Quality approaches in vocational education and training (VET) in European small and medium enterprises: the case of four sectors in three Member States
The Irish National Report
Tom Martin and Jim McDevitt
Tom Martin & Associates/TMA
19 Priory Hall
Tel: (353 1) 283 5252
Fax: (353 1) 283 5251
16 March 2007
Table of Contents
Executive summary 1
1. Introduction and methodology 4
2. Sectoral profiles and training situation 5
3. Consolidated sectoral reports 21
4. Quality approaches in small firms’ VET:
Sectors’ similarities/differences and interpretation 44
5. Summary of findings, conclusions
and recommendations 46
1. Sources of further information 51
2. Bibliography 51
3. Sectoral profile—statistics 53
4. List of interviewees 58
5. Skillnets 59
As part of an international CEDEFOP project, Tom Martin & Associates/TMA, Marketing and Management Consultants, have prepared this report on the quality approaches to vocational educational and training (VET) adopted by Irish SMEs in three sectors, viz Food & Beverages, Retail, and Hotel, Tourism & Catering. The report layout followed a comprehensive set of guidelines developed by the project co-ordinator, Professor Joseph Hassid of the University of Piraeus.
The methodology adopted by the Irish consultants comprised a number of data collection techniques including a literature review and interviews with sector experts, training providers and sector SMEs. A series of international meetings enabled the overall project team to jointly design and finesse comprehensive structured questionnaires for the respective data sources. It should be noted that the modest scale of the project meant a relatively small sample of informants was interviewed and caution should be exercised in interpreting the findings.
The centrepiece of the project was the field study which surveyed three separate stakeholder groupings for each sector — sector experts (government development and training agencies, enterprise representative bodies, etc), VET providers (public and private sector) and SMEs. Where applicable the project hoped to point up the contrasting opinions of these stakeholders in regard to quality in training.
The questionnaires ranged over a wide area of training issues, including levels of in-employment training undertaken, organisation levels targeted (operatives, management, owners), ‘drivers’ of training (new statutory regulations, new technology, increased diversity of new recruits, etc), impediments to SME training, training needs identification (including for any special categories such as migrant workers), design of training programmes, selection criteria for training courses, modes of training delivery, SME satisfaction with training courses and training providers, impact of training on company performance and development, attitudes of providers and SMEs to quality in training, government incentives for training and agency initiatives to promote quality VET in SMEs.
The salient finding of the study was that the stylised SME constraints — the lack of funds, management time, manpower, information and long-term strategic thinking — all conspired to make VET extremely problematic for Irish SMEs in all three sectors. Statutorily-driven training (e.g. food safety) was diligently undertaken but, despite managers becoming better informed of the merits of HR development, few companies enjoyed the luxury of fashioning a comprehensive developmental training strategy.
The besetting problem for SMEs was their inability to let their staff have sufficient time off for training; where larger organisations had the manpower resources to cover for such a training occasion, SMEs simply had no ‘slack’ to exploit. VET providers, who had traditionally concentrated on the provision of generic courses, delivered in a classroom setting, and often of long duration, were only beginning to address the demand among SMEs for short, practical, business-specific and individualised interventions, delivered, where possible, at the place of business.
Another major theme in the Irish case was the phenomenal growth in the immigrant labour force attending the economic boom in the last decade. This welcome influx has challenged the enterprise sector and the training community to design appropriate induction training programmes to maximise the gains for trainees and host organisations. The skills profile of immigrant workers in Ireland in the recent past has exceeded that of the resident population but it is also widely acknowledged that migrants are operating in occupations below that which one would expect, given their educational profile. The principal reasons for this are lack of comparability of international qualifications and deficits in English language skills. The National Qualifications Authority of Ireland (NQAI) is leading the development of an integrated policy approach to the recognition of international qualifications.
As regards government policy on VET, the study found that, in the last decade, policy measures had been heavily concentrated on efforts to upskill the unemployed. Both general training agencies such as FÁS and sector-specific development agencies such as Fáilte Ireland (FI) devoted most of their VET budgets to getting people back into the labour force. The situation for in-employment VET improved when the 2000–2006 National Development Plan allocated a substantial budget for in-employment training to be delivered by FÁS’ Competency Development Programme (CDP) and Excellence through People (ETP) scheme, and by Enterprise Ireland (EI) as part of its Business Development Model (BDM).
