Latvia’s vocational education and training (VET) system has modernised in governance, infrastructure and curricula, yet funding rules—largely unchanged since 2007—no longer reflect real study programme costs or incentivise quality. Labour‑market forecasts indicate a significant gap between the demand for and supply of labour, as well as persistent skills shortages in Latvia, including in medium-skilled occupations often filled by VET graduates. Reforming VET funding is part of Latvia’s Education Development Guidelines 2021‑2027. It is well aligned with the EU policy priorities (Union of skills) and EU funding (Recovery and Resilience Plan, European Social Fund Plus). A national working group is already exploring governance, programme costs, performance funding and support measures, providing a foundation for this project.
Development of performance-based vocational education and training funding in Latvia
The OECD Centre for Skills and the European Commission’s Reform and Investment Task Force (SG REFORM) are co-operating to provide technical support to Member States upon request through the Technical Support Instrument.
This project aims to support the Ministry of Education and Science of the Republic of Latvia to design, discuss and pilot a performance‑based model to finance state-funded VET schools. Overall, the project will help Latvia align vocational education and training (VET) financing with education quality and labour‑market needs.
Context
Overview of OECD support
As part of the project, the OECD Centre for Skills will conduct comparative analysis, review international good‑practices, make recommendations for a performance‑based model, pilot a model with up to five schools, and organise capacity‑building activities and a final event. The project will last for 18 months starting from 1 September 2025, and will involve online activities and missions to Latvia to interact with stakeholders at various points.
Results achieved
By the end of the project, Latvia will have a comparative assessment of current VET funding and international good practices, along with findings from a school‑level pilot, and final recommendations for a performance‑based model. The project will also deliver awareness‑raising materials and capacity-building support for the Latvian stakeholders responsible for implementing the reform.
Through this work, Latvian authorities will be able to identify the gaps of their VET funding system compared to other countries, and to test and adapt their preferred performance-based funding model for VET schools. This will help authorities adopt a model that rewards VET schools for quality, improves efficiency and better aligns VET provision with labour‑market demand - supporting higher graduate employment and stronger skills outcomes.
