Workforce for Reconstruction and Dual Education: How to Engage Business in Training Students?

Businesses do need workers, but too often it is easier for companies to train people from scratch than to retrain VET graduates to meet modern market standards or the specific needs of production. This makes close cooperation between business and educational institutions indispensable—both for the quality of vocational education and for the country’s reconstruction. So what, then, prevents this mutually beneficial cooperation?

Vocational education plays a key role in supplying the labor market with skilled workers—yet both their number and quality leave much to be desired. The issue is especially acute during wartime, when a large share of the working-age population is either fighting or has left the country, even as the demand for workers continues to grow.

The war has become a severe test for Ukraine’s labor market. On the one hand, according to UN data, more than six million refugees have left the country, significantly reducing its labor potential. For instance, in the first seven months of 2025, the State Employment Service offered over 265,000 vacancies, yet only 136,000 people were employed. On the other hand, the same UN data show that Ukraine has 3.6 million internally displaced persons (IDPs) who, because of relocation, had to seek new jobs—contributing to a rise in unemployment.

According to a human capital study by the KSE Institute, Ukraine is experiencing both high unemployment—11.5% in 2024—and a shortage of workers, with 63% of businesses reporting difficulties in hiring. This points to structural unemployment in the labor market—a form of joblessness that stems from a mismatch between workers’ existing skills and the demand for labor brought about by structural changes in the economy.

As a result, some sectors face acute labor shortages—particularly in blue-collar professions—while in other sectors or among certain groups, unemployment remains high. For instance, unemployment among IDPs is 15%, four percentage points above the national average. To cope with the shortage of workers, businesses are raising wages. For example, in 2024, the average pay for construction workers rose by 30%, while pay for logistics specialists increased by 20%.

At the same time, although vocational education institutions are meant to be the primary suppliers of skilled blue-collar workers, the shortage of labor is compounded by another problem—low employment rates among graduates. Only 68.3% of VET graduates find work after finishing their studies, well below the EU average of 81% (across all fields).

The effectiveness of vocational education—that is, the share of graduates who find employment—depends largely on the closeness of cooperation between institutions and employers. While, on average, the employment rate of VET graduates in the European Union is significantly higher than in Ukraine, it ranges from 60% to 95% across EU countries.

Meanwhile, standard workplace practice is not always enough to equip students with the necessary skills. A telling example is Spain, where 96.5% of students had experience with work-based learning (WBL), yet the graduate employment rate was only 62.8%. This can be explained by a number of factors, including the particular features of Spain’s economy—such as its seasonal reliance on tourism. However, another factor may be the limited spread of deeper cooperation between educational institutions and businesses: dual education (see Map 1).

Only about 1.4% of Ukrainian companies with more than 10 employees take part in dual vocational education, a level comparable to other Eastern European countries such as Romania (3.5%) and Lithuania (2.3%), but far below Central and Western Europe, where participation can exceed 40%. The share of students in dual programs is also small—just 5–7% of all vocational education students.

Although this is a relatively small group of students, the employment rate of dual program graduates matches the EU average (81.4%). This makes dual education more effective than standard vocational programs, as it serves the interests of students, businesses, the state, and society at large, which benefits from a greater number of well-trained specialists working in their field.

Yet if there is such a straightforward way to improve the quality of training and raise the employment rate of vocational students—one that benefits everyone—why is it not more widespread in Ukraine? There are several reasons. The problem is not only the difficulty of implementing dual education, but also the fact that placing practice above theory is not always appropriate in training students.

To address this question, the KSE Institute, together with Ukraine’s Ministry of Education and Science, conducted a study to identify the key barriers to the development of dual education and exploring pathways for its expansion. In this paper, we share the main findings and recommendations, which can help make dual education more widespread and effective in Ukraine. The study consisted of two components: a quantitative one—a national business survey—and a qualitative one—interviews with representatives of business, educational institutions, and local authorities (see Methodology for details).

Why doesn’t business participate in dual education programs?

To understand why businesses hesitate—and what pitfalls dual vocational education faces in Ukraine—we conducted 11 interviews with representatives from companies, educational institutions, and local authorities. These conversations revealed two of the most significant problems:

• Businesses often lack clarity on how to engage with educational institutions

The rules and conditions of dual programs are not clear to all educational institutions or companies. This results in wide variation in how VETs implement them—from versions of dual education with almost no theory and more than 90% practice (even though the intended ratio is about 30 to 70) to “online dual education,” where the essence of the model is lost, since the students mentioned in interviews cannot actually work. Businesses, in turn, may genuinely invest in training students—committing significant time and resources—or simply assign them low-skilled tasks.