A key finding of the study was that identification of training needs — the crucial first element in the European Common Quality Assurance Framework (CQAF) — was proving too big a challenge for busy SME management. Several Irish reports had recommended that the agencies (FÁS, EI and FI) should fill this gap by developing a cadre of skills identification officers in their organisation who could then assist SMEs to accomplish this initiating task.
Recent reports by the Expert Group on Future Skills Needs (EGFSN) and the Small Business Forum highlighting the poor VET performance by Irish SMES have drawn fresh initiatives from the government agencies. In particular the spotlight has fallen on management development in SMEs as an efficient means of instilling a training ethos, and FÁS, in co-operation with local business groups (e.g. Chambers of Commerce, trade associations), are planning SME-friendly management training programmes and training of trainers within SMEs.
One area of promise in the Irish VET policy landscape was the promotion of the network approach to training involving small enterprises. The very successful Skillnets initiative, first piloted in 1999, represented a co-operative training strategy pursued by networks of enterprises operating in the same sector or geographic region to identify and address common training needs. The Skillnets SME-friendly philosophy was to develop practical tools to analyse and meet training needs quickly, effectively and locally. The new County Based Tourism Learning Network announced in 2006 by Fáilte Ireland marked another network-training initiative.
The overall conclusion must be that measures by policy makers and training providers for the provision of training to Irish SMEs are still quite some distance from achieving the robust approach to quality training envisioned in the EC’s Common Quality Assurance Framework in terms of Needs Identification, Training Planning, Implementation, Assessment/Evaluation and Review/Feedback.
TMA recommended that CEDEFOP (or the appropriate European body) should mount an intensive awareness campaign to get the CQAF message out to the relevant national stakeholders — agencies, social partners, business associations, training providers, companies and trainees. A pilot national CQAF programme should be launched in selected sectors to galvanise the training community.
1. Introduction and methodology
The TMA team of Tom Martin and Jim McDevitt are pleased to submit this report to the Project Co-ordinator, University of Piraeus, on a study investigating Irish perspectives with respect to quality approaches in vocational educational and training within small and medium sized enterprises.
The report was prepared following receipt of a comprehensive set of guidelines prepared by the Project Co-ordinator.
The researchers employed a number of data collection techniques including:
Literature review: Published reports and statistics were collected with respect to the three sectors under review: Food and beverages, Retail, and Hotel, tourism and catering. The list of publications accessed is included in Appendix 2 while statistical data are included in Appendix 3;
Interviews: The research team conducted interviews with a range of informants in the three sectors including sectoral experts, training providers and small enterprises. The list of informants surveyed is included in Appendix 4;
Data analysis and report presentation: The researchers analysed the data collected during the preceding two stages and prepared the draft national report for submission to the project co-ordinator.
Members of the Irish research team took part in meetings of the overall project team in Berlin, Brussels and Thessalonica.
It should be noted that the research project was based on a relatively small sample of training providers and small and medium-sized enterprises in each of the three sectors under review and caution should be exercised in interpreting the results.
2. Sectoral profiles and training situation
Section Two provides a brief overview of the dynamics and economic significance of the following sectors in Ireland:
Following these profile sketches the section presents a brief summary of the training situation in terms of demand and provision for the three sectors.
Additional statistical data on each of the three sectoral profiles are presented in Appendix 3.
2.2.1 Food and BeveragesSector
Food and Beverages is Ireland’s single largest indigenous sector and it plays a critical role in the continued growth and success of the Irish economy. The latest published Central Statistics Office (CSO) figures show that it employed 47,000 people directly in 2003, with 75% of this figure working in indigenous industry. The food processing industry accounts for 85% of direct employment.
1997 data showed that there were approximately 1,000 Irish-owned food firms in Ireland employing nearly 32,500 people. 640 of these firms employed less than 19, with an average of 7 employees per firm and a total employment of 4,200. Based on the Forfás IEE Survey data, for Irish-owned food firms employing greater than 19, 55% of their output was sold on the Irish market, with associated employment of approximately 16,000. About 40% of firms employing greater than 19 exported more than half their production and almost 50% exported less than a quarter of their production.
In addition to direct employment the food sector is responsible for c. 300,000 indirect jobs on farms and in sub-supply industries and ancillary services.
