Welcome to The View—a weekly perspective on alternative education, EdTech startups, and European government funding routes.
The View is written by Gordon MacRae. Gordon is a 10-year veteran of the alternative education space, including leading education teams at General Assembly and Multiverse.
He is now the founder of Track Changes, a research and advisory company that focuses on alternative education, start-ups, and product teams.
Digital skills gap in Germany
At this point, the digital skills gap is a cliché. Glance across most EdTech pitch decks and you’ll see the same statistics about unfilled tech jobs. But it’s a problem that’s not going away. In Germany, for example, there are currently 96,000 open IT jobs1 and hundreds of thousands more unfilled tech jobs that require digital literacy.
Whether you believe there is a digital skills gap or not2, apprenticeships are often touted as one solution.
Employers, educators, and policymakers often cite Germany as the ideal apprenticeship model. It’s well-established (centuries old), embedded in the school-system, and supported by industry.
But while the German model is inspiring for countries looking to establish their own apprenticeship system, it doesn't work in rapidly changing fields like software engineering, data science and UX design.
The system has fallen behind in digital training. And it is struggling to catch up.
The problem? Access to apprenticeship funding to reskill or upskill is limited to learners at the start of their careers. The choice to pursue an apprenticeship is made while someone is still at school. Which means access to apprenticeship funding is not available for someone beyond their early 20s. A real problem when the average person will change careers 10 or more times in their career3.
A comparison with the UK system is useful. Since the expansion of the apprenticeship levy in the UK in 2016, employers have been able to spend apprenticeship funding to reskill or upskill post-school or even post-university learners. This allows learners to make a choice to reskill or change careers after the age of 18.
The result has been an almost x20 increase in the number of learners aged 25 and above reskilling or upskilling using the levy.
We can see this in the changing demographics of apprentices on Level 4 programmes4 in England (editor: level 4 is roughly equivalent to a foundation year or the first year of university).
The number of apprentices aged 19—24 who start a Level 4 programme went up over this period, as we would expect from the expansion of the levy. This is, after all, the typical age of a first-year student at university.
But the number of learners aged 25 and above skyrocketed in the same period. In 2016, there were just 200 starts in this age category; in 2021, that number leapt to over 4,500.
Primarily, this growth has been driven by the focus on upskilling in digital skills, led by Corndel and Multiverse, who I looked at in Issue #1. The expansion of the levy allowed companies to spend apprenticeship funding on upskilling existing employees, rather than just training school leavers. It also highlights an opportunity missed for the German apprenticeship system.
Unfortunately, data for apprentice starts in IT isn't made available by the German government. But I can see four main points of difference which indicate that support for upskilling or re-skilling isn't supported by the German apprenticeship model.
German apprenticeships are only designed for young people looking to begin their careers. They aren't accessible to mid-career professionals or anyone looking to upskill in their role. German policy hasn't focused on expanding access to these mid-career professionals for ongoing skills training.
Time. According to federal law, apprenticeships have to last for at least two years (perhaps as much as four years, depending on the job). Two years is far too long for most of the missing digital skills, which can often be taught in a year of intensive study.
Accreditation / curriculum change cycles. Vocational schools in Germany struggle to deliver classroom-based training within a two-year apprenticeship. Providing intensive programmes would require a whole new business model. And a long accreditation process for new programmes (or changes to existing ones) further limits how quickly providers can change.
No Apprenticeship Levy. Funding for training depends on firms' commitment to fund it. And this has been declining since the 1980s.
In 1985, 34% of companies provided funding for apprenticeship positions.
In 1995, that had dropped to 24%
And in 2018, it stood at 20%: a reduction of 43% since the 1980s5
This contributes to what's known as the "free-rider problem", where a small percentage of firms provide apprenticeship training. Then other firms pay higher wages to poach these apprentices when they are fully trained.
Is change on the horizon? Not as far as I can see. So far, Germany's Employer Association has rebuffed proposals to introduce a UK-style Apprenticeship Levy.