In such an uncertain environment, some companies prefer to wait for the “finalization of the reform,” unwilling to participate in experiments. Businesses also have the alternative of internships, which carry far fewer obligations, and many do not understand why dual programs would be more beneficial for them—one of several symptoms of poor communication.

Although tools exist to facilitate cooperation between companies and educational institutions, implementation often runs into difficulties. For instance, there is a mechanism for regional contracting in vocational education that formally incorporates business input through employer consultations and the coordination of specialties demanded on the local labor market. In practice, however, regional contracting does not always reflect actual market needs.

When a new industry emerges in a region, companies often have to train specialists themselves, since the VETs there do not provide such instruction. And even when jobs are available and companies are ready to employ students, their requests may not be included in the regional order—likely because officials favor established, popular programs. Meanwhile, because educational curricula and facilities are updated so slowly, businesses are left to train employees on their own.

•  Investment risks

A major barrier for business is investment risk. Proper training of students requires significant time and financial resources, which may not pay off. For the investment to be justified, a student must either remain with the company long enough or generate returns greater than the cost of training. In Switzerland, for example, companies on average manage to recoup these costs at a rate of 110% through students’ work.

However, in a labor market crisis, the main measure of return on investment in dual education is how many students remain to work at the company. Here, outcomes can vary significantly: in one interview, a company representative reported that 100% of their students stayed after training, while another reported none. Such differences may reflect not only company-specific procedures for selecting and training students, but also how students themselves envision their future careers and place of residence.

In fact, as in all matters of business, there are no guarantees of success—only a balance between potential risks and benefits. Among those risks, beyond the direct costs of training, is the danger of staff poaching, which can be a serious problem in competitive sectors such as construction.

Factors behind non-participation in dual education programs: what stops companies from training students?

To validate the interview findings and assess the impact of different factors on companies’ participation in dual programs, we conducted a quantitative survey of Ukrainian businesses. The results showed that the main barriers to introducing dual vocational education are the lack of government support and the legal risks of employing minors (see Figure 1).

Looking at the situation by company size, significant differences emerge:

• Micro (up to 10 employees) and small companies (10 to 50 employees) most often cite a lack of government support and financial difficulties.
• Medium-sized companies (50–250 employees) are less likely to emphasize government support or financial difficulties, and no single factor stands out as distinctive.
• Large companies (over 250 employees) are the least concerned about government support and finances but place greater emphasis on the material and technical resources of VETs and on student shortages.

A common problem for all companies is the risk of employing minors: from the challenges of working with underage students and the heightened responsibility they entail, to the legal restrictions on their employment. The significance of this factor is underscored by 2024 data from the State Statistics Service, which show that 58% of VET students are under the age of 18. At the same time, 42% are adults—a share that is substantially higher than the current participation rate in dual programs (5–7% of students)

Thus, two main factors constrain the spread of dual programs:

• For micro, small, and medium-sized companies—limited business resources.
• For large companies—limited capacity of VETs.

Possible solutions: how to scale up dual education and engage businesses?

The dual education format assumes that students spend more time in companies than in educational institutions. Implementing dual education may involve paying for dedicated staff (trainers) and covering students’ material needs—in addition to wages, this can include transportation, equipment, and meals. These are significant costs for businesses, so the state could direct part of its vocational education funding to support companies participating in dual programs. Equally important is the form this government support takes, an issue on which businesses also expressed their views in the survey (see Figure 2).

The most desirable forms of financial support for businesses are direct cost reimbursement and tax breaks. Direct reimbursement is attractive to companies of all sizes, while tax breaks appeal primarily to micro companies and, to a lesser extent, to small and medium-sized ones.

To attract large companies, VETs require major upgrades, including modernized facilities and training programs that better align with labor market needs. Part of the funding for this can come through cooperation with businesses, as typically half of a student’s wage earned in dual programs is allocated to VETs. Still, the first step in improving the material and curricular base of VETs must be taken by the state.

The size of the compensation businesses expect should also be taken into account. On average, companies asked for rather high amounts to launch dual education programs—UAH 20,000 per student per month. These figures are unrealistic and can be attributed to a lack of experience with dual training, as expectations for expanding existing programs were significantly lower, at UAH 10,000.

