ERIC ED371117: Vocational Training in Chile: A Decentralized and Market Oriented System. Training Policy Study No. 8.

28 Pages·1994·0.87 MB·English

by  ERIC

DOCUMENT RESUME
CE 066 002
ED 371 117
Espinoza, Eduardo Martinez
AUTHOR
Vocational,Training in Chile: A Decentralized and
TITLE
Market Oriented System. Training Policy Study No.
8.
International Labour Office, Geneva (Switzerland).
INSTITUTION
ISBN-92-2-109257-7
REPORT NO
94
PUB DATE
28p.
NOTE
Reports - Research/Technical (143)
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Adult Vocational Education; *Decentralization;
DESCRIPTORS
Educational Administration; Educational Legislation;
*Educational Policy; Employment Programs; Federal
Legislation; Foreign Countries; *Job Training;
Postsecondary Education; Program Effectiveness;
Program Evaluation; *Public Policy; School
Restructuring; Secondary Education; *Vocational
Education
*Chile
IDENTIFIERS
ABSTRACT
From 1976 to 1983 major reforms were enacted in Chile
principles:
in the vocational training systems, based on four
decentralization, integration, diversification, and participation.
established,
The vocational training system in Chile is a legally
market-oriented system in which many private training agencies
compete to sell their services to private firms and
decide
government-sponsored public training programs. Private firms
the amount and kind of training they want to buy; government
subsidizes firm-based training programs through tax rebates and
finances public training programs for workers without access to
Training
training in private firms. Enacted in 1976, the Vocational
delivery of
and Employment Statute stresses market forces in the
vocational training services. Five types of public training programs
statute: vocational
are offered under the training and employment
training program
training grants, adult workers retraining programs,
for low-income female workers, youth training program, and
apprenticeship program. Evaluation of the training system performance
provides evidence that decentralization of demand decisions to the
to
level of individual firms has brought training supply much nearer
to
local labor market demand; enhanced the capability of the system
unit cost
respond flexibly to local needs. Efficiency in terms of
achieved.
reduction and local relevance have not yet been fully
(YLB)
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Reproductions supplied by EDRS are the best that can be made
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BEST COPY
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Training Policy Study No. 8
decentralized
Vocational training in Chile: A
and market oriented system
by Eduardo Martinez Espinoza
UMITED DISTRIBUTION
ILO.
The views expressed in this paper are those of the author and not necessarily those of the
Training Policy and Programme Development Branch
Geneva
International Labour Office
3
Copyright © International Labour Organization 1994
Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention.
Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated.
For rights of reproduction or translation, application should be made to the Publications Branch (Rights and Permissions),
International Labour Office, CH-1211 Geneva 22, Switzerland. The International Labour Office welcomes such applications.
ISBN 92-2-109257-7
First published 1994
The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation
of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office
concerning the legal status of any country, area or territory or of its authorities. or concerning the delimitation of its
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The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors,
and publication does not constitute an endorsement by the International tabour Office of the opinions expressed in them.
Reference to names of firms ahd commercial products and processes does ;sot imply their endorsement by the International
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Publications, International Labour Office, CH-1211 Geneva 22, Switzerland. A catalogue or list of new publications will be
sent free of charge from the above address.
Ptinted by the International Labour Office. Geneva, Switzerland
This study is one of several prepared in the framework of research
undertaken by the ILO's Training Policy Branch on the subject of
national experiences in attempting to improve the efficiency, effec-
tiveness and impact of public training systems. The research has
focused in particular on the decentralization of training as a means
of enhancing flexibility and responsiveness to local labour market
conditions.
111
Contents
1. Executive summary
1
II. Background: Labour market and human resources development
3
- the institutional framework
3
A. The labour market
3
B. Human resources development - the institutional framework
7
II!. Social changes and the emergence of a new vocational training institutional model
7
A. The transition to a market and outward oriented economy
7
B. Impact of economic restructuring on the labour market
8
C. The educational and vocational training reforms of 1976-1983
10
D. Structure and functions of the vocational training system
11
E. Standards and procedures for tax rebates on training costs
13
IV. Public training programmes under the training and employment statute
13
A. Vocational training grants
3
B. Adult workers retraining programmes
14
C. Training programme for low-income female workers
14
D. Youth training programme
14
E. Apprenticeship programme
15
F. Achieving local labour market relevance
17
V. Evaluating trainirq system performance
17
A. Size and effectiveness of the vocational training system
18
B. The equity issue
19
C. The efficiency issue
19
D. Training demand in firms
20
E. Public vocational training
21
F. The training quality issue
21
G. The role of intermediary organizations
H. Workers' participation in vocational training policies and programmes
21
23
VI. Conclusions
25
Notes
27
Bibliography
6
Executive summary
I.
