Many American labor experts have looked upon Europe’s vocational education and training (VET) systems with admiration. One of the great strengths of these systems has been the way in which they have fulfilled important economic objectives, such as furnishing firms with a steady supply of skilled workers, while at the same time performing critical social inclusion functions, such as opening a pathway for lower-income and non-academically inclined youth to acquire the training they need to find stable, well-paid employment. Contemporary changes—both in the mix of skills demanded by firms and a growing drift on the part of youth into higher education—are placing new pressures on these systems. This policy brief compares recent developments in Germany and Denmark, two of the hitherto most successful systems of firm-sponsored VET, documenting their divergent responses to these new challenges. Germany has pursued a firm-led strategy in which adjustments to VET reflect the needs of the country’s largest and most sophisticated firms, emphasizing the economic objectives of training, but at the partial expense of its social inclusion functions. By contrast, Denmark has pursued a more state-led strategy; legislative reforms in the 1990s played an important role in shoring up the VET system’s social inclusion functions, but these interventions may have also contributed to a deterioration in the public image of VET. An unintended result has been a decline in participation among the most advanced Danish firms, which in turn has reduced the attractiveness of VET for Danish youth—trends that the government has since struggled to reverse. The brief begins by situating these two cases within a broader comparative context, and ends with a reflection on the policy lessons for the United States.