Boom and bust?

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Written by Richard Griffin on 12 February 2014

On a number of occasions in the last few years I have written about how spending on training in the UK has held up despite the severe recession that started in 2008. As I write this the economic evidence points to a quicker and stronger recovery than expected. There may be debates about the quality of the recovery; how sustainable it is given much growth seems to be fuelled by consumer borrowing and PPI pay outs but it's clear that - GDP is up, inflation stable and unemployment down. Businesses are more confident about the future as a consequence. 

As we head into the sunny uplands of economic recovery, what's happening to training? Well according to the latest UKCES survey there's ........ less of it. £2.4 billion less to be precise. Total spend on training in the UK is now £42.9 billion a year. A third of companies do not even train, a stubbornly persistent figure. And guess what, there are now dire warnings that the recovery might be threatened by skill shortages. 22 per cent of vacancies are because of a lack of employees with the appropriate skills, UKCES report. 

Of course we do need to be careful not to read too much into one set of figures and to be fair the data covers a period when the economy was still flatlining and the prospect of recovery seemed a distant prospect. It does though seem odd that companies decided  to cut training spending by over 5 per cent now after holding up investment for so long. 

Quite often in economic down turns companies try to hold on to employees. They also see the benefit, particularly if order books are a bit flat, to use slow periods to train staff. Better to book a five day residential course when things are quiet than take people out of work when there is a clamour for sales. Invest in skills  during the downside and reap the rewards when things pick up. 

I don't though think this is what's happening now. One of the concerns about the recovery is that labour productivity remains low. The Bank of England was not alone in thinking that employers would initially respond to rising demand through increased productivity from existing staff. What actually happened is that they have hired new staff, hence the rapid fall in unemployment. 

Is there then a link between these two facts: low productivity growth and cuts in training spending? Is there a feeling that the billions invested annually in training over the last few years has not produced the returns expected? Maybe. 

As I wrote in a previous blog, we know trainers are good at responding to employers needs (although employers may not be great always in paying for the training they need). The issue may not be one of training content and availability but rather the extent to which training is organised and delivered in partnership with business stakeholders and thought is given to training transfer strategies. It's no point sending a changed employee into an unchanged workplace. 

The latest figures could be a one off rather than the start of a trend. Whether they are or not, and I am sure further research will shed light on what's happening, they remind us all - if we need reminding - that training must be integrated in core business processes and the case for investment in staff constantly demonstrated. 

About the author
Richard Griffin is director of the Institute of Vocational Learning and Workforce Research. He can be contacted at Richard.Griffin@bucks.ac.uk

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