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

alanfelstead@cf.ac.ukf.green@ioe.ac.uk

nickjewson@cf.ac.uk

http://www.cardiff.ac.uk/socsi/research/researchprojects/traininginrecession/index.html