Workforce Retraining: What America Can Learn From the World’s Leaders

Workers in the United States face a formidable challenge in developing and maintaining globally competitive skills. The Information Technology and Innovation Foundation (ITIF) recently hosted an expert panel to identify what the United States can learn about workforce retraining from leaders at home and abroad. In a rapidly changing economy, these lessons will strengthen our ability to keep workers equipped with the skills they need to stay competitive amid unrelenting forces of competition, technological innovation, and globalization. This event was the first in ITIF’s @Work series, which is dedicated to examining employment in today’s economy and proposing actionable policies to boost innovation and economic growth.

Senator Chris Coons (D-DE) opened the event by identifying America’s meager investment in workforce training as a key impediment to a more adaptable and competitive workforce. Although he highlighted examples of progress in the United States, including the Manufacturing Innovation Institutes, the North Carolina Community College System, and the recently passed manufacturing universities legislation, Senator Coons suggested that the United States has much to learn from the success of active labor market policies in countries such as Austria and Germany.

Drawing from his own experiences, Senator Thom Tillis (R-NC) observed that rapid developments in technology have created a mismatch between the U.S. workforce’s skills and industry’s needs. To address this mismatch, Senator Tillis argued that the United States should develop policies to inform educational institutions and students about existing and emerging needs and employment options. Furthermore, Senator Tillis advocated for closer collaboration between industry, government, and the education system to anticipate structural changes in the labor market. He pointed to apprenticeship and vocational training programs like those in Germany and Austria as good models, and urged industry to better articulate what type of workforce skills it will need now and in the future.

Stephen Ezell, ITIF vice president of global innovation policy, identified two goals for workforce development. First, students must be well-trained when they enter the workforce. Second, those in the workforce must be continuously reskilled and retrained so that they can compete in a rapidly changing global economy. Ezell explained that the United States faces many challenges in meeting these objectives, including a persistent skills gap and the decline in investment in workforce training as a share of GDP. In fact, as a share of GDP, the United States invests just one-sixth in active labor market support policies than does peer OECD nations on average, even as U.S. companies’ investments in workforce training have declined by 30 percent over the past decade.

Monika Elsik, deputy director general of the Institute for Economic Promotion of the Austrian Federal Economic Chamber, and Freya Lemcke, vice president at the Representative of German Industry and Trade, then gave overviews of their respective programs.

Elsik explained that Austria’s approach to education and apprenticeships is helping to address the challenges of unemployment and a lack of skilled workers. In the Austrian education system, after nine years of compulsory education, students are required to decide whether to pursue general education, vocational training, or apprenticeship programs. Each of the three paths attract about one-third of Austrian students, offer opportunities for continued education throughout students’ lives, and lead to a broad range of white- and blue-collar careers. Elsik noted that, as a result, Austria boasts a highly skilled workforce and low youth unemployment.

Lemcke detailed the German vocational training system, noting that the system both prepares first-time students and retrains mid-career professionals using off- and on-the-job training. This system has been highly successful in producing skilled workers and low unemployment. Other countries have noticed and are increasingly interested in developing their own vocational training programs. To help export the German model, the German government has actively facilitated knowledge exchanges and supported consultations. Lemcke noted that German companies abroad have also developed in-house training programs based on their experiences in Germany.

Both panelists highlighted the importance of a close collaboration between labor, management, and the government to the success of their respective workforce development efforts. Lemcke and Elsik both noted that their countries’ programs are industry-driven, which ensures the relevance of training and improves job mobility. Furthermore, both emphasized that companies share the cost of workforce training programs because they view the programs as crucial medium- and long-term investments. Lemcke explained that up to 80 percent of program costs are borne by German companies. While the Austrian government offers tax incentives, Elsik said companies are primarily motivated by the value of workforce development and view costs incurred as a worthwhile investment.

In Germany and Austria, students are placed on tracks at a relatively young age. Becky Klein-Collins, associate vice president of research and policy development at the Council for Adult and Experiential Learning, pointed to a perception in the United States that tracking limits mobility. She explained that this is a potential reason why partnerships between education, industry, and policymakers seen in other countries are not emulated as often in the United States. Another reason is that the U.S. workforce is relatively mobile, and companies may not benefit from investments made in employees that move or are poached.

Klein-Collins observed that the U.S. education system is expected to produce fully trained students, which is impossible without robust input from industry. She argued that there needs to be greater collaboration and sharing of training costs, and a recognition that education and learning are life-long pursuits for all workers, not just dislocated workers or the long-term unemployed. Additionally, Klein-Collins suggested other policy proposals, including adjusting tax policy to encourage workforce development and making programs more accessible to adult learners.

The North Carolina Community College System has been particularly successful at integrating a German model of workforce development. Chris Paynter, dean of science, technology, engineering and math at Central Piedmont Community College (CPCC), explained that highly engaged employers play an integral role in driving curriculum development. At CPCC, students can participate in an apprenticeship program that consists of an academic core around which employers customize on-the-job training, which allows students to either move into work or transfer into higher education. Like the other panelists, Paynter identified close collaboration with industry as essential to anticipating and addressing workforce needs.

From improving collaboration between employers and educators to ensuring workers have access to education and skills development opportunities, leaders in workforce development at home and abroad highlighted numerous lessons that the United States can learn to improve its ability to retrain and reskill American workers at the pace of technological change. While efforts in the United States to expand workforce development are important and encouraging, the United States clearly has more to learn and do.