Skills Development Programs Against Financial Crisis

Abstract

This study recognizes that training and skills development are the main forces that drive the social and economic development of any nation. Moreover, it is apparent from the bitter experiences of the global financial crisis of 2008 that countries having higher levels of skills development opportunities are more effective in meeting the emerging challenges. This study’s main objective was to examine the extent to which the training and skill development programs can help employers and policy-makers to fight against the economic crisis. To evaluate the effect of training and skills development programs during the global financial crisis, this study reviewed the theoretical framework of knowledge and skill development, job-related training programs in the international labor market, the position of the unskilled labor force during the financial downturn, and the relationship between skill development and productivity. A comparison was made between the training and skills development initiatives in different nations following the global financial crisis of 2008. Besides, an analysis was made of the emerging patterns in terms of increase in employment and economic growth. It was found that in many EU nations, there were low levels of training and skills development opportunities, particularly because the education base in the continent was not strong from the beginning. Similarly, in the US and many Latin American countries, government efforts worked wonders in allowing the economies to stage a dramatic comeback. Although the global economy has not yet recouped to the pre-crisis era, there are positive signs that government initiatives through implementation of social projects involving training and skills enhancement of citizens have created confidence and resulted in better economic outcomes.

Introduction

In September 2008, the credit crash in the US mortgage market and the collapse of Lehman Brothers initiated the global financial crisis (GFC), which rapidly spread all over the world through the international banking system. Its impact was so strong and complex to deal with that the adverse influence continues to impact global financial markets till the present time. Different fiscal and monitory tools including bailout initiatives failed to stabilize the global economy. Facing such a serious challenge, governments of many countries have realized that training and skills development programs are the keys to economic recovery because such programs are known to be the drivers of economic and social development. Therefore, the main objective of this report is to examine the extent to which training and skill development programs can help employers and policy-makers to fight against the economic crisis. In this context, the paper also seeks to answer the following questions:

  1. How is the unemployment rate affected by training?
  2. How is the overall robustness of the economy affected by worker training?
  3. How is the performance of a firm affected by internal worker training programs?

With the introduction of larger numbers of training programs by governments, workers become more competent in attaining skills that will make them eligible for a larger number of jobs for which they can apply. These initiatives go a long way in reducing the unemployment rate in any economy. The overall robustness of the economy is positively impacted by worker training because workers become more productive after acquiring new skills and knowledge, which enhances the overall productivity of the organization and the nation as a whole. The combined knowledge and skills base of the organization improve significantly with the training of workers. The firm can adopt the latest innovation and techniques of production to remain competitive and to have a competitive advantage over its business rivals. But the new processes can be implemented effectively only if workers are trained appropriately in handling them. Therefore, internal training programs are necessary to improve the performance of the organization.

Many nations across the world have realized that better skills amongst the labor force allow the economy to adjust effectively with the emerging global opportunities and challenges. Training and skills development programs are of different durations depending upon the objective for which they are being organized. But the basic objective is to improve performance and develop leadership effectiveness through courses offering opportunities to learn techniques and skills relative to the management of resources. Besides, such programs use feedback and reflection techniques in allowing participants to determine the extent to which they have succeeded in learning and applying the newly acquired knowledge. Candidates for these programs are chosen based on their position in the organization and the disciplines in which they work. After undergoing the duration of the given program, candidates become well equipped in implementing the required responses, develop stronger working relationships, communicate more effectively under pressure and develop clear insights about the ongoing need to learn and grow. Nevertheless, the target groups for training and skill development programs comprise all people working in the organizations and they have to be systematically included in such programs to ensure uniformity in the provision of the given opportunities.

Impact of Global Financial Crisis

The global financial recession forced organizations to reduce new investments as well as the number of employees on their rolls. Such downsizing implies that lesser numbers of people will have to perform the same functions in achieving the targeted output. Because of the added pressure on employees, the only option is to make current employees more competent by providing them training in different processes. For example, 20 people working in a department may have the same levels of competency but they will have specific skills in their respective areas of work. Consequent to downsizing after the recession, a few employees that specialized in a particular function may have been fired, which means that existing employees will have to perform the required functions for which they will need to be trained. It is for this reason that training and skills development programs assume greater significance during the recessionary period.

