Government tests new training programme for low-skilled workers

In September 2002, the UK government launched six pilot schemes designed to test a new policy model for supporting the training of poorly qualified adults in England. This feature looks at the background to the new initiative and some of the main challenges it faces.

In September 2002, the UK’s Labour Party government launched a new pilot programme aimed at testing a common policy model for supporting the training of workers with low skills. The 'employer training pilots' (ETPs) will operate in six areas of England until at least August 2003. The pilots are testing various models of an adult learning entitlement for workers without a 'level 2' qualification, based on free tuition, paid time off work for study, and financial support for employers in compensation for their replacement wage costs. A 'level 2' qualification is the standard normally expected of those completing lower secondary education at 16 in the UK and equates to five good GCSEs at grades A*-C or an equivalent vocational qualification (ie NVQ level 2).

The pilot schemes have fuelled speculation that the government may be considering the introduction of a statutory right to time off work for training for all adults with low skills. The government has already introduced a right for young workers aged 16 and 17 to attend college for one day a week to obtain a level 2 qualification.

Background

In recent years, the emphasis of the UK’s training policy has moved away from initial entrants to the workforce towards adult workers with low skills. Current policy concerns stem from the fact that around one-third of the UK adult workforce appear to receive little or no systematic training from their employer. Most of these workers either have no qualifications or are currently without a level 2 qualification. It is also estimated that there are as many as 7 million adults (one in five) in England with literacy skills at or below those expected of an average 11-year-old and that one in four have a problem with numeracy. Policy-makers insist that a satisfactory level of attainment in basic skills and a level 2 qualification are the absolute minimum required to ensure an adult’s employability. A further concern is that, unless this problem is addressed, the UK’s productivity performance will continue to lag behind that of its major competitors.

The belief that there should be an adult entitlement to free education and training to level 2 can be traced back to the final report of the National Skills Task Force in 2000 (UK0010196F). Since then it has been echoed in a number of high-profile reports, including by the Cabinet Office Performance and Innovation Unit’s project on workforce development, and the joint Confederation of British Industry (CBI)/Trades Union Congress (TUC) productivity working group (UK0111104N). The employer training pilots were announced as part of the 2002 budget in a joint report published by the HM Treasury and the Department for Education and Skills (DfES) entitled Developing Workforce Skills: Piloting a New Approach. The ETPs are one of series of initiatives and pilots currently taking place at national, regional, sectoral and local level designed to test options for the development of a new national skills strategy scheduled for June 2003.

The pilots operate in the context of new adult learning targets as laid down in the July 2002 spending review White Paper. These include:

• reducing by 40% the number of adult workers currently without a level 2 qualification by 2010; and

• improving the basic skills of 1.5 million adults between 2001 and 2007, with an intermediate target of 750,000 by 2004.

The employer training pilots

The Treasury/DfES report suggests that there is a serious problem of 'market failure' in training, such that government intervention and subsidy are required. The document clearly states that the UK’s 'purely voluntary approach has not brought about the step change in UK skill levels that is needed to close the productivity gap.' It also suggests that the problems may be such that some sectors find themselves trapped in a 'low skills equilibrium'. The report argues that, by increasing the supply of skills, 'firms could begin to adopt more skill intensive (and more productive) strategies, individuals would have a greater incentive to invest time and resources in training, and there could be a once and for all change in the training market.'

The ETPs started in September 2002 and will continue until at least August 2003. They operate in six areas of England and are run by the following local Learning and Skills Councils (LLSCs) (UK0110111F):

• Birmingham and Solihull;

• Derbyshire;

• Essex;

• Swindon and Wiltshire;

• Greater Manchester; and

• Tyne and Wear.

The pilots are voluntary, with the LLSCs responsible for approaching prospective employers which may wish to participate in the scheme. The employers may be drawn from the private, public or voluntary sectors. In his pre-budget statement in November 2002, the Chancellor of the Exchequer, Gordon Brown, announced that the pilots would run for a further year and that they would be extended to cover more areas of the country. At the same time, Mr Brown more than trebled the funding for the scheme from GBP 40 million to GBP 130 million.

