THE FUTURE OF VET SYSTEMS: AN AGENDA FOR VET POLICIES IN THE EU BEYOND 2010 Pascaline Descy, Guy Tchibozo, Jasper van Loo Centre for the Development of Vocational Training (Cedefop – European Union), Greece 1. INTRODUCTION With the Lisbon Strategy coming to an end in 2010, progress achieved since March 2000 will be assessed and reflections on how to design the next steps are underway. New priorities and policies are expected to give a new impulse to the progression of EU economies and societies. The present contribution takes this context as its starting point. It addresses the following research question: in the field of VET, what should the medium-term policy agenda look like? In other words, what should be the priorities for VET policy in the next 5 to 10 years? Strongly embedded in current research on VET, the paper aims to feed into EU and national VET policy-making processes with evidence-based recommendations (see also Cedefop 2009).To address the research question, in the following two sections we present external and internal challenges VET systems will be facing in the near future. This analysis is based on review of research literature and of relevant comparable international statistics. Based on this, section 4 outlines the ensuing policy priorities. Section 5 concludes. 2. EXTERNAL PRESSURES AND THEIR IMPLICATIONS FOR VET Four major types of contextual determinants push for adapting and modernising VET systems and policies: labour market trends, population ageing, economic competition and the demand for social cohesion and social inclusion. 2.1. Labour-market pressures on VET In what ways do current labour-market developments demand VET modernisation? Four dominating labour-market trends can be distinguished: the deteriorating labour market position of youth, the partial implementation of the flexicurity concept, increasing skills shortages and limited intra EU geographical mobility. First, although the labour-market position of young people has improved in the last decades, with increasing earnings and falling unemployment (OECD 2008), their overexposure to unemployment remains a serious issue as the gap in unemployment rates between youth and adults has widened. At the same time, a significant share of young people is neither in employment, nor in education or training (NEET): in 2006 in the EU, disengaged youth represented 18.6% of those aged 20-24. Alike, for young people in employment, job quality is problematic. In the EU on average, the share of temporary jobs in youth employment has increased from 34.9% to 40.9% between 2000 and 2006 (European Commission 2007, p. 46), and the percentage of youth working part-time has increased from 20.2 to 25.6 between 1996 and 2007 (European Commission 2007, p. 128). Both are often involuntary. Education and especially VET might have a role to play to curb these trends, give access to better quality employment, and reduce the risk of complete disengagement from the education system and the labour market. Flexicurity, next, aims at promoting the use of flexible forms of work organisation and labour relations, while securing good prospects for workers’ employment and career development. Several indicators show that while flexibility has indeed increased, this is not the case for security. The gross replacement rate of unemployment benefits (calculated for 19 EU Member States) has declined from 33.3 to 27.1 between 1995 and 2005 on average (OECD Social and Welfare Statistics) and public expenditure on active labour-market policies (ALMPs) as a percentage of GDP (calculated for 17 EU Member States) has decreased from 1.2% in 1998 to 0.72% in 2006 (OECD Online Employment Database). Investing in continuing VET and training for jobseekers obviously belongs to the set of ALMP measures to be intensified.