Consequences of the coronavirus crisis: One in ten companies intend to provide less training

A survey by the Institute for Employment Research shows that companies are scaling back their training commitment due to uncertain business expectations. The federal government is seeking to counteract this with new assistance.

Hubertus Heil, Federal Minister of Labour, is concerned: "In view of the economic situation, many businesses are in two minds as to whether they should offer training positions," explained the SPD politician recently to the German news organisation Redaktionsnetzwerk Deutschland. He therefore wants to extend and expand the “protective shield” for training positions.

Heil's concerns are justified according to a recent investigation conducted by the Institute for Employment Research (IAB). This shows that one tenth of companies authorised to provide training are planning to offer fewer training positions in the coming training year, or to abandon training altogether.

One reason for this are the persisting pressures resulting from the coronavirus pandemic. For example, in December three out of ten companies surveyed by the IAB stated that they had been heavily impacted by the Covid-19 crisis.

Accordingly, seven percent of companies authorised to provide training have withdrawn from their original plan to offer training positions in the 2021/22 training year. A further four percent are reducing the training position offer.

Overall, a good third of the companies authorised to provide training intend to do so despite the pandemic. It is above all the smaller companies and sectors really struggling as a result of the lockdown who are reluctant. For example, 28 percent of respondents from the catering sector plan to fill fewer or no training places at all. In the manufacturing industry the figure is ten percent.

Financial reasons for less commitment to training

93 percent of businesses seeking to cut back that training commitment cited uncertain business expectations as the reason for this. 71 percent specified financial reasons. This is where the protective shield for training positions, set up by the federal government in August of last year, comes into play.

Companies with fewer than 250 employees which maintain or even increase their training commitment despite falls in sales due to the pandemic, or short-time working, can apply for a government bonus of 2,000 Euro or 3,000 Euro per training position. This support is limited to training contracts which started no later than 15 February of this year.

Minister of Labour Heil has therefore announced the extension of the protective shield and will present a concept for this in March. "There will be a new, and once again significantly more generous training bonus than before," he explained. The aim is for considerably more companies to be able to use it.

According to Federal Employment Agency (BA) data, from August 2020 to January 2021, positive decisions were made on 29,500 bonuses. In almost 15,000 cases, the bonus has already been paid.

It is interesting that almost two-thirds of bonuses awarded were allotted to businesses which have actually expanded their training commitment. However, this might also be to do with the fact that many small businesses only appoint new trainees every two or three years.

Number of training positions registered falls by eight percent

According to the IAB study, companies impacted by the coronavirus crisis are facing a dilemma. On the one hand, given their financial situation and the economic uncertainty, it is currently difficult for them to maintain their existing training commitment. On the other, this is precisely the reason why they may face a shortage of skilled workers over the medium to long term.

Jens Brandenburg, the FDP parliamentary group spokesperson for vocational education and training, emphasised that the federal government will not succeed in altering the decline in commitment to training, "however many bonuses it offers, if it does not finally begin to promote vocational education and training at a fundamental level". He added that a "vocational education and training excellence initiative" was needed with practical careers guidance, flexible training pathways and digital curricula.

According to BA data, in January 12,000 training positions which had been registered for a start of training by no later than December 2020 remained vacant, this compared to almost 56,000 applicants still seeking a training position. From October 2020 to January 2021, 358,700 training positions were registered with the Federal Employment Agency – eight percent fewer than in the same period for the previous year.

The IAB has been a special office of the Federal Employment Agency since 2004 and conducts labour market research under the statutory mandate of the federal government "in order to advise political actors at all levels in a competent manner," as stated on the IAB website.

Source: (website of the German newspaper Handelsblatt), revised by iMOVE, March 2021