Editorial: training and the limits of supply-side skill development

Authors


Mark Stuart, Leeds University Business School, Maurice Keyworth Building, University of Leeds, Leeds LS2 9JT; e-mail: ms@lubs.leeds.ac.uk

INTRODUCTION

The acquisition, development and use of vocational skills have assumed a growing importance as part of the employment relationship. Employers, especially those engaged in high value-added production, are concerned about the supply of appropriately skilled employees and employees themselves are concerned about their levels of skill development as they seek employment in increasingly deregulated labour markets. Skills at and for work have assumed a greater importance for employers and employees, but the way in which these skills are developed is shaped by social institutions and social actors in the vocational education and training (VET) system and the industrial relations (IR) system. The development of vocational skills in educational institutions cannot be examined in isolation from the way in which skill utilisation and reward are shaped by the institutions that regulate the employment relationship.

These simple considerations mean that access to training has important effects on employment outcomes, that the exercise of employee voice in relation to training is an important issue for the IR system and that the engagement of employers and employee representatives in the provision of training is an important issue for the VET system. The articles in this special issue all consider recent developments in VET and present fresh insights into these relatively under-examined concerns.

SUPPLY-SIDE RESPONSES TO SKILL DEVELOPMENT NEEDS

It has long been argued that systems of training and skills make a significant contribution to the competitive position of nations, firms and industries. This concern with skills has intensified in recent years as policy makers have sought to respond to the increased challenges of globalisation, technological change and the rise of the so-called knowledge economy. In the context of EU policy formulation, for example, this is evident in the Lisbon agenda to make Europe the most competitive, knowledge-based economy in the world by 2010. The achievement of this goal has been linked to a drive to improve, through skills upgrading, the employability and mobility of labour (Stuart, 2007). In the specific case of the UK, the mantra has been to improve skills supply as a means to address long-standing deficits in comparative performance and significant gaps at the level of basic skills. Yet, the path of policy delivery never runs smooth. Simplistic assumptions that an increased supply of skills translate into a derived demand for skilled workers have been found wanting; along with the crude causality that a revolution in skill development translates seamlessly into productivity transformations (Keep et al., 2006).

The articles that follow all, in some way, unpack the weaknesses inherent in a supply-side strategy for vocational training and skill development. First, they consider important questions of equality of access to training, notably in terms of basic skills and contingent labour, whether this is changing and the impact of training in terms of employment and earnings for the traditionally disadvantaged. Second, they shed new light on trade union and employer engagement around training matters through studies of the UK trade union learning representative (ULR) initiative and Group Training Organisations (GTOs) in the UK and Australia. Finally, developments in training policy and practice are explored through a comparative lens, in terms of the changing relationship between VET and general education in Canada, Denmark, Germany, the USA and South Korea.

In comparative analysis, the UK case is typically presented as a liberal model, in contrast with the more coordinated systems of northern Europe. In such liberal regimes, training investment decisions are essentially left to the vicissitudes of the market and the economy is more exposed to the market failures that characterise training investments (Keep and Mayhew, 1999). Coordinated economies have, historically, mitigated market failures through complex institutional constraints on employer investment decisions and a range of social protections (Estevez-Abe et al., 2001). Vocational training tends therefore to be more widespread in coordinated systems, compared to the priority accorded general education in liberal economies. Yet, the forces of economic change and international competition are posing new challenges for the types of vocational training and skills needed in the future. Bosch and Charest (this issue) suggest this has promoted a renewed interest in vocational training in liberal economies and a modernisation of vocational training through the supply of more general education in coordinated economies. This raises a question over the potential convergence of systems, although differences remain deep.

In practical terms, it is evident that individuals in all systems have been called upon to manage their own skill development, with associated supply-side support to facilitate this. But this raises key questions around the extent to which an increased skills supply is matched by a commensurate demand for such skills, and how the balance between the supply and demand for skills is coordinated within the changing dynamics of national training systems. The challenges posed are pertinent to all systems as the pace of institutional reform in VET systems and IR systems accelerates.

