Collective skill formation systems were central to sustaining a high-road to economic development while upholding social inclusion in industrial societies. But can they still deliver on both economic and social grounds in knowledge-based societies? The article argues that the transition to the knowledge economy may in fact strengthen the ‘traditional’ advantage of collective skill formation systems over other skill formation systems on both economic and social grounds while simultaneously, however, exerting pressure on them to recalibrate some of their underlying policy arrangements. It is argued that this dual relationship has to do with the institutional architecture of collective skill formation systems, in particular, their ‘shared governance’ between employers, unions and governments, and with the nature of technological change in the transition to the knowledge economy, in particular the bias toward complex cognitive skills that it produces. Quantitative and qualitative evidence lends overall support for the argument. Regression analysis shows that collective skill formation systems are still positively associated with a range of socio-economic outcomes also in the new knowledge economy, although conditional analyses suggest that they may be subject to ‘diminishing returns’ on social inclusion grounds, i.e., their ability to effectively perform a social policy function is confronted with greater challenges at high levels of technological intensity. Case studies of Austria, Germany, and Switzerland show how collective skill formation systems have adapted to the knowledge economy following country-specific patterns. © The Author(s), 2025.
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