The European Training Foundation (ETF) assessment provides an external, forward-looking analysis of a country's human capital issues and vocational education and training (VET) policies from a lifelong learning perspective. It is based on evidence provided in the Armenian National Torino Process Report compiled in 2019 using a standardised questionnaire called the National Reporting Framework (NRF) and additional information sources, where relevant.

The assessment process included an extensive phase of desk research based on responses to the NRF and the preparation of a paper about the major issues that included an overview of the themes to be discussed in the present report. It was finalised in consultation with the country and thematic teams that are responsible for Armenia at ETF.

The National Development Strategy for Armenia for 2014-2025 views education 'as one of the preconditions for sustainable development for the country'. In this context, vocational education is recognised as a small but important contributor[1] Armenia Development Strategy 2014-2025, page 106
.

In Armenia, VET initiatives concentrate primarily on initial VET (IVET). IVET is divided into two levels: preliminary (craftsmanship) and middle vocational education. Both offer vocational qualifications, which help open access to the labour market. Individuals can also pursue a secondary general diploma, called a Matura.

Armenia faces significant human capital development challenges – including a high rate of labour market inactivity (39.1%), high unemployment (17.8%), particularly in urban areas, a large informal sector and substantial differences between regions and population groups. Notably, young people and women are underrepresented in the labour market. These challenges limit the development and use of human capital, leading to both constraints and extra costs. The country spends relatively little on education (2.8% of GDP) and employment programmes (0.1% state expenditure).

VET programs suffer from a perceived disadvantage because higher education seems to offer students better returns. The employment rate for higher education graduates is 60.5%, compared to 51.1% for VET graduates[2] ETE KIESE Indicators, 2019
. Higher education graduates tend to obtain better jobs: 72.6% hold high-skilled jobs compared to 30% of VET graduates, and they earn 27% more on average[3] Labour Market in the Republic of Armenia, 2013-2017 Statistical Handbook, Income, Table 5.4
. This would seem to make higher education more attractive to students; however, at the same time, a greater focus on higher education could lead to more mismatches in the labour market.

A brief analysis of economic and labour market developments in Armenia points to the following issues regarding the use of human capital in the country.

Armenia has made important and valuable progress in appropriate directions in recent years with limited resources. In the past 10 years, the country has updated its VET system to include: entrepreneurial learning in the curriculum; regular continuing professional development for VET teachers; sector skills councils; work-based learning; qualification standards, including the use of learning outcomes; quality assurance measures; and closer links between VET institutions and businesses, with significant progress on career guidance. The approach undertaken by Armenia is in line with contemporary approaches to VET.

Most current measures address skill development, largely through educational institutions, basically preliminary and middle VET schools. There are few other options for individuals to participate in recognised training. Multiple actors provide business-related training, but the sector is fragmented. It could be further developed to create a system of continuing vocational training (CVT) centred around enterprises and private entities to complement the existing school-based system. The present system also fails to integrate non-governmental organizations (NGOs) and their substantial training programs. These are important from a human capital development perspective because they often work with marginalised people who, for example, work in the informal sector or are not active in the labour market.

To maximise the potential of current initiatives to improve the experience of people in the labour market, existing reforms need to be augmented by new measures to improve links between the different reforms. These could include, for example, stakeholder partnerships, particularly between employers and public authorities. Stakeholders should focus on networking, the sharing of expertise and cooperative decision making, specifically between public and private institutions. To meet the challenges of human capital development, both public policy and market-oriented initiatives will be needed. This will help ensure that improvements in one part of system can be tracked and adopted in another area.

Steps have been taken to establish a national qualification framework. Armenia should continue to work on its development and implementation, focusing specifically on industrial sectors. A qualification framework can lead to further progress on reforms. Promising initiatives would be more easily connected by a common reference point. To further develop the qualification framework, public authorities would need to work more closely with the private sector and NGOs, particularly in relation to the accreditation of recognised training.

The government recently started to develop a work-based learning scheme. It has prepared a road map based on a national consensus. The proposed system has the potential to provide a valuable additional option for people in the labour force to access training and complement existing institutional programmes. Introducing the system will require more resources and closer cooperation with industry and NGO stakeholders

The existing system for teachers would be improved by the development of a qualification framework for them and VET professionals. This could also be used to create links with people in new and related occupations, such as mentors, coaches, demonstrators, and assistants. The framework could also be used to develop new standards for emerging specialties in the vocational training area, such as workplace trainers and assessors.

VET teachers and practitioners are in theory 'dual professionals' who have acquired skills from both industry and the educational system. In this respect, VET is unique in the education sector. This engenders both challenges and opportunities for staff recruitment and retention. In addition, the pro-reform atmosphere opens opportunities for VET professionals to take positions in organisational leadership and management instead of doing hands-on training.

The current system does not address job quality or management capacity. Progress in these areas would help boost productivity and ensure that skilled workers are optimally deployed by enterprises. Micro, small and medium-sized enterprises play significant roles in the country. There are strong entrepreneurship programmes in schools, but limited opportunities for small business people, particularly in the rural areas, where there are large numbers of own account workers. Targeted programmes could promote productivity by offering them more access to information and training.

Working age women tend to have higher levels of education and qualification than men. Nevertheless, women lag significantly behind men in the labour market. Active measures to overcome wage inequalities and labour force participation should be developed within the context of an updated employment strategy.

The Ministry of Labour provides short-term employment-related training as part of its suite of unemployment programmes. Run by the Ministry of Education,[4] This report may use “Ministry of Education”, “Ministry of Education and Science”, and “Ministry of Education, Science, Culture, and Sport” interchangeably.
VET targets mainly entry-level training. There are links at the local level between two ministries, but training run by the ministries and the business community mostly take place in separate environments and have different orientations and cultures. More integration between the two programmes would support learning pathways from education to employment and likewise from the labour market to continuing vocational training.

The assessment makes recommendations in two main areas. First, in relation to the VET education system's institutional framework and programmes with the aim of supporting the development of a lifelong learning system. These principally address areas where there is evidence of innovation that could be accelerated (e.g. work-based learning and the qualification framework) and where new initiatives would improve the overall operation of the system (e.g. partnerships).

The second set of recommendations is principally linked to the context in which skills will be used - mainly employment and enterprises - and the need to focus on the quality of employment. The recommendations also suggest that people in the labour market need support, for instance, through pathways to skill development that enable people to move out of the informal sector.

Education and employment policies need to be considered together. The sole aim should be to create a system that supports the development of good skills and high-quality employment. With these long-term goals in mind, it will be important to identify the right steps to take both now and in the medium-term.