Training and skills development programs are known to boost employee morale and productivity as employees start attaching immense value to the fact that their employers are investing in them to achieve a better working environment. Therefore, such programs are beneficial from two perspectives; firstly, employees achieve intrinsic job satisfaction in learning new skills, and secondly, they can improve their performance levels, which make them feel more involved and committed to the organization. Also, higher levels of commitment immediately impact job performance in positive ways and result in increased productivity. This also implies that even if the employee is not immediately applying the new learning on the job, his/her motivation remains very high, which eventually benefits the organization in terms of higher productivity in the employee’s current area of operation.

There has been a significant advancement in technology and enhanced availability of online resources in the last few years, allowing for lower costs on training. Thus many companies are now finding novel ways to enhance their intellectual properties at lesser costs. A major advantage of implementing training and skills development programs for the organization is to achieve synergy, whereby the combined knowledge of all employees proves to be greater than the individual knowledge levels of different employees.

The preparedness of people in the EU nations is best represented in the following diagram depicting the percentage of the population that has achieved upper secondary education in 2006. The position is not very encouraging, which means there is a strong case for the government as well as business organizations to take initiatives of introducing training and skills development programs so that people become more competent and technically qualified in achieving better productivity. Only then can organizations take initiatives in offering them better incentives and rewards.

Attainment of Upper Secondary Education in different European nations.
Table 1: Attainment of Upper Secondary Education in different European nations. Source: European Commission. (2010). New Skills for New Jobs: Shared Labour market experiences.

Developed countries like Japan, the USA, Germany, and France have placed a special focus on training people in leadership positions because a skilled management team can manage the company and workers more effectively. The managers of the UK are less skilled, which can become a serious challenge for this country in the competitive world. The below-mentioned figures demonstrate the position of five developed countries in this regard –

Training of managers in selected countries. 
Figure 1: Training of managers in selected countries. Source: Rake (136).

UKCES (10) stated that in the UK, only 600 managers are skilled among 1800 managers in the public sector, which indicates poor management capacity in terms of international indicators of qualifications in the global financial crisis. As a result, the policymakers focus on the implementation of the long-term plans to overcome post-recessionary impact and compete with international markets. Examples of such programs are the Vocational Qualification Reform Programme (VQRP) and Ambition 2020 (Bewick 10). At the same time, the policymakers have identified several concurrent alarming issues in the global context, such as-

Skills mismatches between the skills available and skills required, which constrains enterprises from being proficient to meet market demands, scopes, or goals, which is apparent from the following diagram:

Main components of Skills imbalances. 
Figure 2: Main components of Skills imbalances. Source: UKCES (10).

In this regard, Mason & Kate (5) stated that developing countries mainly faced a problem related to skill shortages.

Active Labour Market Policy

Meager (3) has held that the wider part of the literature on skills development as integrated with the labor market policies can be perceived as two distinct categories; the ‘Active’ that urges for market re-engineering and the ‘Passive’ that advocates for ‘alternative earnings’ during the unemployment period, which that can be ensured through ‘unemployment insurance’ or special financial support. The ALMP1 evidenced in the European countries due to war crisis and brought comparative balance in the labor market policy through the implication of both the active and passive instruments that generated remarkable mobility in the market to stabilize in the right direction. On the other hand, some literature depicted the efforts to analyze ALMP from the perspective of supply to meet the labor market demand. Such perception align with the following attributes –

  • Training Scheme: – This module of ALMPs integrated option for general and vocational skills arguing that it increases the prospect of having a fresh entry for the unemployed
  • Job Information & Brokerage: – This scheme arraigned to introduce a one-point service providing for the job seekers or both public and public sector and they would be able to know all information related to the jobs they would like to apply, the brokers have the opportunity primary selection and pace applicants data to the employers through online;
  • Guidance and Advice Centre: – Such service providers would provide a commitment that is more realistic for the job seekers in integrating necessary support for skill development including required motivation
  • Scope for Sanctions and incentives: – This scheme is designed for the complete jobless to provide special support and benefits for participating in the obligatory training program that encourages financial incentives linking with their skills; some other supportive programs increase the interest of individuals to participate in training.