TRAINING PARTICIPATION AND DISADVANTAGE

The 1998 Moser report suggested that around one in five UK adults, around 7 million in total, have difficulties with basic literacy and numeracy. In response, the UK Labour government identified the need to raise the percentage of the population educated and trained to a Level 2 stage qualification [broadly equivalent to (five) qualifications attained at age 16] as central to its strategy for skills development. A variety of initiatives and entitlements have been introduced to support this strategy, most notably the Skills for Life programme. As Meadows and Metcalf explain, ‘Skills for Life aimed to improve the provision of basic skills training and to increase participation in that training. A wide range of literacy and numeracy courses were provided free of charge to those without Level 2 literacy or numeracy qualifications’. The recent Leitch Review and the subsequent government response suggested that around 1.7 million adults have gained such qualifications through the Skills for Life programme, with a million acquiring a Level 2 qualification. Despite this, Leitch concluded that the UK skills profile still has a long way to go before the economy can be considered in the world's premier league for skills (Department for Innovation, Universities and Skills, 2007).

In more prosaic terms, there has been little evaluation of the actual benefits for those that gain a qualification through Skills for Life. Meadows and Metcalf use a sophisticated method to examine this, based on a longitudinal evaluation that compares the outcomes of two surveys of Skills for Life participants, with a sample of non-participants. Skills for Life participants tend, by definition, to be low qualified and also disadvantaged in the labour market in a number of other ways. Thus, in addition to low levels of qualification, the sample investigated by Meadows and Metcalf were over-represented with ethnic minorities, women and those reporting an illness or disability. Skills for Life participants (learners) were compared to a sample with a similar profile that did not follow any relevant courses (non-learners), to evaluate ‘the change in a range of employment and employability measures for those undertaking basic skills training’. When asked to simply self-report experiences, learners reported higher levels of improvement in literacy and numeracy over the previous year, and around a quarter reported that their employment prospects had improved. Deeper analysis suggested, however, that improvements in employment status were not significant. The authors found that while the employability of learners had improved, in terms of increased self-esteem, reduced levels of long-term illness and increased commitment to employment, there were no improvements in employment or earnings one year after participating in Skills for Life courses.

Meadows and Metcalf conclude on a cautionary note, suggesting that the value of such courses should not be written off, as any impacts may take time to occur. Yet, set against the findings of the recent Skills Survey that show rising levels of overqualification in certain job grades in the UK (Felstead et al., 2007), such findings are of concern. They suggest a need to look closely not just at the experiences of those undertaking learning, but also the context of training and employment within the workplace and the factors that influence employers in relation to training provision and the recruitment and selection of new employees.

It is well known that there is inequality of access with regard to employer-provided training (Hoque, 2008). The article by Forde, MacKenzie and Robinson examines the training disadvantages experienced by contingent workers in the UK construction industry. The construction industry is noted not only for its use of contingent labour, but also for a degree of sectoral coordination around training via the Construction Industry Training Board that should encourage greater equality of access to training. The article by Forde, MacKenzie and Robinson compares the provision of training for contingent labour with directly employed labour, and also, in a novel approach, seeks to unpack the experiences of different forms of contingent labour (agency, self-employed and subcontract). Forde, MacKenzie and Robinson seek to identify the structural and organisational factors that ‘shape the provision of training to different contingent labour forms’. They find, unsurprisingly, that those employed on direct contracts are more likely to receive training (particularly off-the-job provision) than those on contingent contracts. Yet, of greater interest, the training of contingent workers varied by form and was found to be associated with potentially different operational imperatives. In general, the study found that the training of contingent labour did not seem to be associated with a strategic view of skills development among employers. However, there was an association with training for contingent workers and the approach of the firm to training direct labour. ‘Firms that provide training to agency and self-employed labour are those that tend to favour lower cost, non-certified approaches to the training of direct staff’. Thus, ‘the training of contingent labour seems to offer a short-term response to operational need’. In contrast, the longer-term relationships that firms sought to advance with subcontractors were more conducive to higher levels of investments in training for this type of contingent labour.

THE ROLE OF TRADE UNIONS

Trade unions have an important role to play in the design of national training systems and in influencing workplace investment decisions (Stuart and Cooney, 2004). Their role tends to be more embedded in highly coordinated and corporatist systems, such as Germany, than in liberal training systems. In the UK, trade union involvement was marginalised during the 1980s and for much of the 1990s as successive Conservative governments sought to entrench the power of employers in the training system. While Labour governments since 1997 have not sought to radically depart from this position, they have, nonetheless, accepted that the union movement has a role to play in raising the demand for learning among individuals (Rainbird, 2005; Stuart, forthcoming).

