KfW Bankengruppe

08/30/2021 | Press release | Distributed by Public on 08/30/2021 03:56

KfW Research: No recovery in sight for the training market

  • After two years of crisis, four in ten businesses offering training expect fewer apprentices and trainees
  • Fewer apprentices and trainees particularly in small businesses and in the manufacturing sector
  • Catching up quickly is important for the educational prospects of young people and businesses

The coronavirus crisis has been a real dampener for dual vocational training in the past year. At the start of the new training year, there is no recovery in sight for the training market in 2021 either. A preliminary evaluation conducted by KfW Research on the basis of the representative KfW SME Panel 2021 shows that 28% of the small and medium-sized enterprises offering training reduced the number of apprentices and trainees in the course of the year 2020. For 2021, one in four (26%) expect to employ fewer apprentices and trainees at the end of the year than at the end of 2020. This means that after two crisis years, almost 4 in 10 SMEs offering training have reduced the number of apprentices and trainees employed.

However, some enterprises are expanding their training activities in the crisis. KfW's survey revealed that around 15% of SMEs offering training expect to employ more apprentices and trainees this year. But that clearly puts them in the minority, as was already the case in 2020 (19%). Thus, around half the companies have maintained or intend to maintain a constant level of training activity in both years of the crisis.

The KfW survey for 2020 shows that the drop in training activity differs by company size and sector. Micro-businesses with fewer than five employees were most affected and twice as often experienced a decline (30%) than an increase (15%). Large SMEs with at least 50 employees reported roughly equal declines and increases, at 30% each. Drops in apprentice and trainee numbers were particularly common in manufacturing (35% vs. 17%) but least likely in the construction sector (23% vs. 18%).

'The preliminary evaluation of the KfW SME Panel provides little hope for a swift recovery or catching-up effects in the German training market. The willingness to take long-term responsibility for apprentices and trainees may still be affected by uncertainty over the sluggish rate of vaccination and the Delta variant', said Dr Fritzi Köhler-Geib, Chief Economist of KfW. 'It is important that training activity returns to pre-crisis levels as soon as possible, both for the future of the students involved and for the competitiveness of small and medium-sized enterprises, many of which are already suffering from skills shortages.'

Around 90% of trainees and apprentices in Germany traditionally undergo training in small and medium-sized enterprises. By far the greatest portion of dual vocational training thus takes place in the SME sector - to be precise, in a small segment of it. Of the 3.8 million small and medium-sized enterprises, around 450,000 (12%) offer training. According to the Federal Statistical Office, in 2020 the number of new training contracts fell from 513,300 to 465,700 on the previous year, a 9.3% decline (47,600). This drop by far exceeds the long-term trend. Dwindling numbers of school students and a growing preference for degree courses had led to annual drops of around 1% before the crisis. The total number of in-company trainees and apprentices at the end of 2020 was 1.29 million, 3% less than the previous year's 1.33 million.

The current analysis can be retrieved at www.kfw.de/kompakt

The database:

The current analysis by KfW Research is based on a preliminary evaluation of the KfW SME Panel 2021, which will be published in October 2021. The KfW SME Panel is an annual survey of small and medium-sized enterprises in Germany with an annual turnover of not more than EUR 500 million. With a database of up to 15,000 companies a year, the KfW SME Panel is the only representative survey of the German SME sector, making it the most important source of data on issues relevant to the SME sector. A total of 11,400 SMEs took part in the current survey wave between February and June 2021.