Skills Development On-the-Job Training: How the New Funding Works

An automotive supplier is producing fewer traditional transmissions and has now started manufacturing electric motors instead. At an industrial logistics company, more and more work is being done digitally.

These are just two examples among many.

German industry is undergoing a major transformation. As a result, many jobs are changing. In situations like these, employees need the opportunity to prepare themselves for new roles—even if it costs money and time.

The “traffic light” coalition has adopted an idea from IG Metall to address this. With the“Act to Strengthen Support for Vocational Training and Continuing Education,”it has created new funding opportunities for workplace continuing education.

The most important funding instruments under the law took effect on April 1, 2024.

How “Continuing Education Funding” Works

Who is eligible for funding?
Continuing education funding is available for individual employees or entire groups. They may remain at their company after completing the training, but are not required to do so. Age, qualifications, and company size do not factor into eligibility for funding.

What is funded?
Funding is available for everything from skill development to retraining.

How is funding provided?
Employees receive 100 percent of their pay during the training.

The employer receives a wage subsidy and a subsidy toward the costs of continuing education. These subsidies are available only under certain conditions. As a general rule, the smaller the company, the higher the subsidy.

If there is a company agreement on training, the company receives an additional 5 percent wage subsidy.

How the “Skills Development Grant” Works

Who is eligible for funding?
The training allowance is intended for entire groups of employees affected by economic or technological structural change.

To qualify for funding, at least 20 percent of the employees in a company must require continuing education. In small and medium-sized enterprises, this requirement is only 10 percent.

Another requirement for the training allowance is a company agreement or collective bargaining agreement that addresses the training needs and career prospects of employees at the company.

What is funded?
The training allowance also supports continuing education programs, including retraining. However, training to become a vocational specialist is also an option.

How is funding provided?
The training allowance functions as a wage replacement benefit—similar to short-time work benefits: Employees receive 60 percent of their normal wages. Those with children receive 67 percent. The employer may supplement this amount, for example, through a company agreement.

The company covers the costs of continuing education.