2019 December-January Analysis

How the private sector can revolutionize education and the labor market in Georgia

“We’ve enough economists and lawyers – the Georgian economy needs skilled experts in other fields. Wine experts, tourism and IT specialists. People who can work with heavy machinery, carry out technical work in the lab”, Head of the Vocational Education Development Department at the Ministry of Education Irina Tserodze told Investor.ge.

Instead, Tserodze suggests, the key to sustainable growth in the economy now means supporting the growth of human resources and capital – and the dual VET (vocational education and training) system, tried and tested in strong European economies such as Germany and Austria, may offer one of the most effective paths forward.

Below, an in-depth look at what dual VET programs have been able to accomplish in Georgia since their inception in 2016, what hurdles they have had to get over, what challenges lay ahead – and what benefits.

A win for students and business

One of the major issues facing the Georgian business sector is the fact university graduates rarely fit the needs of the labor market.

“The Georgian business sector used to tell us all the time – ‘we can’t employ university graduates, they don’t have the skills we need.’ This is what makes dual VET stand out: businesses and the labor market itself are able to define the course of study, and shape the next generation of skilled workers and specialists”, Tserodze says.

Indeed, EU experience shows that well-run and extensive dual VET programs are crucial elements of addressing youth unemployment and labor market gaps. In Germany, youth unemployment in 2018 was 6.4 percent – one of the lowest rates in Europe. This is partially due to the extent of participation in dual vet programs: more than one-third of all secondary school students enter vocational education programs after graduation, of whom two-thirds decide to enroll in dual vocational education programs.

In Georgia, Schuchmann Wines was one of the first companies in Georgia to take the dual vocational education plunge.

“10 years ago it was very difficult to find competent staff in Georgia. The educational system was structured in such a way that students were only receiving theoretical knowledge in universities; they had no practical experience. And in the field of agriculture, this is insufficient”, Managing Director Dr. Roland Burdiashvili told Investor.ge.

“That’s why we decided to get involved in dual education programs in viticulture and winemaking in cooperation with Kachreti Vocational School AISI. Nine students were selected during the first stage, who had to receive 70% of their education in the factory and 30% of their education at Kachreti Vocational School. Afterwards, all of them were employed by our company; three of them are with us to this day.”

Burdiashvili said allowing the private sector to get involved in the process of education has made it easier to find highly-qualified personnel, which in turn has lead to a growth in production and the development of the winemaking sector at large. But wine is hardly the only industry where dual education programs stand to make a difference; the approach can be used to turn Georgia into a serious competitor in a number of international industries, such as transport and logistics, ICT and construction.

There is ample reason to begin developing the human resource side of these industries now, GIZ Deputy Director of the Private Sector Development and Technical Vocation Education and Training Program, Johannes Strittmatter, told Investor.ge.

“These are growth sectors that have to assert themselves in highly competitive regional and international markets, and thus sectors which international businesses may source from outside of Georgia if the country fails to supply these high-level services through a very qualified workforce. That’s why many of our dual education programs are targeting namely these industries”, Strittmatter said, adding, “Take logistics for example. If you don’t have reliable transport and shipping, then countries may continue to move their goods through Russia instead. Or construction; given the lack of a qualified workforce in the sector, it’s not simply self-interest that causes a foreign construction company to bring in its own workers”, Strittmatter added.

Students and youth stand to gain just as much as businesses and the economy at large; especially in a country such as Georgia where youth unemployment was 30% in 2018.

Strittmatter notes the employment rate of dual ed students is nearly 100%, because most graduates are taken on by the companies they are trained by. Moreover, GIZ expects that wages for this class of workers will eventually outstrip that of their counterparts who graduate subject-based courses.

Getting the private sector on board

The first step to implementing the dual VET system in Georgia entailed the involvement of the private sector, given private enterprises provide more than half the instruction and contact-hours.

However, the private sector was at first somewhat reticent to get involved, Strittmatter told Investor.ge.

“As often happens with launching anything new, you meet first with resistance and sometimes scepticism. In this case, the biggest concern of the private sector was that they would invest their time and resources into students who would then run away at the first better offer, to the competition that pays just a little bit more”, Strittmatter said.

The private sector needed reassurance that the heavily interpersonal nature of dual VET education would make this an unlikely scenario, Strittmatter says.

“Dual VET education is not just training. It is also relationship building. Let’s say you’re a young person, and you join a dual VET program. With most of the training time provided in-company, it’s very likely that the company training you is your future employer. So you build up a relationship with them, and they with you. They know you. They see you everyday, or every other day. They can guide you, become your mentor.

