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Collective Skill Formation in Liberal Market Economies (Vossiek)


In the last decade, the VofC-school has significantly furthered our understanding of modern capitalist economies and systems of skill formation. Nevertheless, the clear-cut distinction between CMEs and LMEs obscures substantial variation of skill formation within these ideal-types, while the functionalist approach to comparative institutional advantage leaves the questions of institutional origin, genesis and change unresolved.
This project addresses these research gaps by analyzing the variation of apprenticeship arrangements within three LMEs, which attempted reforms towards the German model of “collective skill formation”. While the United Kingdom failed in its reform attempts, Australia until the mid-90s and, more recently, Ireland display more successful solutions in their apprenticeship systems. These differences are analyzed by tracing the (non-)evolution of apprenticeships towards the collective model since the 1980s, by employing a time-sensitive combination of actor-centered institutionalist and power resource approaches.
The study departs from two central working hypotheses. First, it assumes that relationships between employers, unions and governing parties, and their influence on forms of corporatist policy- making are of central importance for divergent training policies. Regarding partisan politics, and in contrast to typical models of party differences, the emergence of collective apprentice- ship systems depends more heavily on governments’ incorporation of business and union interests than on its partisan complexion. Second, the emergence of cross-class coalitions between capital and labor are necessary for the political sustainability of reforms towards the collective model. In absence of such coalitions, policy reforms will not lead to institutional change and are bound to be continuously contested and prone to market failure.

Long summary

In the last decade, the Varieties of Capitalism (VoC)-school (Hall/Soskice 2001) has significantly furthered our knowledge of modern capitalist economies, especially regarding systems of skill formation. Nevertheless, the clear-cut distinction between coordinated market econo- mies (CMEs) and liberal market economies (LMEs) has obscured substantial variation in the realm of skill formation within these ideal-types.

Recent studies by Busemeyer (2009a) and Busemeyer/Trampusch (2011) find three different variants of skill formation within CMEs, while Iversen and Stephens’ (2008) depict a social-democratic and a conservative variant of skill formation among this country-cluster. Moreover, though LMEs are regularly classified as a rather homogenous country group in various typologies of comparative political science (Castles 1993; Esping-Andersen 1990), a closer assessment reveals more pronounced differences in their vocational education and training (VET)–systems than is usually assumed. For example, scholars have shown that apprenticeship, as a main way of intermediate skill formation, faced an early decline in the USA at the beginning of the last century, while its institutions remained more stable in the UK (Gospel 1994; Thelen 2004), although they have not developed as far as to solve the problem of its “low-skills equilibrium” (Finegold/Soskice 1988). Regarding the oftennoted poor performance of VET in the UK, other findings point to the su- perior performance of its counterparts in Australia (Gospel 1994; Smith 2010; Toner 2008) and Ireland (Nyhan 2010; O'Connor/Harvey 2001; Ryan 2000), despite their common origins with the British system. Despite the ingenuity of the aforementioned studies, unfortunately they fall short of a common research framework that can explain the observed differences.

Another criticism, leveled against the original VoC-framework is, that a functionalist approach to comparative institutional advantage leaves the question of institutional origin, genesis and change unresolved (Coates 2005; Deeg/Jackson 2007; Hall/Thelen 2009). The VoC-propositions explain the persistence of two ideal-typical capitalisms by reference to differing institutional equilibria, which result from the interplay of “institutional complementarities”, and hold that institutional reforms flow from shifts in coordinating mechanisms. Hall and Thelen (2009) suggest including actor-constellations into the VoC-framework, as their continuous support is needed for the sustainment and reforms of institutional equilibria. Regarding institutional change more generally, there has been a threefold move away from punctuated equilibrium models (Baumgartner et al. 2009; Baumgartner et al. 2007) towards approaches that are more sensitive to influences of timing and sequencing on policy change (Hall 2003; Pierson 2004), incremental institutional change (Mahoney/Thelen 2010; Streeck/Thelen 2005; Thelen 2009) and diverse actor-constellations between firms, workers, their intermediary organizations and governments (Culpepper/Thelen 2008; Hall/Thelen 2009; Thelen 2004). But apart from Thelens’ (2004) study of intermediate skill formation in the US and the UK, these innovations in the theories on institutional change have been rarely applied to comparisons of skill formation among LMEs, where the political driving forces of apprenticeship reforms remain somewhat opaque. 

