Nine out of 10 firms had heard of the qualification, but one in 20 said they would avoid recruiting candidates with an NVQ.
A survey of 1,500 employers, commissioned by the Department for Education and Skills, discovered only 45 per cent of companies had any "useful understanding" of the qualifications. About a sixth are aware of the equivalence intended between NVQs and academic qualifications.
Colleges, accused by the Confederation of British Industry of failing to provide for employers' training needs, said the survey showed companies needed to look to their own responsibilities. John Brennan, chief executive of the Association of Colleges, said: "It is astonishing that so few employers have taken the trouble to acquaint themselves with a range of qualifications built at public expense to their expressed requirements."
The CBI claims companies spend pound;23.5 billion a year on skills, although government figures suggest spending on off-the-job training is nearer Pounds 4bn, or pound;200 per employee.
The researchers concluded that NVQs had failed to become the major qualification for skills in England. The survey also claims that NVQs failed to eliminate the complexity of competing vocational qualifications, instead adding to the confusing variety of awards on offer.
The researchers also suggested that the vocational qualification was more highly regarded below managerial and professional level, where it has not overtaken traditional qualifications.
Those employers who did use NVQs praised the balance of theoretical knowledge and practical skills, although they also complained about bureaucracy and jargon.
Figures released last week by the DfES showed that enthusiasm for the qualification is increasing among students. The number of NVQs awarded in the UK rose by 17 per cent last year to a record level of half a million.
Since 1987, when the qualification was introduced, more than 5.5 million have been awarded.
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