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National Employers Skills Survey 2007

TUC Organisation & Services Department

May 2008

National Employers Skills Survey 2007

Introduction

The Learning and Skills Council (LSC) published the latest edition of its main survey of investment in training by employers in England (National Employers Skills Survey, 2007) on 7^th May. These survey findings gained some media attention largely because the LSC press release focused on the latest estimate of total employer spend on training produced by the survey, which is now claimed to be in the region of £39 billion per annum.

This TUC brief provides a critique of this controversial estimate of employer spend (e.g. highlighting the fact that around half of the estimate is accounted for by including the normal wage costs of employees whilst they are involved in training). In addition, this TUC brief highlights other less well publicised findings in the survey, including that a third of employers in England did not not provide any training at all to their staff over the latest 12-month period and that 37% of all employees received no training during this period.

There is little doubt that the National Employers Skills Survey 2007 (NESS07) is a comprehensive survey (e.g. it is based on 79,000 interviews with employers) and the TUC accepts that it offers a detailed picture of employer practices on workplace training. However, it was disappointing that the LSC released the findings by focusing on the controversial figure on employer spend whilst failing to acknowledge some of the key skills challenges highlighted in the survey, including the continuing long tail of employers who do not invest at all in the skills of the workforce.

How many employers train?

As with the previous surveys, NESS07 asked all employers if they provided any training to their staff in the previous 12 months. One third (33%) responded by saying that they did not and this compares with a figure of 35% in the last survey undertaken in 2005 (NESS05). While this slight improvement since 2005 is welcome, it is a shocking indictment that a third of employers are still not providing any form of training for their staff.

Nearly two thirds of those employers that had not funded or arranged any training over the past year said that they had not done so because they believed that all their staff were fully proficient. However, when questioned further, a third of this particular group of employers reported that they faced significant skills gaps even though they simultaneously said that they offered no training because all their staff were fully proficiently. The authors of NESS07 highlight this contradiction in employer behaviour as follows: 'This suggests a disconnection between employers' thinking when assessing their workforce development needs and their general opinon of their staff's proficiency' (NESS07, page 133).

The adoption of a strategic approach on training by employers is evaluated in the NESS by asking a series of questions about training plans and budgets. The findings from NESS07 shows that 48% of employers had a training plan and that 35% had a budget for training expenditure (respective percentages from NESS05 were 45% and 33%). In effect the latest figures show that over a third of employers (35%) have a training budget compared with the two-thirds (67%) of employers who claim to have provided training and development over the past year.

Which employees are trained?

NESS07 estimates that 37% of employees in England received no training at all from their employer over the past year, a slight improvement on 2005 when 39% of employees found themselves in this situation. The latest figures also highlight the continuing training divide that pervades our workplaces - for example, 52% of professional employees said they had received off-the-job training over the past year compared with only 24% of production line staff.

What kind of training?

The NESS also provides data on those employers that only provide a minimal level of training largely because they need to meet legislative requirements under health and safety law and /or to provide induction courses for new staff. The latest survey shows that 11% of those employers that do train had only provided health and safety or induction training and no skills development training of any other kind. And around a quarter of employers providing training said that at least half of their training comprised health and safety or induction training.

NESS07 also highlights that too few employers are enabling their employees to train towards nationally recognised vocational qualifications, which is quite rightly a central thrust of Government policy. Of the 14 million employees that had received training in the previous 12 months, 2.6 million (18%) had been trained towards a nationally recognised qualification. Slightly less than half of these training towards a nationally recognised qualification were training towards an NVQ, comprising 9% of the 14 million employees that had received training in the previous 12 months.

As a proportion of the total employee workforce (i.e. including those not receiving any training at all), over the past year 11% of employees had been trained towards a nationally recognised qualification and 6% had been trained towards an NVQ. In addition, just over one in six employers (17%) were training at least one member of staff towards an NVQ or had done so in the previous 12 months.

NESS07 shows little progress in this area since 2007 and even notes some reversals, e.g., slightly fewer trainees working towards a nationally recognised qualification in 2007 (18%) compared with the situation in 2005 (19%). And the actual number of employees being trained towards NVQs has remained static at 1.2 million.

Regional analysis

NESS07 provides a regional analysis of many of the training indicators highlighted in this briefing and the relevant data are set out in the two tables below.

# Note: the percentages in these two columns are calculated by reference to the total employee workforce (i.e. those receiving training and those not receiving any training)

Employer spend on training

This is only the second time that the NESS has attempted to estimate total employer spend on training. This estimate was first included in the 2005 NESS which used a methodology originally devised for a previous survey commissioned by the DfES (D. Spilsbury, Learning and Training at Work 2000, DfES Research Report 269, 2001). The original DfES survey in 2000 came up with an estimate of £23 billion and the 2005 NESS estimated that employers were spending in the region of £33 billion. The latest estimate produced for NESS07 is £38.6 billion.

What is important to consider about this estimate is that it is hugely influenced by the inclusion of the wage costs of employees whilst they are involved in training. In other words, the estimate includes normal wage costs of employees when they are training on the basis that this should be treated as 'lost production' on the grounds that employees are training rather than producing goods or services for the company/organisation. In total this accounts for just over £18 billion or 47% of the total estimate. In addition, wage costs of internal staff involved in managing and delivering training account for over £14 billion or another 37% of the total estimate.

The total estimate therefore fails to indicate the extent to which wage costs are so influential and also disguises some worrying trends in other areas, especially employer investment in training delivered by colleges and training providers. NESS07 shows that over the latest 12-month period employer spend on fees to external providers was £2.6 billion (a mere 7% of the total estimated spend of £38.6 billion).

In the table below the TUC has undertaken an analysis of the three surveys which used the same methodology for estimating employer spend on training and highlighted the trends in employee wage costs and fees paid to external training providers. It is evident that the ongoing increase in the estimate of employer spend since 2000 is being driven to a significant extent by the calculation of employee wage costs (up from £10 billion in 2000 to £18 billion in 2007). However, employer spend on training delivered by colleges and training providers has remained static and was exactly the same level (£2.6 billion) in 2007 as it was in 2000.

These findings may to some extent reflect the trend in the previous section of this report showing that employers are by and large providing informal workplace training that does not lead to the acquisition of recognised qualifications by the majority of employees. Whilst this form of training may meet employers' short-term business needs in some instances, it is a shortsighted approach and over the longer term will do little to address the low productivity levels found in too many companies and organisations in the UK. In addition, this approach to training certainly does not meet the longer-term skill needs of individual employees and also the economic and social priorities which underpins the skills vision set out by Lord Leitch.

Briefing document (1,800 words) issued 13 May 2008