The Chilean vocational training system is
demand and supply; (b) market comNtition
essentially different from the typical Latin
among training agencies as a means of promot-
American model where services are provided
ing efficiency and quality in the production of
by an official, largely monopolistic, Vocational
training services and (c) provision of free
'Raining Institution (V71), financed mainly by
public vocational training programmes ad-
a payroll levy on firms. Instead, Chile has a
dressed to labour force entrants, unemployed
legally established, market oriented system in
adults and workers not covered by firm-based
which many private training agencies compete
training programmes.
to sell their services to private firms and
government-sponsored public training pro-
Although this system has boosted national
grammes. Private firms decide the amount and
training activities, more than tripling the num-
kind of training they want to buy; government
ber of trainees and fmancial resources allotted
subsidizes firm-based training programmes
in the former public vocational training system
through tax rebates, and finances public train-
- 280 thousand trainees and resources of US$
ing programmes for workers who do not have
57 million in 1992 - it has had only a limited
access to training in private fffms. Given the
distributional impact, since subsidized training
fact that training expenditure is determined by
is highly concentrated in bigger firms and for
firms themselves, tax rebates for private train-
top level personnel. Indeed, there are signs of
ing programmes in Chile are not
- as in other
*switching effecte generating windfall gains at
Latin America countries
the expense of public resources for private
- simply a mechanism
to withhold part of an enterprise's compulsory
firms that do not need incentives to train their
contribution to an official VTI.
workers. Furthermore, in some cases the
quality of training services seems undermined,
In 1976 Chile enacted the Vocational
training costs have risen and there is uncertain-
'Raining and Employment Statute (Estatuto de
ty regarding the socially efficient use of resour-
Capacitación y Empleo) stressing market for-
ces when the market is highly subsidized.
ces in the delivery of vocational training ser-
Fmally, training opportunities in public
pro-
vices. The rationale of this system Ls based
on
grammes have been scarce until quite recently.
a
the following principles: (a) stimulating decen-
Nevertheless, most
these shortcomings are
tralized demand decisions as the leading force
probably the consequence of a lack of govern-
guiding the provision of training services,
ment policies and controLs, and could be
aiming to strike a better balance between
resolved without excessive financial strain.
7
1
Background: Labour market and
human resource
development
- the institutional framework
A. The labour market
the unemployment rate of the former is
more
than double the national
average (12 percent
in mid-1992 in the 15-24
age bracket.
In the last six years, the labour market
in
MIDEPLAN, 93), whereas female workers' in-
Chile has experienced
an impressive level of
come ranks 30 percent below male incomes,
on
growth accompanied by
an improvement in its
average (MIDEPLAN, 91).
employment quality indicators, all of which is
consistent with successful economic perform-
Human capital has grown consistently,
ance, as illustrated in Table 1:
measured in terms of labour force educational
attainment, from an average of .6.2
years of
schooling in 1960 to 9.2
years in 1992. Further-
Table 1. Chile: Labour market
profiles
more, in 1992 over 8 percent of active workers
received continuing training in firms.
1986
1992
Participation rate (%)
30.9
33.7
Employed workers
B. Human resources development
(thousands)
-
3,743.3
4,552.1
the institutional framework
Unemployment rate (%)
11.0
4.9
Real wages index
(April 89
100)
113.5
Labour productivity index
Work-related education and pre-employ-
(Dec.88..100)
ment training in Chile are designed
117.3
to satisfy
expansion and replacement needs in
a labour
Sources: National Staiistics Institute (INE),
Plan-
force of 4.7 million. Employment is
expected to
ning and Cooperation Ministry (MIDEPLAN)
expand by 4-5 percent annually in the
next five
Nevertheless, over one third of the labour
years, based on economic growth projections
force is precariously employed in: (a)
the urban
and employment-productivity elasticity
trends,
informal sector (22.3 percent of
and currently accounts for
employed
a labour market
workers, with an average monthly
income of
absorption capacity of more than 200
thousand
US$ 190); (b) domestic services
labour force entrants per
(6.3 percent of
year. Additionally,
employed workers, with
more than 260 thousand adult workers
an average monthly
are
income of US$ 86) and (c) small farming
engaged annually in retraining and
ac-
upgrading
tivities (8.4 percent of employed
courses - mostly in firm-based programmes
workers, with
- to
an average monthly income of US$ 125). Even
cope with technological change, industrial
in the formal sector, small finns
restructuring and employment
- with low
turnover.
productivity and salaries
- account for more
than 25 percent of employment. In
On the supply side, the annual
contrast,
output of
the average monthly
wage of semi-skilled
the formal education system (those
who com-
plete or drop out) amounts to
workers in the modern sector is
over US$ 300.
over .242,000.
The breakdown by educational level
is given
Young and female workers constitute
the
(for 1989) in Thble 2.
more vulnerable segments in the labour force:
3
1989
educational level -
system by
the formal education
Table 2. No's leaving
(thousands)
512
University graduates and dropouts
25.3
dropouts)
technicians (graduates and
High level (post-secondary)
23.8
and dropouts)
technical) technicians (graduates
Middle level (secondary
25.8
(graduates)
Secondary general education
62.4
(dropouts)
Secondary general education
53,8
and dropouts)
Primary education (graduates
242.3
Total outflow
Source: ODE, 1990
broadly borne
respectively). These rates are
who do not com-
Dropout rates (i.e., those
and drop out data for
out by the enrolment
the system (for
plete) are quite low throughout
3.
