A skills levy for more and better training at work

Alex Bevan calls for a levy to be reinvested into industry to support the upskilling of workers.

“Industry has responsibilities to invest, to train, to act responsibly, to provide good employment, to support communities and to help meet our big challenges like environmental sustainability.”

Mike Wright, Executive Director

Jaguar Land Rover

Lots of employers invest in quality, structured skills development for their employees. In many cases it’s central to their business model, saves money in the long term and boosts morale amongst a workforce that is valued and listened to. What is more, learning at work often means a second chance for those who missed out at school to excel in disciplines previously written off.

It’s good for the economy and is a virtuous process in and of itself which is why governments (UK and Welsh) invest in adult skills provision in a variety of ways.

However, the apparent consensus at this level is not strong enough to meet our ambitions for the skills needed for the future of the Welsh economy. That’s because lots of employers choose not to invest in quality, structured skills development for their employees and their intransigence is a threat to the labour market in Wales and our chances of achieving genuine prosperity.

In the middle there is of course an amorphous group of employers who are, for a variety of reasons, not well placed or are perhaps just too small to contribute much in the way of meaningful skills development. However, their existence and economic predicament is no justification for those employers who can contribute but refuse to recognise the responsibilities articulated by Mike Wright in his recent review of advanced manufacturing for the UK Labour Party.

It is not in the interests of working people in Wales for employers uninterested in structured and useful skills development to remain so. Nor is it in the interest of those who invest responsibly to be undercut and undermined by irresponsible employers. Worse still, it will do nothing for long term, quality inward investment if we fail to join countries such as Denmark, Germany and the Netherlands in presenting a reciprocal system that incentivises long term-ism and innovation.

The huge variation in the attitudes and commitment of employers means that there is frankly very little upward pressure on skills. In a recent submission to a Welsh Government  consultation on co-investment for adult skills, Cardiff University’s Professor Caroline Lloyd and Dr Dean Stroud warned against the popular assumption that employers are gearing up the UK economy for a revolution in skills within our modern workplaces. They are not. Lloyd and Stroud point to the Working Futures report which predicts ‘a less than 2 percentage drop in jobs in the occupational categories that require qualifications up to level 2 or typically no qualifications at all.’ The OECD’s 2013 Skills Outlook also highlights the substantial levels of over-qualification in comparison with the jobs that are currently available in the labour market.

Responding to the same consultation, Wales TUC reiterated the call for a whole government approach to the economy with a defined industrial strategy. Within this, skills need to be underpinned by a shared understanding of, and commitment to, how we can best develop sectors across our economy. To make this happen, Wales needs compulsory training levies – as operated across 70,000 employers in the UK’s construction sector – which are agreed and supported by industry bodies with trade union and employer representation. A levy is a payment made by employers that is then reinvested back into the industry to support the development of apprenticeships and broader upskilling.

Such an arrangement will need to be imposed as it would be impossible to create radical improvements without a formal system strong enough to boost skills utilisation and encourage courses, apprenticeships and job design for the long term. A system that is not dependent upon partnership and shared responsibility will always be undermined by short term concerns and populist pushes against alleged red tape that will dampen our ambitions. In practical terms that means slow and little progress on utilisation, spending that is too loosely linked to long term skills needs and a network of providers not pushed to deliver the best possible quality training.

Employers operating successful companies within similar systems in Denmark and Germany are embedded into the system and use the certainty of shared objectives – not just funding – to invest in skills that deliver increased productivity, enhanced jobs prospects for employees and a labour market strong enough to attract far more long term investment.

Wales and the UK more broadly, needs sector level partnerships to provide more clarity for employers that require support but may be unaware of what is available or the wider ambitions of government policy. A network of 1,300 Union Learning Representatives in Wales already play a unique role in brokering learning agreements in such workplaces. At Dwr Cymru, for instance, over 800 staff have benefited from a partnership approach to union led learning with stories like Paul’s shining a light on the difference it can make to life at work.

The Welsh Government’s Skills Implementation Plan is a welcome step forward with a clear ambition for a broad approach to the responsibility of learning at work. Wales TUC shares its ambition to meet new targets on skill levels set out for 2024 and will play a central role in delivering against them. However, without a system of partnership and shared goals necessitated by levies, employers who are unwilling to invest will continue to hold us back.

Alex Bevan is Policy Officer at Wales TUC

One thought on “A skills levy for more and better training at work

  1. So, once again – as with unemployment insurance, pensions, tax collection, sick pay, maternity leave, etc – businesses are to be expected to do the state’s work for it.

    As usual the burden will fall especially heavily on small businesses. Many have already had the heart-breaking experience of investing time and money in rescuing employees from the failures of the education system only to have them poached by big businesses. Paying into some sort of ‘pool’ is not the answer because such ‘pools’ are usually run by committees where any ‘business representatives’ are from the big businesses. As with most state involvement in business, it would only make the well-connected rich richer.

    Ask actual employers and what they say almost without exception is that, if politicians are serious about training, they should first look to fixing our broken education system.

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