This paper from CEDEFOP (The European Centre for the Development of Vocational Training) takes stock of recent policy instruments that support employer-sponsored training, particularly in small companies.

As in Australia, micro, small and medium-sized enterprises tend to train their employees less than larger companies do.

Why is there a training gap?

As the paper points out:

“Many small company owners find the cost of training too high compared to its perceived outcomes, others lack the know-how or time to organise it.”

In addition, these companies “face a higher risk than larger ones of losing their return on investment in training: workers in small businesses may not be able to apply their newly acquired skills in their work or may be poached by a competing company.”

Finally, there may be weak cooperation between companies or between companies and training providers, or collective agreements may have poorly developed training-related dimension.

All these scenarios may dissuade such companies from providing training.

Ways forward

The paper makes a number of suggestions and highlights initiatives being used in various countries in Europe. These include:

• Targeted support, whereby financial approaches, including levies, are used to support company training. As the paper points out: “They usually provide public joint funding through grants or tax incentives or focus on cost-sharing, either between employers (training funds) or between employer and employee (payback clauses).” Other support could be non-financial and include “training-related consultancy services/organisational counselling addressing any step of the training cycle (identification of skill needs, training design, planning and delivery, selection of providers and evaluation of training outcomes).”

• Other targeted approaches include “supporting pilot projects to test new training formats and approaches; promoting networks or clusters bringing together these smaller and larger enterprises” and implementing initiatives that strengthen cooperation between smaller enterprises and training providers.

The other approach the paper highlights is mediated support. This is where innovation and organisational learning is encouraged to help these companies to introduce “new or improved products, services and work processes, adopt new automation and digitalisation technologies, or access new markets.”

In these scenarios, a “broader use of skills, inciting companies to train their workers, is a desired spin-off effect.”

Such mediated support fostering innovation is often provided through shared funding schemes, which help these companies “to obtain better training options.”

Finally, the paper points to a need to develop and implement a well-coordinated or, even better, an integrated set of policies and instruments that offer a “targeted and mediated approach.” Thus:

“Broad stakeholder cooperation is needed, including policy-makers and social partners, and holistic policy approaches linking different policy domains: lifelong learning, employment, business development and innovation.”

As the paper highlights, there is a need to combine financing and structural support instruments in order to tackle different root causes of low training performance in these sorts of companies.