In the short to medium term, further developing the system for non-formal and informal learning could help fill occupations that do not attract people with the required skills. More long term, the expansion of adult education provision and the systematisation of targeted active labour market measures combined with social protection should become a national priority, consequently better resourced from the state budget, given the demographic situation of the country.

In complement, the further development of dual education, as the main innovation within the VET system, with a proper mechanism for monitoring and evaluating impact, is a promising way forward: not only does it smooth the transition from school to work, but beyond individual cases, it also fosters engagement of the private sector in the training provision, and in management of the system more broadly. This is internationally recognised as a key condition for success.

Maintaining and expanding the financial mechanism of individual incentives to engage in in-demand occupations is a safe channel to prepare young people with the necessary skills. In addition, as previously described, some financing instruments have been created to encourage young people to choose training pathways corresponding to the in-demand occupations, and this measure needs to be continued, perhaps expanded. This could also be combined with priority development of dual education in these occupations.

Keeping and reinforcing the focus on the development of key competences throughout the education, training and employment programmes will be an important step to regain the trust of employers in the quality of future employees, and as a more general consequence to public provision.

Several measures could help reduce the gap between structure and volume of demand and supply. These include a proper targeting of economic and social needs in the education and training provision, and measures for stimulating demand and job take-up. It requires accurate knowledge of the situation and adequate tools. To start with, the discrepancy between existing occupations and actual job vacancies, highlighted by the national employment agency, calls for revising the structure of occupations that serves as reference for designing or offering training. Longer term, there is a need for tools for more precise analysis of skills needs, but also anticipation is needed to harness the VET system's responsiveness. Further capacity building of public institutions and proper resourcing is required to play an effective role in addressing the labour market and skills imbalances.

As the current strategy will expire in 2020, this provides an opportunity to prepare for the design of the next strategy by drawing lessons from current gaps; in particular, it will be important to: i) identify national strategies and reform efforts having a link to skills development (including Economic Reform Programme and key economic sectors' development strategies), and the nature of this link; ii) ground the strategy in a clear vision for skills in Montenegro based on these links, but also a clear vision of the place and priority purpose of VET within the education and training system; iii) broaden the strategic planning to the whole VET/skills development sector in order to mirror and back the economic development strategic priorities of the government; iv) set safeguards for this new strategy to explicitly serve the needs of the labour market (by better use of relevant data); v) make the VET strategy more forward-looking and impact-oriented, including through the introduction of outcomes/impact objectives, targets and indicators in a performance assessment framework. A costing methodology should be developed and agreed to ensure accurate and sustainable budget planning and execution.

When creating the new VET strategy, a multi-stakeholder task force could be set up to enable better horizontal coordination across ministries, ensure close complementarity across strategies (including education, training and employment), and to help engage social partners.

As a first discussion point, the division of responsibilities in the new strategy could be a good time to refresh what the legal framework already authorises and how to make the most of it.

As in the case of the skills mismatch, the experiment of dual education may be a good example to follow: implementation of this reform is monitored by the National Coordination Body, composed of representatives from the Chamber of Commerce, VET Centre and the Ministry of Education. This requires carrying out a mini-exercise of lessons learned based on these two years of existence.

Further develop the framework for shared governance of VET, with particular attention to the roles and responsibilities of social partners in policymaking and implementation.

Regarding VET colleges' autonomy and decentralised governance, a greater degree of decentralisation could provide more autonomy (both in terms of management and financing) to the VET schools to enable them to adapt and better respond to the skills needs of the local labour market. This should go hand in hand with revised accountability rules, based on clear, agreed objectives. The youth advisory bodies that are foreseen in the new Law on Youth could also be interesting intermediary bodies for inclusive approach of policymaking including young people.

In order to accurately define remediation measures to the capacity issues, whether human, material, or financial, a sound diagnostic assessment of the capacity state of play would be needed as the very first step. It could easily build on existing methodological tools, including the SABER methodology from the World Bank (Systems Approach for Better Education Results), the SIGMA methodology from the OECD and EU, or other organisation audit methods.

Regarding human and institutional memory issues, including staff turnover, corporate measures could help to establish an institutional memory. These measures may include setting up an institutional database to be regularly updated and maintained, formalised handover procedures, and/or overlapping engagement of the current and new staff.

For financing aspects specifically, and as recommended by the World Bank in its Growth and Jobs report (2018), a spending review could help 'verify whether efficiency of spending is appropriate given the limited ability of the sector to provide the right skills', and establish the baseline situation and scope of needs. Improving financial capacity would require assessment of investment needs to upgrade the infrastructure and the equipment in schools. The assessment should be based on the needs expressed by the schools, aggregated by categories of investment; establish the corresponding priorities by categories, municipalities, and training providers; and make an investment plan over a longer period.

To ensure financial sustainability, there is an urgent need to diversify the sources of funds and increase the share of non-state resources. Various means may help doing so: introduce further fiscal facilities or communicate about existing incentives given to enterprises involved in the dual system, and allow, encourage or even train (if needed) training providers to apply for foreign donors' financial support for equipment, technology or technical assistance.

Based on the experiences developed with the funds for in-demand occupations, for talented students or with the subsidies for dual education, it would be interesting to explore what other schemes could be set up to similarly support the main policy priorities, for example in favour of vulnerable populations or lagging-behind regions, in order to bridge the human capital gaps. This exploration should take into account the need to keep mechanisms as simple as possible in administrative and legal terms, both for targeted users to apply and for the public actors to manage them.

Building and institutionalising a shared monitoring and evaluation function, and related framework, will enable assessment of policy progress but could also help engage the stakeholders.