No train no gain? Why employers don’t train and what to do about it

Skills are at the heart of the Coalition’s strategy for growth. However with fiscal austerity dominating the agenda, the government also hopes employers will be willing to shoulder more of the costs of workforce training. Central targets have been cut and FE colleges and training providers given more freedom to collaborate with employers to develop and fund qualifications. The assumption is that central planning and control over skills policy under Labour hampered employers’ pent-up demand and willingness to invest in training.

But employer demand for training has fallen over the past decade. Data from the Labour Force Survey shows that in 2001 around 30 per cent of the workforce had received job related training in the previous 13 weeks. In 2011 this had fallen to 27 per cent, with the sharpest decreases for young people.

With a third of employers providing no training at all, the risk is that training providers will struggle to find employers willing to share the costs of training. Unable to find employers who will act as partners to develop high quality training programmes, unscrupulous providers may also seek to access funding through more so-called ‘hot housing’: short and fast training programmes of little value to employers or employees.

A new report by IPPR published today argues that low training rates are rooted in the ‘low-road’ competitive strategies adopted by some firms, which rely on cheap production costs and low skilled staff. While these firms can be found across all industries, they are often associated with the sectors responsible for the UK’s relatively high levels of working poverty, such as retail, hospitality, storage and distribution, and food processing firms; and in low paid service occupations such as care workers, nursing assistants, and fitness instructors.

Given the high cost in working tax credits, it’s right that the state questions business models that sustain large quantities of low paid work. The rationale for intervention is also clear in sectors such as manufacturing, where survival depends on product innovation and where English firms often perform poorly when compared to their European counterparts. It is critical in sectors where poor professional competence poses a risk to consumer health or wellbeing, such as fitness and social care – as the recent scandals in elderly and disabled care homes suggest.

The question then is how can we influence the decisions made by managers about how they compete? This is particularly difficult given that business support in the UK is chronically weak, currently reduced to a website and a phone line.

The UK compares poorly to other northern European countries, where many companies provide more training, and to a higher standard, than comparable English firms. As a result many jobs that in England are viewed as inherently low skilled, such as bricklayers and lorry drivers, are broader and require a deeper level of skill. Firms in Germany, Denmark and the Netherlands (among others) benefit from powerful unions and employer associations, which drive improvements in their sectors and supply chains by regulating training and offering networks of business support, supported by state-backed finance.

IPPR’s report argues UK firms should have access to comparable networks of support, offering active and tailored business support to encourage more firms to adopt competitive strategies that support better job quality, including higher levels of training. Delivered through reformed sector bodies and existing employer associations, this would encourage firms to raise the quality of their goods and services through improvements in the professional competence of their staff. It would also give FE colleges and group training associations a genuine role in helping to develop high quality workforce development programmes, rather than abandoning them along with employees to the vagaries of employer demand.

Tess Lanning is a research fellow at IPPR and co-author of the report ‘No Train No Gain: Beyond free market and state-led skills policy’, published today at www.ippr.org