This objective has been supported through two high-profile initiatives. First, a Trade Union Learning Fund (ULF) has been established to support, through pump priming, trade union projects that facilitate learning opportunities and individual demand for learning. As Hollinrake, Antcliff and Saundry note, now its 11th year, the ULF has so far provided over £90 million ‘in support of union-led projects many of which have provided innovative ways of accessing learning for hard-to-reach groups’. Initially administered via central government, the ULF has been overseen by the Trade Union Congress learning academy, Unionlearn, since 2007. Second, a new brand of union representative, the trade Union Learning Representative (ULR), has, since 2002, received statutory support to engage in a range of activities that further demand for learning at the workplace (see Wallis et al., 2005, for a detailed overview). The TUC target is for a network of 22,000 ULRs by 2010 that will assist 250,000 people a year into learning. Around 18,000 ULRs were in place by March 2007 (Stuart, forthcoming). But what is the impact of ULRs on employee voice in regard to training? How have they contributed to the distribution of learning opportunities in UK workplaces and what effect have they had on union activity at the workplace level?

The article by Hollinrake and her colleagues presents the findings of the largest study of ULRs conducted to date. Drawing on a mix of survey and interview evidence, they explore the nature of ULR activity and the factors that shape such activity. Their study offers some encouragement for the efficacy of this new union role, but this is underscored by the evident challenges that ULRs face. The ULR role appears to be encouraging ‘new blood’ into union activism—with just under 4 in 10 ULRs having never previously held a representative position in a union—and includes activists from under-represented groups such as ethnic minorities. Problematically, it takes time for ULR activity to get started in the workplace and inactivity is high—around a third of ULRs—even after three years in the role. The main factors associated with high levels of ULR activity appear to be strong workplace support systems, including learning agreements, working groups and paid time off. Often these support systems are built by ULRs themselves and, as a number of commentators argue, are important mechanisms for sustaining union-led learning activity and delivering positive learning outcomes (Munro and Rainbird, 2004; Wallis and Stuart, 2007). Yet Hollinrake et al. suggest they will not be enough in themselves, since ultimately ULR activity is shaped by the attitudes and practices of employers, and these are shaped by specific production imperatives. In common with other commentators in this area, Hollinrake et al. conclude that statutory supports for ULRs are not enough for this new union role to effect significant change. In the absence of corresponding obligations on employers (e.g. to consult and bargain with ULRs), the effectiveness of ULRs is likely to be limited.

While few would contest this line of reasoning (and certainly not unions themselves), this should not be used to deride the valuable role that ULRs have played within such a relatively short period of time (see McIlroy, 2008). It may be too much, given the current weaknesses of the UK labour movement in general, to position ULRs in the vanguard of union renewal. More pertinently, there is strong evidence that they are playing an important role in raising demand for, and involvement in, learning and training opportunities for those most in need and those most likely to be disadvantaged. Certainly, much ULR activity has focused on those with lower-level skills and basic skills needs, an area which, as noted above, is a key priority within the UK economy. Getting employers to buy in and support this activity, however, remains an ongoing challenge.

EMPLOYER ENGAGEMENT

It is the role of employers that informs the contribution by Cooney and Gospel. Their study looks at the under-researched activity of ‘group training’ as a form of employer collective action in the UK and Australia. This study is of particular interest because while employer cooperation is regarded as pervasive in systems such as the German VET system, it is less well-understood in more liberal systems. Yet, the authors assert that examples of group training are more prevalent in market-based, voluntarist systems like the UK and Australia than previously thought. Thus, in the UK case, around 10,500 firms are involved in such arrangements covering around 20,000 trainees, while in Australia, some 26,500 firms are included covering 36,000 trainees. Consistent with the employer voluntarism of more liberal market VET systems, however, this form of employer action is heavily dependent upon state support. Group training has received particular support from the Australian state in recent years to stimulate its growth, although in both countries, group training is heavily reliant on state funding.

Group providers are defined ‘as not-for-profit bodies whose focus is upon inter-firm brokering’ that may cover ‘a single industry, related industries, or multiple industries in a locality or larger area’. They offer a way, through the sharing of training costs and the risks inherent in taking on a trainee, to address the market failures that plague the production of transferable skills. Thus, they focus heavily on intermediate-type skills and apprenticeship training in particular and are most highly represented in traditional trades training. In the UK case, take-up is high in the engineering sector, while in Australia it is more prevalent in the construction sector.

