Continuity and change: employers’ training practices and partnerships with training providers

Contemporary issues in employer training

This section recounts some key trends in the literature on employer training over the past five to ten years. Not surprisingly a major concern in the international literature is the effects of the Global Financial Crisis (GFC).

The effects of economic downturns: Training floors and ceilings

Recent research in the UK has explored the trajectory of training activity during the GFC and its subsequent recession. Although Australia has not been affected as much as many other countries, this research nevertheless provides useful information. The findings of the regular UK employer skills survey have shown that training activity was not as affected by the recession as might have been thought given the conventional wisdom that training expenditure tends to viewed as discretionary by most employers (UKCES 2011). The variations in the reduction in training activity are explained by Felstead and Jewson (2014) by employing the concepts of training “floors” and training “ceilings”. The concept of a training ceiling refers to the total amount of training activity that an organisation undertakes including all forms of training. The training floor refers to the non-discretionary element of training, that is, the training that the organisation feels it is obliged to carry out if it does not wish to jeopardise its operations. Health and safety training in the mining industry might be an example of a training floor for many mining organisations. During the recession different forms of responses were observed including the cutting of training ceilings as organisations no longer carried out training that was discretionary. This suggests that a certain level of training activity, the training floors, would continue despite economic conditions. However, some organisations did cut their training floors – especially if they were very adversely affected. The picture is complex but suggests that the concept of employer training is not homogeneous across all industries and employers (Felstead, Green & Jewson 2012). This work also demonstrated that training activity in the public sector was not immune to economic recession and that, although training in the public sector was maintained in the recession, the funding and planning of training suffered to a greater extent than training in the private sector (Jewson, Felstead & Green 2014).

In the Australian context, McGraw (2014) notes that a survey in 2011 had found that over 70% of respondent companies had maintained or increase their training budgets since the onset of the GFC, although a separate review of multi-national companies in Australia found that just over half had reduced their expenditure, presumably as a result of changes elsewhere in the world. McGraw also noted the two-speed economy that characterised Australia at the time of his paper, and the risks, particularly to other industries and the skills of their workforces, associated with the high dependence on mining.

Training intensity

The Employer Skills Survey (UKCES 2011) traced the patterns of employer training provision during the worst years of the recession from 2007 to 2009. The reports shows that, as Felstead et al (2012) had discovered, the total amount of training activity declined during this period. Employers spent less on training (training expenditure declined by over 5 per cent) and fewer workers received training from their employers. However, the form of training changed. More employers provided off the job training, often in combination with on the job training. The emphasis of the primacy of on the job training seemed to give way to a more nuanced and focused approach. This was also reflected in the training expenditure on each individual employee that was trained (training intensity). This rose by 3 per cent over the same period that total training expenditure by employers declined by 5 per cent, indicating a stronger focus on returns to training investments and value for money, as opposed to a blanket approach to workforce training.

High performing workplaces and resource-based theories of the firm

The drivers of training have been more fully investigated in the literature on high performing workplaces. The original Australian work including the Industry Training Studies model (Smith & Hayton 1999) and the later work on the impact of new management practices on the incidence and form of employer training (Smith, A et al. 2003) have been developed by reference to the impact of competitive markets and business strategy. Ashton and Sung (2006) have argued that input-based models of employer training take account neither of the external competitive environment of different firms nor the internal impact of work re-design and re-organisation. In particular, they point out that simply training more will not necessarily yield benefits for firms working in standardised markets and with mass production technologies. The impact of workforce skills will be greater where production is differentiated and where the firm competitiveness is based on innovative capacity. This argument has also been adopted by the advocates of the resource-based theory of the firm. In this case, resource-based theory predicts that the basis of firm competition will be on the inimitable factors of workforce skills and innovation rather than on productivity and price. In this situation, exhorting employers to undertake more training makes sense as it fits with the competitive basis of the industry and will yield tangible competitive benefits (Boxall & Purcell 2000).

Financial incentives for employers

In terms of encouraging employers to provide more training to their workers there have been a number of schemes used in the developed world to provide incentives for employers to increase their training effort. In general, these schemes have either provided subsidies to employers or have used a more punitive, levy approach in which employers are compelled to pay a certain levy if they do not train (Smith & Billett 2006). A recent review of these systems by the OECD (Müller & Behringer 2012) concludes that that the evidence for subsidy or levy schemes working to promote an effective increase in employer training is limited. They argue that subsidies are often prone to the deadweight argument, mentioned earlier in this paper, in that governments may only be paying firms to carry out training that they would have provided in any case. They also state that levy systems tend to promote reluctant compliance on the part of employers who are not convinced of the need to provide more training (perhaps for the competitive reasons outlined by Ashton and Sung (2006) and so may find ways to game the system and avoid paying levies whilst providing training that may be of limited value in the creation of skills.

Smith and Billett (2006) suggested that the most effective schemes to promote employer training were those which worked with employer backing and often on an industry sector basis. Good examples of this approach can be found in the Netherlands where the industry associations operate voluntary training levy schemes which create a pool of funds on which employers can draw to fund training they require. Sung (2008) has also endorsed this sectoral emphasis in his analysis of industry training bodies in New Zealand and Britain. His research suggests that it is the voluntary “buy-in” of employers to national or industry based training arrangements that produces success rather than a simple top down approach from government.

While this area is problematic, it is difficult for governments to withdraw from this area. Many employers still claim the cost of training is unduly burdensome and prohibitive (NCVER 2013). With the withdrawal of funding in some industry areas, some employers have indicated that the cost of training was prohibitive for themselves and also for their employees wishing to self-fund their training within the VET system in order to up-skill (Guthrie et al. 2014).

Skills utilisation

In the global market, effective skill utilisation is linked to higher level of creativity and innovation (Buchanan et al. 2010; Bretherton 2011). As Bowtell (2014) remarks, the training sector needs to increase its efforts beyond developing skills ‘for’ the workplace to the utilisation of skills ‘in’ workplaces. Significantly, these calls for new approaches confirm the importance for the continuous evolution of our thinking about learning and employee development within workplaces (Buchanan et al. 2010; Bretherton 2011; Bowtell 2014). A current OECD project on utilisation of skills (OECD 2015) is carrying out country case studies to find good practice examples. Better skills utilisation also has significant implications for workers in the current ‘job quality’ debate in the literature on the sociology of skill (Warhurst & Knox 2015).