Funding Arrangements in Denmark
In the Danish VET system, VET funding is shared between the state and the employers. The school-based part of VET is financed by the state, and the companies fund the work-based training, as well as the wages apprentices receive during the entire main VET programme. The Employers’ Reimbursement Fund reimburses the company for the apprentice’s wages when the apprentice undertakes the school-based part of a programme.
The state and the employers are the two main actors in the financing of the apprenticeship system. The school-based parts of the vocational education and training programmes are financed by the state based on a taximeter system (pay per student). There are no tuition fees for students, who in fact receive an apprentice salary from the company fixed in the apprentice training contract for their work during the entire apprenticeship. All companies, both public and private, have to pay a fixed annual amount into the Employers’ Reimbursement Fund for each of their employees, which reimburse the company for the apprentice’s wages when the apprentice is undertaking the school-based part of a VET programme.
Financial support for VET colleges
The Danish VET colleges are self-governing institutions, and the system is based on management by objectives. This implies that the VET colleges have substantial autonomy within the overall objectives, including the quality-management goals and the legislative framework. The governing board is accountable to the Ministry of Children and Education. VET colleges in Denmark are funded by the Ministry of Children and Education from a basic grant for being a VET college and by five different taximeters related to the number of students enrolled: 1) student taximeter; 2) completion taximeter; 3) common costs taximeter; 4) building taximeter; and 5) the Centre of Placement taximeter.
The basic grant varies from college to college. The first four taximeters are allocated in accordance with the number of students. There are rather large differences in the subsidies between the basic and the main programmes, and again major differences between the different educational programmes. The fifth taximeter is an economic incentive for the colleges so that they receive extra funding through the taximeter system if the Centre of Placement manages to increase the number of apprenticeship agreements with companies.
Financial support for apprentices
The Danish VET system is a dual system. It is based on the notion that employers have an interest in the best possible and relevantly educated labour force and are therefore willing to take on an active role in the training of apprentices. In principle, the government pays for the school-based activities, and the employer pays for the time the apprentice is in the company.
The first part of a VET programme (the basic programme) is school based (twenty to forty weeks), while the second part (the main programme) alternates between training in school and at the company, based on a contractual agreement between employer and apprentice. During the basic programme, the student/apprentice receives economic support from the government in the form of a state grant. During the main programme, when the apprentices have a contract with a company, they receive wages according to the collective bargaining agreement.
If students do not have a contract with a company, then for some programmes they can conduct the practical training in a Centre of Placement. The student will receive financial support from the government equivalent to the state grant.
During the main programme, the student may undertake part or all of the practical training in a company abroad. The Employers Reimbursement Fund contributes by helping the student with expenses when moving to another country. It also covers travel expenses when students go abroad, and when they return they undertake the school-based part of the main programme.