14 July 2009

Whether the economic recovery will be V-shaped, W-shaped or even as one commentator described it last week, saxophone-shaped, it is probably too early to say but a battery of Reports over the last few weeks has at least offered a few hopeful signs if not about the recession at least about some of its side effects.

An Institute of Directors (IoD) Report on ‘Training in the recession,’ published recently concluded that “contrary to the received wisdom so regularly repeated in these times, training has not suffered disproportionately heavily from budget cuts.” A CBI Report on ‘Employment trends 2009,’ out at the same time as fears have been rising about the employment prospects of this year’s graduates, argued that “graduates should stay positive – one in twenty companies is looking to increase its graduate recruitment and one in six is providing internships and placements.” And adding to the slightly warmer glow, the latest quarterly survey from the British Chambers of Commerce reports “a marked improvement in confidence.”

Nobody’s talking green shoots yet and as the Chambers of Commerce chief economist said, “even if we do get a recovery, it will be very shallow and very gradual” but any good news, even if it’s transient, is welcome these days so how genuine is it?

The CBI has been producing Employment Surveys for some time and perhaps it’s a sign of the times that it will publish not one but two this year. This particular one is based on evidence from over 700 organisations collected in April/May this year. The resulting picture is a mixed bag. Most firms expect recruitment to be lower this year than last although in the public and services sectors, numbers might be higher. 38% of employers have frozen graduate recruitment while over a third are recruiting at similar levels. In addition, many firms are taking stringent steps to try and weather the recession without resorting to redundancies using flexible working, agency staff and so on; examples have been in the press recently.

As to the future, views seem mixed about when things might improve; most favour two to three years. Yet the general tenor of the Report is one of cautious optimism; “what is striking and encouraging is the extent to which organisations and employees have shown flexibility and adaptability to achieve cost savings while preserving jobs wherever possible.”

The IoD Report looked at employer training and how far this has held up during the recession. It reflects the views of just under a thousand directors, like the CBI survey, in late spring this year. Although here too a great sense of uncertainty prevails, the underlying message is perhaps surprisingly upbeat. Of the 937 directors questioned, 81% said that their organisation had either maintained or increased investment in training over the previous six months while 88% reported that their organisation was planning either to maintain or increase training investment over the next six months. The picture of course varies organisation by organisation but is heartening given the traditional view that at times of economic difficulty, it’s training that gets chopped first. Nor is this just confined to respondents to the IoD survey, a similar picture emerges in the CBI Report; “many employers (47%) were leaving training expenditure unchanged while 9% were planning to increase investment.” So what lies behind it? Arguably three things.

First a sense that things are different this time round. “In previous recessions training has always been one of the first areas to be cut. In my opinion this is because it has been seen by senior managers and financial managers as a cost rather than an investment. There is a definite difference this time.” Second, a more focused approach being adopted towards training. “46% of directors argued that their organisation was prioritising essential training, generally short courses focused on immediate needs over longer-term investment training.” And third, a belief that the ‘Now is the time to invest rather than cut back on skills’ campaign which has been co-ordinated by the UK Commission for Employment and Skills through things like adverts in the press seems to have paid off; possibly because it has been led by employers themselves rather than being passed down by Ministers.

So what are these Reports saying about the things employers would like to see in the future to help them even further? Four stand out.

First, clearer recognition from Government of the problems that employers are facing. The new BIS Dept and its current industry policy is intended to help here though whether employers will welcome yet another White Paper on full employment and another Skills Strategy Paper as the Prime Minister promised a couple of weeks ago remains to be seen.

Second, more direct funding to boost supply of apprenticeship places. The CBI Report, for instance calls for more incentive payments and high-quality Group Training Associations although that may be balanced by the IoD view that “the latest survey indicates no distinct pressure on apprenticeship places as a result of the recession.”

Third, what the IoD Report calls “radical” reform of Train to Gain. While there are clear levels of satisfaction from those who use the scheme amounting to 70% in the IoD survey and over 90% of learners and employers according to recent LSC commissioned research, “perceptions of bureaucracy and inflexibility” remain. The sort of thing cited as an example in the IoD survey is eligibility. Last year the eligibility barrier was lowered from ten employees in a company to five but that still leaves “many directors of very small companies disappointed.”

And fourth and finally, that hardy perennial of simplifying the skills system. The UK Commission has just launched phase 2 of its ‘simplification’ project which now moves from ‘hiding the wiring’ of the skills system to ‘rewiring’ it overall. This has come at the same time as debate has moved on from investment cutting to quango baiting. Nobody seems to know quite how many quangos there are, though in his recent speech David Cameron suggested 790 and counting. Not all of course operate in the skills system though many employers think a lot do. Either way both Parties are now committed to a review of quangos, with David Cameron setting out some clear criteria that should be used. You can almost hear the sharpening of the knives.

© Edexcel Policy Watch 2009. Steve Besley is Head of Policy at Edexcel. Policy watch is a service intended to help busy people understand developments in the world of education. Visit Edexcel at www.edexcel.org.uk