A common response was the equivalent of one minimum wage in 2025 (UAH 8,000) or less—selected by 17% of companies without dual education programs and 67% of those that have them. Arguing in favor of this level of compensation, or equivalent tax breaks or other forms of support per student, is the fact that the dual format requires 70% of training to take place in the workplace. In effect, companies would be performing a large share of the work of VETs.

However, such monthly payments for thousands of students could become a significant financial burden for businesses. To reduce costs, the Austrian approach could be applied, where compensation is only provided for the initial training period, when the student is still a low-productivity worker. For example, payments of UAH 8,000 during the first three months of training.

Why don’t educational institutions participate in dual education programs?

Although this article mainly focuses on the business perspective, the perspective of educational institutions cannot be overlooked.

• Curriculum issues: practice over theory?

In the interviews, respondents expressed concern that when 70% of the program is devoted to workplace training, students lack sufficient time for theoretical instruction. While dual education can improve the chances of employment after graduation, it may also sharply limit a student’s opportunities for career advancement or for acquiring new skills.

The problem of balancing theory and practical training can be viewed from two angles:

• Variety of practice. For example, if cooks or pastry chefs train in only one restaurant, they may be exposed to only a limited range of dishes.
• Quality of practice. In some companies, a dedicated trainer guides students through different aspects of the work process, while in others, students are relegated to low-skilled tasks without acquiring meaningful skills.

In addition, students who enter vocational schools after the 9th grade must still complete the general school curriculum in order to take the NMT/ZNO exams later on. For these students, the 30% share of theoretical training in dual education programs—focused mostly on professional preparation—is insufficient.

• Are students ready to work?

The need to complete a full secondary education is closely linked to students’ age. Most enter vocational schools after the 9th grade. Because their programs are longer than those for students who enroll after the 11th grade, minors make up the overwhelming majority of vocational education students (see Figure 3).

Thus, the spread of dual education is constrained not only by the need for theoretical knowledge and the completion of the school curriculum, but also by students’ age. While employing minors is possible, it is legally and socially complicated.

The war also hinders learning. A representative of one vocational school noted in an interview that they have a group formally enrolled in dual education, but the students study theory remotely. This is due to security concerns and the school’s proximity to the frontline: not all parents are willing to let their children travel alone to other cities for work, even when such opportunities exist. As a result, even in relatively safe regions, it is difficult to arrange for vocational students to work in other cities.

Therefore, scaling up dual education is possible but severely constrained, especially under current conditions. On the one hand, students and vocational schools cannot be sure that a company will remain in operation—financially or even physically—until the end of training. On the other hand, companies have no guarantee that students will not go abroad or move to a competitor once their training is complete.

This highlights the need to reassess the role of vocational schools and place greater emphasis on training and retraining adult workers. For this group, theoretical instruction is less critical, as they are less likely to need to complete secondary education, while the need to work and earn is pressing. Dual programs for adults could provide a relatively fast pathway to acquiring a profession. In this way, adults would gain employment and companies would obtain qualified specialists.

Conclusions

Vocational education should not be regarded as a “last-resort option” for those who did not pass university entrance exams. Instead, it should be recognized as an essential pillar of the labor market—meeting business needs while offering students near-guaranteed employment in their chosen field along with decent pay.

Achieving this requires the Ministry of Education and Science to provide financial, administrative, and informational support for dual education, while taking into account the needs and concerns of businesses. The aim of such support is to place vocational schools on a market-oriented footing, so that the quality of training improves not only through public funding but also through the active involvement of companies in preparing specialists for their own workforce needs.

Revitalizing vocational education in this way would generate significant social benefits. It could become one of the key measures enabling Ukraine to cope not only with postwar reconstruction but also with the labor market crisis driven by long-term demographic change.

At the same time, this does not mean that vocational education should be shifted entirely into the dual format. This model is most suitable for adult students who have already completed secondary education. Equally important is ensuring quality control of practical training, so that students do more than perform repetitive, low-skilled tasks—they must genuinely learn and acquire professional competencies within companies.

Methodology

The study was conducted in April 2025, with respondents recruited through invitations sent to companies. In total, 697 respondents participated, each representing their respective company. The sample was non-probabilistic, as participants were engaged through invitations and announcements on social media. To design the questionnaire, a preliminary stage of individual interviews was carried out with representatives of companies, vocational schools, and local authorities.