Annual food output exceeded €12 billion in 2003 and the industry contributed €6 billion in exports (circa 7% of total manufacturing exports). This export figure had grown to €7 billion by 2005.
Some 70% of food manufacturing enterprises are small companies employing less than 50 people; however, these represent only about 20% of total employment in the industry, and less than 10% of net output.
Growth of the Food and Beverages Industry
The continued development of the food sector is a major priority for Enterprise Ireland (EI), the Irish indigenous industry development agency. In its Annual Report for 2004 EI stated that the potential for continued growth in the food industry was enormous. Such growth will occur against a backdrop of rapid and sustained transition as the food sector becomes increasingly market driven. A new dynamic is at play with new sectors emerging that mirror lifestyle changes and consumer trends in society. Innovation, new market-led products and moving up the value chain shape the future and are the key imperatives for companies that want to be part of this growth. 2004 and 2005 were very god years for the indigenous food sector with many expansions and innovations announced.
Ireland’s vibrant food sector has attracted many of the world’s top food companies such as Diageo and Nutricia. Diageo made two strategic investments in Ireland in 2004 that illustrate how attractive the economy had become as a location for highly successful global multinationals.
There is an increased focus on market-led innovation in the food industry. The primary driver is the market and the consumer, and their requirement for innovative, sophisticated and competitive products. There is particularly strong growth potential in functional foods, ingredients and beverages, and in prepared consumer foods. The companies that succeed in this environment are distinguished by their capacity to innovate on a continuous basis to meet changing consumer demands on a global scale.
Consumers are demanding health, wellness, convenience and value from the food industry. Wellness is a key trend and each producer must have a clear view as to how wellness is going to impact on its product range. The challenge therefore is for producers to create products that follow these trends. This requires an increased level of R&D and innovation focused on high-grade nutritional products, food ingredients and the development of strong consumer brands.
Enterprise Ireland is focussed on supporting this culture for innovation in the sector through:
Supporting the establishment of global research centres, innovation programmes and innovation networks;
Developing networks and collaboration opportunities with industry and the academic/research community.
The 2004 Enterprise Strategy Group (ESG) report, Ahead of the Curve, stated that the Irish agri-food and drink sector now faced fundamental change, largely driven by CAP reform and WTO negotiations. Rapid consolidation at retail and production levels, trade liberalisation and increased competition from lower cost regions, represented major challenges to this important sector of the Irish economy.
The ESG report claimed that Ireland’s future competitiveness as a food exporter will depend on efficiencies across the entire supply chain, from primary input production to manufacturing, marketing and distribution. Product differentiation and the capability to satisfy evolving consumer requirements will be essential.
The ESG concluded that if the key initiatives from the recent strategies proposed for the development of the agri-food sector were implemented, Ireland could achieve world-class standards in production, processing, and customer services in specific segments of the industry. It identified these as:
Prepared consumer foods;
Functional foods and beverages;
2.2.2 Retail Sector
The Forfás report on The Dynamics of the Retail Sector in Ireland back in 2000 noted the substantial changes in the retail sector in the last 30 years, both in Ireland and internationally. The retail base in Ireland was once made up of large numbers of small shops offering specialised services, e.g., butchers, bakers, shoe shops and small general stores offering ranges of dry goods and fresh foods. These were complemented by large department stores offering a range of clothing and household items. High streets in cities and towns contained an assortment of small shops and small general stores (small by comparison with today’s outlets). Manufacturers had considerable market power. They distributed goods through their own outlets, through third party retail outlets and, particularly in the area of fresh foods, through doorstep sales.
As the economy developed consumers became more mobile, tastes changed, and a greater emphasis was placed on price. The retail sector had to respond to these new circumstances. The key change was the emergence of large-scale retailers, particularly in the food sector. As these major food retailers grew they widened the gap with the smaller, more traditional retailer. Increased concentration in Ireland mirrored the same phenomenon in other countries. This, in turn, led to the ‘internationalisation’ of retailing with super retailers operating in a number of countries.
This growth switched the market power, introducing a range of retailers who were larger than many of their suppliers. Food retailers, in particular, assumed the role of ‘channel captaincy’ and drove much of the subsequent changes in the supply chain. Footwear and clothing retailing also experienced increased concentration but not to the same extent as the food sector. Like its counterpart in many European countries, the Irish independent non-food retail sector remained strong by adapting to changing consumer tastes and trends.
