- 2019Approved/Agreed
- 2020Implementation
- 2021Implementation
- 2022Completed
Background
Until 2019, vocational education institutions were financed based on the number of State-financed study places. The disadvantage of the system was the dependence of the budget on changes in student numbers. Also, the financing system did not involve any funding component based on performance.
Objectives
To increase the responsiveness of VET schools to changes in the regional labour market, and to establish better preconditions for cooperation between VET schools, employers and local governments. For learners, the amendments aim to broaden their choices and improve the regional accessibility and quality of VET.
Description
The financing model for VET has been renewed and amendments to the Vocational Education Institutions Act were adopted in 2018. They came into force in 2019. Financing principles were changed to increase VET institutions' motivation and autonomy. The system of State-commissioned study places was abolished and replaced by the number of training places in areas of national importance being negotiated separately with each school and school council, based on OSKA's recommendations and regional needs.
According to the amended system, the operating costs of schools are covered from the State budget. Up to 20% of the school's operating costs is performance-based. The level of funding is determined by study outcomes and a range of indicators: the quality indicators of the provision of VET, which include graduating with a vocational examination and completion of workplace-based study; the performance indicators of the provision of VET, which include completion of vocational secondary education curricula; and indicators of supporting the development of society, which include graduates´ participation in employment and continuation of studies and cooperation with the social partners and education institutions. It is also possible to provide targeted support to the school.
In 2019, a regulation of the Minister for Education and Research was enforced to establish the principles of operating support for VET institutions and conditions and procedures for their implementation. Operating support enables the VET institution to organise high-quality vocational training and carry out its development plan.
VET institutions´ budgets and provision of training for 2020 were based on the new principles of operating support, but due to the lack of funds performance-based funding has not been implemented.
The financing model continued to be implemented regarding VET institutions' operating support and funding based on training places. Performance-based funding has still not been implemented due to the lack of funds. However, it is considered a priority that is expected to be funded starting from the next budget period. To increase stakeholder involvement, the VET Council (an advisory body consisting of social partners) has been involved in the planning of VET training places.
In 2022, regulation on updating the principles of operating support of VET institutions was prepared to align operational and performance indicators. State funding of VET was increased to launch the performance-based financing system from 2023.
For progress as of 2023, see related policy developments.
Bodies responsible
- Ministry of Education and Research
- VET Council
Target groups
Entities providing VET
- VET providers (all kinds)
Thematic categories
Governance of VET and lifelong learning
This thematic category looks at existing legal frameworks providing for strategic, operational – including quality assurance – and financing arrangements for VET and lifelong learning (LLL). It examines how VET and LLL-related policies are placed in broad national socioeconomic contexts and coordinate with other strategies and policies, such as economic, social and employment, growth and innovation, recovery and resilience.
This thematic category covers partnerships and collaboration networks of VET stakeholders – especially the social partners – to shape and implement VET in a country, including looking at how their roles and responsibilities for VET at national, regional and local levels are shared and distributed, ensuring an appropriate degree of autonomy for VET providers to adapt their offer.
The thematic category also includes efforts to create national, regional and sectoral skills intelligence systems (skills anticipation and graduate tracking) and using skills intelligence for making decisions about VET and LLL on quality, inclusiveness and flexibility.
This thematic sub-category refers to the ways VET is funded at the system level. Policies include optimisation of VET provider funding that allows them to adapt their offer to changing skill needs, green and digital transitions, the social agenda and economic cycles, e.g. increasing the funding for VET or for specific programmes. They can also concern changing the mechanism of how the funding is allocated to VET schools (per capita vs based on achievement or other criteria). Using EU funds and financial instruments for development of VET and skills also falls into this sub-category.
Subsystem
Further reading
Country
Type of development
Cedefop, & ReferNet. (2025). Amending the financing principles of VET (until 2022): Estonia. In Cedefop, & ReferNet. (2025). Timeline of VET policies in Europe (2024 update) [Online tool].
https://www.cedefop.europa.eu/en/tools/timeline-vet-policies-europe/search/35333