Skills Development & Productivity

Specific programs providing training and skills development opportunities are known to have succeeded in the provision of employment for unemployed people. For example, in many countries of Latin America, such as Honduras, Peru, Dominican Republic, Colombia, Chile, and Argentina, the Joven programs that were created to address employment problems faced by young people resulted in the creation of positive economic outcomes for them. The same results were produced in the US, primarily because training and vocational education were very helpful in widening opportunities, particularly for young females. This was because women are generally reluctant to join programs providing training and skills enhancement in male-dominated areas such as woodwork, carpentering, and electrical works. Instead, when provided opportunities to train in female-dominated areas such as sewing, beauty care, and secretarial work, many women were found to be forthcoming. However, such initiatives can at best be initiated by the government in fulfilling its social duties by making citizens self-dependent and appropriately qualified to do well-paid jobs. These initiatives by the government are welcomed because they remove the actual as well as perceived discrimination in the labor markets. On the other hand, the initiatives of employers in skills enhancement through the creation and execution of such programs goes a long way in achieving better results for all including those that believe they are being discriminated against. This is because they get the required opportunities to hone their capabilities and perform better while advancing their careers (Adams, 2011).

According to Adams (2011), people in the lower economic strata tend to demonstrate higher returns on investments in secondary and vocational education in comparison with people belonging to higher income levels. In other words, when the government provides for training and skills development opportunities in situations when the economy is creating jobs that require such skills, there will be a boost to the economy in terms of growth and higher standards of living as more disposable income will come in the hands of the lower classes. Adams (2011) has cited research outcomes in which students pursuing vocational courses were found to contribute much more to the economy than students pursuing purely academic courses, meaning that there is a strong case for the government to introduce more skills development courses. The author concluded that the cost-benefit ratio for skills enhancement programs was much higher because increased demand for such courses was directly associated with increasing demand for high skills. This is also apparent from the results depicted in the following diagram:

Marginal Returns by Education Level and by Earnings Quartile.
Table 2: Marginal Returns by Education Level and by Earnings Quartile. Source: Adams, Arvil V. The Role of Skills Development in Overcoming Social Disadvantage, UNESCO Report Number 2012/ED/EFA/MRT/PI/04, 2012.

The World Bank (23) presented a complete model of skill development framework from childhood learning to market placement training and urged that it is essential to recognize the rights of every employee for training. Naturally, going for training would hamper the current production by that worker, but the flexibility for human resource development would ultimately generate enhanced productivity that would directly assist to boost revenue. On the other hand, more flexibility to the employees would assist to generate mobility within the labor market and the employee would get a better opportunity for the superior match of his skills that may assist greater mobility in the labor, but without social protection, employees cannot enjoy such facilities. The establishment of excellent basic education, employability skills, job centered qualification, supportive entrepreneurship, continuous improvement, creativity, the scope for accurate job matching and mobility, social system systems provided by the state or unemployment insurance could ensure the implication of this model prescribed by the World Bank (1-36).

Conceptual Framework of Training & Skills

Engestrom (11) mentioned that the most common public reception about learning is the acceptance and memorization of realistic knowledge. Repeated application of that knowledge provides proficiency to perform the same task continually with less effort and incorrect ways, thus making the employee skilled. The learning outcomes provide fresh attitudes in comparison to before, which means behavioral models can be changed leading to a change in the emotional attitude of the learner along with the surrounding social experience that he interacts with regularly. Engestrom (20) pointed out that the domain of productive learning could effortlessly impact the society whereby solutions could be found and justification discovered for them. At the same time, the learner engages to utilize different tools like books guidance of other people experienced in the same area. In this assortment, the knowledge resources act as learning instruments where learning occurs in a circular motion among the learners, instruments, and learning objectives. Such a structure of the learning is illustrated as a part of regular learning below –

Model of Learning.
Figure 3: – Model of Learning. Source: Engestrom (20).

Margerison & McCann (14) pointed out that companies involved with teamwork necessarily need to develop communication skills along with problem-solving efficiencies. They also need to develop the following five types of skills:

Enquiring Skills These skills provide competences to gathering information by asking pertinent questions to the target audience and to listening to them courteously in a vigorous way that gives confidence to the respondent to express easily what they are willing to say
Diagnosing Skills It is an assortment of skills to enable a person to refine the collected data and generate necessary information analyzing them
Skills for Summarizing Under the type of skills an individual would gain the proficiency to represent his views comparing with the others is a concise and abstract form
Proposing Skills it generates expertise to make a recommendation for a particular problem solution
Directing Skills It provides self-confidences to lead and direct the people in the right direction of resolution

While integrating the above five skills, Margerison & McCann (15) presented the model of communication diamond as follows-

 Communications and Problem Solving Diamond. Source: Margerison & McCann.
Figure 4: – Communications and Problem Solving Diamond. Source: Margerison & McCann (15).

