The transition of Germany towards the knowledge economy: The internationalisation of Vocational Education and Training

Since reunification, the availability of a large pool of mid-skilled workers trained through vocational education and training (VET) has supported Germany’s stellar economic performance (Culpepper, 2003). However, the relationship between economic competitiveness and VET has evolved in the knowledge economy. The latter involves an increasing reliance on knowledge and information, as opposed to physical inputs and natural resources, for economies to grow and creates the need for a workforce with higher skills than those usually acquired through VET (Hall 2020). Hence, the literature has looked at how Germany “upskills”, namely how it reforms education systems to offer people opportunities to acquire higher skills (Durazzi 2023; Emmenegger et al. 2023). This narrative, however, overlooks the long-lasting shortage of workers in typical VET-trained occupations in the middle of the skills distribution, as shown by the ever-increasing excess of apprenticeship spots (105.900 in 2021-22). We study the adaptation of Germany to the knowledge economy from the perspective of the mid-level skill shortage. We conduct process tracing with data collected through document analysis and interviews with experts and stakeholders. We argue that Germany adapts to the knowledge economy not least by “internationalising VET”. The strategy, enacted by the Ministries of Education, Economy and Development Cooperation, involves (a) training people abroad according to German standards and (b) facilitating recognition of foreign qualifications, to fill the mid-level skills shortage. This argument suggests the difficulty of sustaining export-led growth when firms start “producing where they sell” and offers a “sending country” perspective to research on VET transfer.