Overall, the pace of structural change in the Irish retail sector accelerated, driven by the search for economies of scale, increased market share, vertical integration of the supply chain, consolidation among the major companies and the integration of information and communications technologies. The change was manifested in continued expansion in outlet size together with variations in formats to meet locational and demographic needs and the growth of symbol groups. Very noticeable in Ireland was the increase in international ownership, particularly with the economic boom from the mid 1990s.
The Forfás report summarised the dynamics of the retail sector:
The economic contribution of the Irish retail sector (gross value added as a percentage of GDP) increased over the decade. Comparisons with other countries had found that the ratio of GVA to GDP does not change significantly as an economy grows; this implied that Irish retailers were benefiting from a productivity learning curve. Industry sources reported that Irish retailers were becoming very competitive in aspects of retailing such as purchasing, category management, logistics management, store management and consumer marketing;
The number of retail outlets in Ireland grew from just under 40,000 in 1977 to nearly 53,000 in 1998. There was a significant reduction in grocery shops, which was more than offset by increases in the numbers of shops providing personal services;
Within the food sector, there was a significant reduction in shop numbers over the decade largely due to the decline of the independent general grocery sector.
The number of clothing shops remained fairly constant. Independent specialists comprised a significant cohort in this sector.
Employment in the retail sector was high in Ireland compared to other European countries. In 1998 employment in the Irish retail sector accounted for 10.8% of total employment.
There was a significant trend towards part-time and female employment in the retail sector.
Retailing has significant linkages within the Irish economy. 50 per cent of employment in food and clothing manufacturing companies employing 20 or more people were directly dependent on the domestic Irish retail market.
The rate of concentration in the food sector due to indigenous growth had levelled off at the start of the decade but the subsequent entry of major UK food retailers into the Irish market renewed the concentration dynamic.
The level of own-label food product sales in Ireland was low compared to other countries. The expectation was that own-label sales would increase in the near future;
The 2005 report of the Consumer Strategy Group (CSG) updated the commentary on the dynamics of the Irish retail sector. The structure had changed dramatically with retail sales accounting for 15.1 per cent of GDP, having grown by 40 per cent in the 1999–2003 period. Although there was little change in the number of food and non-food retail outlets, total retail floor space grew by 36.1 per cent from 7.2 million square metres to 9.8 million square metres.
Forty four per cent of retail outlets were in Leinster. Dublin, with 29 per cent of the population, had only 19.5 per cent of outlets, but these had higher average floor space.
Ireland was well served in terms of number of outlets per head of population and was above the EU average. In 2003 Ireland had 8.6 retail outlets for every 1,000 people compared to an EU average of 8.
Food sales from convenience stores now represented 42.2 per cent of sales compared to 38.1 per cent in 1999. Between 1999 and 2003 food sales in Ireland at discount supermarkets such as Aldi and Lidl rose from €29 million to €165 million driven by new store openings and consumers’ growing acceptance of the new format. Aldi and Lidl together now accounted for 3 per cent of total retail grocery sales.
Sales through alternative selling channels (e.g. catalogue shopping, internet retailing, direct selling, vending machines and non-petrol sales at service stations) increased by an estimated €1.1 billion in 2003.
2.2.3 Hotel, Tourism and Catering Sector
Tourism is a major economic sector for Ireland in terms of national and regional wealth creation. Tourism generates some €4 billion in annual foreign revenue earnings and €1 billion in domestic earnings, supports 140,000 jobs and is by far the largest, Irish-owned internationally-traded sector of the Irish economy.
The turnover of the industry represents c. 4.4% of Irish Gross National Product.
Employment in the sector grew by more than 70% between 1990 and 2002 — a rate of growth considerably above the 50% growth in overall employment in the economy over that period.
Visitor numbers to Ireland grew well ahead of global trends throughout the 1990s, increasing by an average of over 7% each year compared with a corresponding world figure of 4.3%.
In terms of revenue, Ireland’s performance also exceeded European and global growth rates in the eleven years up to 2001. The best performance source markets for Irish tourism were the US and Britain.