This model illustrates that the five skills are strongly interlinked to focus on an individual’s skills that emphasize problem-solving attributes aimed to provide exact justification with a complete solution where the enquiring and diagnosing skills aligned with problem-centered zones.

Changing Dynamics of Training

It is held by some researchers that schools do not prepare the youth on how to sustain under the new challenge of a recessionary economy or how they can effectively encounter the crisis. Besides, the knowledge and skills that they are developing contain huge gaps with the real-life scenario; mostly they are contrary to the organizational learning that the business communities are looking for. The role of schools appears to be of ‘quasi-custodial factories’ where the skills required for business success are imbibed with leadership, learning, and teamwork; such practices are remarkably absent in the school curriculum and teaching process. Individual innovation or collective creativity looks very poor in the institutional atmosphere (Leiba 709). Hannon (3) added that in the changing dynamics of the socio-economic reality of economic downturn, it is required to introduce a model of driving change in the process and quality of the training and developing skills to face the challenges of the twenty-first century. More focus has to be placed on social innovation and technology integration along with inspiration that would generate a Learning Eco-Systems environment.

Some researchers have held that that the engagement in training is essentially conducted with a standard set of skills set out by the national authority of a country with particular flexibility and significance towards vocational education and training approach designed and developed based on the local industry needs (Mills, Bowman & Ranshaw, 5). Johnson, Jim & Linda (4) mentioned that in the UK, the National Skills Academies were established in 2006; the objectives of the NSAs were to formulate the standards of skills development by integrating employee representation in company boards to boost skills acquirement.

Emergence to Invest for Skills Development Program

In different countries, there are diverse skills development programs, but their fundamental goal remains the same in terms of creating a skilled working force with advanced knowledge and experience achieved through a particular period of training or by participating in several months’ courses or diplomas. The trained employees can then get higher ranking by way of salaries and benefits than other workers. Enhanced financial benefits of the trained employee would facilitate them in enjoying a higher standard of living in the concurrent recessionary economy. Besides, the improved skills of the employees would positively generate smooth and timely production than before, while the worker’s efficiency would improve at all levels of the national economy. Moreover, the flows of foreign direct investment would increase in that country and the promotion of the trained employees at superior levels would generate new vacancies at the entry-level that ultimately create new employment opportunities in the economy.

Private and Public Partnership for Skills Development

HM Treasury (9) found that the UK government strongly upholds the perception that skills development in the public sector and the private sector plays an indispensable role by encouraging voluntary or involuntary partnership and joint venture with nongovernmental organizations or commercial providers. Under PPP contracts, the government procures support and services from private entrepreneurs through the usual governmental processes. In this context, the associated risk, tenure, and effectiveness of the performance can be claimed by both sectors in the sharing of risks.

In the traditional form of public procurement, public bodies carry out the possession related risks and the private sector operational risks related to quality, but the mode of PPP for public sector skills development could be organized through joint ventures and proportionate risk-sharing for long-term contracts as well as outsourcing. PPP provides additional hope of success in many countries to ensure the right use of public money. What is needed is major reformation in the area of transparency, rate of return, and strong features of liabilities with accounting process to ensure right use of public resources including the materialization of PFI to match with the changes of the global financial market.

According to Dunbar (3) training programs should generate employment opportunities for the unemployed, while for the employed it facilitates up gradating the existing position to the next level. At the same time, interns from academia would achieve their practicable experience for their future competition for the job market or to get better placement. Here, the trainers from the private sector play a more precious role than the public trainers in the context of cost-saving, effectiveness, and risk of encountering new challenges by strapping administrative capabilities and cost-effective process of fund management to ensure a higher return on the investments on a training program.

After the onset of the global financial recession at the end of 2007, the private, as well as the public sector, started taking initiatives towards enhancing skills development amongst employees. Goldman Sachs introduced its five-year program whereby a budget of $100 million was allocated to train 10,000 women to generate additional employment opportunities for them. These efforts involved creating circumstances of shared prosperity through training programs, accessibility to specialized guidance, and availability of funding. These women got opportunities to enhance their skills in areas such as accounting, marketing, and creating business plans. This program led to positive results and proved that investments in education and training for women have multiplier impacts in improving productivity, healthier and satisfied families, and thriving communities. Similar efforts were made by Groupe Speciale Mobile Association (GSMA) in Europe, which has over 800 member establishments, through the use of mobile technology to introduce educational programs for youth in developing countries. The programs used non-conventional strategies in exploring possibilities of how such youth could be connected to employers in demonstrating their skills of job readiness in the sector (GSMA, 2012).

