eBook Payback clauses

Payback clauses in Europe
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Supporting company investment in training, final report. Research on the operation and performance of incentives and funding instruments to support investment and participation in adult learning has become more significant since the Lisbon strategy set the target for lifelong learning. The Education and Training 2020 strategy has now set the benchmark for adult participation in learning at 15%, to be reached by 2020. This is a great challenge considering that the current European average is still below 10%. It can only be achieved with the active involvement and commitment of states, social partners, companies and individuals.

Public investment in adult learning alone will not be sufficient to ensure the total coverage of the training demand, particularly for those who have already entered the labour market. Since compulsory education and initial vocational education and training (IVET) is funded in general by governments in most European countries, individuals and companies are requested to cater for their own training needs in the labour market. Although employers are major investors in continuing vocational education and training (CVET), they do not cover all employee training needs satisfactorily due to various market failures. One of the core investment risks is when the employee leaves the company shortly after the termination of training, for example for a more challenging or better paid job. The new employer then reaps the benefits from the training provided by the former employer. Payback clauses are a means of overcoming this risk and so promote training investment.

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