Training in a Cold Climate: The Effect of Recession in the UK Alan Felstead, Francis Green & Nick Jewson Paper presented to the LLAKES Conference, October 2012 An ESRC/UKCES Strategic Partnership Project

Outline of Paper 1.Popular discourse and theoretical predictions 2.Evidence from surveys of employers & workers 3.Qualitative explanations from employers

Fears of Training Cutbacks ‘In an economic downturn, there is always a temptation … to cut spending on staff training’ Calls for Restraint ‘But it’s a false economy’ ‘We must not pay the price of failing to invest in the talent on which our future will be built’

Popular Perceptions of Training Cuts

But Little Serious Analysis So Far The academic literature has more discussion (notable contributions here come from Mason & Bishop, 2010; Brunello, 2009), but given the policy concern we might have expected more Economic and Labour Market Trends carried 12 articles over a period of a year (Sept 09-Aug 10) on the effects of the recession, but training was barely mentioned

Any Theoretical Pointers? Reasons for a rise, a fall or little change: Up: labour hoarding, reduced opportunity costs & changing product market strategy Down: deep recessions alter cost-benefits & all recessions led to recruitment freezes and/or redundancies Little change: ‘training floors’ make some forms of training a ‘must have’ activity Overall, theory offers an ambiguous answer to the question ‘how does training fare in recession’

What Do Surveys Tell Us? 1. Analysis of secondary data collected from employers (CBI, BCC & NESS) 2. Analysis of secondary data collected from individuals (LFS)

Source: supplied to authors by CBI. Collapse in Employers’ Training Expenditure Intentions Q Q recession Q Q recession CBI Training Expenditure ‘Balance’ Index, Manufacturing, Balance (% increase minus % decrease) Q Q?2012 double dip

Balance (% increase minus % decrease) Source: BCC data taken from website reports. CBI and BCC Training ‘Balance’ Index, Collapse Greatest for Large Manufacturers

Source: own calculations from NESS2009. But Actual Experience More Optimistic % of employers Reported Impact of the Recession on Training, 2009

Source: own calculations from QLFS (year averages across 4 quarters). No Evidence of a Recession Effect on Incidence of Training

Similar Patterns for Sex, Age, Off-the-Job Delivery and Intensity

Some Evidence of More, Albeit Modest, Change in the Public Sector Sharper, but still modest, reduction in training incidence in public sector – LFS measure Evidence in NESS series of public sector training infrastructure under more threat – establishment-level planning and budgeting falling a little quicker Training plan 1 All Public sector Private sector Training budget 2 All Public sector Private sector recession -----

What Do Employers Say is Going On? Interviewed in mid employers drawn from NESS2009 – 45 in the public sector, 25 in private manufacturing & 35 in private services – 77 re-interviewed in 2011/12. Most are carrying on as before because of: ‘training floors’ operational issues market competition managerial imperatives funding arrangements

However, ‘training smarter’ is common – making training expenditure go further by: focusing training on business need shifting to in-house provision training more staff to become on-the-job trainers renegotiating prices and terms of delivery with external providers organizing on-site group training sessions making greater use of e-learning As a result, employers are finding innovative ways of maintaining training coverage, sometimes with less resource

Conclusion We have not found evidence of a dramatic decline in training, despite some early concerns In fact, data based on expectations and predictions of what will happen are overly pessimistic when set against what is reported to have happened in practice Nevertheless, we have found evidence of ‘training floors’ and an increased emphasis on ‘doing more with less’ – both have served to maintain training coverage despite the severity of the recession

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