According to a report of the European Training Foundation (2009), The European Learning Industry Group (ELIG), which comprises of European organizations in the areas of education and service and technology industry, new technologies work very well in addressing the skills needs of different industrial sectors. This was found to be particularly true for several nations in Africa and the ELIG concluded in this context that skills development programs should be given a further boost in these nations to resolve problems relative to low skills and competence levels (European Training Foundation, 2009). Moreover, many multinational companies such as Xerox, Holiday Inn, Dell, and American Express have authorized the Management & Training Corporation (MTC) to conduct training programs for them in their respective establishments to promote industry-specific training programs.

New Umbrella Standpoint of Skills

Every skill for social performance, physical feat, or mental excellence has different objectives, but there are some common attributes such processes have to adhere to regarding the objective. It is required to set up targets and to put into practice chronological sequences with effective coordination. The skills process involves a physiological phase that is essential to deliver skilled performance and in this regard, human psychology illustrates that the human brain has diverse strengths for information processing that generates different types of constraints for different performers where the skills of an individual are measured through comparison with unskilled people. Thus, skilled individuals are experts in a particular area in having a significant specialty in a specific field to adopt the required knowledge correctly in any new situation. This is possible through multiple Intelligences representing corresponding skills that make an individual competent to develop through learning assistance from trainers or even through self-development (O’Donnell & Garavan 2)

Quantifying the Benefits of Increased Worker Training

The benefits of training and skills development programs are directly related to positive outcomes in terms of lower unemployment rates and higher economic growth. This aspect is best demonstrated through a comparison of countries in the EU Zone; between those that have strong vocational programs and those that have weak programs. Typical examples in this regard are Germany and France, which are incomplete contrast with one another in terms of the importance given to skills development and training programs. The differences between the two countries exist because of different educational systems, institutional frameworks, and the levels of government centralization of educational and training programs. Germany is better placed in terms of the effectiveness of its vocational programs because it focuses on providing learning through practical experience. The German system makes a combination of practical work experience in organizations along with educational programs in vocational institutions. For Germany, this process has created a massive pool of skilled labor, particularly after the global recession of 2008. Other nations have now started looking towards Germany’s vocational education systems while attempting to improve their respective vocational education systems. The objective is to reduce unemployment amongst youth and to closely associate vocational training with the working environment.

While comparing the vocational systems in Germany and France it is apparent that the differences lie in terms of the diverse sectors of skill formation. In Germany, vocational training plays a major role in preparing youth for their active and positive involvement in the labor markets. The model has been extremely successful in combining school and occupational training. France continues to be characterized by regionalization in its vocational and educational systems and such systems have led to change processes over a longer period. There is no immediate change apparent in terms of creating external outcomes that prove to be positive in boosting employment and economic growth. Attempts have been made at improving vocational training by complementing it with an increase in apprenticeship opportunities but these measures have not delivered the required outcomes. The strength of the Education Ministry in France has been reduced because of regionalization and the central government now has a lesser role to play in decisions relative to financing for education and skills enhancement. In the absence of a centrally focused program to improve vocational skills, France continues to lag behind Germany in terms of skills enhancement amongst its labor force.

The costs of vocational education training can be understood by way of wages paid to apprentices, salary paid to teach personnel, and costs of teaching aids, infrastructure, and equipment. Also, there is an opportunity cost related to earnings that are foregone by unskilled people. In comparison with normal education programs, costs associated with vocational training are quite high, particularly for streams requiring advanced equipment and infrastructure. According to Hoeckel (2013), the cost of vocational training per person in Germany is EUR 10,800; while it is EUR 4,500 in the tertiary sector and EUR 5,500 in academic education. In Germany, firms taking on people for training as apprentices and have to bear their costs; meaning that they train people and reap the benefits by employing them after their training is completed. In contrast, the French government has adopted the interventionist system whereby it is the major entity that takes on the role of designing and implementing the programs while collaborating with social organizations. France has provided employers with incentives for training apprentices and exempted them from paying certain taxes if they are involved in training people in specific skills. France has experienced that apprentices tend to deliver better results if they become a part of the labor market as compared to students that are trained in vocational schools.

