer learning as cost-effectiveness. As such, there is an interest in how public-led incentives, such as the co-funding scheme, could work alongside interventions and support that are more industry-led.

The European Company Survey (ECS) has provided further information on the extent of collaboration among businesses more generally within the Luxembourg economy and where there is room for collaborative working to be enhanced (Figure 3.10). The survey has differentiated between collaborative relationships that are formal and contractual (such as outsourcing) and those that are collaborative regardless of their formal status. It can be seen that while in most European countries, the majority of businesses do not generally collaborate with other employers as part of their general business activity (i.e. from around 60% to 80% of employers), there are relatively higher proportions of businesses in Luxembourg that are not operating collaboratively (i.e. around 75%). As such, Luxembourg lags the leading countries, such as Finland, Lithuania and Sweden. Collaboration was seen most in traditional sectors, such as construction and manufacturing, and least in service areas, such as hospitality and financial services. Collaboration was also greater in larger establishments than smaller and headquarters and subsidiary sites rather than single establishments. The survey further supports the importance of national governments working to enhance business networking, as it shows that those establishments that collaborate with other establishments perform better.

One mechanism Luxembourg has deployed in the past to stimulate levels of investment in skills across broader business communities, which may offer potential moving forward as a means to tackle common barriers affecting lower training sectors through collaboration, is sector training funds. These have been evident in the finance, health and construction sectors, for example.

These collective measures are important demand-side, industry-led investment measures (UKCES, 2011[44]) aimed at enhancing the relevance of services provided to employers. They can be combined with government funding to create public-private partnerships but are often only privately funded. The core aim is collaboration and sharing the costs and benefits of engagement. By so doing, the objective is to raise the overall level of employer participation and, in turn, the platform of skills investment and performance across that community. In turn, this offers greater potential to extend the reach and support for businesses and their employees in scale across broader communities, especially working to enhance the involvement of smaller businesses where the costs of engagement are greater. This can reduce individual market failures, such as the risks of poaching, bounded rationality and short-termism and provides a means to enhance economies of scale for smaller businesses and hence tackle wider co-ordination failures.

Initially, a core focus of such initiatives has been enhancing the availability of technical and specialist training for businesses, but increasingly approaches are broadening. Indeed, collective funds are extending into wider areas of training in transversal, digital and management skills and broader business support covering issues such as the adoption of digital technology, innovations in organisational and work design and business practices such as recruitment, retention and deployment of staff (OECD, 2021[45]). Relatedly, different schemes are seeking to inspire business improvements, not only through practical and online tools, research and guidance, and workshops and events but supporting knowledge sharing, dissemination and networking based on best practice case study examples and links to knowledge experts and peers.

There are examples of such developments within Luxembourg through the establishment of a series of sector-specific training and competence centres, which have aimed to strengthen partnerships with businesses and wider partners in the skills system. These activities, too, have initially specialised in technical areas of training but are moving into broader areas of skills and business development and management. These include the House of Training, which incorporated the Banking Institute in 2015; the Widong Centre, established in 2002 as a training institute to support the healthcare sector; and the IFSB and Craft Competence Centres, which are serving the needs of the construction sector.

The strengths of such an approach can be illustrated through a closer look at the construction sector. This is of particular interest as it has a long history and has been able to evolve its approach over time, with the sector training fund first being created in 2002. Vitally, it was formed out of a collective agreement between the sectoral business federations and trade unions. Employers across the sector were then required to contribute financially based on a collective agreement, which mandated them to act and immediately broadened engagement. In return, employers receive subsidies towards their training costs, access to R&D (Research and Development) and specialist training in the sector. The IFSB first delivered this. Following its success, further competence centres for the wider parts of the industry have been created, resulting in a wide-ranging training catalogue serving the training needs of the sector as a whole. A key part of the process was establishing funding at a competitive level relative to other schemes – for example, setting the employer contributions at a rate of 0.5% of the payroll was at a lower rate than similar schemes in border countries, such as France (1%) and Belgium (1.5%). A key part of its effectiveness has been based on a transparent relationship between funding and the services and products that employers can buy, therefore creating the conditions for longer-term stability through industry investment. The amount of the contribution is calculated from the payroll certificates to aid management using information processed annually by the Joint Centre for Social Security (CC, 2018[46]).18

