Purpose – The purpose of this paper is to argue that both the supply-based model and the demand-based form of vocational education and training (VET) have their limitations and propose a “third way” in which reflective learning in the workplace is a central ingredient.

Design/methodology/approach – The data was collected from several studies of VET programmes in Sweden based on individual and group interviews, a survey and continuous participation in developmental work. The paper uses an interactive research approach in the research design.

Findings – The paper proposes a “third way” that tries to overcome the deficiencies of both the supply- and demand-based strategies for VET by developing a more equal balance in the relationship between the education and workplace systems. Collaboration and partnership between education providers and progressive workplaces are core elements.

Research limitations/implications – The paper tries to connect activities and changes at the organisational, inter-organisational and institutional levels of the VET system. It is argued that changes at different levels are strongly interconnected and necessary to an understanding of the prerequisites for workplace learning. These vertical relationships form the main focus of future research.

Practical implications – It is argued that changes in the VET system should be initiated using a “bottom up” approach, start at the local level, and include change at all levels. The “bottom up” approach should include a combined employer, employee and service-user perspective. It requires that learning issues are solved in a partnership that represents both the supply side of education and the demand side of working life.

Originality/value – Inter-organisational relations need to be based on equal, mutual and trustful relationships between the education and workplace systems in order to support a sustainable change process.