Description: This paper explores the competence required by the learning organizations which are prioritised in current EU industrial policy. It argues that the European policy framework for VET does not provide sufficient acknowledgement of the relationships between the individual and the organization that take place in these organizations. Methodology: Data from a European research project on learning organizations are analysed to reveal how authority and responsibility for problem solving and continuous improvement is delegated to ordinary employees. The nature of learning and competence development is analysed in this context. Conclusions: Individual participation in organisational learning cannot be understood in terms of the concept of the individually contained self which is assumed by many EU VET policies. This kind of occupational identity is disintegrating in the face of social change and the decline of the old industrial culture. Instead, the development of occupational competence must be understood as a function of a relational self which exists in and through dialogic relations with others. Occupational competence develops in the workplace as individuals make sense of lived experience by engaging in dialogue, identifying with categories and discourses and using these to position and construct themselves in successive situations. (197 words)