Training and skills development programs result in enhanced productivity for the firms because well-trained employees deliver greater production in comparison with untrained employees. Productivity is known to decline if workers do not have knowledge and skills relative to the latest technological developments. Employees not capable of keeping up with technological advancements tend to get frustrated and become prone to abandon their work. To avoid employees from being provoked to develop such attitudes, organizations need to provide appropriate skills development opportunities to their workers. Trained employees are confident and have higher morale in being able to perform better as they have full control over their given situations at the workplace. Skills development and training programs assist in effectively coordinating between workers and logistics and result in a better understanding of company policies and expectations from employees. Employees thus have a clear picture of what they are expected to do and what rewards they will get from their efforts. There is congruency in all execution initiatives towards achieving organizational goals, which allows the achievement of a better working environment as workers are rewarded well and they continue being in a high state of motivation to consistently deliver better outcomes. It is thus true that skills development and training programs reduce employee turnover and lead to congruency in the achievement of organizational objectives. Conversely, lack of such programs leads to high unit cost, high absenteeism amongst employees, and low productivity.

Skills development and training programs have a multiplier effect on the firm’s productivity because the acquirement of additional skills allows the organization to become prepared for future changes and circumstances in having better qualified and more competent employees. Training programs add to the value of the company’s assets as trained employees can produce higher outputs. As new employees are recruited and they are constantly trained in the emerging technological advancements, the organization develops a strong asset base in terms of highly productive employees who will keep improving on their productivity in addition to guiding the newcomers, thus allowing for consistency in the increase of production output of the firm. Eventually, the firm can boast of a huge asset base comprising of well trained, well qualified, and technologically competent employees that are always prepared to meet all exigencies relative to the adoption of new technology and production processes, which are essential in the increasingly competitive environment. Training programs eventually instill a sense of job security amongst employees because they do not feel that they fall short of skills and abilities in meeting the needs of the job. The multiplier effect works further in motivating the management to constantly adopt new techniques of training and skills development for employees to achieve the best possible results. An efficient working environment is best achieved through better human relations that can become possible only through training.

Training and Skills Development under Recessionary Economy

It is now recognized that the impact of the unexpected economic downturn has seriously hampered the usual functioning of businesses whereby organizations are forced to take remedial measures through training programs. Many organizations are cutting jobs as a part of cost reduction and continuing their business with lesser skills amongst the workforce (Cheese, 3). Due to job cutting, many skilled and competent employees are losing their present employment and the organizations are functioning with a low-paid inefficient workforce that leads the business towards an uncertain direction. There is thus a strong need for immediate attention to establishing training and skills development programs (Kucherov & Zavyalova 87). The most recent researches in the UK illustrated that business communities are going through a difficult phase with unskilled human resources with lack of employees’ engagement, whereby middle-level managers have no job satisfaction; the skilled employees are moving towards a better job market or becoming unemployed (Rothwell 88).

It is known from past recessionary patterns that the crisis in the context of talent management does not necessarily have to continue for a long time; the economic downturn of the eighties and nineties evidenced that mobility of human resource remarkably increased immediately after the recession, but the concurrent downturn is significantly different and failed to bring economic growth in the last four years (Lazarova & Cerdin 407). The vulnerable economic condition illustrates that retaining and attracting the business talents requires concerted efforts in offering stronger value propositions for the employees with enhanced flexibility to draw more and more diverse talents matching with the required business model of the organization (Schmidt 4). Some of the theorists have argued that integration of Information Technology could be another effective tool for business communities to conduct online training and skill development courses, while employees could perform most of their duties without attending office through web-based engagements (Caligiuri & Tarique 336).

