Problems on the road to high skill: a sectoral lesson from the transfer of the dual system of vocational training to eastern Germany

The central challenge of transferring the dual system of education and training to eastern Germany is to convince companies to bear the in-firm costs of apprenticeship training. Two prominent explanatory variables in the social scientificliterature - national institutions and social capital - offer certain predictions aboutwhich factors will be most important in facilitating the transfer of the dual system toeastern Germany. Data from interviews with thirty-four firms in the metal andelectronics industry suggest that institutionalist theory mis-specifies the role ofemployers in coordinated market economies. Employers' associations in both eastern and western Germany have neither the access to inside information nor theinformal sanctioning capacity attributed to them in this literature, nor do they play anyrole in the regular diffusion of strategies of best practice. Ownership by westernGerman companies, however, appears to be of particular significance in the decisionof eastern German companies to train, a link which may support the institutional emphasis on access to long-term finance. Social capital is unable to explainsignificant variance in the ability of companies to cooperate in order to create additional apprenticeship places. The role of policy design in the new federal statesappears to have an important effect in explaining the ability of firms in some states tocooperate in training apprentices. The ability to craft effective policies depends oncoordination among state governments and employers' organizations, but the distributive conflicts inherent in these subsidies can hamper cooperation among employers.