Transcript The UK labour market in recession: what is happening to

The UK labour market in recession:
what is happening to employerprovided training?
Geoff Mason
National Institute of Economic and Social
Research, London
ESRC / HM Treasury Public Policy Seminar on
‘Labour market, recession and social impacts’,
29 September 2009
Overview of presentation
•
•
•
•
Macroeconomic background
Recent labour market trends
Training in previous recessions
Recent survey of employer-provided training:
two data points in mid-08 and mid-09
• Impacts of recession on employer-provided
training
• The balance between adult training and labour
market entry training
UK monthly GDP estimates
The Profile of the Depression: Months from the Start of the Depression
GDP : Change from Peak
2%
1%
0%
-1% 1
3 5
7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51
-2%
-3%
-4%
-5%
-6%
-7%
-8%
-9%
1930-1934
1973-1976
1979-1983
1990-1993
2008-
Weak recovery under way?
NIESR forecasts (September 09):
• Economy to contract by 4.3% in 2009
• Growth in real GDP of 1% in 2010 and 1.8%
in 2011
• GDP forecast to return to its 2008-Q1 peak in
2012-Q3
• Unemployment expected to continue to rise,
peaking at around 3 million in 2011
Employment, unemployment and
inactivity
3 months ending 3 months ending
July 08
July 09
Employment level
Total (millions)
Full-time (mn)
Part-time (mn)
29.5
22.0
7.5
28.9
21.3
7.6
Working-age employment rate
Total (%)
Men (%)
Women (%)
74.6
78.6
70.3
72.5
75.8
68.9
Working-age ILO unemployment rate
Total (%)
5.7
Men (%)
6.1
Women (%)
5.2
8.1
9.1
6.9
Working-age economic inactivity rate
Total (%)
20.8
Men (%)
16.2
Women (%)
25.8
21.1
16.6
26.0
Source: LFS/ONS, September 2009
Unemployment rates, analysed by age-group, mid-2008
and mid-2009
40
% of age-group
35
30
25
20
15
10
5
0
All aged 16 and
over
16-17
18-24
Mid-2008
Mid-2009
25-49
50 and over
Hours, earnings and bargaining power
Usual weekly hours of work in
main job
% working less than 6 hours
% working 6-15 hours
% working 16-30 hours
% working 31-45 hours
% working over 45 hours
Average earnings (incl.
bonuses)
Whole economy
Private sector
Public sector
Labour disputes
3 months
ending July 08
3 months
ending July 09
1.2
6.6
18
55.7
18.6
1.2
6.8
18.8
55.7
17.5
% changes year on year
(3 month average)
July 08
July 09
3.4
1.7
3.1
1.2
3.2
3.4
Working days lost
(thousands)
12 months
12 months
ending July 08 ending July 09
Whole economy
1115
253
Private sector
1064
180
Public sector
51
73
Source: ONS, September 2009
What happens to training in recessions?
Potential developments:
• Downward pressure on training budgets
• More time available to train
• Forward-thinking skills development for future
recovery
Experience in past recessions:
• Early 80s – apprenticeship training hit hard
• Early 90s: Loss of skilled jobs more serious than
reduction in training
• Employer-provided training cut in some sectors
between 1990 and 1992 but maintained in others,
partly as result of regulatory requirements and (in
some cases) as response to intensified market
competition (Felstead and Green, 1996)
Early evidence on current recession
CIPD surveys of 892 member firms (Winter 08-09):
• 32% of firms report cuts in training budgets in recent
months
• 24% have increased staff training
CFE/ICM on-line survey of 505 businesses in England
(June 09):
• 16% of firms have increased staff training
• 63% no change
• 16% reduction
• 5% don’t know
LLAKES-NIESR longitudinal survey of
adult training, mid-2008 and mid-2009
City-region:
Birmingham Glasgow Manchester
Sector:
Architectural
and
engineering
services
Social
work
15
18
9
2
2
2
15
38
11
8
4
3
Size group:
5-9
10-24
25 - 49
50 - 99
100 - 199
200-plus
South West Southampton
(GOR)
Retail
Total
9
16
7
4
0
2
27
18
8
1
2
4
83
114
42
18
15
13
38
60
285
Electronic,
electrical and
instrument
engineering
Number of establishments
Cultural
industries
17
24
7
3
7
2
60
79
48
Total
36% single-establishment firms, 64% part of multi-establishment firm;
89% UK-owned, 11% foreign-owned
Change in sales in previous 12 months, mid-2009
80
70
% of establishments
60
50
Rapid decline
Some decline
No change
Some growth
Rapid growth
40
30
20
10
0
Arch./eng.
services
Social work
Cultural
Elect. Eng.
Retail
Change in training expenditure in previous 12
months, mid-2009
90
80
% of establishments
70
60
Decreased by more than 25%
Decreased by up to 25%
Stayed the same
Increased by up to 25%
Increased by more than 25%
50
40
30
20
10
0
Arch./eng.
services
Social work
Cultural
Elect. Eng.
