FINANCING OF VOCATIONAL AND TECHNICAL EDUCATION IN GERMANY AND

JAPAN: LESSONS FOR NIGERIA

Introduction
Vocational and Technical Education (VTE) occurs in a large variety of structures and under various
responsibilities, both in the public and private sector. As far as its financing is concerned, additional
factors related to the socio-economic, political and administrative situations prevailing in Germany
and Japan, have to be taken into account. Vocational and Technical Education can be conceptualized
as an alternative training programme that is designed mostly to improve the employability of
participants and also to empower them with work readiness skills. The aim of such training
programme has been to support participants’ inclusion into labour force. Based on this fact, it can be
reiterated that the need to link vocational and technical education programme to economic
opportunities within the context of livelihood sustenance is highly imperative in academic
scholarship.
Technical and vocational education is one of the core components of the economy that involves
individuals acquisition of skills and enable such individuals discover their environment or
surroundings and harness the resources within it, which could serve them and the society since the
wealth of the society determines to a large extent, the development of such a society Amoor (2011).
Nigeria is confronted with this problem of her citizens’ non-discovery of and poor harness of
resources within her environment, and which makes her not to be shielded from the problem of
unemployment, poverty and poor transformation of the society.

This chapter therefore reviews the mode of financing vocational and technical education in Germany
and Japan and how Nigeria as a developing nation can adopt the dynamic patterns adopted by both
countries.

Vocational and technical education financing in Germany

The German Technical and Vocational and Training (TVET) system is a dual education system that
combines apprenticeships in a company and vocational theoretical learning at a college. It is
participatory-based, combining full-time education, apprenticeships, and socialization (Ochs, 2006).
A major advantage of this dual system is that it integrates real-world experience with
theoretical learning and teaching in TVET (Blossfeld and Stockmann, 1999). Vocational training
plays a prominent role in the German educational system. Almost 60% of each year’s students
choose professional education. Up to 70 % of them again fall into the dual system while the
remaining part of the students completes a full-time school-based education at a vocational

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school. The system is called dual because the training is performed in two learning places: at an
enterprise and at the vocational school.
The school-based element of dual vocational training is financed by Land and local authority public
funds. The Länder bear the costs of internal school affairs (e.g. supervision of schools, laying down
of curricula, teacher training, teachers’ pay), and the local authorities are responsible for financing
external school affairs (e.g. construction, maintenance and renovation of school buildings, ongoing
management, procurement of teaching and learning resources). Enterprises are responsible for
financing the in-company training element while the individual enterprises decide independently
whether and in what training occupations they will provide training, how many trainees they will
take within the framework of the statutory provisions, and how much they will spend on this. In
addition to this financing by individual enterprises, in some sectors, financing regulations have been
collectively agreed. In these cases, all enterprises pay into a joint fund on a particular assessment
basis. The expenditure of training enterprises is partially or wholly reimbursed from this fund.

Table 1: Financing of vocational training by financing bodies, 2005

Financing Bodies Expenditure (in € billions)
Enterprises 2.77*
Federation and Lӓnder
Part-time vocational schools (dual system) 2.8
Full-time vocational schools 2.2
Other school types providing VET 1.5
(e.g. specialized grammar schools, Fachoberschulen)
Intercompany VET facilities (UBS) 0.03
Teaching courses and programmes 0.28
Federal Agency for Employment (BA) 4.5
*Gross costs, i.e. training costs without allowing for training income. The information is based on a
representative survey of enterprise training costs, last conducted

Source: Berufsbildungsbericht 2006, p.11

Public funding for vocational education and training in the dual system in Germany is provided at
both the Federal and State level. At the Federal level, the German government commits funds to
support measures to promote part-time training within companies, on the job training of
disadvantaged young people, 'external' apprenticeships within the dual system, and vocational
training assistance contributions made by the Federal Employment Agency and the Federal Ministry
of Labour and Social Affairs. The main financial responsibility of the governments of Germany’s 16
States is the funding of the vocational schooling component of apprenticeships (plus contributions to
funding for on the job training of disadvantaged young people within the apprenticeship system).

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In Germany, the TVET is more centralized and standardized. The federal government plays an active
role in legislation and laying the foundation for partnership with state governments. The main
providers of education and training are colleges and companies. They support and consult each other
in developing the pedagogical content. Secondary school graduates who do not pursue university
education usually join TVET and in most states they study and apprentice part-time. Since low-skill
job workers with vocational degrees are offered fair pay, students are willing to obtain a
vocational degree as a prerequisite for employment. By law, credentials are transferable to a higher
education programme (Euler, 2013).

