Firm-Provided Training During the Great Recession

Abstract

SummaryEven though the 2008/09 economic crisis had only minor employment effects on the German labor market, it might have affected firms’ further training and apprenticeship training behavior. From a theoretical point of view, the impact of the business cycle on firms’ training behaviour is ambiguous. There are reasons for an increase of training during a downturn (e.g., declining opportunity costs of training, fewer exit options for trained workers) as well as arguments for a decrease of training (e.g., uncertain future benefits of training). The existing empirical evidence on the relationship between training and economic downturns is relatively scarce. In particular, we are not aware of any empirical study investigating the effects of the most recent crisis on firms’ training activities in Germany. Our paper aims to fill this gap by using data from the IAB Establishment Panel, a representative German panel data set with annual information about almost 16,000 establishments. In particular, we analyzed the provision and the intensity of further training and apprenticeship training in firms which were affected by the crisis and in those which were not. Our empirical investigation revealed that the establishments, irrespective of whether or not they were hit by the economic crisis, decreased their further training and apprenticeship training efforts in 2009 compared to 2008. However, establishments directly affected by the great recession tended to reduce their training activities more often than those which were not affected. Furthermore, we found much stronger variations in the development of firms’ further training activities than in the development of their apprenticeship training.

Training in the Great Recession – Evidence from an Individual Perspective

“…From a theoretical point of view, the effect is unclear because there are arguments for both directions. The few existing empirical studies on the Great Recession indicate a counter-cyclical development of training (Bellmann et al, 2014;Felstead et al, 2012;Mason and Bishop, 2015;Popov, 2014). However, there is no empirical evidence regarding the individual training behaviour of employee groups.…”

“…Based on the IAB Establishment Panel, Bellmann et al (2014) find that German establishments reduced their training activities in 2009 -at the peak of the crisis -compared with 2008, independently of whether or not they have been directly affected by the economic crisis. In addition, establishments that have been directly affected by the crisis reduced their training efforts to a much larger extent than other establishments.…”

“…There is empirical evidence for training being counter-cyclical (Sepulveda, 2004) or pro-cyclical Bassanini and Brunello, 2008;Majumdar, 2007). However, all studies that have analysed the effects of the Great Recession find negative effects on establishments' training activities (Bellmann et al, 2014;Felstead et al, 2012;Mason and Bishop, 2015;Popov, 2014). The recession in addition came as a shock and incurred strong uncertainty on the future development (Bloom, 2014 In the context of training decisions, for establishments, cost-benefit considerations are decisive.…”

“…At the same time, these establishment characteristics may also influence the likelihood of being affected by the crisis. Bellmann et al (2014) We estimate a linear probability model explaining individual training participation and a linear regression model explaining the number of training measures. In order to gain insights into whether employees with specific characteristics are affected differently by the economic crisis, the sample is also subdivided into skilled and unskilled employees.…”

Training‐related dimensions of apprenticeship programmes in crisis‐ridden Greece: an exploratory study

“…Apprentices, nevertheless, often experience problems relating to [the setting of/absence of] learning goals. This is despite the high value and appreciation attached to such goals [by apprentices] (Fjellström, 2017); • The importance of constructing an evaluation framework for the development of skills that is in line with labour market needs (Payne, 2011); • The significance of a strong training component, in conjunction with (1) training that is not too narrowly focused, and that covers broader skills, and (2) the certification of the training content through a system of nationally recognized qualifications and competencies, for apprenticeships to be regarded as high quality (OECD, 2012); • The negative effect of the financial crisis on the training offered in apprenticeship programmes, and the training behaviour of private companies in particular (Bellmann et al, 2014); • The existence of a positive correlation between the quality of apprenticeship, as reflected in the content, duration and type of apprenticeship programmes, and the effects of apprenticeship on labour market outcomes (Bertschy et al, 2009); and • The existence of a relationship between training-related factors and the level of satisfaction with apprenticeships, as reflected in the non-completion of apprenticeship programmes. Such factors include a non-supportive workplace, the absence of quality assurance procedures to ensure satisfactory training, the lack of training relevant to the apprentices' specialty, the failure to teach up-to-date knowledge, skills and techniques to apprentices; and the lack of suitably qualified trainers, both in relation to their level of subject knowledge and their skills as teachers.…”