April 26, 2017

Skills crisis worsening as UK training spend falls significantly

UK employers are facing a massive skills crisis and are not doing anywhere near enough to overcome it. So says a new CIPD report, ‘From ‘inadequate’ to ‘outstanding’: making the UK’s skills system world class’, which claims that the UK is “sleepwalking into a low-value, low-skills economy”.

The report, which reviewed the UK’s skills policy over the past 20 years and is part of the CIPD’s formal response to the Government’s Industrial Strategy Green Paper, highlights several factors that it says are behind the worsening skills crisis. Low employer spend on training is one of the main factors, the other big contributory factor being an inadequate education system.
How much is spent on employee training is a problem that employers can do something about. At the moment, UK employers spend less on training than other major EU economies. They also spend less than the EU average. The CIPD report cited statistics from the Continuous Vocational Training Survey, which show that UK employers spent an average of 226 euros per employee on training in 2010, compared to 511 euros spent per employee on training on average across the EU. Plus, in the UK, the cost of vocational training as a share of total labour costs was 1.1%, compared to 1.6% across Europe.
And the situation is getting worse, not better: UK training spend has been falling since 2005. “Participation in job-related adult learning has fallen significantly in recent years, leaving us languishing close to the bottom of the league table,” says Peter Cheese, chief executive of the CIPD. The UK is now fourth from bottom place in an EU league table of job-related adult learning.

However, as the CIPD points out, the effectiveness of training is not necessarily determined by how much is spent on it. It is possible that UK employers have found ways to minimise their training spend, without reducing the quality of the training. This could be by harnessing the power of digital or by negotiating better deals with training providers, for example.

Cheese says employers and HR need to take a much more strategic, proactive and targeted approach to skills and training. Rather than reacting to skills needs as they arise and pursuing a policy of recruiting skills and talent on a needs-must basis, employers and HR should be identifying critical skills in advance and developing them in-house. Employers and HR should be investing in the skills needed now and in the future.

According to the report, it is particularly important that employers and HR focus on the skills development of the younger generation, those in the early days of their career. “It is hard to avoid the impression that many young people experience slower progression in the workplace in their first years of employment than in many other OECD economies’, reads one of the lines in the report.

If the situation is of concern now, the CIPD is even more concerned about a UK skills deficit post-Brexit. Should there be less access to migrant labour from EU countries post Brexit, then there will be an increased pressure on the UK talent pool. The skills shortage is already proving detrimental to businesses’ long-term prospects – HR and employers cannot afford to wait to see what happens post-Brexit. The time to act is now.