1. TRAINING AND EMPLOYEE USE OF SKILLS John Sutherland Centre for Public Policy for Regions The author acknowledges the (former) Department of Trade and Industry, the Economic and Social Research Council, the Advisory, Conciliation and Arbitration Service and the Policy Studies Institute as the originators of the 2004 Workplace Employment Relations Survey data, and the Data Archive at the University of Essex as the distributor of the data. The National Centre for Social Research was commissioned to conduct the field work on behalf of the sponsors. None of these organisations bears any responsibility for the author’s analysis and interpretations of the data.

2. THE RESEARCH QUESTIONS 1. How much training do individuals receive? 2. How many are dissatisfied with the training they receive? 3. How well do the skills levels individuals possess match the skills levels they require to do their present job? The third question is examined in two ways: when individuals report that their skills levels are lower than those required, this is assumed to be a manifestation of a ‘skills gap’: and when individuals report that their skills levels are higher than those required, this is assumed to be a manifestation of ‘skills-under-utilisation’.

3. THE ANSWERS ?

4. 1.THE QUANTITY OF TRAINING RECEIVED The question asked: “Apart from health and safety training, how much training have you received during the last 12 months, either paid for or organised by your employer?” Note: the inference is ‘formal’ training: and, as such, ‘informal’ training ‘on the job’, a particular feature of training in SMEs, is likely to be ignored.

5. Days of Training Received Percent None32.33 Less than 1 day9.95 1 to less than 2 days15.16 2 to less than 5 days22.74 5 to less than 10 days11.39 10 days or more8.42 Number of Observations 2,493

6. 2.DISSATISFACTION WITH THE TRAINING RECEIVED The question asked: “How satisfied are you with the following aspects of your job? : ‘The training you receive’” (and offered responses associated with degrees of ‘satisfaction’ and ‘dissatisfaction’) Note: ‘Dissatisfied’ could relate to many aspects of the training received e.g. its ‘quantity’ (for example, ‘none’ may have been received); its ‘quality’; the mode by which it was delivered etc.. Hence, there is an inevitable ambiguity as to how individuals interpreted the question.

7. ResponsePercent Very satisfied8.60 Satisfied40.09 Neither satisfied nor dissatisfied 27.09 Dissatisfied16.67 Very Dissatisfied7.55 Number of Observations2,477

8. 3.‘SKILLS MATCHES/MISMATCHES’ The ‘skills’ question asked: How well do the skills levels you personally have match the skills you need to do your present job? Those who responded ‘a bit lower’ and ‘much lower’ are associated with ‘skills gaps’. Those who responded ‘a bit higher’ and ‘much higher’ are associated with ‘skills under-utilisation’.

9. Response: My Own Skills Are: Percent Much higher19.14 A bit higher34.15 About the same42.39 A bit lower3.48 Much lower0.84 Number of Observations 2,498

10. THE PRINCIPAL COMPONENTS OF THE (REMAINDER) OF THE PRESENTATION 1.The Data Set 2.The Structural Model and the Estimated Models 3.(Some) More (Detailed) Results, featuring the role of academic/professional/vocational qualification variables 4.Some Qualifications, Conclusions and Policy Implications

11. 1.THE DATA SET The data set has its origins in Workplace Employment Relations Survey of 2004 (WERS 2004), the fifth in the series which maps the contours of employment relations in Great Britain. The unit of analysis in WERS is the ‘workplace’ (“the activities of a single employer at a single set of premises”). The sample is drawn randomly from the International Departmental Business Register, maintained by ONS. The sample consists of 2,295 workplaces employing 5 or more workers (223 of which are located in Scotland).

12. There are 4 elements associated with the cross section survey. The research used a matched workplace-employee data set which comes from 2 of these: viz. 1.The questionnaire responses of the senior manager responsible for employment relations at the workplace (‘The Management Questionnaire’), and 2.The self completed questionnaires distributed to up to 25 employees at each workplace which participated in the management survey (‘The Employee Survey) (generating 22,451 observations, 2,515 of which are from workplaces located in Scotland). This research made use of observations from the ‘located in Scotland’ subset of the full data set.

13. 2.THE STRUCTURAL MODEL AND THE ESTIMATED MODELS The structural model is as follows: y iw = x iw β + ε iw where y iw is the ‘iw’ th observation associated with a dependent variable, as appropriate; x iw is a vector of values for this ‘iw’ th observation; β is a vector of parameters to be estimated, depicting the personal characteristics of the individual, related to and unrelated to the workplace, and the structural characteristics of the workplace at which the individual is employed; and ε iw is an error term. The ‘highest’ educational (etc.) qualifications would be an illustrative example of non work related personal characteristics.

14. An ordered logit model was used to estimate the determinants of the six training outcomes. Binomial logit models were used to estimate three probabilities: 1.That an individual reports dissatisfaction with the training received; 2.That an individual reports that the skills levels he/she possesses are lower than the skills levels required to do his/her present job (thereby identifying a ‘skills gap’); and 3.That an individual reports that the skills levels he/she possesses are higher than the skills levels required to do his/her present job (thereby identifying ‘skills under utilisation’).

