Rethinking the Welfare State: The prospects for ... - e-Library

Labour market training 197
provider then redeems the value of the voucher from the government. However, the
introduction of competitive pressures into the provision of labour market training has
been incremental and very few governments have completely abandoned the public
provision of ALMPs. Instead, most offer some range of publicly provided services in
addition to vouchers or allow vouchers to be redeemed on a competitive basis at either
private or public institutions. A review of the competitive experiences of three countries,
Chile, Sweden, and Australia, is illustrative. Chile offers an example of an early struggle
to utilize competitive pressures, only partially successful in the absence of a voucher
model. Sweden demonstrates some of the gains to be made from market contestability, as
well as a common attachment to publicly delivered services—even in the face of gains
from competition. Australia, the most progressive country in the OECD on the private
delivery of labour market training, 68 provides a useful model for voucher delivery.
Chile
Following the ousting of the Socialist Government in the mid-1970s, “Chile initiated a
series of comprehensive institution reforms aimed at creating a market-oriented and open
economy.” 69 Against this broader background of privatization, a competitive market for
training services emerged. This included decentralization of services, diversification in
the supply of technical and vocational education and training (TVET), and more market
involvement in work-related education and training. 70 Reforms required the Ministry of
Education to withdraw from its role as a direct provider and instead set training standards
and allocate subsidies. 71
Chile subsidizes enterprise-based programs (training services provided by employers
to their employees) through tax rebates, thus reducing the financial burden of training on
companies. For workers who do not have access to enterprise programs, such as lowskilled
labour, the unemployed and youth, the government finances “public” training
programs, which are selected on a competitive basis through public tenders. While these
programs are referred to as “public training programs,” they are actually provided by
private agencies. Providers include both training agencies and businesses, the latter of
which offer on-the-job training. Follow-up studies on enterprise-based on-the-job
programs show that “the post-training placement rate is over 70 percent.” 72 The main
problem with the Chilean system is its reliance on supply-side subsidies rather than
demand-side subsidies. Indeed, distortions include “inefficient behavior of enterprises in
their training decisions induced by subsidies, a lack of information and the diversity of
the training services supplied, both in terms of content and quality.” 73 Chile, then, has
introduced some competition into the labour training market but failed to take the plunge
into a voucher system. Programs such as Chile’s also tend to be more prone to creamskimming,
as discussed in more detail below. 74
Sweden
Sweden has a long-standing tradition of emphasizing the use of ALMPs over PLMPs, and
until the economic downturn of the early 1990s had one of the lowest unemployment
rates of OECD countries. 75 Government employment offices provide information on
labour training programs and eligibility requirements, as well as playing a role in