Given the core goal expressed by Luxembourg partners to create a more integrated skills system, and the need for sustainable partnership models based on a commitment from all parties (including shared investment), this reinforces the potential of extending collective incentives. As such, the OECD has explored through consultations with stakeholders, concrete areas where these sector-focused approaches might be revisited and extended, thus contributing to a more balanced and optimum skills investment picture across the economy moving forward, supported through co-investment. While these kinds of collaborative industry-focused schemes have evolved internationally as well as within Luxembourg in response to varying economic developments and business needs, the schemes as a collective offer significant insights. This is not least around feasibility, key design features and what has the potential to work in the future within Luxembourg. Indeed, stakeholders referenced the sector initiatives within Luxembourg as examples of good practices on which to build and a need to learn from levy schemes for income generation. Wider insights can also be drawn from international research (see Table 3.7).

As a result, there is significant potential to test their feasibility moving forward, especially in new, growing parts of the economy, such as ICT and the digital sector, the creative industries, advanced manufacturing and wider parts of the green economy. As seen earlier, however, it will be key in designing any new training funds, to work with key partners within the institutional landscape. Crucially, this will need to include relevant business associations and sector bodies operating across key business communities. It will also need to link with respective unions and employee representative bodies (such as CSL and CHFEP). It will require working beyond the traditional mechanisms to reach new, highly innovative and evolving parts of the economy, especially where there are growing numbers of micro-businesses, freelancers and atypical modes of working, such as in the creative industries and the green economy.

In reviewing existing Luxembourg schemes and drawing insights from international programmes, it was felt that the levy-grant schemes, which have been used in Luxembourg before, offered the most potential as a collective incentive for income generation (examples of levy schemes from which there may be opportunities to learn are provided in Box 3.10). Such schemes have been shown to incentivise employer engagement where they are co-designed and implemented by the business communities themselves, as funds raised enable the design and delivery of industry-led and hence more relevant initiatives, products and services. That said, it is key that tools are clearly hypothecated so that the deployment of pooled funds is visible to employers and valued, which will help to ensure ongoing co-investment and employer engagement.

Wider research from the OECD (2017[5]) has shown how training funds can be effectively developed to serve different types of business communities – through sectors, supply chains and in different locations. Indeed, Italy19 and Ireland provide specific illustrative examples. These studies highlight the benefits. Indeed, international funds offer significant potential to shape practices in businesses that have been traditionally hard to reach. For example, they have brought significant benefits to smaller businesses by: sharing the cost of training and enhancing economies of scale; mitigating financial constraints by pooling resources and expertise; shaping collective more sector-relevant training solutions for sector-based communities; and facilitating access to technically trained employees who can move within the funded network, including during periods of training to cover staff absences – thus reducing the risks of poaching (OECD, 2017[5]). A further country example illustrating the policy measures that could be useful in addressing SME worker absence during training is provided by Denmark (Box 3.10).

Given the ongoing transformations in a dynamic future economy due to the effects of unexpected shocks and long-running megatrends, there is also value in using financial incentives to encourage workplace innovation to overcome market failures and to drive an appropriate upskilling response. These types of interventions aim to support the ongoing development, upskilling and use of the skills of the workforce over time to make better use of technology and innovations in ways of working attached to climate change and the need for low-carbon practices. This might benefit, therefore, from a closer connection to the Luxembourg growth clusters (outlined earlier). In this context, there is an interest in using financial incentives not only to support the costs of skills investment but to build wider management capacity and the culture for continuing business and skills development and learning attached to the future of work. The long-term intention is that this can improve working conditions and better drive ambitions around skills demand and investment.