Alternative funding
The lack of digital apprenticeship training providers has fuelled the growth of alternative education providers to fill the gap in Germany.
A range of government funding routes is available to students that sit outside the traditional apprenticeship structure. So, while students don't work while they learn, they have access to government funding to offset the cost of re-skilling in technical skills.
For students who live in Germany, one of the most popular ways to fund a bootcamp is a state-sponsored educational voucher called a Bildungsgutschein.
At a high level, this voucher allows a learner to take a course, bootcamp or any other educational program and have the German state pay for its cost.
Many German bootcamps are registered on the list to accept Bildungsgutschein6, including Neue fische, Wild Code School, and SPICED Academy (a complete inventory is available on Startsteps). And many providers employ staff to guide applicants through the application process.
Germany also recently passed a law called the Qualifizierungschancengesetz7 which allows individuals to access digital training paid for by their employer. Learners get mandatory training in digital skill sets, as well as support in accessing it.
But the process feels… light compared to the more rigorous apprentice standards, which are set and agreed by industry. To apply for the Bildungsgutschein, providers must hold the AZAV accreditation, but approval doesn't require an on-site visit, and data on successful outcomes is hard to find.
In addition, the incentives for learners and providers aren't well aligned. Bootcamps are paid when someone enrolls, not when they graduate or get a job. And success as a provider isn't measured by outcomes; it's measured by enrollments.
The difference between the UK and the German models comes down to the age range of the learners who can access apprenticeships. The German model is constructed around the idea that training occurs after school. The British model allows employers to access the apprenticeship levy at any stage of an employee's lifecycle (as long as they haven't previously learned the subject).
A missed opportunity, perhaps, for Germany's digital skills providers.
Other news
Since Tomorrow University raised a €1.1m pre-seed round in early 2021, their growth has been astounding. They’ve now become the first edtech company in Germany to get degree-awarding powers.
Starting in October this year, students can enroll in a remote-first Bachelor's degree at Tomorrow University8. With Multiverse also announcing9 the launch of their own degree award, this should clear the path for other alternative education providers to win approval to award their own degrees in the coming months.
But why bother being able to grant a degree? Afterall, Multiverse has positioned itself as an “alternative to university”. So why pursue recognition by the very establishment you’re running against?
As with most things, money talks. An learner on a 3-year apprenticeship degree is worth between £35–40k for Multiverse, compared to £12-18k for a learner on a 1-year, non-degree apprenticeship.
Previously, to access funding for a degree apprenticeship, training providers like Multiverse could only teach in partnership with a provider who had degree-awarding powers. Multiverse delivered the training, the university provided the accreditation.
And at a cost, typically 20–25% of the available funding went to the degree-awarding provider. By being able to grant their own degrees, Multiverse is able to claim the full 100% of the available funding for each apprentice on program.
Whether this is a good move remains to be seen. As Mike Radcliffe points out10, the new degree awarding powers award limits Multiverse to just three pathways for one specific degree in Digital and Technology Solutions.
And the move means Multiverse will need to adapt to financial regulation by the Office for Students. Financial statements will need to move to the OfS approved standard – allowing more analysis of the company’s accounts.
Jobs
Tomorrow University, Program and Community Manager, Remote.
London Interdisciplinary School, Marketing Manager (CRM), London.
Get on it.
Thanks for reading, this newsletter is still a work-in-progress so do let me know what I missed. I’m all ears. - G
The Myth of the Skills Gap, MIT Technology Review, 2017
This number seems… wild but here’s the source
You’ll remember that the UK standard framework runs from Level 2 to Level 7, with Level 2 being equivalent to GCSE’s (aged 16), Level 3 to A-Levels (aged 18), 4,5,6 & 7 to each of the years of a university degree (e.g. Level 4 = foundation year / first year of university; Level 7 = Masters degree). You remember because you read the first issue, right?
Guide to Qualifizierungschancengesetz