From unskilled workers to professionals through company-provided training? Upward occupational mobility and wage changes of low-skilled workers in regulated and unregulated internal labor markets

A considerable share of low-skilled workers in Germany perform specialized activities for which some kind of formal vocational qualification is required. This article examines the role of non-formal in-company training for the career advancement of low-skilled workers in the internal labor market. The focus is on the role of regulating structures. Based on the human capital and filter theory as well as the labor-queue-model, hypotheses are formulated on the association of company-provided training with changes in occupational status and wage increases of full-time employed semi-skilled and unskilled workers. Differences in the regulation of the internal labor market are examined with regard to collective agreements, formalized HR policies, and structures of employee representation. Additionally, the role of change of company is taken into account. Regression analyses based on Linked-Employer-Employee data (LIAB) covering 2005 to 2010 show a positive correlation between regular in-company training investments and occupational status improvements for low-skilled workers who did not change companies (,,stayers"). In regulated internal labor markets, this correlation is more pronounced and is also more likely to be accompanied by higher wage development. Simultaneously, if a high proportion of low-skilled workers undergoes further training, chances of becoming a professional are reduced. This makes career advancement more difficult for low-skilled workers in companies that are particularly active in providing further training to low-skilled workers. Under these conditions, occupational status improvements are more likely to be realized by company changes (,,movers"). Overall, the study points to the importance of regulating structures of the internal labor market for the career advancement of low-skilled workers in the context of company-provided further training.