How Much do Employers Spend on Training? an Assessment of The ‘Training in Britain’ Estimates

The Implications Of ‘Training in Britain’ For The Analysis of Britain's Skills Problem: a Comment on Paul Ryan's ‘How Much do Employers Spend on Training?’

“…How Much Do British Employers Train? Ryan (1991a) gives a comprehensive account of the methodological problems in FS, ranging from the neglect of training opportunity costs to the confusion posed for both interviewers and interviewees by the unusual definition of on-the-job training contained in the study that generated inconsistent responses.' One methodological difficulty which he identifies when assessing the high percentage of off-the-job training costs accounted for by senior management (nearly 20 per cent of the total), but does not explore more generally, is the problem of self-reported data.…”

“…This is because the method used to calculate training expenditure by FS has not been used in other countries' surveys. Those figures which do exist, such as the estimaste that US firms spend $32 billion on training (Training Magazine, 1987) or that Japanese and German companies spend between 1 and 2.5 per cent of national income on training (Dore and Sako, 1989:80;BMBW, 1990, in Ryan, 1991a, tend not to include on-the-job training and, as a result, fail to weight trainer, trainee and management salaries to the same extent as FS, where salaries accounted for more than 85 per cent of total training costs. Comparisons with Japan are particularly difficult because so much of skill development takes place through systematic job rotation programmes, the costs of which are almost impossible to measure.…”

“…I am indebted to Paul Ryan for comments which helped clarify this argument. The figures regarding training days per employee should be treated with extreme caution, since they are particularly subject to the on-the-job training estimation errors within FS (Ryan, 1991a).…”

Annual Review Article 1991

“…For example, one estimate suggests that British firms only devote some 0.15 per cent of turnover to training compared with 1-2 per cent in Japan, France and West Germany (cited in Finegold and Soskice 1988: 23). However, it needs to be recognized that any such statistics need to be treated with considerable caution as individual firms rarely have good, standardized data on training expenditures (see Ryan 1991), while there is also the problem of measuring the extent of informal, on-the-job training. Nevertheless, despite quibbles about the accuracy of such figures, researchers have produced an impressive list of the reasons why British employers have historically tended to under-invest in training.…”

Book Reviews

“…However, in the following decade, one of further deregulation under Mrs Thatcher's inspiration, the first systematic government survey of employer training in the UK revealed a totally different picture, at least in terms of employer expenditures on training (Deloitte, Haskins andSells 1987, see Employment Department: Training Agency 1989). Although Ryan (1991) showed that these were considerable overestimates, his corrected figures still showed British employers spending £10bn a year, about 3% of the gross domestic product (GDP). These expenditures were much wider than industrial apprenticeships, and they would appear to highlight that far from opting out of training, British employers were substituting other kinds of training for apprenticeship.…”