There are some notable differences between group training in the two countries. In the UK, group training is far more likely to include actual training provision. Training is organised and assessed via the GTO, with the costs shared between the organisations that employ trainees. In Australia, trainees are far more likely to be employed by the GTO and are ‘given a higher level of support during work placements and the opportunity to rotate placements and thus gain a greater breadth of experience’. In both cases, it is argued that the quality of training, the experiences of trainees and completion rates of qualifications are higher than alternative modes of provision. Group training, it is argued, is also more directly related to employer need and this too may be a factor in the quality of the training provided. The weaknesses of group schemes relate to their heavy dependence on state funding, and even with such funding, the actual levels of inter-firm cooperation, communication and coordination remain low, with the group training operations acting more as arm's-length brokers of training than as agents of direct employer coordination. To find examples of more engaged and involved employer activity, we need to take a broader comparative sweep and compare training practice with that in more coordinated systems.

COMPARATIVE DEVELOPMENTS

The contribution by Bosch and Charest examines ‘recent developments in general and vocational training and its links to the labour and product market’, in five countries, Denmark, Germany, Canada, the USA and Korea. The main focus of their analysis is on the production of intermediate skills and the labour market worth of such skills in comparison to professional-level skills acquired in tertiary education. Bosch and Charest note that some well-recognised differences between national training systems are of relatively recent origin—e.g. just after the Second World War, both the USA and Canada had well-developed apprenticeship systems, while the German dual system only really advanced from the 1960s onwards. Yet, the pressures for change are suggestive of a trend reversal because the vocational systems of Germany and Denmark are struggling with modernisation and demands for more general education, while the call for more vocational training is again on the agenda in countries like Canada and the USA in response to acknowledged deficiencies in intermediate skills. Likewise, while there was a strong emphasis on vocational training in Korea during the period of rapid industrialisation, this has diminished more recently as the share of university graduates has increased.

This comparative study illustrates how the modernisation of vocational training systems is shaped by the degree of involvement of the key social actors and the extent to which VET is linked to the labour market. A key concern, given the increased prominence of tertiary education, is the value attached to VET in the economy, and hence its attractiveness to trainees. Attempts to modernise and upgrade vocational training in the USA, Canada and Korea have proved challenging, as the points of linkage with the labour market are weak and social actor (union and employer) leverage in the system is largely absent. In response, in Canada and the USA, VET has largely been assimilated into the school-based system, while rising income inequality has led to wage cuts in intermediate skills, thereby reducing the attractiveness of vocational training. Such training is therefore seen as a lower quality option for weaker students. In Korea, unions and employers are also absent, but the state has played a far more interventionist role, driving employer investment in VET through a levy-grant system. Integration with the labour market is nonetheless weak, and such training less attractive, as the social partners have no role in situating training reform within the broader reform of payment systems and career structures. This has proved to be the defining characteristic of the modernisation of VET systems in Germany and Denmark. Both systems face significant challenges, but VET has been modernised (and to some extent, integrated general education options have been created) and remains attractive because of the close involvement of the social partners in ensuring that training reforms are linked with new systems of work organisation, along with ‘good pay and with opportunities for promotion’.

CONCLUSION

The supply-side response of governments in more liberal market systems of VET is evident in all of the contributions to this volume. State support for basic skills development to redress social disadvantage through programmes, such as Skills for Life, is hardly surprising, but state support to encourage the engagement of unions and employers in VET systems is more unusual. Attempts to stimulate demand for training through support for union learning projects, ULRs and GTOs are indicative of the extensive supply-side policies favoured by government to address market failure in the development of transferable skills. Whether such supply creates derived demand on the part of employers is, however, open to question. The assumption that employers take a strategic view of skill development is questionable in many cases and, while examples of good practice in skill development can be found in more voluntarist VET systems, these are not necessarily widely emulated by other employers. In the context of weak regulation of workplace skill development through the VET and IR systems, raising demand in any meaningful sense remains challenging.

The outcomes of such supply-side approaches have also been considered. Learner demand for basic skills training may be stimulated by government and union programmes, but there is little evidence that this is translated into improved employment and pay outcomes. Contingent labourers likewise see little improvement in their employment prospects from participation in training and while group training may stimulate some SMEs to take on more trainees, such arrangements represent a weak form of employer action and do not necessarily stimulate greater employer involvement in the VET system. Despite the increased attention paid to VET in more liberal market systems, there seems to be limited evidence of improved outcomes from training for employees, little evidence of any derived demand by employers for training and little evidence of a strengthening of the engagement of social partners in institutions in the VET system. The comparative evidence suggests that while coordinated economies seem to be struggling with a similar set of issues, they have a greater capacity for innovation in VET. The central dynamic at play here is not, however, VET reform in itself (a common feature of the liberal economies), but how VET is situated within the broader complex of institutions that govern the labour market.

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