From education to employment

The real value of skills and training

What are the values of skills? What is training actually worth? The value attached to training both for the workforce and for employers has been a key part of the debate on the need for more training and investment in the UK workforce for many years.

It now looks as if we can place a value on training to the UK as a whole. A new report that looked at investment in and time spent on vocational training shows that every hour spent for the workforce accelerates growth of GDP by 0.55%. It’s a staggering statistic that such a relatively small amount of training time can have such an impact on the wider economy.

It will come as no surprise to readers of FE News that training is so important and that its impact can be so vital. A report from the CBI several years ago highlighted that a business is 25% more likely to survive a downturn in the economy if it invests in training. Evidence from the many businesses unionlearn works with has shown the value both employer and employee place on training once it is established and in place. But it will perhaps surprise people at how much impact is possible to the wider economy by investing in skills.

There are of course some qualifiers to the report. The author’s definition of vocational training is robust, it has to be a genuine skills programme that delivers real benefits to the learner and do more than just to comply with the basic statutory requirements. The financial and productivity benefits are not going to be reaped from a quick one off training session that, even if informative, does not widen the skills base.

The report also shows that countries (like Germany) which have much higher volume of training will also use that training more effectively. For example they will be better at utilising the training they have, better at planning it and the quality of training will be higher. It is a clear lesson that once training becomes embedded and more widespread the effect of the training and the quality of it improves. It is clear then that there are benefits to long term development of our skills agenda in terms of the way we use vocational training, the overall impact it has above and beyond the effect on business and employee.

It is worth perhaps reflecting that of the countries looked at the UK was in the group with the lowest time investment in skills. On average employees spend less than 8 hours a year on training, putting the UK on par with Greece, Italy and Portugal (perhaps not the best economies to be grouped with in the current climate), below Germany and France on 8 – 12 hours a year and well below Luxembourg and Sweden at over 15 hours a year.

This shows starkly the huge scope that remains for increasing the workplace training we offer and boosting the existing provision offered. The UK needs to be moving up this league table and putting ourselves alongside France, Germany and Sweden if we are going to grow our economy and be truly competitive. We also need to bring training to those 10 million UK employees (about 25% of the total workforce) that never received any workplace skills and training. On the basis of the figures in this report just bringing them up to the average level of UK training each year of about 8 hours would be worth around 1% to GDP.

It sounds incredibly simple, it sounds absurd that we haven’t realised the true nature and value of vocational training to the UK economy before; but with the urgent need for economic growth and development of the UK economy in 2012 we’d be mad not to start acting on these findings.

The report referred to looked at 16 sectors in 21 different economies (including the UK) from the years 1999 – 2005. It was produced for the Institute for the Study of labour (IZA) in Bonn and is IZA Discussion Paper No. 6171.The full paper is available here.

Tom Wilson is director of unionlearn, the TUC’s learning and skills organisation

Read other FE News articles by Tom Wilson:

FE sector deserves the proper use and monitoring of funding

Invoking the spirit of Stephenson

Gearing up for the party conference season

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