15. 3. (MORE DETAILED) RESULTS Four sets of results are reported, relating to: i. The amount of training received ii. Dissatisfaction with the training received iii. Skills Gaps iv. Skills Under-utilisation The pattern used to present these results is the same, viz. The coefficients and the marginal effects of the academic/professional/vocational qualification variables are identified, whether or not the coefficients in question are statistically significant. (Statistically significant variables are identified with *.) (Throughout the omitted, reference categories are possessing GCSEs/SCEs as the highest academic qualification and possessing NVQ/SVQ Level 1 as the highest professional/vocational qualification.) (Some of ) The variables which are statistically significant in determining the outcome in question are identified.

16. i. The Amount of Training Received Where none of the qualification variables is statistically significant (contrary to expectations given some other studies, principally undertaken during the 1990s).

17. VariableCoefficientLinearized Std. Err. Marginal Effects Outcome 1 (None) Outcome 2 (Less than 1 day) Outcome 3 (1 to less than 2 days) Outcome 4 (2 to less than 5 days) Outcome 5 (5 to less than 10 days) Outcome 6 (10 days or more) Highers/A levels.1312.1241-.03-.00.00.01.00 Degree or higher degree.3402.1831-.07-.00.00.03.02.01 NVQ/SVQ Level 2-.0326.2040.00 -.00 NVQ/SVQ Level 3-.4315.3708.10.00-.01-.04-.02-.01 NVQ/SVQ Level 4-.2287.5317.05.00-.00-.02-.01-.00 NVQ/SVQ Level 5.2534.8539-.05-.00.00.02.01

18. In the context of the amount of training an individual receives: Training (of varying quantities) was more likely to be given to younger workers those supervising other workers; and those working fixed term contracts. Training was less likely to be given to women the low paid; and those with long tenure at the workplace.

19. ii. Dissatisfaction with the Training Received Where there is a ‘story’ associated with the qualification variables: ‘Academic’: Those with ‘Highers’/’A’ levels as their highest qualification are more likely to report dissatisfaction (so too are those with degrees, although this result is not statistically significant) ‘Professional/Vocational’: In contrast, those with NVQ/SVQ level 4 as their highest qualification are less likely to report dissatisfaction. (Note the negative signs on NVQ/SVQ levels 3 and 5 also.)

20. VariableCoefficientLinearized Std. Err. Marginal Effect Highers/A-Levels.7752.1976.13 ** Degree or higher degree.5525.4005.09 NVQ/SVQ Level 2.0450.1773.00 NVQ/SVQ Level 3-.5360.3398-.07 NVQ/SVQ Level 4-1.4050.9117-.13 ** NVQ/SVQ Level 5-.2538.8860-.03

21. In the context of reporting dissatisfaction with the training received: Those more likely to report dissatisfaction were: individuals employed at multi-plant workplaces (relative to those employed at single plant organisations); and individuals working at workplaces which had recently experienced ‘change’ (e.g. in work practices; the organisation of their work). Those less likely to report dissatisfaction were: Women, and those who had receiving most training.

22. iii. ‘Skills Gaps’ Where the qualification variables were of no consequence. Indeed, no variable of consequence was statistically significant in this context. (These ‘results’ may be attributable to the relatively small number of observations reporting ‘skills gaps’.)

23. VariableCoefficientLinearized Std. Err. Marginal Effect Highers/A levels.1900.3853.00 Degree or higher.4623.5188.00 NVQ/SVQ Level 2 -.1603.4372-.00 NVQ/SVQ Level 3.6683.6974.01

24. iv. ‘Skills Under-Utilisation’ There was some evidence that individuals possessing ‘higher’ qualifications were more likely to report that their skills were under utilised. This was especially evident in the context of those holding NVQ/SVQ level 5 as their highest professional/vocational qualification. (Note, however, NVQ/SVQ levels 3 and 4 are negatively signed, although not statistically significant.)

25. VariableCoefficientLinearized Std. Err. Marginal Effect Highers/A levels.1555.1349.03 Degree or higher.3039.3028.07 NVQ/SVQ Level 2.0807.1731.02 NVQ/SVQ Level 3 -.1317.3124-.03 NVQ/SVQ Level 4 -.5381.6045-.13 NVQ/SVQ Level 5 1.7783.9133.34 **

26. Individuals were more likely to report that their skills were under utilised when they had: a long term disability Individuals were less likely to report that their skills were under utilised when they: were on fixed term contracts had received large amounts of training; and were employed at small workplaces (e.g. employing less than 50 workers).

27. 4.SOME QUALIFICATIONS, CONCLUSIONS AND POLICY IMPLICATIONS QUALIFICATIONS: 1.The WERS survey was undertaken in 2004 2.The nature of cross section data analysis makes for the identification of correlations, not causations.

28. CONCLUSIONS 1.A large proportion of the employed workforce receive no training 2.A significant minority report dissatisfaction with the training they receive 3.There is little evidence of ‘skills-gaps’ 4.There is considerable under-utilisation of existing skills 5.An individual’s qualifications are important determinants of whether an individual reported dissatisfaction with received training and whether he/she perceived his/her skills levels to be under-utilised.

29. POLICY IMPLICATIONS 1From the ‘training evidence’ presented: There is a need to improve both the quantity and quality of training provision 2.From the evidence of considerable ‘skills under utilisation’ presented: There is a need to recognise that ‘labour supply based’ policies by themselves are insufficient, especially so in the context of generating economic growth. To fully utilise the existing skills base, labour supply based policies need to be complemented with ‘demand’ lead policies. How to unleash the untapped potential within the workforce is the principal policy problem.