A Question of Skills: Training in enterprises is key to the recovery

In a recent event, the OECD brought together policy makers and shapers to discuss the findings from our report Training in Enterprises: New Evidence from 100 case studies. Banner image: Shutterstock/adison pangchai
A Question of Skills: Training in enterprises is key to the recovery
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This article is part of a series in which OECD experts and thought leaders  from around the world and all parts of society  address the COVID-19 crisis, discussing and developing solutions now and for the future.

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This article was co-authored by Julie Lassébie, Anja Meierkord, Stefano Piano and Glenda Quintini of the OECD's Directorate for Employment, Labour and Social Affairs.

Enterprises are the main provider of reskilling and upskilling opportunities for adults. Enterprises invest in learning opportunities because skilling their workforce helps them adapt to technological change, integrate new recruits, ensure health and safety of staff and stay competitive. The COVID-19 pandemic has posed significant challenges for training in enterprises: according to the European Labour Force Survey, 9.5% of employed adults in the EU-27 in 2020 had taken part in education and training in the previous four weeks, down from 11.4% in 2019 (see Figure 1). This was the first decline in a decade, bringing participation rates down to 2012 levels. The decrease in training participation during the crisis is a clear threat to long-run growth in productivity, wages and well-being.

Figure 1. Participation in education and training has decreased in the pandemic

Participation rate in education and training, 2013-2020

Note: Participation rate in formal and non-formal education and training in the last 4 weeks, employed persons, from 25-64 years
Source: European Labour Force Survey, for details see (OECD 2021), Training in Enterprises. New Evidence from 100 Case Studies, Getting Skills Right, OECD Publishing, Paris.

Fresh research insights on how to support enterprises to train

In a recent event, the OECD brought together policy makers and shapers to discuss the findings from our report Training in Enterprises: New Evidence from 100 case studies.

Stefano Scarpetta, Director of the OECD Employment, Labour and Social Affairs Directorate kicked-off the event, observing that even prior to the pandemic, many enterprises were underproviding training with respect to maximising their own productivity and the performance of economies as a whole. He emphasised that the decline in training provision during the pandemic was a very worrisome development.

The decrease in training participation during the crisis poses a clear threat to long-run growth in productivity, wages and well-being.

– Stefano Scarpetta, Director of the OECD Employment, Labour and Social Affairs Directorate

He then argued that there was a strong economic rationale for supporting enterprises to provide more and better training as part of COVID-19 recovery plans and beyond. Our new OECD report highlights that support for enterprises should address the four main obstacles faced by enterprises to provide training:

  1. Enterprises frequently lack the capacity to provide effective learning opportunities for their employees. This is especially the case for small and medium enterprises.
  2. Enterprises also underprovide training because they face co-ordination problems. These can be internal to the firm, for example, if management and employees don’t agree how to share the costs and benefits of training. Co-ordination problems can also be external, for example when enterprises don’t provide training because they are concerned that staff will be poached by other firms.
  3. Firms fail to consider the positive externalities of training in terms of productivity and well-being. Participation in training leads to a wide range of economic and social benefits, such as greater innovation, improved health and higher well-being.
  4. Enterprises do not train all groups of employees equitably. Younger, higher-skilled, higher-paid employees, those on permanent contracts and those in specific positions (such as sales, HR, management, IT and client services) tend to train more than others.

Mr. Scarpetta outlined that policy-makers can draw on a tool box of five policy instruments to support training in enterprises, including 1) information and guidance, 2) building capacity of firms to provide training, 3) financial incentives, 4) the direct provision of training and 5) regulation. He closed his presentation by highlighting the key questions policy-makers should ask when designing interventions to support training in enterprises.

Seven questions for policy-makers to consider

      1. Do we need a policy intervention? What do we aim to accomplish?
      2. What learning opportunities should be supported to achieve the policy objectives? Do we know what skills are needed to compete regionally, nationally and internationally?
      3. What instruments are most appropriate to achieve our objectives? Do different instruments need to be combined to reach these objectives?
      4. Who should we target? Specific types of enterprises or groups of individuals?
      5. What similar interventions have been tried in the past, here or in other countries? What have they achieved? How good is the evidence for their achievements?
      6. How will enterprises find out about the intervention? Do we need to plan and fund outreach activities so that they are aware of the support available?
      7. How will we evaluate the success of the measure? Do we need to have an evaluation strategy and fund an independent evaluation?
Source: OECD (2021), Training in Enterprises: New Evidence from 100 Case Studies, Getting Skills Right, OECD Publishing, Paris.

Lessons from the frontlines

Margrethe Marstrøm Svensrud, Head of the Department of Working Life and Skills at the Norwegian Directorate for Higher Education and Skills, emphasised the difficulties experienced by many enterprises to deliver in-person training during the pandemic. Policy-making in Norway had to react to these changes, adapt existing measures and expand the eligibility of training support to include the increased number of unemployed individuals. The declared aim of these efforts was to have a better skilled workforce after the crisis that was able to support the recovery.

Ana Cláudia Valente, Senior Officer Strategic for the Planning and Prospective Planning Department from the Portuguese Ministry of Labour, Solidarity and Social Security, pointed out that the skill profile of the population had to be taken into account when designing support for enterprises. She explained that the relatively high share of low-skilled adults in Portugal impacted on the quality of management and human resource policies in enterprises. She concluded that strong public investment was needed in these specific circumstances to build capacity.

Mary Lyons, Director of Enterprise, Employees and Skills at the Irish education and training agency SOLAS, highlighted that the promotion of existing measures was essential for their success. She explained that the Irish Skills to Advance Programme had a significant communication component, with substantial staff resources dedicated to developing the appropriate messaging and major promotion campaigns, involving radio advertisements and social media.

Teija Felt, Labour Market Counsellor from the Finnish Ministry of Economic Affairs and Employment agreed with this key lesson. She added that enterprises, in particular when they are small, often did not know what skills they needed. A new Service Centre for Continuous Learning in Finland aims to improve existing methods for skills assessment and anticipation, and improve the use of this information by individuals and enterprises to make training decisions.

What’s next?

The COVID-19 pandemic has disrupted labour markets in the OECD and beyond. It has posed training challenges for enterprises, notably by making it difficult to deliver in-person training as well as by changing the way many employees work. Yet, even before the pandemic many enterprises were offering less training than they needed to maximise their own performance and to achieve the wider economic and social benefits of training. Recovery plans are a unique opportunity to support enterprises to provide more and better training for all. Policy-makers should build on new OECD evidence on training in enterprises, as well as the lessons learnt across OECD economies when it comes to developing effective and efficient support for enterprises.

Read the report Training in Enterprises: New Evidence from 100 Case Studies

Read the report Training in Enterprises: New Evidence from 100 Case Studies

Read the latest OECD Employment Outlook 2021: Navigating the COVID-19 crisis and recovery and check out the digital report for facts, data, resources and more

Read the latest OECD Employment Outlook 2021: Navigating the COVID-19 crisis and recoveryCheck out the  OECD Employment Outlook 2021 digital report for facts, data, resources and more 

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