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2017 Management Letter - Audit on support for young people with skills gaps

Final audit report on support for young people with skills gaps pursuant to Art. 54a of the German Social Security Code, Volume III (Förderung der Einstiegsqualifizierung)
Jan 25, 2017

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Employers who provide support to young people through entry-level on-the-job training (Einstiegsqualifizierung), can obtain grants pursuant to Art. 54a German Social Security Code Volume III. The German SAI has audited the support for young people and produced the following final findings.

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In 13 out of 142 cases audited, the local employment agencies either failed to assess whether the eligibility criteria for entry-level training support had been met, or failed to do so in a timely manner. The Federal Employment Agency concurred with the opinion of the German SAI and pointed out various options for improving technical oversight to ensure local agencies check eligibility on a timely basis.

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In seven cases audited, the apprenticeship seekers supported would not have been eligible in the first place because they had been ill-suited to the training objective or had already completed professional training abroad. The Agency rightly argued that developing vocational aptitude might also be a legitimate purpose of entry-level on-the-job training. The Agency also acknowledged that its local agencies should not have funded entry-level on-the-job training for young people who already had completed vocational training abroad. However, the Agency said it was considering a modification of its internal guidance so as to limit exclusion from financial assistance to vocational qualifications formally recognised in Germany.

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The local agencies have the legal duty to incorporate into integration agreements to be concluded with apprenticeship seekers the objectives and stipulate what is expected of both themselves and the prospective apprentice, along with the benefits to be provided. In 52 per cent of the cases audited, valid integration agreements were lacking. In a further 26 per cent of the cases audited, the agencies did not specify, in a valid integration agreement that support for entry-level training was one of the benefits provided. The Federal Employment Agency intended to improve administrative practices by means of implementing various measures at the regional directorates.

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Entry-level training support is a discretionary benefit of employment promotion. In all cases audited, the agencies funded entry-level training to the maximum amount and full duration of 12 months without providing any relevant justification. In July 2016, the Federal Agency amended its internal guidance to the effect that entry-level training was to be funded with the statutory maximum amount, if the remuneration was equal to or exceeded the maximum amount of financial support. As a result, the Agency instructed its local agencies not to rely any longer on the leeway provided for by legislation. Therefore, this instruction and any administrative action to this effect are illegal.

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In some cases, the apprentices supported for entry-level training simultaneously received grants for professional integration pursuant to Art. 45 Social Security Code Volume III. In some cases, the employer also sponsored these other measures, meaning that the employer received benefits under both schemes. However, duplicative funding of two full-time measures pursuant to Art. 45 Social Security Code Volume III and Art. 54a Social Security Code Volume III is not permitted. The Federal Employment Agency concurs with the opinion of the German SAI. The Agency stated that the regional directorates concerned had reviewed the measures and not found any further duplicative funding and that in the future, they would check potential cases of duplicate funding.

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In half of the entry-level training programmes lasting at least three months, the agencies did not contact the apprentices. Nor, in more than a quarter of these cases, did they make any contact with the employer. The agencies should mentor apprentices and employers more closely during entry-level training than they had done to date, in order to avoid drop-outs, and support apprentices in finding subsequent vocational training. The Federal Employment Agency wants to provide better service in the future.

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In 30 of 41 of cases, where entry-level training was not followed by vocational training, no certificates of the skills and knowledges imparted, were provided to the young people. In 11 of these 30 cases, agencies failed to consistently manage the procedure, for example via the confirmation templates and thus did not ensure that they obtained a copy of the certificate. According to the Federal Employment Agency better use should be made of information on the knowledge and skills acquired at entry-level training when matching apprentices to positions. The Agency pointed out that the regional directorates had also alerted the local agencies to the importance of obtaining and documenting the knowledge and skills acquired during entry-level training.

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