Retail
Focussing on training for ‘core employees’
• Detailed questions about training asked about ‘core
employees’ in both 2008 and 2009 surveys
• Core employees defined as those ‘whose skills and
knowledge make the greatest contribution to the
success of your business’ (excluding managers)
• For establishments with under 10 employees, training
questions were asked about All Employees
• Main core groups were:
–
–
–
–
–
professionals in arch./eng. services
personal care providers in social work
advisers in cultural sectors
operators in electronics and related engineering
sales workers in retail
Core employee skills in need of updating or
improvement, 2008
All sectors
% of establishments
Core employee skill gaps
Computing skills
Generic skills
Leadership and supervisory skills
Basic skills
Technical and practical skills
No skills need improvement
50
74
54
24
44
11
Factors driving changes in core employee skills over previous 2-3 years
Development of new goods and services
Introduction of new working practices
Introduction of new technologies or equipment
New legislative or regulatory requirements
No change in skill requirements
44
47
51
53
19
Declining intensity of core group training
provision between 2008 and 2009
2008
2009
% of establishments
Proportion of core group
receiving ON-the-job
training:
None
Up to a third
One third to two thirds
Two thirds or more
Total
14
6
16
64
100
16
30
23
31
100
2008
2009
% of establishments
Proportion of core group
receiving OFF-the-job
training:
None
Up to a third
One third to two thirds
Two thirds or more
Total
30
17
21
33
100
46
27
14
12
100
Multivariate analysis of intensity of off-thejob training provision
• Off-the-job training for core employees is significantly
and positively related to sector characteristics (highest
in social work), union presence and change in sales in
previous 12 months
Controls in place for sector, size of establishment, core group
qualifications, age of firm, single establishments, foreign
ownership, geographical market focus, union presence and
recent innovations
• Decline in training intensity in 2009 is most likely to
occur in establishments reporting declining sales,
especially large establishments where sales have fallen
• In 2008 off-the-job training intensity was significantly
and positively related to skill updating and
improvement needs – but this was no longer the case in
2009
Training plans blown off course?
% of establishments
stating 'very likely' to
provide future training,
2008
Proportion of employees receiving
ON-the-job training, 2009
None
Up to a third
One third to two thirds
Two thirds or more
Total
Proportion of employees receiving
OFF-the-job training, 2009
None
Up to a third
One third to two thirds
Two thirds or more
Total
8
29
29
34
100
(n = 167)
41
30
15
14
100
(n = 189)
Assessment
• Reported increases in training by some firms closely
related to above-average sales performance
• Similarly, reductions in training provision in other
firms linked to decline in sales
• Training in hardest hit firms is not cut altogether but
is greatly reduced in intensity
• Off-the-job training in these firms has declined much
more steeply than on-the-job training
• In-depth qualitative research in progress to find out
how much this matters in terms of unmet skill
improvement needs for adult workers
• Policy issues regarding balance of public sector
support for adult upskilling and reskilling as
compared with education and training provision for
labour market entrants
Education and training participation by 2559/64 year olds, UK, 1993-2008 (Source: LFS)
Formal education, jobrelated training (13 weeks)
and/or leisure or other
education classes
Formal education and/or
job-related training (13
weeks)
35
30
25
% of working-age
people aged 2520
plus (men 25-64;
women 25-59)
Job-related training (past 13
weeks)
Job-related training (past 4
weeks)
15
10
Formal education
5
1993
1996
1999
2002
2005
2008
Leisure or other education
classes (not job-related)
Educational and economic activity status, 16-17 year
olds, mid-2008 and mid-2009 (Source: LFS/ONS)
Employed (in FTE)
Unemployed (in FTE)
Economically inactive (in FTE)
Employed (not in FTE)
Mid-2008
Mid-2009
Unemployed (not in FTE)
Economically inactive (not in FTE)
In full-time education (FTE)
0
10
20
30
40
50
60
% of all 16-17 year olds
70
80
90
Educational and economic activity status, 18-24 year
olds, mid-2008 and mid-2009 (Source: LFS/ONS)
Employed (in FTE)
Unemployed (in FTE)
Economically inactive (in FTE)
Employed (not in FTE)
Mid-2008
Mid-2009
Unemployed (not in FTE)
Economically inactive (not in FTE)
In full-time education (FTE)
0
10
20
30
40
% of all18-24 year olds
50
60
Policy issues
• Strong case for allocating scarce resources towards
younger age groups most vulnerable to
unemployment and inactivity during recession
• BUT: many downsides to continued reduction in
adult education and training participation:
– Productivity suffers from adult skills not being
updated or improved to required levels
– Loss of vocational training capacity in colleges
and training providers
– Reduced scope for health benefits and
improvements in well-being and civic involvement
associated with adult participation in learning
activities