Training expenditure is at its lowest level since records began in 2011, with investment per employee down by 19 per cent in real terms. This is according to an inaugural report by Skills England, a body launched in July by the UK government to help businesses identify and resolve any workforce skills gaps.
This report isn’t the first to point to the gap in skills investment and, if businesses are constantly hearing the same reports but not doing much about it, it’s a fair assumption to wonder if it matters. Cassie Gasson, co-CEO at Thrive, thinks so. “What’s most surprising is that businesses are understanding the pace at which skills are evolving. They understand that there’s a need for training and that there’s always going to be a need for comms within businesses, compliance and support,” she tells People Management.
Skills England was formed to transform opportunities and drive growth. Its remit is to define and map pathways to fill the yawning skills gaps. Studies have consistently highlighted the importance of skills for economic growth, with around one third of average annual UK productivity growth attributable to an expansion of skills available in the workforce between 2001 and 2019. A fact that is increasingly worrying is that, across the UK, more than 2.5 million roles are in critical demand, and more than 90 per cent of these roles require periods of work-related training or education.
According to the report, the downturn in skills investment has been driven by a range of factors. These include: employers perceiving that their staff are sufficiently skilled; not having the right resources to upskill staff beyond minimum requirements; a lack of a clear industrial strategy providing a foundation for a linked skills strategy; strong international labour supply and flexible labour market; a shift in attitudes, shifting responsibility for upskilling from employers to government; and low overall business investment.
The list is long and varied but a key reason that isn’t referred to in the report is that many businesses fail to see the tangible return on investment commitment. Gasson says companies like Thrive are focused on showing a positive ROI and that others should follow suit. The business has worked with lingerie retailer Ann Summers to roll out a blended learning programme. There was a desire to focus upon upselling; Thrive introduced a programme of training to deliver on this aim that could be achieved in the individual shop locations. “We found a strike rate of 25 per cent, which was 7 per cent above the strike rate target set for that shop, and they ended up selling up to 30 per cent more add-on products,” explains Gasson. It’s a good example of how training providers can prove that the investment can turn a profit.
Gasson says what’s interesting is that often this isn’t a wake-up call for businesses either. Many know, for example, that they must prepare for the digital transformation that is coming in the shape of AI. “Employers need to be in tune with what skills they have, where the demand is and the fact that so many people have skills but may not necessarily know about it,” she says. What often happens, however, is that there is a job to perform to unveil subject matter experts that are already lurking within the organisation.
Investment in upskilling can help to do this. It can prize open an ability that is there but may not have been recognised – it may be innate to the individual or grow over time with exposure to experience, and this means savvy employers need to find avenues where it can be surfaced within a safe environment. Often this is achieved by empowering employees, letting them try things out and creating a culture where failure is as much part of success as achieving the goal.
The report also points to the skills needed for the future, of which many will be needed in the labour market in 2035 and will be impacted by demographic and technological skills. Unsurprisingly, it is also widely anticipated that digital skills including AI will become increasingly important to many jobs across sectors in the future.
It could be argued that hybrid working is preventing upskilling, after all many employees work remotely for part of the week. Gasson believes, however, that this should not be a barrier to upskilling the workforce. “We need greater adoption of digital tools to drive them and better engagement,” she says. “If we don’t invest in that, teams will feel disconnected and believe that there is no investment in their learning and development – we must build that digital gap and support them from wherever they are working.”
Gasson adds that the problem with stagnation, powered by the ‘do nothing’ approach, is that businesses fail to carve out the competitive edge to help them stay ahead of the game. “Companies will lose out if they don’t invest in skills, or upskilling, to empower their teams, to learn more to receive information,” she points out. But Gasson says this doesn’t need to be traditional training, which can move quite slowly and be outdated easily: “Learning technologies such as Thrive’s roadmap, which is based around adaptive and personalised learning, and bringing AI to support intelligent and semantic search means all these things are moving so quickly. If you don’t embrace new technologies, you are essentially playing catch up with your competitors.”
It’s a belief that is born out by the Skills England report, which says an organisation’s ability to adopt and deploy new technologies directly affects their ability to grow and innovate. Analysis by the Institute for Public Policy Research suggests that 11 per cent of tasks in the UK economy are exposed to existing generative AI and this figure could increase to 59 per cent if companies integrate AI more deeply, with deployment of AI providing the opportunity to free up resources to jobs in demand. The report says: “UK employers and the skills system will need to adapt to ensure individuals have the skills required to make the most of the potential benefits of AI and new technology. For employers, this is particularly relevant as a recent survey suggested that more than half of business leaders felt a lack of readiness for AI [owing to] a lack of understanding.”
As to next steps, Skills England has announced that a series of roundtables and webinars will be held this autumn to test and refine the initial assessment of skills needs provided in the report to publish further analysis and a forthcoming white paper, Get Britain Working. For most businesses getting on with their daily lives, the wake-up call is coming if it hasn’t already. As Gasson says, investment in workforce skills is not so much of an ‘optional add-on’ but a key tool for survival.