The hotel sector is one of the biggest sub-sectors within the tourism industry; there were an estimated 54,095 people employed in the hotel sector in 2005. Of these, approximately 89% were year-round and 11% were seasonal employees; this represented a marginal increase on the 2004 figures.
Overall 26% of operators stated they had increased employment, 17% a decrease in employment, and the majority 59% said employment was broadly the same when compared to 2004.
Approximately two out of every three year-round hotel employees are in full-time employment.
Waiting staff account for approximately 18% of those in employment, followed by accommodation staff (16%), bar staff (13%) and chefs and cooks (12%).
Unskilled operatives, which includes occupations such as cleaners and those employed at a general assistant level, also accounted for 12% of all year-round employment.
In the region of three out of five (59%) people working in hotels are women. Women account for an even greater percentage of those employed in a supervisory role (63%), whereas the gap at managerial level is a lot narrower, with 51% of hotel managers being female, and 49% male.
Approximately two-thirds (64%) of year-round employees are Irish. A further 26% are from other EU member states, and 10% from non-EU member states.
The restaurant sector is also a major employer. There was an estimated 43,309 people employed in the sector in 2005. Of these approximately 35,997 (83%) were year-round and 7,312 (17%) were seasonal employees; Approximately 58% of year-round employees were in full-time employment.
About 28% of the total employment was in the Dublin region (equivalent to about 12,000 people). The largest proportion of employees were employed in the remainder of the Southern and Eastern region (45%); while the remaining employees (27%) were employed in the Border, Midland and Western region.
Waiting staff accounted for approximately a third (34%) of those working in the restaurant sector, followed by chef/cooking staff (25%), and unskilled operatives (14%).
Just over half (53%) of those employed on a year-round basis in restaurants were women. Women accounted for an even greater percentage of those employed in a supervisory role (55%). However, the men were a slight majority at managerial level, with 53% of all managerial staff being male.
Approximately 55% of year-round employees were Irish. A further 29% were from other EU member states, and 16% from non-EU member states; Irish employees accounted for the vast majority of employees at managerial and administrative level, whereas other EU and non-EU nationals accounted for more sizeable minorities amongst waiting, cooking and unskilled operative staff.
2.2.4 Concluding Remarks on the Sectoral Profiles
What is common to the three sectors chosen for study in this report is their image as traditional sectors with a good deal of low-tech, low-skills activities and sizeable SME populations. However all three have been shown to be very significant components of Ireland’s enterprise structure and have the potential to remain substantial creators of wealth and employment.
Reports have described how the three sectors have experienced profound changes over the last decade and none has remained untouched by the bracing wind of global competition.
It is a commonplace to state that, in the face of change and competition, a sector’s crucial resource is its people (patently so in the case of Tourism), but if acknowledgement of this fact is backed up by world-class investment in Human Resources (HR) development then Ireland can continue to enjoy the fruits of their success.
The following section looks at the current situation regarding training in the sectors as reflected by activity from the demand and supply sides and the efforts of government to enhance their commitment to HR development.
2.3 Training situation
2.3.1 Training in the Food and Beverages sector
Two reports in 2003 by the Expert Group on Future Skills Needs1 (EGFSN) concluded that although the food sector was expected to experience a decline in employment over the period to 2007, it would continue to represent a significant sector in Ireland, both as employment provider and as a major exporter. For this reason, it was all the more important that those continuing to work within the sector were well equipped with the education and skills needed to deal with an increasingly competitive environment.
Two areas where changes were likely to be most apparent were in the skills profiles of production/operative staff and graduate entrants. Its industry survey indicated that while the demand for overall operative staff was set to remain constant or in slow decline, the demand for immigrant labour, the majority of which were employed in low-skilled jobs, was likely to increase due to competitive pressures and the difficulty in securing local labour. Second, while it was found that there was no current or likely shortfall in graduate numbers to the food processing industry over the next five years, analysis of survey respondents and the views expressed by industry confirmed that the skill-sets of graduates would need to evolve to reflect changes in the market environment and industry structure.
The principal public-sector training agencies involved in the Food Industry include sectoral specialists Teagasc (agriculture and food processing), An Bord Iascaigh Mhara (Fisheries) and Bord Bia (food marketing), together with cross-sector agencies FÁS, the National Training and Employment Authority, and Enterprise Ireland (EI), the development agency for indigenous enterprise.