While the trend in Germany is for companies to assume the cost of training and provide for
vocational education with respect to the specific skills required, states play a central role because of
their responsibility to provide education. It must be emphasised that the National Federal
government does not directly provide funding for training and vocational education. In other
words, while it intervenes as a regulator, funding is limited, based on the economic and specific
labour needs (Rauner and Maclean, 2008; Kath, 1998). The private sector in Germany ensures that
training costs do not become the sole responsibility of government.

It should be noted that the costs of the dual vocational training system are borne proportionately by
the government and the business community. Not all businesses that are authorized to train workers
actually do so. In the case of certain occupations, providing vocational training results in net income
for the businesses involved. Vocational training programs can serve as an investment in a business’s
recruitment strategy; potential benefits from “free-riding”. Also, the financial involvement of the
business community makes it possible to keep government expenditure for vocational training at
a relatively low level. (Euler, 2013).

The partnership between government and the private sector, among other things, extends to
financing. The government and the private sectors contribute in different ways to financing TVET.
Funding by companies is offset by the productive contributions of their trainees and other
factors that generate benefits for the contributing company. The 2012 report on education
expenditures shows that, in the area of vocational training, contributions from the public sector
amounted to 57.2% (federal: 18.5%; states: 27.6 %; local communities: 11.2 %), while private
entities contributed 42.8% of the total (German Federal Statistical Office 2012, quoted in Euler,
2013).

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From the business viewpoint, a company may reduce financing vocational training if it deems this
investment to be a burden and a competitive disadvantage relative to companies that do not
train workers. In Germany, there have been repeated calls for shared financing. This involves
companies contributing to a fund based on the volume of its employees. This money is managed and
distributed to pay the costs of attending TVET and to finance intercompany training. In addition,
subsidies are paid to companies that provide training positions.

Vocational and technical education financing in Japan

The Japanese vocational schools are also known as senmon gakkō. They are component of Japan's
higher education system. They are two-year schools that many students study at after completion of
high school (although it is not always required that students graduate from the high school). Some
have a wide range of majors, others only a few majors and some examples are Computer
Technology, Fashion and English.
In Japan, the technical and vocational training programmes are ranged from short introductory
courses for workers joining the firm to full-fledged university degrees which are organized by big
enterprises. The enterprises actually conduct training programmes on need basis on each skill as per
requirement of the market. Although, the regular schools in Japan have an independent vocational
tracks however the main players of skill formation are the big corporations. Japan is unique from
other countries in skill formation of its workers as it keeps plentiful provision of in-service training
and the training is a continuous process that continues throughout the life of the worker. A variety of
courses are offered that cover immediate and specific needs of workers thus producing a work force
that is committed, regimented, stretchy, and adaptable. There is a low mobility of labor due to in-
plant training based on the lifetime employment commitment of large firms. Nevertheless, small and
medium-sized firms are totally dependent on school based training.

Parents and students in Japan traditionally place higher value on academic education compared to
vocational education. Hence, vocational education is often considered a second option after
university for students with lower grades and/or students from lower socio-economic backgrounds.
Enrolments have grown over that period, but many universities (particularly private institutions and
those in regional areas) now face serious financial and demographic pressures. More recently, due to
changes in industry and in the skills required for work, vocational education and training institutions,
especially the specialized courses at professional training colleges have been gaining in popularity.
Enrolments in these courses are now growing after a period of continuous decline.

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Vocational schools are attracting not only senior secondary school graduates but also university
graduates who were not successful in securing employment upon graduation. At the same time,
Japanese companies are making significant changes to their operations. In 2014-15 for the first time,
Japanese listed companies made more of their profits offshore than domestically. Companies have
also reduced funding for in-house training programs and are looking to do more externally. Japanese
vocational schools are now also attracting more international students. In 2014, about 16% of the
total numbers of students studying at vocational schools were from overseas, mainly from the Asian
region. The number of VET students from Japan studying in Australia is now also increasing again
after a period of decline. This mirrors the broader trend in the number of Japanese students heading
overseas.

As the VET system, especially professional training colleges, does not currently have an established
quality assurance framework; these schools often do not receive appropriate valuation from society.
In addition, pathways from vocational schools to universities are still not well developed. Only 2% of
Japanese university entrants are aged over 25 (compared to the OECD average of 18%). The barriers
to mature-aged entry reduce mobility and opportunity for re-skilling and life-long learning.
Currently, about 20% of students in the senior secondary education are studying at vocational
schools. However, only 20% of these students go to universities. Hence, offering wider opportunities
for further education is one of the challenges the Japanese government is facing.

