By Julie Lassébie, Stefano Piano and Anja Meierkord
The pandemic has induced a dramatic change in work practices. How have these changes affected the provision of training by firms? This blogpost provides some preliminary evidence, by drawing on recently published data and a forthcoming OECD report.
The pandemic has had a tremendous impact on enterprises worldwide. Many firms providing non-essential services have been forced to shut down or have scaled down their operations for prolonged periods, whereas those providing essential services have been operating at higher capacity than usual. And virtually all firms who stayed in business have had to change their working practices to introduce social distancing measures and promote teleworking. How have these changes in the world of work affected the provision of training by firms? Answering this question is important for at least two reasons. It might provide more evidence on how training patterns could change in a hybrid world of work. It might also help to increase the resilience of the training system in view of future shocks.
Recently published data provide some preliminary evidence, but leave some open questions
In principle, a negative shock to economic activity could either decrease or increase the provision of training. On the one hand, a contraction in economic activity means that there is more time available to train. On the other hand, firms may be less able and willing to finance training, because of fewer financial resources (especially in the presence of liquidity constraints or other credit-market imperfections) and greater uncertainty about future changes in the demand for their products. However, the COVID-19 crisis has been very unusual for at least two reasons. First, the shock to economic activity has been highly asymmetric across sectors. Only firms in non-essential sectors have faced an economic contraction, whereas firms in essential sectors have often operated well beyond normal capacity. Second, the crisis has led to a massive shock to training and work practices. Training activities have been subject to social distancing requirements across virtually all countries, which made them more difficult and costly to organise. Yet, the mass-scale adoption of teleworking has reduced commuting times, increasing the time available to train through online seminars and courses, but only for employees who could telework.
Recently published data from the EU Labour Force Survey (EU-LFS) point to how these effects have played out empirically. The EU-LFS asks individuals to specify whether they participated in education and training over the four weeks prior to the interview, including formal qualifications, courses, workshops and seminars. In 2020, 9.5% of employed adults in the EU-27 had taken part in education and training in the previous 4 weeks, down from 11.4% in 2019. This was the first decline in a decade, bringing participation rates down to 2012 levels.
The decrease was smaller in Italy (1 percentage point) and larger in France (7 percentage points). Understanding what drives the differences across countries is tricky. Part of the explanation lays in cross-country differences in the sectoral composition of the economy and the severity of the economic contraction. Institutional arrangements could also play an important role, by facilitating or hindering the adoption of online training. For example, France could have faced a larger decline compared to Italy, because the French system relies more on certified training opportunities, and delivering certifications in a virtual world might be more difficult.
In line with expectations, there was also important heterogeneity across sectors: the decline in participation rates was especially pronounced in essential sectors, particularly healthcare, and less pronounced in sectors that faced a decrease in economic activity. This seems to suggest that enterprises that were facing increased productivity pressures during the COVID-19 crisis invested less time in training. The heterogeneity might also reflect some compositional effects. Less skilled workers who train less were more likely to have lost their jobs than higher skilled workers. This implies that sectors with a higher share of lower skilled workers (such as accommodation and food services) might have experienced a smaller decline in participation rates.
Crucially, the variation across countries and sectors may be related to the incidence of teleworking and the willingness and ability to deliver training online as opposed to face-to-face. However, it is difficult to evaluate whether and how changes in training and work practices affected training participation during the COVID-19 crisis based on the LFS data alone.
A forthcoming OECD report provides some answers
A forthcoming OECD report provides more fine-grained information on the factors affecting training provision during the crisis. The report looks at what, why, and how medium and large firms provide training to their employees, using qualitative evidence from 100 case studies of enterprises.
Consistently with the LFS data, the vast majority of companies in the study reported lower levels of training during the crisis. Because of containment measures taken by countries during the spring of 2020, some training providers had to stop their activities, since organising in-person collective training sessions became impossible or very difficult. This meant that the training activities had to be postponed or provided online. Unfortunately, organising training online proved difficult, especially for smaller enteprises. Before the outbreak of the pandemic, smaller firms were less likely to offer online training than large enterprises or enterprises that are part of a multinational corporation. This implies that they were less prepared for a transition to online training when COVID-19 struck and often experienced significant difficulties.
Lower profitability experienced during the crisis generally led to cost-saving actions and reductions in the training budget. Several firms also reported that they were training less due to the dismissal of part of the workforce or a reduction in hiring, which meant that fewer employees had to receive an induction to the enterprise.
Despite the difficulties and financial constraints, a small number of firms reported that the provision of training increased during the pandemic. Several companies declared that the COVID-19 crisis increased the necessity to provide training to respond to new and specific skill needs brought about by the pandemic, such as training for digital skills and tools, soft skills, communication, and management in an online setting, risk assessment and resilience, and compliance with COVID-19 measures. Some firms also declared that the combination of online learning and teleworking increased the time available for training. The fact that the schedule of online training is usually more flexible, allowing individuals to follow classes when it best suits them, was also an important facilitating factor.
This suggests that it might be possible to better exploit online training in the future, especially in small and medium enterprises (SMEs). At the moment, the under-provision of online training in SMEs seems to be driven by a range of attitudinal, informational and financial barriers. Managers and staff frequently have weak digital skills and sometimes show negative attitudes towards digital solutions. Even when positive attitudes are present, SMEs might struggle to organise online training delivery, due to a lack of internal capacity and resources. Governments and social partners can intervene to support SMEs in making the best of online learning, for example by financing the establishment of shared online training platforms and resources.
For more information on these issues and other training dynamics within firms, the full report on “Training in enterprises: New Evidence from 100 Case Studies” will be launched in a webinar on 29th October. Please register to the event to find out more about: i) what training and learning opportunities enterprises provide; ii) why they provide training (or not); and iii) how they make decisions about training.