Report authors: Jane Schueler, TeaHQ, and John Stanwick and Phil Loveder, National Centre for Vocational Education Research (NCVER).

The National Centre for Vocational Education Research has completed a report into the return on investment that individuals, organisations and governments can expect from Technical and Vocational Education and Training.

Technical and Vocational Education and Training (TVET) is seen as an important strategy in contributing to equitable, inclusive and sustainable economies and societies.

The United Nations (2015) lists one of its sustainable development goals as to ‘ensure inclusive and equitable quality education and promote lifelong learning opportunities for all’. However, this comes with challenges for the funding and financing of TVET systems internationally and also for providing evidence for the return on investment (ROI) in TVET.

Providing information on ROI in TVET is important as it provides governments and funders of the system with analytical information on the performance of the system and further provides justification for the expenditure on TVET. Information on ROI is also useful at the level of the enterprise and the individual.

However, the measurement of ROI is not straightforward and thinking through what is involved in the ROI calculation can give a better understanding as to what type of information and data is required to calculate the measure. This may also vary depending on the context of the country’s TVET system.

Therefore this report presents a conceptual framework for measuring ROI in TVET that can be tested in international contexts. It builds on previous work done as part of a larger collaborative project by UNESCO-UNEVOC in association with the National Centre for Vocational Education Research (NCVER) in Australia, and other UNEVOC Centres in the Asia-Pacific region.

The aim of the collaborative project is to investigate measurement of ROI across different contexts including across varying countries. The longer-term aim of the ROI project is to equip organisations in various countries to be able to systematically investigate evidence of ROI in TVET and to engage a range of stakeholders in this process. Part of this is the development and testing of a suitable ROI framework that can be applied internationally. There may well be variations between countries in terms of priorities regarding the costs and benefits of TVET. There will almost certainly be variations in terms of the data that is available to measure ROI in TVET.

The report firstly summarises some of the main issues that need to be thought through in measuring ROI. It then introduces an analytical framework that looks at the ROI equation from a range of perspectives, including economic and social and for different stakeholders; including individuals, businesses, governments and societies.

For the purposes of this report:

• Return on investment or ROI refers to a measure of the benefit of an investment relative to the cost of that investment. So in the TVET context, ROI is the benefits derived by individuals, firms and nations from investing in training (VET Glossary 2016).
• Returns to education refer to the individual gain from investing in more education, especially focussed on the relationship between education attainment and earnings. However, for consistency and simplicity, this report tends to use the terminology of Return on Investment or ROI.
• Technical and Vocational Education and Training or TVET comprises education, training and skills development for a wide range of occupations. It can take place in secondary school and tertiary education and includes work-based learning and continuing education and training.

Key messages

The authors highlight the following key observations:

1. The key types of ROI for individuals arising from TVET are primarily employment and productivity supporting higher wages. Attainment of employability skills and improved labour force status are also highly valued job-related returns. Non job-related indicators focus on well-being such as self-esteem and confidence, foundation skill gains, along with social inclusion and improved socioeconomic status.
2. The key indicators of ROI for employers arising from TVET cover employee productivity, business profitability, improving quality of products and services and business innovation. Businesses operate similar to small communities and as such generate social and environmental benefits. In particular employee well-being, employee engagement (which reduces absenteeism and staff turnover), a safe workplace and environmental sustainability practices are key non-market indicators of business returns.
3. The key indicator of ROI in the economy from TVET is economic growth. This relates to labour market participation, reduced unemployment rates and a more skilled workforce. TVET returns to education and training, bring other benefits to society, including improved health, social cohesion (increased democratisation and human rights), and improved social equity particularly for disadvantaged groups and strengthens social capital.

The full report is available here.