Education, skills and productivity: commissioned research - Business, Innovation and Skills and Education Committees Contents

5. Continuing training for adult employees

Although a majority of British employers display relatively low demand for the types of skills that are developed through long-duration apprenticeship training, there are good reasons for many of them to finance short periods of continuing training for existing employees.

In the 2013 UK Commission's Employer Skills Survey (UKCESS), as many as 71% of UK establishments reported that some of their employees needed to acquire new skills or knowledge, with many of these new skill requirements deriving from factors such as the introduction of new goods or services or new work practices or new technologies (Winterbotham et al, 2014).

These skill updating needs were reported across a wide range of occupations but applied particularly to professionals, personal service workers, managers and skilled trades workers. Across all occupations the main types of skill in need of improvement included technical and practical skills, planning and organising skills and problem-solving skills. Other priority skill updating needs included advanced IT/software skills for managers, professionals, associate professionals and administrative and clerical workers and customer handling skills for workers in sales and elementary occupations (ibid). This reported incidence of skill updating and improvement needs among existing staff was much higher than the 4% of firms reporting skills-related recruitment difficulties, defined as vacancies that were hard to fill for skills reasons at a given point in time (ibid).

According to evidence from the Continuing Vocational Training in Europe Survey in 2010, about 80% of UK firms supported continuing training for at least some existing employees in order to meet skill improvement needs of the kind described above (Eurostat, 2013, Table 1). This measure refers to continuing vocational training courses designed either by the company itself or by external providers, plus other forms of training such as planned learning through job rotation, exchanges or secondments, participation in learning or quality improvement groups, or self-directed learning. By this yardstick the UK ranked third highest of 25 countries, with France ranked 6th (76% of firms) and Germany 9th (73%).

However, the UK ranked much lower in terms of the proportion of employees participating in planned continuing training courses which took place away from their usual workplace: by this measure the UK ranked 18th (31% of employees participating) compared to France ranked 6th (45%) and Germany ranked 11th (39%).

Cross-country evidence on continuing training is hard to gather and to interpret, and some other measures of the incidence of continuing training show the UK comparing more strongly against both France and Germany (O'Mahony, 2012). However, even if we treat the comparative evidence with caution, there is evidence internal to the UK which points to growing weakness in continuing training provision. Recent analysis based on the Labour Force Survey suggests that the average volume of job-related adult training—in terms of days per employee—fell by about a half between the mid 1990s and 2012, with the strongest effects on those in younger age groups and those with lower levels of prior education (Green et al., 2013).

This is paralleled in the US by similar evidence of employers reducing their commitment to training for existing employees: evidence derived from the US Survey of Income and Program Participation suggests that employer-financed training for adult workers fell by roughly 28% between 2001-09 (Waddoups, 2015). This provides a degree of support for the proposition that 'responsibility for developing the skills that [US] employers want has been transferred from the employer to the job seekers and schools' (Cappelli, 2015:281).

Reductions in continuing training for adult workers could potentially harm productivity performance, not just because of possible failure to meet recognised skill updating needs (of the kind revealed by the UK employers' survey described above) but also because, in cross-country comparisons at industry level, positive links between vocational skills and labour productivity have been found to strengthen when the measures of vocational skill take account of employer-provided job-related training as well as certified vocational skills (Mason et al, 2014).

One well-known institution designed to stimulate continuing training by firms is the French training levy scheme, introduced in 1971, under which firms are obliged to spend specified proportions of their wage bills (varying by firm size) on continuing vocational training. For several years after 1971, French firms' spending on continuing training rose steadily and, for all but the smallest firms, reached levels well above the minimum required share of wage costs (CEREQ, 2006). Although the impact of the training levy is hard to disentangle from other influences on training expenditure, successive Continuing Vocational Training in Europe Surveys have shown higher levels of continuing training per employee in France than in the UK or Germany and some researchers have attributed this in part to the effects of the French levy (Greenhalgh, 2002; Behringer and Descamps, 2009). However, as in many countries which do not have training levies, continuing training in France continues to be offered disproportionately to more highly-educated employees than to lower-skilled workers (Muller and Behringer, 2012).

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Prepared 5 November 2015