Firms still training despite recession
The recession was expected to deter UK firms from training their staff, but rather than prompting employers to slash training, the downturn has forced companies to concentrate on ‘must-have’ skills and to offer more in-house training to save money. ALAN FELSTEAD, FRANCIS GREEN and NICK JEWSON report
It is commonly assumed that company training is one of the first casualties in times of recession. Falling recruitment, pressures to cut costs and a focus on short-term survival force businesses to put training on the backburner. Expecting the worst, the UK Commission for Employment and Skills (UKCES), the Confederation of British Industry (CBI) and the Trades Union Congress (TUC) published an open letter in October 2008 calling on employers not to cut training during the recession. Yet, some economists suggest that an economic slowdown creates opportunities for businesses to up-skill, in order to meet heightened market competition and prepare for the upturn. Moreover, governments in the UK and elsewhere have introduced schemes intended to sustain training during the downturn. What really happened to training in the 2008-09 recession?
Less dramatic
Our research suggests that the effects, looking back, were less dramatic than feared. At the start of the downturn, many employers had dire expectations, as can be seen in the CBI’s business attitudes survey. It reports members’ training intentions and presents an ‘optimism’ index; that is, the balance between the percentage of respondents anticipating an increase and a decrease in training investment.
The impact of this recession is unmistakeable (see Figure 1). Optimism at first fell and then collapsed in 2008. It did not bounce back until the end of 2009. This compares to a milder decline in the last recession in 1990-91 when expectations fell more modestly.
Training confidence, then, was very gloomy; but did this reflect employers’ actions during the 2008-09 recession?
According to the National Employer Skills Survey (NESS), training expenditure rose from £38.6 billion in 2007 to £39.2 billion in 2009; a real-terms fall of just five per cent. The reality, then, was not quite as alarming as predicted. The survey also asked employers about the impact of the recession on a range of aspects of training. A minority (19 per cent) said they had reduced training spending per head and a similar proportion (19.4 per cent) reported reductions in recruitment of apprentices and new trainees (Table 1, see overleaf). Nevertheless, most said the recession had had no impact on spend per head, coverage, external provision, informal learning and qualification-related learning. Indeed, a small minority reported an increase. According to this evidence, most employers maintained training programmes through the downturn. However, the survey also records negative balance indices in all but one category. The CBI survey also presents balance indices but, unlike NESS, does not reveal how many respondents reported ‘no change’. Balance indices, then, highlight
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