Restructuring High Skill Formation for the Knowledge Economy: Universities, Employers and the State in Germany and South Korea

The expansion of higher education (HE) is reshaping initial skill formation, which currently takes place in universities for a majority of young people also in coordinated market economies, which have traditionally relied on vocational education and training (VET) systems. The paper compares Germany and South Korea and shows that the expansion of HE over VET has prompted a number of policy responses in both countries to align HE provision to labour market needs. Yet, the two countries have not converged towards a market-led model associated with liberal market economies. Rather, we note an active role of the state in coordinating the supply of skills in HE, while employers have privileged a segmentalist approach over collective arrangements. By analysing developments in the German and Korean HE systems over the last 20 years, the paper traces a process of differential growth and layering in Germany, which have resulted in the expansion of universities of applied sciences relative to ‘traditional’ universities, hence facilitating the expansion of those subjects, notably STEM, demanded by employers. As far as Korea is concerned, we note a process of displacement through which the government, influenced by large business, restructured the HE offer of the country through financial incentives for those universities that prioritise STEM over humanities and social sciences. The paper argues that understanding skill formation in post-industrial societies requires a conceptualisation of the relationship between HE institutions, the state and employers and therefore a ‘distinct’ political economy, compared to the analysis of skill formation in VET.