“So while this doesn’t mean that trainees remain with their companies forever, dual VET graduates largely stay on long enough to more than justify a company’s initial investment in them. In Germany, most companies make back what they spend on training employees even during the training period in most industries. It has been shown that by the end of training, apprentices already contribute so much to production and value addition as to have made up the instruction costs, both financially and in terms of labor hours.”

Moreover, Strittmatter notes, dual VET education and work-based learning are, for many industries, the only reliable way to ensure a steady stream of qualified personnel.

Despite this, much of the private sector still feels that education and the instruction of the new generations of the workforce is the responsibility of the government.

Strittmatter explains: “They might say – ‘we pay tax, these funds should be paid to produce the skilled labor force we need. And now you’re asking us to put in more?’ In some ways, this perception is correct, but ultimately, what we see is that private-sector led vocational education is far more effective than when curricula are exclusively developed by other actors; businesses themselves know better what the market needs.”

A final hurdle to the leap of the private sector’s involvement in dual VET education is the widespread perception that companies can get by with cheap, unskilled or low-skilled labor. Not all companies and sectors are convinced that if they have higher skilled labor, they will be more productive and competitive.

“This is a matter of perceptions, of how one looks at the field of human resources in general, and at the value of individuals in particular”, Strittmatter says, but adds that “as companies become more competitive due to the improved labor force, other companies will follow these early adopters in order to gain similar competitive advantages.”

Despite these issues, Director of Kachreti Community College AISI Malkhaz Aslamazishvili says the interest of companies is steadily growing:

“When we started out with dual education programs in viticulture and winemaking, we had just five employer companies. Now we have more than 20. Almost all of the large wine companies of the Kakheti region are involved in dual education programs, and many others have expressed their desire to be included.

“One factor that has contributed to the attractiveness of the program is the recent decision implemented this autumn to hand off the selection and uptake of new students to the employer, who ultimately gets to decide with whom they want to work.

This is much more attractive than simply being told by the college: ‘this is whom we’ve accepted. Take them on and train them'”, Aslamazishvili said at a recent meeting of the Georgian Chamber of Commerce and Industry.

Student interest

Students, too, are enthusiastic and attracted by the prospects of studying in dual education programs, in which enrollment numbers are steadily growing.

Though still in a beginning stage, dual VET programs are quickly gaining momentum in the country.

In 2016, the year in which dual education programmes launched for the first time in Georgia, the system had just 110 applicants, of which 62 were accepted.

But by 2018, that number had reached 694, of which 318 accepted, and 2019 is expected to have similarly strong figures, with more spaces opening up for a higher acceptance rate of students.

Here, too, however, there are several stumbling blocks along the way – one of which is prestige:

“Georgian society has yet to begin looking favorably upon vocational education and related professions in general. There is still very much the mentality in Georgian society that either you are a doctor, a lawyer, a banker, a professor – or you’re nobody”, Head of Vocational Education Development Department Tserodze says.

Another issue that until recently hindered the growth of the popularity of VET education in the country was a ‘dead-end’ in the educational system.

Tserodze explains: “Several years ago, if you chose to go into vocational education in grade nine – that is, after completing basic education – and then decided you wanted to go to university, you were basically stuck. You had to return to secondary school, complete 10th, 11th and 12th grade, and then apply for university. This was a totally unattractive perspective for students, and it scared away a lot of students who otherwise might have chosen to go down the vocational path.”

To solve both these issues, the Ministry of Education has offered a compromise: now, the completion of a three year vocational education program will be recognized as the equivalent of a secondary education, which means that upon graduation, an 18-year-old school-leave can pursue either their profession or a higher education.

Tserodze says her department hopes that this will also encourage the public to look more favorably on vocational and technical education as well.

Looking forward

Dual education and traditional subject-based vocational education have much room to grow in Georgia.

Strittmatter says that given the number of companies currently participating in dual VET programs – more than 70 as of fall 2019 – the formal Georgian VET system is currently handling about what it can in dual VET, but that if more Georgian businesses get involved, then the capacity could easily grow by a factor of 10 over the next few years.

“I believe the current number of students enrolling per year could easily grow to 4,000 – but for that you need the serious commitment of the private sector and well-managed coordination with the leisure VET colleges that provide part of the training”, Strittmatter says.

Head of Vocational Education Development Department Tserodze says her department has ambitious plans as well. Ultimately, Tserodze says, her department would like to see a dramatic change in enrollment statistics between higher and VET education.

“By 2025, we want to see about 15% of 15- 24-year-olds participating in VET programs in general; that’s nearly 40,000 people. Currently, our capacity for VET programs is about 12-15,000 places. So we both see and have lots of room for growth.”