UK Governmental Initiatives for Skills Development

It has been correctly argued by TUS (3) that the package offered by the UK government to reduce the job market vulnerability through training and skills development is quite feasible from the social priorities and economic viability perspective because new techniques have generated new hope for recovery through rising sectors such as the Green economy. SSCs and RDAs including other government agencies are working together to implement the skills strategy through T2G grants through which £258 million has already been allocated for the sectors facing vulnerability in the job market. There are plans to allocate a further £350 million for the state-financed construction projects and SME sector where workers are trainees and distressed by the recessionary economy. At the same time, the government introduced JCP to provide quick response to the fresh starters at their entry jobs with appropriate training in industries having job vacancies. This program generates hope for the unemployed to get new entry and sustain with competence gained from training and skills development. The governmental steps towards training and skills development have integrated the employees at risk of job loss, whereby employees union now play a wider role to ensure more participation and motivation of the employees to attend training programs with special emphasis to the industry’s needs where they are interested to engage for future job prospects.

Importance of Vocational Training

Kasipar, Mac & Se-Yung (11) stated that vocational training is different from other training programs because it enables practical knowledge related to the real needs of the job. The government of Vietnam believes that such training courses play a vital role in attempts to reduce poverty and are closely linked with production; therefore, which is why it made the MLISA2 responsible to supervise vocational training in the country. The government has established about 262 vocational schools, almost 600 vocational centers, over 800 job centers, and over 200 colleges to serve these needs and meet the demands of labor markets. The following figure shows the implemented strategies –

Management structure of VTE systems in Vietnam. 
Figure 5: Management structure of VTE systems in Vietnam. Source: Kasipar, Mac & Se-Yung (12).

Although the programs were attended by about 1.34 million students and 2.6 million full-time trainees in 2006, the trained employees made up only 20.2% of the total workforce in an economy where the annual average growth rate was 6.5% (Kasipar, Mac & Se-Yung 12). This initiative increased economic growth rates (GDP per capita amplified by 50%) and sped up industrialization and modernization procedure. The following table depicts the figures of employees in different sectors –

Percentages of employees in different sectors in Vietnam. 
Figure 6: Percentages of employees in different sectors in Vietnam. Source: Kasipar, Mac & Se-Yung (14).

Kasipar, Mac & Se-Yung (12) further stated that developing countries have already initiated strategies for the industrialization process during the next seven years; for instance, Vietnam had about 240,000 enterprises employing 11 million workers (near 3 million engaged in the SMEs) and they play a significant role in the national economy. SMEs particularly foreign-invested companies need more skilled laborers as the production depends on the advanced technology and use of knowledge; however, SMEs earned more than 25% to 40% of the total GDP (Kasipar, Mac & Se-Yung 14).

At the same time, Quanquan (69) stated that the government of China concentrates on the continuous development of practical work-based training as it tries to prepare students for employment and to adapt to the changing nature of the Chinese economy. Also, Quanquan (69) stated that the government of this country introduced suitable plans and concentrated on reforms to meet the needs of industrialization. Therefore, in 2002, the State Council concentrated on the vocational training programs as it needs skilled labor both in rural and urban areas to enhance the development of the industrial sector.

On the other hand, the UK Commission for Employment and Skills reported that the people of this country have taken some measures, but the economy achieved a relatively low score among the EU and other OECD countries in the context of the success of vocational training programs. The government has increased remuneration for the academic and vocational training holders considering the economic value of different qualifications. The following table demonstrates the percentage of labor getting some form of vocational training –

Country Percentage (%) Country Percentage (%)
Greece 12 Italy 29
Bulgaria 14 Norway 29
Latvia 14 Cyprus 30
Lithuania 14 Germany 30
Hungary 16 Malta 32
Romania 18 Spain 33
Poland 22 Austria 34
Estonia 12 The UK 34
Portugal 27 Netherlands 34.5
Denmark 35 Sweden 45
Slovakia 36 Luxembourg 47
Finland 39 Slovenia 50
Belgium 40.25 Czech Republic 58
France 45

Table 2: The percentage of workers getting vocational training. Source: UKCES (86).

Labour Market and Global Recession of 2007–2009

According to the report of the US Bureau of labor statistics (1), there were at least ten recessionary periods in America during the period 1948 to 2012. However, the global economy experienced an actual recession in the last month of 2007, which continued for two years through many countries still face post-recessionary impact (the US bureau of labor statistics 1). Here, it is important to mention that there were different effects on different industries and employees, for example, the employment rate declined by 13% to 10% in the construction and manufacturing industries. The following diagram depicts the employment rate amplified by 5% in the education and health sectors –

Percent change in employment during the recession
Figure 8: Percent change in employment during the recession (19973 – 2011). Source: The US bureau of labor statistics (9).

