Training in a Cold Climate:The Effect of 2008-09 Recession in the UK
Alan Felstead, Francis Green & Nick Jewson
Paper presented to the LLAKES Conference,18-19 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 atemptation … to cutspending on staff training’
Calls for Restraint
‘But it’s a false economy’
‘We must not pay the priceof failing to invest in the talent on which our futurewill 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 policyconcern we might have expected more
• Economic and Labour MarketTrends carried 12 articles over aperiod of a year (Sept 09-Aug 10)on the effects of the recession, buttraining 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 & allrecessions led to recruitment freezes and/orredundancies• Little change: ‘training floors’ make some formsof training a ‘must have’ activity
Overall, theory offers an ambiguous answer to thequestion ‘how does training fare in recession’
What Do Surveys Tell Us?
1. Analysis of secondary data collected fromemployers (CBI, BCC & NESS)2. Analysis of secondary data collected fromindividuals (LFS)
Source: supplied to authors by CBI.
Collapse in Employers’ Training Expenditure Intentions
Q2 2008-Q3 2009recession
Q3 1990-Q3 1991recession
CBI Training Expenditure ‘Balance’ Index, Manufacturing, 1989-2012
Bal
ance
(% in
crea
se m
inus
% d
ecre
ase)
Q4, 19
89
Q3, 19
90
Q2, 19
91
Q1, 19
92
Q4, 19
92
Q3, 19
93
Q2, 19
94
Q1, 19
95
Q4, 19
95
Q3, 19
96
Q2, 19
97
Q1, 19
98
Q4, 19
98
Q3, 19
99
Q2, 20
00
Q1, 20
01
Q4, 20
01
Q3, 20
02
Q2, 20
03
Q1, 20
04
Q4, 20
04
Q3, 20
05
Q2, 20
06
Q1, 20
07
Q4, 20
07
Q3, 20
08
Q2, 20
09
Q1, 20
10
Q4, 20
10
Q3, 20
11
Q2, 20
12
-40
-30
-20
-10
0
10
20
30
40
50
Q4 2011-Q?2012double dip
Bal
ance
(% in
crea
se m
inus
% d
ecre
ase)
Source: BCC data taken from website reports.
CBI and BCC Training ‘Balance’ Index, 2002-2011
Collapse Greatest for Large ManufacturersQ
3, 2
002
Q4,
200
2Q
1, 2
003
Q2,
200
3Q
3, 2
003
Q4,
200
3Q
1, 2
004
Q2,
200
4Q
3, 2
004
Q4,
200
4Q
1, 2
005
Q2,
200
5Q
3, 2
005
Q4,
200
5Q
1, 2
006
Q2,
200
6Q
3, 2
006
Q4,
200
6Q
1, 2
007
Q2,
200
7Q
3, 2
007
Q4,
200
7Q
1, 2
008
Q2,
200
8Q
3, 2
008
Q4,
200
8Q
1, 2
009
Q2,
200
9Q
3, 2
009
Q4,
200
9Q
1, 2
010
Q2,
201
0Q
3, 2
010
Q4,
201
0Q
1, 2
011
Q2,
201
1
-40
-30
-20
-10
0
10
20
30
40
Manufacturing, CBI Manufacturing, BCC Services, BCC
-40
-20
0
20
40
60
80
100
Training spendper head
Trainingcoverage
Externaltraining
provision
Informallearning
Qualification-related training
Apprenticesand newtrainees
Young people Staff numbers
Increased Stayed the Same Decreased Balance (+% minus -%)
Source: own calculations from NESS2009.
But Actual Experience More Optimistic %
of e
mpl
oyer
s
Reported Impact of the Recession on Training, 2009
Source: own calculations from QLFS 1995-2011 (year averages across 4 quarters).
No Evidence of a Recession Effect on Incidence of Training
810
1214
1618
2022
2426
%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Over 25s Under 25s
Four-W eek Training Rate, By Age Group
5052
5456
5860
6264
6668
7072
74%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Proportion of Training That Is Off The Job
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 trainingincidence in public sector – LFS measure
Evidence in NESS series ofpublic sector traininginfrastructure under morethreat – establishment-levelplanning and budgeting falling a little quicker
2005 2007 2009 2011Training plan1
AllPublic sectorPrivate sector
44.972.841.4
47.670.644.4
43.165.840.2
42.261.839.2
Training budget2
AllPublic sectorPrivate sector
33.371.328.5
36.872.531.9
35.669.931.1
32.059.427.8
2008-09 recession
-----
What Do Employers Say is Going On?
Interviewed in mid-2010 105 employers drawnfrom NESS2009 – 45 in the public sector, 25 inprivate 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 withexternal providers• organizing on-site group training sessions• making greater use of e-learning
As a result, employers are finding innovative waysof maintaining training coverage, sometimes withless resource
Conclusion
• We have not found evidence of a dramaticdecline 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 tomaintain training coverage despite the severity ofthe recession
Contacts
[email protected]@ioe.ac.uk
http://www.cardiff.ac.uk/socsi/research/researchprojects/traininginrecession/index.html