Policy Guidance Note: Financial Incentives for Companies

Support to VET Financing – Policy Guidance Note: Financial Incentives for Companies

A Guidance note on the use of financial incentives to facilitate the participation of companies in training.

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This Guidance note introduces the most common financial incentives addressed to companies that invest in training their staff. It is advisable to use this Guidance note in combination with the ETF VET Financing Prism, which provides a basis for developing multi-stakeholder dialogue on VET finance reform in accordance with principles of good governance. The Financing Prisms models VET finance in terms of three key activities: the mobilisation and allocation of resources along with management of the VET financing chain.

Financial incentives for companies that use VET services include:

• grants involving money or in-kind support from the state;

• tax relief via the system for corporate taxation or the social security system;

• regulatory interventions and other types of non-monetary encouragement such as awards that confer public recognition or the status of ‘preferred provider’ in bidding for public procurement contracts.

Whatever the nature of the incentive, its general purpose is to encourage industry to increase their investment in VET. It is therefore important to design any incentive so that its purpose, cost and potential for adding value is clear. It is also necessary to design and monitor such policy instruments in collaboration with the private sector beneficiaries and public sector stakeholders whose cooperation may be required for implementation. Where these practices are new or unfamiliar awareness and understanding will need to be fostered by demonstrating how they have worked well in other contexts and countries, building the political will and practical support for the introduction of such reforms to the VET financing system.

This policy note is intended as a resource for use by leaders of change related to VET finance reform. It provides many technical elements for consideration in the design of incentives, and illustrates these with case studies of good practice in ETF partner countries.

You may read the document here.