This project tries to remedy these research gaps by analyzing the political processes that underlie the variation of apprenticeships within three LMEs. It compares the development and political driving forces of apprenticeship reforms in the United Kingdom, Ireland and Austra- lia from the 1980s until today. As is shown, despite the common origins of apprenticeships, these countries embarked on different development paths since the 1980s in the aftermath of the economic crises caused by the two oil-price shocks and the related problem of stagflation.

Primary evidence of the empirical puzzle why apprenticeships developed differently in the countries of interest, suggests a strong connection between the development of apprenticeships and industrial relations that seem to have followed parallel trajectories. Despite reform efforts in all three countries to reform their systems towards the role model of German “dual apprenticeships”, the UK did not succeed in building up a high quality collective apprenticeship system with joint governance and shared costs between employers, apprentices and the state. This contrasts with developments in Ireland and Australia (until the mid-1990s), which were more successful in their approximation towards the “German model”. Regarding the structure of industrial relations that apprenticeships are embedded in (cf. Busemeyer/Tram- pusch 2011; Culpepper/Thelen 2008) we can identify similar developments. Here, the UK followed a unilateral, monetarist approach that strengthened market forces and minimized the political influence of unions (King 1993; Rhodes 2000), whereas the other two countries followed social partnership approaches towards macro-economic policies and industrial restructuring. In Australia, industrial relations were buttressed by Accords between unions and ALP- governments (Bray/Neilson 1996; Schwartz 2000), but a later turn gave way to market-friendlier approaches since the middle of the 1990s (Hampson 1997; Hampson/Morgan 1998), whi- le since 1987 Irish industrial relations were governed by tripartite pacts between the social partners (O'Donnell et al. 2011; Teague/Donaghey 2009).

Against this background the study analyses these differences in tracing the evolution or “non-evolution” of advanced apprenticeship systems in the countries of interest by employing a combination of actor-centered institutionalist and power resource approaches. In solving the empirical puzzle of how to explain different apprenticeship trajectories in LMEs, the present study tries to answer two questions.

First, it will be shown which trajectories the countries followed in their reforms and which were the political driving forces behind these institu- tional developments. Here it is argued, that the partisan composition of government matters less than its relations with capital and labor for the direction of apprenticeship and industrial relations reforms. Regarding classical approaches of power-resource theories (PRT) (Esping- Andersen 1990; Hibbs 1977; Korpi 1983), it can be argued that left and Christian democratic parties favor apprenticeship and industrial relations systems that distribute costs and responsibilities among the major stakeholders (employers, apprentices/unions and the state), while conservative-secular and liberal parties favor employer-led, free-market approaches. But in line with recent research (cf. Busemeyer 2011; Thelen 2009) and going beyond the classical approaches, it is shown that we cannot fully understand the reforms of apprenticeships and industrial relations without looking at the relationships between governments and employers. As massively grown exit-options for capital limit the scope of left and Christian democratic parties of how much costs can be placed on employers in the course of politico-economic reforms, it is argued that reforms of apprenticeship systems that equally incorporate the interests of unions and employers serve as an instrument to build up cooperative industrial relations, that no longer can be unilaterally imposed on the social partners as was still possible under the conditions of “embedded liberalism” (Ruggie 1982).

Second, whereas the first question addresses the origins of and actor-constellations towards apprenticeship reforms, it is moreover asked what explains the political sustainability or fragility of reforms towards a collective apprenticeship system. Political sustainability, as understood in this context, means that policy change leads to institutional change in a double sense. On the one hand, it can be understood as policies that effectively reform the apprenticeship system, so that envisaged goals (cost-sharing, effective certification, high skill production, etc.) are reached. On the other hand, and more important for sustainable institutional development, is, that the central stakeholders (come to) follow the newly instituted rules – or, in the case of employers, accept the “beneficial constraints” placed upon them - and come to recognize the merits of the institutional reforms, so that they will actively support the institutional development direction, if they are confronted with newly looming changes. In this regard, the second central hypothesis is, that the development of cross-class coalitions is a necessary condition for a sustainable institutional development towards collective apprenticeship systems. In the absence of such cross-class compromises collective apprenticeship systems are bound to be fragile, continuously contested and prone to problems of collective action, credible commitment, market failure and ultimately subject to (endlessly recurring) new reforms.

(References on request)