Job-Related Training Programme in the Recessionary Economy

During the period of the global financial crisis, employers tried to reduce costs for the training program since they experienced either huge losses or gained minimal profits (Mason & & Kate 36). However, in the past, employers had taken different initiatives to develop skills in keeping with their needs; for instance, the employers concentrated more on the short-term skilled development program in the recessionary period of the 1990s. However, the rationale behind taking such a decision was a reduction in sales and production worldwide. During this time, employers aimed to manufacture goods with skilled labor as only a few expert workers could maximize production while maintaining quality (Mason & & Kate 2010, p.36). According to the analysis of CIPD (5), business profits along with investment reduced disproportionately in the fiscal year 2008/09 and such characteristics were common scenarios during the recessionary period. Consequently, multinational companies as well as small and medium enterprises reduced their budgets for a training program to decrease spending.

However, such patterns varied with different industries. In this context, many researchers including Mason & & Kate (37) highlighted the importance of on-the-job training programs. Most of the developed countries such as the UK, the USA, Germany, Netherlands, Japan, and others have already started focusing on job-related training programs to improve employee skills and competency levels despite the prevailing unfavorable economic environment. In this regard, the government of the UK had introduced skill development programs known as Ambition 2020 to overcome the emerging challenges (Rake 3). The UK Commission for Employment and Skills stated that Ambition 2020 would work to secure economic renewal in situations where employment was declining and unemployment was increasing (Rake 6). This plan aimed to create a specialist, high skill, and dynamic workforce for the future development of the people driven economy. Also, this plan would raise the ambition and objective of the people to attain new skills (Rake 6). However, the purpose of the proposed plan was to ensure job opportunities for skilled labor because they could otherwise lose their present jobs due to the recessionary effect on the company.

At the same time, it is known that employers have limitations in understanding the role of skilled labor to increase productivity as most of them are not allocating sufficient budgets for the training of employees. Therefore, the employers were bound to continue with the production system with unskilled labor in many cases. The following table demonstrates data for the workers under 16 to 64 age limit –

Job-related training from 1993 to 2009.
Figure 9: Job-related training from 1993 to 2009. Source: Mason & & Kate (2010, p.18).

Recommendation

  • The employees of Japan are too experienced, but they need to participate in more training programs to overcome barriers in the recessionary economy;
  • The policy-maker should develop an influential monitoring committee to carry on training and skill programs;
  • It is important to impress upon the committees to submit a quarterly report to assess the success of different programs.
  • There are many developing countries in the world where skilled labor is available at minimal wages, but they do not get the job according to their skills; therefore, employers of the developed countries need to recruit more labor from developing countries like India, Bangladesh, and China. Under this circumstance, the employers have to provide sufficient training to the employees to remove communication problems and minimize the risk of staff turnover;
  • In the era of information technology, the policymakers should concentrate on the use of computer skills and high levels of sophistication;
  • At present, the job market is uncertain all over the world; therefore, the policymakers of the developing countries should concentrate on vocational training programs. Also, they should build vocational training networks in the rural and urban areas to raise aspirations and awareness of the people and to implement plans of industrialization and modernization;
  • Moreover, the policymakers should make simpler the whole training programs and process, such as, demand-led system to attract the workers who come from different cultural backgrounds to enhance skills;
  • More focus should be placed on the gap between part-time and full-time employees and the long-term impact of workers’ task discretion and the distinction between male and female workers. Arrangements should be made for integrated marketing campaigns to make policymakers and employers aware of the importance of training in boosting productivity. There is a need to address different skills requirements for part-time and full-time employees.

Conclusion

From the above discussion, it can be said that employers have started reducing the budget for providing training to their employees. However, the governments of developed countries like Japan, the Czech Republic, Canada, and the USA have taken long-term measures to increase productivity, employment rate, and skills of the work force. This paper has identified numerous problems and provided possible solutions, particularly in the context of skill development programs. This assumes greater significance given the experiences of businesses and government relative to the loss of several jobs and unprecedented increase in unemployment. Nevertheless, given that human beings are dynamic, they have the natural requirement of being imparted with the latest knowledge and skills in all areas of human activities, which is why it is necessary to remain in touch with emerging methods and developments, which is possible through organizational initiatives of providing better skills development and training programs.

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Footnotes

  1. Active labor market policy.
  2. The Ministry of Labour, Invalids, and Social Affairs.