albanian vet strategy and action plan for the period 2013 - 2020
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21.04.23 Seite 1
Albanian VET Strategy and Action Plan for the period 2013 - 2020
Workshop on VET System Management and Financing
VET System Financing
Werner Heitmann
Senior VET Policy Consultant
Tirana | 13 June 2012
21.04.23 Seite 2
Basic Challenge of VET System Financing
VET System
Society Government
Donor Contribution
Social Demand from Individuals
Labour Market Demand from Enterprises
Employability Ability to Study
Government must be interested in satisfying market and social demand.
Competitiveness Voters
21.04.23 Seite 3
EfficiencyLow High
Lo
w
Market model
GovernmentSchool model
Partnership model
Status Quo
Inter-company training model
Alternating model
Rehabilitation Strategy
Hig
h
Co-
oper
atio
n S
trat
egy
Eff
ect
ive
ne
ss
Efficiency: Input-Output-Relation
Effectiveness: Impact-orientation
Both are needed for sustainable
improvement of VET!
Efficiency and Effectiveness of VET
21.04.23 Seite 4
Generation ofResources
Allocation
Institutions
ManagementFourKey
Elements
Vision:
Diversification of VET Financing (State, Enterprises, Individuals)
Strategy:
Efficient and effective allocation of rare resources
Objective:
Stronger incentive-driven & output-orientated financing
mechanisms
Result :
Replacement of input-driven financing mechanisms through demand-driven
financing mechanisms (e.g. vouchers, loans) Organisation:
Establishment of stakeholder-driven VET Funds in Combination
with a National VET Authority
Control Mechanisms:
Ensuring transparency; Avoiding misuse; Monitor & evaluate
progress and impact
Key Elements of VET Financing Systems
Challenges:
Public funds are decreasing, but still the main source
State budget alone is not sufficient for high-quality VET offers
Enterprises hardly contributing
Individuals‘ ability-to-pay is limited
Donor financing is lacking sustainability
21.04.23 Seite 5
Four Basic Allocation Models
Decentralised (market) Approaches
Centralized (regulated) Approaches
Input Orientiation
Output Orientation
Centrally planned, input-
based distribution to
providers
Demand-driven
allocation through trainees
Performance-based
distribution to providers
Purpose-specific
purchasing from providers
Program-orientated
Contract based
Budget- orientated
Trainee-centeredInternational
Trend
Output-oriented allocation motivates VET providers to increase their internal efficiency.
Three reform models:
1.Financing of VET programmes (performance-based)
2.Tender-based purchase of VET services
3.Learner-centered financing model
21.04.23 Seite 6
Strengthening Private Sector Involvement
Target: Direct contribution | In-Company Training Utilization of workplaces for training increases | Efficiency In-Company Training is employment-relevant | Effectiveness Direct benefit must be recognized ( Cost-benefit analysis)
Incentive Systems | Indirect Monetary Contribution Collective VET Levy Levy-Grant-Systems (levy exemption, re-distribution, re-funding) Special taxes
A VET Levy System can only be realized in combination with a National VET Fund.
21.04.23 Seite 7
VET Levy
Advantages Adequate measure if engagement of companies in VET is weak Purpose-specific utilization of funds Constant flow of funds | Applicable to all companies
Disadvantages Informal sector | SMEs: Ability-to-pay is negligible Companies see levies as a burden, not an incentive
Particularly tax-paying enterprises being engaged in VET Mistrust in public institutions | Low acceptance
Clear regulations for purpose-specific utilization of funds, or combination of levies with pay-back / refunding mechanisms
are necessary!
21.04.23 Seite 8
Option 2: Re-funding of training cost
Training Levy
Administration cost VET Funds
National VET Fund
Training providing Company
Non-Training providing Company
Option 1: Exemption from Training Levy
Training providing Company
Option 3: Redistributed levy
Direct Allocation to Training Provider, etc.
Tra
inin
gco
stTraining Levy | 3 Pay-Back Mechanisms
Tra
inin
gco
st
21.04.23 Seite 9
Management via VET Funds
Key characteristics Budget clearly addressed to VET purposes only, no access
through other state budget positions Can be fed by sources of the public and/or private sector, donor
contributions etc. Frequently (not necessarily) combined with a levy system
Advantages Budgets reserved for VET purposes | Reliable financial planning Through ‚Funding Windows‘: Adressing special target groups Cross-subsidisation (between VET sub-systems) easier to control Private sector engagement in financing and forming VET system Independent / performance-based distribution of funds to providers
21.04.23 Seite 10
Common VET Financing Reform Approaches
Government / State
Donors
Enterprises
National VET Fund
Target groups: Trainees, Workers
Income-Generating Activities
Public and Private Training Providers
Grants / Loans
Grants, Loans, Vouchers
Budget AllocationSubsidies, Matching Grants,
Tax Benefits
VET Levy
Performance / Output-orientated
FinancingFees
Fees /Vouchers
Additional Revenues
Trainees
Fees
21.04.23 Seite 11
VET Voucher System | Possible Design
Cooperative Training; Partnerships between Industry & VET Providers
Government
VET Authority: Legislation, Regulation, Coordination, Facilitation
National VET Fund
including VET Voucher & Levy Administration
Public & Private VET Providers
Trainees
Voucher Schemes
Enterprises
Employers
VET Budget
Matching Grants
Donors
VET Information Center
Income Generation
Employee Voucher Schemes
VET Innovation
Fund
VET Vouchers
Levy-basedGrant
Grants
Temporary Budget Support
Tuition Fees
Innovation Budget
Tax Incentives
VET Levy
Quality Assurance & Accreditation
21.04.23 Seite 12
Thank you for your attention…
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