European surveys have established that approximately one- third of all large European firms have recently undergone significant organisational innovation. A major dimension of this innovation is the adoption of the characteristics of the 'learning organisation', especially self-managing teams which plan their own training, lateral pathways of internal communication, a commitment to continuous improvement and the encouragement of a learning culture within the organisation. These developments can be located within the European Commission's policy for innovation and competitiveness, which aims to build a learning economy out of learning regions and networks of learning organisations. This paper examines two key issues for VET which arise from this emphasis on the learning organisation in European economic policy. The first is the need to develop an operational definition of the concept of organisational learning. This term is often used emotively without specifying the processes and actions through which it is brought about, and there is an urgent need to clarify its meaning. The second issue is whether participation in a so- called learning organisation provides authentic and valuable learning opportunities for individuals. In addressing these problems, the paper draws on empirical research carried out in several European countries by the Framework V project ORGLEARN and by other projects. The database comprises in-depth case-studies of learning organisations in Belgium, Germany, Italy and UK. The theoretical framework for interpreting the data is provided by sociocultural learning theory. From a sociocultural perspective, learning is perceived as embedded in social and cultural contexts and best understood as a form of participation in those contexts. Learning occurs through the simultaneous transformation of social practices and the individuals who participate in them. Based on empirical data from the above studies, a definition of organisational learning is proposed in terms of (a) a focus on a common object, (b) conducting organisational enquiries to find better ways of attaining the object, (c) social practices for embedding the results of the enquiries into the organisation's culture, especially as new policies, procedures and norms, and (d) the enactment of the policies, procedures and norms by all the organisation's members. The value of the learning experiences this offers to individuals is examined in three ways: (1) through in- depth interviews with employees of the learning organisations concerned, thus giving them a voice which has not previously been heard in policy debates; (2) mapping the learning careers of employees of learning organisations; and (3) triangulating the above with the results of questionnaire surveys of employees of learning organisations. The results indicate that participation in organisational learning can be empowering for employees and that it encourages them to become knowledgeable agents. However, these benefits are obtained at the cost of a diffusion of professional identities, absence of national certification of the competencies acquired, lack of a traditional linear career structure, and the exclusion of a considerable segment of the workforce (because learning organisations run with reduced numbers of highly selected employees, and outsource low value-added work to other kinds of organisation, which typically offer few training opportunities). These results of the study are used to interrogate the EU employment policy, which stresses the adaptability and flexibility of the workforce rather than the lifelong learning rights of individual employees.