To train or not to train: Swiss firms reconsidering collective action in times of skill shortage

Rapidly changing skill demands are causing skill shortages to become widespread in advanced economies, negatively impacting coordinated market economies' formerly stable labor markets and low youth unemployment rates. Such economies like Switzerland have historically relied on social partnerships to provide vocational education and training (VET) and prevent skill shortages. But the shifting skill requirements may affect firms' willingness to invest in such programs. This study examines the factors influencing Swiss training firms' decisions to invest in VET programs. Our analysis is based on data from over 2,000 Swiss training firms and aims to identify the characteristics of training firms that are more or less likely to remain in or leave VET. We find that the primary driver for firms leaving VET is the perceived difficulty in finding skilled workers. In addition to the rationalist argument made by labor market economists in explaining firm behavior, we argue that this decision is not purely based on a cost-benefit calculation but also reflects the ideational perception of VET as an institution that may no longer be suitable for addressing the current skill demands. To further understand the cooperation dynamics between training providers, we propose a categorization framework that groups firms into "Selective White Collar," "Loyal Veterans," "Opportun-ists," and "VET Flagships." Through analyzing the embeddedness of these firms and their characteristics with fixed-effects models, we gain insights into the factors that facilitate or hinder cooperation between them and their varying levels of confidence in the institution of VET. Our findings have implications for coordinated market economies that rely on social partnerships to provide VET. The proposed framework can help policymakers and stakeholders understand the dynamics of cooperation between training providers and identify strategies to promote investment in VET programs. More generally, this study offers valuable insights into the decision-making process of firms regarding training investment and sheds light on cooperation dynamics in coordinated market economies during changing skill demands.