The Impact of Recession on Adult Training: Evidence from the United Kingdom in 2008–2009

Abstract

Analysis of longitudinal data from Employers Skills Updating Surveys in the United Kingdom suggests that in many establishments training plans were blown off course by the 2008–2009 recession, with reduced coverage of adult training and especially of off‐the‐job training. The effects of such cutbacks on skill levels have been partially alleviated by more precise targeting of on‐the‐job training on meeting skills improvement needs. However, in a sizeable proportion of establishments, future productivity and competitiveness are likely to be impaired by failure to upgrade adult workers' skills to standards which employers themselves perceived as necessary prior to the recession.

Training in the Great Recession – Evidence from an Individual Perspective

“…During the crisis, the outside options for trained employees are also relatively bad and therefore the risk of poaching for these employees declines. The lower exit risk of trained workers additionally reduces the opportunity costs of training (Felstead and Green, 1996;Mason and Bishop, 2015). As a consequence, establishments might have higher incentives to exempt employees from everyday work to participate in training measures.…”

“…Another argument for higher training activities in a recession is that qualified employees will be more productive in the following upswing (Brunello, 2009). Keeping people in the establishment instead of dismissing them also saves adjustment costs such as dismissal costs and costs of new hiring and initial training (Horning, 1994;Knudsen and Lien, 2015;Mason and Bishop, 2015). The strategy of labour hoarding in combination with training activities is particularly important in view of the expected shortage of skilled workers and the necessity of retaining qualified employees in a boom phase (Möller, 2010).…”

“…Owing to declining sales and possible credit constraints, establishments must limit their investments in all areas (Mason and Bishop, 2015). Training costs are often very high, and their effects and benefits are generally rather hard to assess and may come with a lag (Becker, 1962).…”

“…However, when capacity utilization is not expected to return to pre-recession levels, there may also be lower expectations regarding the impact of training on productivity (Mason and Bishop, 2015;Shury, 2010). In the case of limited commercial activities, the capabilities of trained employees cannot be fully utilized.…”

“…However, they do not permit separate observations of training participation for different employee groups. Only Mason and Bishop (2015) differentiate the impact of the recession on training for employee groups.…”