The European Commission has promoted workplace innovation for many years (Pot, 2016[48]) (Box 3.11). A key policy objective has been to improve the management of businesses, in particular, through the adoption of more people-centred high-performance working practices (HPWPs) that enhance business performance, individual progression and working lives (Belt and Giles, 2009[49]). Workplace innovation programmes are gaining traction in many countries as an effective mechanism to respond to continuous developments around the future of work. The core aim is to encourage businesses in scale to support lifelong learning and invest in their workforces and to ensure that jobs are sufficiently redesigned and workers are effectively redeployed to use their skills effectively. Furthermore, drawing lessons from innovation theory, programmes are increasingly focusing on supporting workplace innovation through collaboration where business communities with common interests (“communities of practice”) are encouraged to secure improvements through co-funding, cost sharing and knowledge exchange. This, in turn, can support the conditions for more sustainable management and skills improvements as a vital means to amplify adoption across business communities, extend the reach of programmes and hence, their positive impact.

The recent ECS, carried out jointly by the European Foundation for the Improvement of Living and Working Conditions (Eurofound) and CEDEFOP in 2019 (CEDEFOP, 2019[53]), aimed to explore the degree to which the businesses in different European countries were adopting HPWPs. Based on how the workplace practices combined, four groups of establishments were identified that differ in the extent to which they invest in employees and involve them in decision making, and hence are better performing as they seek to innovate and prepare for the future. According to this assessment, Luxembourg had a higher proportion of middle-performing businesses than high-performing, high-investment businesses (Figure 3.11). This was seen to be an important indicator of the degree to which businesses can proactively manage workplace change. As such, it has started to identify areas for development and business improvement.

The OECD Skills Strategy project provides an opportunity to drive more ambitious, future-focused, demand-led activity and to enhance management practices among communities of businesses in Luxembourg in the future. This could also have the added benefit of building management capacity and a culture for learning more widely, extending the reach in particular to low-training businesses.

In that context, there is potential to develop and deploy a new Future Workplace Innovation and Upskilling Fund for this purpose. It could be aimed at encouraging employers working together in targeted business communities, whether defined by sectors (and hence Luxembourg growth clusters), supply chains and/or geographic locations, to come up with solutions that tackle specific and common workforce development problems they face in response to the future of work. As such, it provides a vital basis for communities of businesses with a common skills interest to work together to tackle workplace challenges restraining effective skills development and use and, by so doing, enhance both business and wider economic performance. The fund could support a range of research and development projects in skills, encouraging experimentation, piloting and new interventions. In particular, it could be designed to drive improvement by supporting knowledge exchange and sharing ideas about what works through co-operative coaching, mentoring and learning networks.

Again, there are international examples from which to learn and draw lessons about the initiatives that could be taken forward in Luxembourg. One example is the UK Futures Programme developed by the UK Commission for Employment and Skills (Box 3.12). This was a bottom-up initiative that aimed to provide employer-led solutions to overcome problems in skills development and skills use. Within this initiative, large companies were encouraged to collaborate with smaller companies and wider industry and technical experts to find skills solutions that were most relevant to their communities. By encouraging businesses and partners to work together and pool resources and expertise, a key aim was to build sustainable benefits for the community in the form of productivity benefits and more good work.

Such a fund could also offer insights for future public programmes to build on previous demand-side projects. One specific programme in Luxembourg that stakeholders suggested would be useful to build upon was the recently piloted Digital Skills Bridge Programme. This pilot project, launched by the MTEESS and ADEM, ran from May 2018 to November 2019. It tested the support services that would be the most beneficial to businesses to help them upskill and reskill their workforce to better adjust to (digital) transformations. The project provided a package of technical and financial support in the belief that any integrated package of support was beneficial to engagement and success. Financial aid was a central aspect of the engagement process.20 The experience gained and lessons learned have been used by ADEM to orient its future service offer more widely, but currently, this does not yet extend to replicating the wider rollout of this type of more intensive scheme.

