High Skills: Understanding the Transformation of the German Skill Formation System

The German skill formation system has been undergoing significant changes over the last three decades. Scholars noted in particular the massive expansion of higher education vis-à-vis the “traditional” dual vocational training, which stands in contrast with the notion of equilibrium that has accompanied the German skill formation system in the literature. Yet, while the institutional underpinnings of the traditional model have been subject to comprehensive analysis and theorisation, it remains unclear what arrangements have become institutionalised as skill formation “moves up” from the dual vocational training to the university system. In particular, some identify a process of liberalisation of the skill formation system, whilst others see a “segmentalist” trend in the rise of so-called “dual study programmes” and yet others note a pattern of state coordination. The paper disentangles these different assessments of the German skill formation system and it argues that a (dominant) pattern of state coordination co-exist with a (relatively limited) segmentalist pattern. It is argued that firm size is crucial to understand how and why the two co-exist: the state provided coordination of high skill formation to the primary benefit of small and medium sized enterprises that have relatively fewer resources; on the other hand, large firms, with more resources and a large internal labour market, have been able to meet their high skill needs without state-mediation, by establishing direct relationships with higher education institutions.