Financing training
Initial education and training and lifelong learning benefit individuals, employers and
society as a whole. Economic principles dictate that the costs for services with public
and private benefits should be shared between public and private funding, or else too
little training will be provided or taken up. While government is a key investor, enterprise involvement is also needed both to provide a stable and sustained means of financing training and to ensure its relevance. Financing schemes are thus best established
through social dialogue, according to good principles set out in the Human Resources
Recommendation (see box 4 above).
Mechanisms for doing this will vary according
to countries’ economic and political circumstances and the degree and level of social
dialogue established.
Financing skills development is dealt with in different ways across countries,
combining a variety of means.
Government
Governments have the responsibility for initial training as part of universal education,
and for retraining focused on the unemployed or workers at risk of unemployment
during economic crises. National, regional and/or local governments may finance
training directly and/or promote co-financing by creating incentives for employers and
individuals to invest in training. Incentives may involve subsidizing training through
budget allocations to training institutions; reliefs from general revenue; payment of
tuition charges and fees; funding for in-service training; vouchers and loans provided
to trainees; exemptions from employer payroll levies where training is provided; and
grants made available to firms to undertake certain designated forms of training both
on and off the job.
Government
Governments have the responsibility for initial training as part of universal education,
and for retraining focused on the unemployed or workers at risk of unemployment
during economic crises. National, regional and/or local governments may finance
training directly and/or promote co-financing by creating incentives for employers and
individuals to invest in training. Incentives may involve subsidizing training through
budget allocations to training institutions; reliefs from general revenue; payment of
tuition charges and fees; funding for in-service training; vouchers and loans provided
to trainees; exemptions from employer payroll levies where training is provided; and
grants made available to firms to undertake certain designated forms of training both
on and off the job.
Employers
Direct or indirect financing of training by employers is a clear statement of the importance of continuing education and training in maintaining and increasing productivity,
competitiveness and versatility. Payroll fees or levies can be effective when combined
with effective governance and communication mechanisms to maintain the relevance
of training to employers. Employers may be exempted from training levies or charged
at a reduced rate in proportion to the training they provide to their employees, whether
internally or externally.
In other arrangements, employers may provide grants to training institutions, or invite several training providers to compete for training courses
financed by one or more employers. Smaller enterprises may come together to arrange
training jointly to reap economies of scale within clusters or communities.
PART III Building blocks of strong training and skills development strategies 33
Individuals
Workers invest time and money in keeping their skills and competencies up to date,
taking responsibility for maintaining their employability in the face of economic
change. Some schemes involve forgoing income during training in exchange for
higher income after completion of training; this may be feasible for some individuals,
especially where training costs qualify for tax credits/deductions or where subsidized
loans are available for training. However, these schemes are not sufficient to enable
workers at low income levels, those with family responsibilities or those in the informal economy to participate in lifelong learning; here employer or public provision of
training is necessary.
