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National Audit Office report: Employers’ perspectives on improving skills for employment

Employers’ perspectives on improving skills for employment

“A more skilled workforce is vital for national productivity and the delivery of public services. Better skills are also important for the country to maintain its position in an increasingly competitive global economy. “The doubts that some employers have about the value of skills training must be addressed by more streamlined communication with employers, by developing flexible and affordable training genuinely targeted on business needs, through incentives to employers, and effective channels through which employers can influence skills training”.

“A more skilled workforce is vital for national productivity and the delivery of public services. Better skills are also important for the country to maintain its position in an increasingly competitive global economy. “The doubts that some employers have about the value of skills training must be addressed by more streamlined communication with employers, by developing flexible and affordable training genuinely targeted on business needs, through incentives to employers, and effective channels through which employers can influence skills training”.

Sir John Bourn

 

More employers in England need to be persuaded of the value to their businesses of employment-related education and skills training, according to the National Audit Office. Today’s report to Parliament recommends that the ways in which employers get advice and information be simplified; that the emphasis should be on flexible and affordable training that employers need; that funding should be tailored to encourage more employers to invest in training to meet skills shortages and regional priorities; and Sector Skills Councils should be helped to develop as genuinely employer-led bodies, leading on incorporating employers’ perspectives into skills development.

Despite expenditure by employers in both public and private sectors estimated at £23.7 billion on education and training, six per cent of employers have skill shortage vacancies and 20 per cent have skills gaps, costing in total some £10 billion a year in lost revenue – or £165,000 a year in a typical business with 50 employees. Recent research estimates that, on average, an eight per cent increase in the proportion of trained workers can lead to a 0.6 per cent increase in UK productivity, as measured by the value added per hour worked.

Employers want their employees to be literate and numerate, but may be reluctant to fund or release employees for basic skills or level 2 training, especially when most people might be expected to become proficient in literacy and numeracy before they leave school. Employers generally acknowledge the economic benefits from training and skills development at level 3 and above and expect to bear at least a proportion of the costs.

The Department for Education and Skills spends around £6.7 billion, through the Learning and Skills Council, on employment-related education and skills training in England. The government’s Skills Strategy is designed to fill the gaps left by market failure in education and training. In rolling out the National Employer Training Programme – to be known as “Train to Gain” – the Learning and Skills Council is extending the availability of skills brokers (advisers who provide advice on training opportunities and suitable providers) who can add value and reduce costs by bringing together different small employers seeking the same or similar skills development, and different colleges and providers who can, together, provide the best and most cost-effective training solutions.

Further education colleges and private training providers have a lot to offer. But it is innovative, partnership working between colleges and private sector providers that could potentially provide a rich stream of future skills development that is especially attractive to employers. Colleges also need to work closely with employers to address barriers such as qualifications not directly meeting employers needs, shortages of skilled trainers in particular geographical areas, and the availability for training purposes of expensive capital equipment.

In general, employers want incentives to train their staff more. In rolling out the National Employer Training Programme, LSC funded skills brokers need to be responsive to the needs of employers; communicate to employers the benefits of skills development; and create and offer packages of training with costs shared appropriately between public funding and the employer, and that are attractive in terms of business benefits. A particular imperative is to engage the ‘hard to reach’ employer, rather than subsidise those who would have trained their staff anyway without government support.

For employers wishing to influence skills training, the biggest barrier is shortage of time, but achieving genuine input from employers is a challenge which has to be met if greater ‘employer engagement’ is to become a reality. The Sector Skills Councils, some of which are relatively new organisations, are required to develop Sector Skills Agreements. As awareness of the Councils increases, there is a risk that they will become overstretched, unwieldy or both. If this happens, they risk losing the ‘buy in’ of the employers in the sectors they represent. The Councils need sufficient time and capacity to develop as genuinely employer-led bodies providing sector expertise in developing skills training and formal qualifications.

 

Publication details:

ISBN: 0102936544 [Buy a hard copy of this report from TSO]

HC: 461 2005-2006

Published date: December 14, 2005