Student scholarships are available through the Japan Scholarship Foundation, which is supported by
national government funds. The foundation provides low-interest or interest-free scholarship loans to
enable competent students to continue their studies. A total of 484,000 students were being supported
through this system in 1996. The proportions of students receiving financial assistance varied in the
colleges visited. In the publicly funded technical college, just over a third of students received the
scholarship of 48,000 yen a month (£260). In a private business college, only 20 students out of over
5,000 full-time students were supported in this way.

Many of the specialist training colleges and junior colleges are wholly owned and run by their host
industry or company, usually through a tax-beneficial trust arrangement. As employees, their
students pay no fees. At Nissan Technical College, for instance, young technician trainees received
the equivalent education to that on a junior college course, working two years full time in the college,
and living on site. In order to qualify for this training, however, they had completed two years with
the company, to satisfy their employers that they deserved the investment.

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Financing of Vocational and technical education in Nigeria
Technical and Vocational Education and Training (TVET) has been misunderstood in the Nigerian
context to mean that type of instruction and training given to people that could never study science or
arts in the school system or those that are not intelligent enough to pass standard examinations for
entry into higher institutions such as universities. As technological developments magnet the world
more closely together, vocational preparedness becomes increasingly significant.

In Nigeria, the federal government provides funds for her own institutions, while the states are also
responsible for the funding of their own institutions. Private school owners are also responsible for
the funding of their respective technical/vocational schools. Nigerians have historically considered
VTE as an education programme meant for low level, low brilliant and less privileged or second
class citizens (Okoro, 1993, and Eze and Okorafor, (2012). The major educational reforms according
to Daniel (2001) have, however, been on vocationalisation. It is in line with this, that different
countries have come up with different framework towards repositioning their VTE
programmes.

Nigeria therefore has joined her world counterparts in restoring and repositioning VTE
programme geared towards ensuring a national system of vocational education. A system that
ensures that, young people see vocational education as challenging and worthwhile. To achieve the
objective of restoring of repositioning VTE in Nigeria, the Federal Government according to
Olakunri, (2006) came up with the strategy of using the Education Trust Fund (ETF) which
was set up by law in 1993 to fund and upgrade the quality of VTE in Nigeria. The federal
government recently mapped out a three-year action plan to revamp TVE through ETF. Olakunri,
(2006) reports the sum of N5 billion annual allocations was mapped out for three-year action plan in
the range of N1.5 billion, N 2.0 billion, N2.5 billion in the year 2005, 2006 and 2007 respectively.

It should be noted that vocational technical education has made some notable impacts on the
Nigerian society, especially in respect to the products of the training programme who are
contributing their quota to the economic growth and development of the nation through various
industrial establishments (Odu, 2013). Inadequate funding of vocational institutions has caused the
turning out of half baked graduates because there is no fund to build and maintain workshops,
laboratories or even purchase modern equipments. Staffing of Vocational technical education is
generally inadequate because of poor funding. Experienced and skilful teachers may not be

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employed. Those that are employed, because of poor remuneration do not stay long in the teaching
profession, but drift to some other more lucrative jobs especially in the industries and abroad.

Consequently, inexperienced and unqualified technical teachers are employed thereby lowering
academic standard, resulting to wastage in the achievement of technical education goals (Agbionu,
2003). Inadequate funding of Vocational technical institutions has often caused a lot of difficulties in
the payment of staff salaries. It has also resulted to the retrenchment of teachers or retirement of
teachers at early age. Furthermore, government lack of commitment to technical education and
inadequate funding has weakened technical education in Nigeria Mohammed (2001). A direct
consequence of this is that while the number of technical education institution is dwindling that of
general education is growing in bounds (Momoh, 2012).

Oryem Origa (2005) opined that only 40% of institutions of Higher Education in Nigeria have
laboratory or workshop space for technical education programmes. The remaining 60% do not have
laboratory or workshop space and this has resulted to the low quality of technology programmes in
our higher institutions. He also observed that the few schools that have laboratories, experience acute
shortage of laboratory equipment and supplies. The conclusion is that the situation is partly the
reason it has been very difficult to carryout experiments effectively for students. This has also made
teaching and research in science and technology difficult and therefore the country was producing
insufficient and ill prepared technical education graduates for driving the technological and socio-
economic development of Nigeria.

