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Impact of recession on workplace training

A report released by the UK Chartered Institute for Personnel Development in April 2009 has revealed the impact of the economic recession on workplace training. The report finds that, in the majority of organisations, cuts have been imposed on training budgets; however, the level of cuts differs between economic sectors. The survey also found that the recession had not adversely affected companies’ and organisations’ views on the importance of training.

About the survey

In April 2009, the UK Chartered Institute for Personnel Development (CIPD) published the results of its annual Learning and development survey (600Kb PDF). The survey aimed to explore current practices within learning and development in the UK. It was based on the responses of 859 professionals working in the field of learning, training and development to a CIPD questionnaire. Respondents were surveyed in October 2008.

Economic effects of recession on organisations and their training budgets

The survey found that, in general, the economic crisis had adversely affected the organisations in which the respondents were employed. Overall, 46% of the survey respondents thought that the economic position of their organisation had worsened in the previous 12 months. Furthermore, the economic recession had led to cuts in the budgets allocated for workplace training within companies and organisations. Some 32% of respondents reported that funds available for learning and development in their organisations had decreased within the previous 12 months. In the private and public sectors, 33% and 34% of respondents respectively reported reduced training funding. In the voluntary and community sector, the proportion was 25%.

Moreover, the survey findings showed that large organisations had been particularly affected by cuts in training budgets. The table below demonstrates this finding. In organisations with over 5,000 employees, 44% of respondents stated that training budgets had been reduced in the previous 12 months. In organisations with 251–1,000 employees and 1,001–5,000 employees, the proportion amounted to 32%. In organisations with 250 or fewer employees, the rate was only 26%.

The survey also revealed a marked discrepancy in the amount of money spent per employee on training in organisations of different sizes. GBP 417 (€457 as at 21 October 2009) was spent on training per employee in organisations with 250 or fewer employees, while just GBP 125 (€137) was spent on training per employee in organisations with more than 5,000 employees. Employees in organisations with more than 5,000 employees also received less training time a year than employees in organisations of a smaller size.

Company size and training budgets
Organisation size % of employers cutting training budgets in previous 12 months Money spent per employee on training (GBP)
250 or fewer employees 26 GBP 417
251–1,000 employees 32 GBP 260
1,001–5,000 employees 32 GBP 184
5,000 or more employees 44 GBP 125

Note: GBP 1 = €1.09 as at 21 October 2009

Future prospects

However, a significant finding of the survey was that the recession had generally not led companies and organisations to view training as an expendable commodity. Some 70% of respondents still considered learning and development to be a key priority in their organisations, and 76% believed that training and development was an important part of business improvement. Furthermore, only 33% of respondents agreed with the statement that ‘in an economic downturn, learning and development in my organisation is considered a “nice to have” rather than a necessity’.

Nevertheless, respondents were less optimistic about training expenditure remaining at current levels. Some 36% of those surveyed thought it likely that spending on training would decrease in their organisation over the next 12 months. This was an increase of 16% on the figure obtained by the same survey for 2008. There was little divergence between the data obtained for the private (37%) and public (36%) sectors with regard to this view. In the voluntary sector, just 29% of respondents thought that expenditure on training would decrease in their organisations over the next 12 months.

Commentary

Policymakers, social partner organisations and human resource managers will be reassured by some of the results of the CIPD survey. The survey demonstrates that opinions on the importance of training and actual spending in this area remain relatively resilient, and companies do not appear to have viewed training budgets as an easy cost-cutting target in a recession. Some of the results of the survey may give ground for concern however. Over a third of respondents, for example, considered it likely that training costs would be cut in their organisation over the next 12 months. Moreover, the results of the survey were obtained in October 2008, which suggests that the findings may not indicate the full extent of the effect of the recession on training expenditure and organisations’ attitudes to the issue.

Thomas Prosser, University of Warwick



Page last updated: 09 November, 2009
About this document
  • ID: UK0909039I
  • Author: Thomas Prosser
  • Institution: University of Warwick
  • Country: United Kingdom
  • Language: EN
  • Publication date: 09-11-2009
  • Subject: Competence and skills development