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Inject at least an extra £1.3 billion a year into adult education to tackle the unemployment crisis

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The Social Market Foundation (@SMFthinktank) says that a “disastrous” 50% decline in adult education funding over the last decade has left many low-wage workers poorly prepared for economic change and will hamper the UK economy’s recovery from the crisis.

Workers losing jobs in the pandemic desperately need a major overhaul of adult skills and training services to help them find new work and avoid falling into poverty, their report “(Adult) education, education, education” said today (12 Nov).

New SMF data shows training can be vital to getting a new job: people using adult education are much less likely to be unemployed than those who do not train, the SMF showed.

Ministers should urgently inject at least an extra £1.3 billion a year into adult education, the SMF said, calling on the Treasury to give education a multiyear financial settlement to support skills and training services, instead of the one-year spending review currently planned for later this month.

The overhaul should also give workers control over funds for learning, simplify training options and launch a major publicity campaign to explain the benefits of improving skills, the SMF said.

Official figures this week show that a record 314,000 redundancies were recorded July-September, with unemployment hitting 4.8% – the highest level since late 2016.

In a report sponsored by the Joseph Rowntree Foundation, the SMF found that the share of British workers participating in adult education has halved in recent years, falling from 29% in 2004 to under 15% now.

Workers with the lowest levels of education – who could gain the most from training – are the least likely to get help with skills: just 6% of them took part in education or training last year.

Many pandemic job losses have been reported in retail and hospitality, where many workers have low skills. The SMF said that without better training options, many of the newly unemployed will struggle to find new work and avoid long-term poverty.

People who were unemployed in 2012-13 and participated in some form of training were far less likely to be unemployed five years later, the SMF found. Some 16% of those who undertook training in 2012/13 were unemployed in 2017-18, compared to 27%  of those did not participate in some form of training.

The SMF report uses longitudinal data from the Understanding Society project to track the economic fortunes of workers over the last decade. SMF researchers also interviewed low-income workers about their views and experiences of adult education.

While the report shows that adult education helps low-income workers get work and increase their pay, it also identifies significant obstacles to their participation in training. Those barriers include the time required to carry out training, but also “dispositional” aversion: some workers just don’t think training will help them.

To address that, the SMF recommends a major public “outreach” campaign, promoted at school gates and elsewhere in the community,

The report also shows that workers participating in state-provided adult education receive significantly greater benefits from that training than those who get in-work training from employers.

Among those in paid employment, those participating in employer-provided training in 2012-13 saw only slightly stronger personal income growth than those that did not participate (12.8% versus 12.0%).

In contrast, those participating in a college or university degree, diploma or course saw notably faster income growth (25% versus 15%).

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Meanwhile, adults who were in work and participated in training in 2012-13 were more likely to have changed occupations five years later

Cuts in adult education funding must be reversed to tackle the unemployment crisis 

Aveek Bhattacharya, Chief Economist at the Social Market Foundation, said:

“For years, too many people at Westminster have ignored and neglected adult education and skills policy as boring issues that only mattered to other, poorer people. That neglect left millions of workers unprepared for economic change and threatens to hold back any economic recovery from the pandemic.

“Good adult education can make the difference between work and unemployment, and help people climb the wage ladder. To really help workers hit by the pandemic, ministers should urgently invest more in adult education, put people in charge of the money that funds their own training and do much more to promote the benefits of developing their skills.

“Doing this properly requires the Treasury to set out funding for training and skills over at least three years, so that education ministers and officials can plan and implement an effective programme of reform.

“As a country, we have collectively failed on adult and education for decades. If we fail the test again now, hundreds of thousands of people will miss out and the UK will fall further and further behind other major economies.”

Helen Barnard, Director of the Joseph Rowntree Foundation, said:

“2020 has been a long and difficult storm to weather, especially for people in poverty who are now facing a winter of anxiety. Recovering from this in the long term will need more jobs, better jobs and access to the skills needed to do them.

“With redundancies reaching a record high, we need to urgently invest in large scale skills and re-training programmes to help adults who have lost their jobs access new opportunities. Government should commit to a major expansion in adult skills and education at this month’s spending review.

“But to be effective, this must go hand in hand with job creation schemes and investments in local economies after coronavirus, to ensure that work can offer families a secure route out of poverty during difficult times”.

Cllr Sir Richard Leese, Chair of the Local Government Association’s City Regions Board said:

“Due to the ongoing COVID-19 pandemic, we face a growing and stark unemployment crisis, which demonstrates the huge importance of council-commissioned Adult and Community Education services in transforming the lives of the 600,000 adults who use them every year.

“Councils have seen funding for these services halved over the last decade, which is why the Government needs to urgently ensure that councils receive the financial support they need to continue to deliver these vital courses. Councils and combined authorities also need greater powers to co-ordinate training and employment opportunities, as they are best placed to provide these in their local areas.

“We are calling for the Government to introduce a COBRA-style response to our looming unemployment crisis in the Spending Review, with councils able to play a leading role in improving skills and life chances of the most vulnerable members of our communities.”

Job switching and wage growth for low-income workers

This paper draws upon a Social Market Foundation roundtable held in early-March 2020. Whilst the economic context has changed considerably, long-run issues surrounding wage growth – and disparities between job switchers and stayers – are likely to remain unchanged.

Executive summary

  1. Switching jobs can lead to wage progression and evidence predating the Coronavirus pandemic suggests that the wage boost received by workers who switch jobs, relative to the wages of those who do not, is growing. Given Britain’s problems of persistent low pay, policymakers should give more focus to how job switching might be a route to pay progression for low-income workers.
  2. Aggregate data on switching among all workers conceals significant variation by income groups. Workers on lower incomes who switch are likely to receive smaller income increases than those on higher incomes – and may experience negative wage growth.
  3. The reasons for these differentials in economic experience of switching are still currently unclear, and should be investigated in more depth. Those differentials strongly suggest the labour market is working differently for people at different income levels. This is likely to be unfair and potentially inefficient.
  4. Workers in the groups and industrial sectors most likely to experience persistently low pay – especially women and part-time workers – appear to be less likely than others to switch, and less likely than other switchers to enjoy significant wage gains from switching.
  5. Non-wage factors may play a significant role in the switching behaviour of such workers, and in their wage outcomes from switching. Again, this should be further investigated.
  6. Particular focus should be put on women who work part-time on low wages and the importance of working patterns in decisions to switch or not switch jobs. Difficulties and/or worries over transferring family-friendly working patterns may be hindering the pay progression of some of these women. Policymakers should give more thought to policies that would make it easier for low-wage part-time workers to transfer their working patterns between jobs. A situation where women are trapped in low-income jobs because of problems transferring suitable working patterns to alternative, better-paying jobs should be addressed by policymakers and employers.
  7. Evidence suggests that low-income workers may be unlikely to make significant geographical moves to switch jobs and increase their wages. Pay-progression policy should put more emphasis on the importance of local labour markets.
  8. Higher skills can make it easier for a low-income worker to move to a higher-paid job but our anecdotal evidence suggests some employers see little benefit in helping to provide training and may even see the linkage between training and employers moving as a reason not to offer training. Coupled with evidence that employer-provided training is heavily skewed towards higher-wage workers, this supports the argument that greater attention be given to the wider, fairer provision of training for working-age adults.

 
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