Review of employer collective measures: Final Report

At first glance, the UK seems to have relatively positive levels of employer provided training, with 65% of employers providing training to their staff and international surveys suggesting the proportion of establishments which provide training is higher than in other EU nations. However, almost a quarter of establishments have never funded or arranged training for their staff; less of this training is certified when compared to other EU nations and training also accounts for a lower proportion of labour costs compared to the EU average. Businesses that employ few people and establishments in certain sectors are least likely to fund or arrange training and these patterns have been true for a number of years. Whilst there are a range of reasons why some businesses do not train their staff, there is evidence that those which do, enjoy considerable benefits relating to survival, productivity, employee job satisfaction and lower absentee rates.
It is in this context that the UK Commission for Employment and Skills was asked to review the range of policy levers designed to encourage employers to train on a collective basis (Collective Measures), such as levies and Licenses to Practice. The UK Commission undertook extensive literature reviews, on-line consultations, policy prioritisation events with stakeholders and initial economic appraisals, to inform the advice presented in this report. The work began with a review of the conceptual literature on the optimal level of employer investment in skills and training and whether public policy could be used to move closer to these levels. It finds that there are a number of factors which can lead to sub-optimal provision at firm and sector level and that this provides a case for State intervention, providing the benefits of doing so would demonstrably outweigh the costs. It suggests that sectoral intervention is probably the most important way of stimulating skills development in the UK: there is a commonality of skill needs; the likely returns to increasing the pool of skills at the sector level are higher; employers would benefit most from an increased pool of sector skills and should contribute to it; employers are best placed to define skill needs within the pool and a sectoral approach reduces the impact of poaching. It is because not all of these benefits are currently realised, that State intervention is justified.