"As skill formation systems are increasingly under pressure from de-industrialization and the rise of knowledge economies, their ability to include the low-skilled has been strained. But what determines how skill formation systems adjust to this challenge? By explaining the divergence of two most-similar systems, those of Austria and Germany, the article highlights the key role of trade unions and of the institutional resources and legacies available to them. Where institutional resources are high and legacies positive, as in Austria, unions were crucial in setting an inclusive pathway of reform of the training system. Where, on the contrary, institutional resources are low and legacies negative, as in Germany, unions' strategies for inclusion failed, paving the way to a dualizing outcome. The article therefore provides a novel analysis of institutional change in skill formation systems, while also offering broader insights on the relationship between coordinated and egalitarian capitalism in post-industrial knowledge-based economies."

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