Examples: a) School qualifications > no training > semiskilling > work b) School qualifications > apprenticeship > skilled worker/skilled employee c) Lower/intermediate secondary school qualifications > apprenticeship > master craftsman d) University entrance qualifications > apprenticeship > additional training > occupation e) University entrance qualifications > apprenticeship > higher education > executive position f) University entrance qualifications > higher education > executive position These examples illustrate that there are two ways of looking at the benefits of training.
The first, which is marginal in one sense, answers the question of what benefits are to be obtained from adding a further stage to the training path already completed. The second is more typical and concerned with the incomes to be obtained from specific training routes. A comparison is made between the incomes attained at 30 years of age and those resulting from the next lower training path. This may be, for example, the benefits of an enterprise-based apprenticeship on the road to an academic qualification (path 6 compared with path 5).
The additional income minus the costs of training produces (allowing for interest) the return on the training investment. From a macroeconomic viewpoint, investments in education and training are, to a certain degree, investments in the infrastructure, and the return on such investments becomes apparent only in the long term. The concept of benefits also includes other aspects which need to be kept apart.
It is helpful in the first instance to distinguish between the benefits resulting from the efficiency of the education system and its quantitative performance, on the one hand, and the benefits in terms of subsequent yields (economic growth, low unemployment, tax revenues) on the other. The efficiency benefit is the ability of the education and training system to train the younger generation in “suitable” institutions so as to minimize the costs of students repeating classes or dropping out of higher education and thus reduce excessively long education and training periods.
The benefits from vocational education and training are also associated with the allocative functions of the labour market. One function of vocational education and training is to ensure that the supply of labour matches demand. A training system should at least produce approximately those qualifications which are required on the labour market. There are therefore two sides to the benefits of investments in training. In formal terms, the benefit is the return on a long-term investment, but this return results from the allocative effects of the labour market.
It would be an excessively narrow perspective if researchers were to look only at the return on investment in terms of human capital. And concentrating exclusively on the allocative aspects of the labour market would ignore the fact that education and training are an investment in themselves. There is also a third aspect to consider. Return on investment calculations can normally encompass only the direct costs and benefits, i. e. the returns of the first type. But investments in education and training also have effects on other areas. There may be positive or negative effects of a second type.
Positive (synergy) effects occur when investments in education and training at one point raise productivity at another. These include in particular education and training investments which equip their recipients to work in research and development. Negative secondary effects occur in the form of redundancies when lesser qualified employees are replaced by their more qualified counterparts. There are numerous ways in which expenses may be refunded for training outside the workplace (refunding), e. g. by employers and employment offices.
These refunds are deducted from individual expenses in the costs model (cf.Figure 6, p. 232). The survey aimed, first, to establish the direct costs, i. e. expenses directly associated with the continuing training measure as such (course and event fees, spending on learning materials, travelling expenses, board and lodging, cost of child care where applicable, and all other costs directly associated with participation in continuing training programmes). The survey also looked at indirect, or opportunity, costs. Unlike direct costs, indirect costs entail no expenses, but arise in the form of lost earnings (e. g. unpaid leave or reduced working hours for continuing training purposes, but not the hypothetical earnings of someone who was previously unemployed) and the loss of leisure time.
The leisure time lost consists of that time spent exploring the market, the time invested in the actual training programme, travelling time, preparation and follow-up and, in some cases, paid leave. However, the yardsticks used to convert the loss of leisure time into fictitious costs are ultimately based entirely on random decisions. Even the net income earned from employment, which would be a plausible choice, does not provide a suitable measure here.
Either the individual may not consider taking paid employment during leisure time – unless it is moonlighting – or may regard it as a consumer good rather than a loss of leisure time. For this reason, the BIBB survey was limited to recording the amount of leisure time lost and no attempt was made to place a monetary value on it. Neither was it possible to apply any rules for evaluating the benefits. While it is quite clear that the “profitability” of continuing training is determined by the benefits, the input encompasses not only the time and money invested, but also the physical and mental exertion associated with learning.
Private individuals, just like companies, are willing to subject themselves to continuing training only if it yields overall “rewards”. But these rewards depend on whether the training is a consumer good and the benefits are to be found in actual consumption, or whether it has been chosen for career, i. e. economic, reasons. Economic benefits may arise in many different ways: continuing training may serve to refresh knowledge, to adjust to new developments, to secure promotion and raise status, or else to avoid unemployment.
Another consideration is that the benefits are normally not yet visible at the actual time of training. Those who opt for continuing training hope it will secure them promotion or save them from unemployment. Whether these objectives are actually attained emerges at a later stage. It is therefore objectively impossible to isolate the economic benefits of continuing training from other benefit factors. For this reason the survey was limited to presenting the respondents with a list of benefits and asking them to rate their importance in qualitative terms. http://www. cedefop. europa. eu/EN/Files/RR1_Kau. pdf.