At the Resolution Foundation’s pay event last week, someone asked a question about immigration. Alison Wolf was leaving but, just as she was on her way out she remarked that, while immigration might not have had an impact on wages, it has reduced the amount of training given by employers.
Well you can’t leave a comment like that hanging so I had a brief Twitter conversation with her afterwards to make sure that I’d heard her correctly. I had. There was, she said, a huge drop in employer training well before the crash and that a link to immigration is consistent with the evidence though difficult to prove with the data we have.
I decided to do a bit of digging. There has indeed been a drop in training provision which started sometime around the middle of the last decade. As this LLAKES report found, since the mid 2000s, there has been a steady fall in the proportion of workers receiving training in the last 13 weeks, 4 weeks and 1 week.
Consistent with this, per capita real terms training investment has fallen by around a seventh:
The best data source for cost indicators is the Employer Skills Survey, which estimates that total employer investment in training in England was £33.3 bn in 2005, and £40.5 bn in 2011. Once inflation is factored in, this represents just a 4% increase, and since the workforce expanded during the interval it represents a real terms cut of 14.5% in training investment per worker.
A UKCES report in 2013 found that the decline in training started well before the downturn. It pointed out that, as well as the participation rate falling, even those who were given training spent less time doing it.
The recent UKCES Growth Through People report found that training had declined for all occupational groups since the mid 2000s. The fall was less sharp for the Labour group of occupations (process, plant and machine operatives, and elementary occupations) though it started from an already low base.
At around the same time that employer training provision began to fall, there was also a rise in immigration. It is well-known that there was a surge in immigration after 2004 when the Eastern European countries joined the EU but figures from the House of Commons migration briefing published in February show that migration from the EU15 also rose after 2005. Immigration had also been rising steadily for the previous five years.
The decline in training occurred over a similar period to the rise in immigration so it is possible there might be a link. There is something else to consider here though.
At about the same time, the labour force participation rate of the over 50s began to rise too. According to Ernst and Young, the increasing state pension age and the squeeze on future pension income has forced a lot more people to keep working. This, say EY, together with immigration, has been the main reason for the growth of the labour supply.
Migrants and the over 50s have something in common. They have already acquired skills and experience of the workplace. The Migration Advisory Committee found that migrants, even in low skilled occupations, are more likely to be over-qualified for their jobs than natives. In other words, like the over 50s, to some extent they come to employers ready-trained.
I’m reminded of a conversation I had with a senior executive a few years ago who remarked, “We are drinking from wells that other people have dug.” Whether those wells were dug decades ago in the UK or more recently elsewhere in the world, UK employers are able to freeride on training that has been paid for by someone else.
But this is all circumstantial. Just because some lines on graphs go in roughly the same direction it doesn’t prove cause and effect. The decline in training might be caused by something else, or may simply another symptom of wider falling levels of investment. Or it might just be a coincidence. There is no conclusive evidence that employers are cutting back on training because they have a steady supply of well-trained people. It might look that way but there is no smoking gun. Unless, of course, you know different.