1990 presented in Table
respectiveiy in
example at 11.6 and 2.7 percent
primary education
general secondary and
1990
by education level
Table 3. Retention rates
Dropout rate
Failure rate (repeaters)
Pass rate
Enrolment
2.29
7.80
89.91
1,984,288
Primary
7.37
12.35
8027
720,30
Secondary
7.26
1238
80.37
464,522
General Secondary
7.58
12.31
80.11
255,708
'Ibchnical Secondary
from secondary
with the growing demand
for pre-
Various public programmes
university en-
graduates, without overloading
and technical
employment vocational training
instkutions,
thus, new private
rolments;
school dropouts.
education are offered to
universities, were created.
separate from the
education (3,000
These include adult tezhnical
Centres (Centros de
Technical Education
adult vocational train-
adults enrolled in 1989);
and Professional
Formación lEcnica - CFT)
participants in 1989);
ing programmes (11,000
Profesionales - IP) offer
Institutes (Institutos
vocational training
and more recently a youth
in advanced
three to four year programmes
de
Capacitación
(Programa
programme
1989, out of 110
technological education. In
launched with financial
Laboral de J6venes)
graduates, 42
thousand secondary school
Inter-American Develop-
assistance from the
CFB, 13 thousand in
thousand enrolled in 144
(25,000 participants in 1992).
ment Bank - IDB
in 52 universities.
161 IPs and 33 thousand
large number of small
In addition, there is a
sponsored by private
scale training initiatives
middle level technicat
At the same time,
non-profit organizations.
transferring the
education was decentralized,
public schools either to
management of former
for work-re-
The institutional framework
local govern-
federations of industries or to
has experienced a
lated education and training
(Municipalidades)1. Under this scheme,
ments
revolution - Ithe
major evolution - some say a
through the Ministry of
the central authority,
of the transition to
last twenty years. The core
and supervisory
Education, plays a normative
decentraliza-
is diversification and
a new model
curricula standards, and
role focusing on basic
increasing private provision
tion in a context of
Over ten years of
subsidizes school operations.
services. Post secon-
of education and training
school manage-
experience in decentralized
expanded to cope
dary education capacity was
ment show encouraging results in terms of
In the vocational training area, direct
matching school output and industrial
needs,
public financing of the former official National
especially in industry-managed establishments.
Training Institute
Nacional de
(Instituto
In 1990 there were 70 Upper Secondary Tech-
Capacitación - INACAP) was discontinued
nical Schools (Liceos de Educación
lecnico
and INACAP was recently transferred to the
Profesional) managed by industrial federa-
private ltade and Production Federation
tions, such as: Sociedad de Fomento
Fabril
(Confederación de la Producción
y el Corner-
(manufacturing sector employers); Asociación
cio). Though still one of the most important
de Industziales MetaKirgicos (metallurgy
sec-
vocational training institutions in Chile, IN-
tor employers); and Sociedad Nacional de
ACAP is nowadays a market-oriented
agency
Agricultura (agriculture sector employers).
selling its services in the field of subsidized
With small differences, the linkages
between
firm-based training and publicly sponsored
these technical schools and industries consist
programmes (for example, the Youth Training
mainly of: (i) employers' participation in school
Programme).
the
Moreover,
of
bulk
planning and curricular design; (ii) study
visits
INACAP's activities today caters for
new cus-
by teachers and students to industries; (iii)
in-
tomers: secondary school graduates ready to
dustry professionals and technicians lecturing
pay for advanced technological education as an
in technical schools; (iv) industry co-operation
alternative to university education. Overall,
in work experience
programmes, and (v) in-
direct public provision of vocational training
dustry contributions to schools, mainly in
the
services - through INACAP
- has been re-
form of equipment and materials. By
contrast,
placed by a demand-side subsidy to
more than
the 150 municipal schools
are only loosely con-
12,000 firms performing training activities and
nected to the employment sector and
the
by publicly financed training grants for workers
quality of their education is hampered
by
not covered by firms' programmes. On the
budgetary constraints.
supply side, more than 1,700 private training
agencies actively compete to capture private
On the down side of the current
strategy,
and public training demand.
it is more difficult in a decentralized
system to:
(a) coordinate nationwide educational
policies
None of the foregoing should give the im-
and strategies; (b) benefit from economies
of
pression that riorms have resulted in
the
scale in administrative tasks and
general pur-
demise of public training. There is still
a sub-
pose activities such as teacher training, teach-
stantial amount of public training in Chile,
but
ing
material
production
and
education
this is now managed in
a highly decentralized
technology research and development,
and (c)
fashion.
correct regional disparities.