The pilots are designed to address two key problems:

• the lack of time which employees have to study, due to work; and

• the costs incurred by employers when releasing staff for training purposes.

All ETPs therefore are built around the following core components:

• free tuition/accreditation for employees without basic skills or a level 2 qualification to work towards a recognised qualification up to level 2 standard;

• an entitlement to paid time off for all low-skilled adult employees without a level 2 qualification. The pilots are currently trying out two options of 35 hours (five days) and 70 hours (10 days) of paid leave to study in each year of the project;

• employers are compensated by their LLSC for the replacement labour costs incurred in allowing staff to take time off work to train. This includes the wage costs of staff who take time off plus the costs of recruiting temporary staff to replace them. Compensation varies according to firm size. Small firms with fewer than 50 employees are paid 150% of the average wage costs for the period of time off. Larger firms are expected to cover some or all of the costs involved; and

• extended information, guidance and support for employers and individuals taking part in, or considering taking part in, the scheme. This includes the 'wider deployment of 'skills champions', along the lines of union learning representatives (ULRs), which have proved successful in breaking down individual and employer barriers to training' (UK0210103F).

An independent evaluation of the pilots is being carried out by the Institute of Employment Studies, in partnership with the Institute of Fiscal Studies and opinion pollsters MORI.

The response of the social partners

The TUC has welcomed the pilots and the role afforded to ULRs in helping to deliver them, whilst urging the government to go further and introduce a statutory entitlement to paid leave for all adults without a level 2 qualification. This suggestion has been strongly opposed by the CBI, which argues that legislation will prove counter-productive because the main barriers to learning are 'lack of motivation, not lack of opportunity'. John Cridland, the CBI’s deputy director-general, insists that: 'tackling low skills is a priority for the UK. We can motivate more adults to learn and more employers to train by demonstrating the benefits of improving skills.'

Commentary

ETPs embody the Labour government’s commitment to tackling the problem of low skills among the adult workforce, and have added to speculation that the government may be contemplating a statutory right to training leave. At the same time, they are part of a long line of government-sponsored initiatives designed to increase the supply of skills. As some commentators have suggested, it is not altogether clear whether the pilots are intended primarily as a competitiveness/productivity-enhancing measure or as a means of compensating employers for developing individuals’ employability, or both. It is worth pointing out that the main gap in the UK’s skills profile is often said to be in level 3 craft and technician skills, and that it is this deficit which is believed to be a central factor in explaining the UK’s poor productivity performance relative to countries such as France and Germany. Furthermore, the emphasis placed in the pilots on funding training rather than education, coupled with relatively short periods of time off, suggests that government intends adults to work towards level 2 vocational qualifications. This is despite the fact that the government’s own figures suggest that the 'private rate of return' for such qualifications is zero, and may even be slightly negative.

For the Treasury, the hope is clearly that some form of an adult entitlement to level 2 can make a serious impression on the UK’s productivity problem. However, research suggests that the links between skills and organisational performance are complex and do not flow in one direction. The fact that the USA performs better than the UK despite having a broadly similar skills profile only underscores this point. Some commentators have also argued that policies designed to increase the supply of skills in the UK are likely to run into the problem of weak employer demand for, and usage of, skills - linked to firms’ choice of product market strategy, work organisation and people management approaches. While it may therefore be possible (and necessary) to use public spending to lever up the number of adult employees with level 2 qualifications, the impact upon organisational performance may prove limited if those workers remain in jobs that do not require skills at this level. Rather than giving incentives to firms to adopt more skill-intensive, high-productivity strategies (as the Treasury believes), the main impact may be felt in terms of increased staff turnover and heightened employee dissatisfaction with boring, menial jobs that offer few opportunities for progression. The fact that skills which are not used regularly tend to grow weaker is a further concern. (Jonathan Payne, SKOPE)