Guiding and incentivising skills choices is critical for individuals, firms and society in Luxembourg to adapt and thrive in a world of changing and rising skills demands. Two opportunities have been selected indicating where guidance and incentives of skills choices can be strengthened:

  1. 1. improving guidance services for adult learning

  2. 2. improving financial incentives for adult learning.

This chapter presented ten recommendations in order to seize these opportunities in the area of adult learning provision. A high-level overview of the recommendations can be found in Table 3.8. This selection is based on input from a literature review, desk research, discussions with the Luxembourg National Project Team, and broad engagement with a large variety of stakeholders, including two workshops in Luxembourg and various related meetings and group discussions.

Two recommendations have been selected that should be considered to have the highest priority based on potential impact, relevance in the current context in Luxembourg, as well as the overall support for implementation. To strengthen the guidance and incentives of skills choices, the OECD recommends that Luxembourg should:

  • Develop an engagement strategy to more actively involve employer and employee representatives in guidance services (Recommendation 2.2)

  • Target more of the financial incentives within the existing co-financing scheme to support smaller employers to train (Recommendation 2.8).


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← 1. The MO’s co-ordination services were formally backed in law in 2017.

← 2. At the time of writing, this was based at a more permanent address at the MENJE building at 29 Rue Aldringen.

← 3. For more details, see the Learning Portal at www.lifelong-learning.lu/Accueil/en. It is maintained by the INFPC. The Government’s secure, interactive platform, “MyGuichet.lu”, can be accessed at https://guichet.public.lu/en.html.

← 4. See, for example, the list of business associations listed on the Government portal at https://guichet.public.lu/en/organismes/organismes_entreprises.html.

← 5. See, for example, more information regarding employer support at the Learning Portal at www.lifelong-learning.lu/Detail/Article/Aides/Aides-formation-en-entreprise/en (maintained by the INFPC) and the business portal on guichet.lu. at https://guichet.public.lu/en/entreprises/financement-aides.html.

← 6. The changes in the Labour Code through new articles L. 542-1 reduced state aid for co-financing applications for the 2018 financial year (introductory deadline: 31 May 2019). See https://legilux.public.lu/eli/etat/leg/loi/2017/08/29/a798/jo.

← 7. For more information, see https://adem.public.lu/en/employeurs/futureskills/services-skillsbridge-adem.html.

← 8. These included, for example, Horesca, CdM, FEDIL and CC, to name a few.

← 9. The Pädagogische Hochschule Niederösterreich is a public institution for training, further education and teacher training.

← 10. For more information, see www.euroguidance.eu/guidance-system-in-luxembourg.

← 11. More information can be found at https://schoulfoire.lu.

← 12. For more information, see www.oecd.org/els/emp/individual-learning-accounts.pdf.

← 13. See https://legilux.public.lu/eli/etat/leg/code/education_nationale/20210606.

← 14. See https://legilux.public.lu/eli/etat/leg/code/travail/20211129.

← 15. See, for example, the industries supported by the government through the Luxembourg Cluster Programme at www.luxinnovation.lu/innovate-in-luxembourg/luxembourg-cluster-initiative/.

← 16. See, for example, patterns of employer investment in training from the CVTS Survey in Chapter 2.

← 17. For example, see INFPC (2021[15]).

← 18. More information is also available at CEDEFOP (2016[11]), CC (2018[46]) and on industry websites such as www.cdc-gtb.lu/cotisations/.

← 19. More information on the Italian scheme can be found at OECD (2019[55]).

← 20. For each participating company, MTEESS co-financed a maximum of 12 days of technical assistance for workforce analysis and planning; 1 day of personal coaching per participating employee; a maximum of 35% of the training expenses; and 90% of the salary expenses during the training period. For more information, see https://adem.public.lu/en/employeurs/futureskills/projet-pilote.html.

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