Historically, the financing of Education in Nigeria has been accomplished through: School fees;
grant-in-aid from the various governments; and levies by cultural unions and various forms of
voluntary contributions by parents and guardians (Bassey, 2000). In the past, Mbipom (2000)
observed that though education receives the largest share of annual budgets, it still remains
inadequately funded because of large numbers and high cost of equipment, facilities and resources.
But in budget allocation to priority areas in 2012, security received the highest percentage of
the budget allocation with 38.85% and 20.34% allocated to security and education
respectively (Budget Speech and Appropriation Bill, 2012).
The three tiers of Government in Nigeria have not fully come to appreciate the contributions of
vocational and technical education to national economic development even though it is an
indispensable tool for tackling unemployment and poverty in the society. This is because successive

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governments have not found it necessary to adequately finance both the planning and implementation
of standard and sustainable vocational and technical education programmes in the country. In support
of this statement, Okorie (2001) and Okeke and Eze (2010) stated that insufficient finance is a
realistic and practical factor inhibiting the implementation of vocational and technical education
sector is holistically on science education. Too much noise is made on the pages of papers and
television about vocational and technical education, but little is done to improve the
teaching/learning of vocational and technical education programmes in Nigeria.

There are two major sources of finance to vocational education otherwise referred to as revenue.
These sources include: internal and external sources of finance. Finance from either source is used
for capital expenditure or recurrent expenditure. The internal sources of school finance include;
school fees, income from investments or educational entertainment activities, sales and services etc
(Ebong, 2004). While the external sources include government grants, subventions, loans, non-
governmental donations, endowment fund and appeal funds. The sourced finance is utilized in the
execution of vocational education in aspect of capital and recurrent expenditure.
Lessons from Germany and Japan
In Nigeria, we have engineers who cannot produce scientific or technical invention since most of our
institutions do not have the equipment and where this equipment are available, there is shortage of
personnel in technology, engineering profession and the professionals prefer to work in industries for
more pay than teaching in schools. In the next millennium, Nigeria should take after the developed
countries like Japan and Germany, that usually support, sponsor the vocational and technical
institution by industries, individual or organizations in addition to government subventions to enable
these institutions execute their vocational and technical education programmes. Vocational technical
education graduates should strive to be job creators rather than job seekers who roam around the
street of Nigeria with dozens of certificate in endless search for jobs. This implies the production of
competent vocational graduates who can adapt to changing economic situation in Nigeria.
Vocational technical education should keep its gate open, flexible and learner oriented since one
of the factors contributing to poverty in Nigeria is lack of equal access to education, and lack of
employment/vocational skills. The Nigeria government should also devise a viable strategy of
making its policies on VTE programmes a very continuous exercise from the planning,
implementation and evaluation stages.
Nigeria can make her VTE sector to be a dual type as done by Germany such that students
learn in the classroom, and also they learn by doing. The trainees will attend vocational school one or

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two days per week and study the theory and practice of their preferred occupation. Trainees also do a
working apprenticeship in their chosen field, and they should receive about one-third of the
salary (or as determined appropriate by the government) of a trained skilled worker. Nigeria
can collaborate with some registered organizations and there should be a legal contract between
the employer and the apprentice and provide a combination of school-based and workplace
training. If vocational training systems are very large and programme activities cannot be adequately
supported like Germany and Japan, it may be better to reduce the programmes and consolidate the
existing resources and reallocate them appropriately. The important thing is effective management of
the institution through a proper balance between capital and recurrent expenditures. All training
components should be strengthened and emphasis should be on quality training.

Conclusion
Adequate funding of Vocational and Technical Education need to be emphasized if Nigeria is to
provide required training and competencies to individuals that will proffer adequate solution to
industrial apathy and technological backwardness in this nation. Therefore, there should be
adequate funding for the stated objectives and proper implementation to be achieved. To achieve this,
there is need for alternative sources of funding because the government cannot fund it as expected.
For an individual to have access to quality Vocational and Technical Education (VTE) that
will enable him/her to be self-reliant/sufficient, the funding of VTE must not be left alone to the
government. Every citizen of this nation must contribute his/her quota to ensure that quality
education is given. If Vocational and Technical Education which is the panacea to the increasing rate
of unemployment is adequately funded, rate of kidnapping, stealing, maiming and incessant killing
by Boko Haram will be reduced in this country. Adequate funding of Vocational and Technical
Education needs to be emphasized if Nigeria is to provide the required training and competencies
to her citizens that will proffer adequate solutions to industrial apathy and technological
backwardness in the country. Investment in Vocational and technical Education and Skill training
must be accorded priority attention. Since no country can favourably compete in the emerging global
market place with poorly and unskilled labour. The Nigeria law makers, stakeholders in the
education sector need to learn from the international experience as we struggle to establish a more
responsive Technical Vocational Education (TVE) system as to meet the ever evolving demands of
Nigerians towards our technological development.

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