Capital gains from the training boom;FE Focus

29th January 1999 at 00:00
Many bosses are finding that investing in people pays off in improved productivity, reports Ngaio Crequer.

TRAINING works - almost half of the capital's employers who gave their staff training improved productivity, while a quarter (27 per cent) did not, according to the London Skills Forecasting Unit.

The unit, launched this week with the publication of its first report, will provide annual forecasts of future skills needs and re-training requirements where employees are vulnerable to changes in information technology. It is currently the only one in the country and is funded by the umbrella body representing the seven London training and enterprise councils and the European Social Fund.

"The annual report will keep London employers more informed about skills their workers must develop to keep apace with global competition," said a spokeswoman for the London TEC council. "Further and higher education, and training and enterprise councils, will also have a clearer insight into what training and qualifications will be most effective in enabling people to secure employment and make the most of work opportunities."

The unit has tracked skills levels, demands and deficiencies across London. It has monitored eight major elements of the London economy: financial services, business services, public sector, hotels and catering, retail, transport, manufacturing and construction.

Its key findings are that:

* job opportunities in the hotel and catering sector are expected to grow at four times the rate in the other sectors until 2001, but the workforce is ill-prepared - this sector has the highest number of employers reporting skill gaps;

* manufacturing has the poorest training record, with only 31 per cent of employers offering training last year;

* financial services have the best training record - in 1998 79 per cent of firms provided training;

* nearly half of London's long-term unemployed previously worked in manufacturing.

Sectors that have most difficulty in responding to change should become a focus for training and education activity, the report says. For example, in manufacturing "employers and employees are the least interested in training, and yet manufacturers report high levels of recruitment problems due to applicants' lack of appropriate skills. At the same time almost half of the long-term unemployed in London are ex-manufacturing workers. This indicates that manufacturing companies may find it more difficult to adapt and compete in a rapidly-changing market-place." Both employers and employees had to change their attitudes to meet future demands.

The unit looked in detail at the following sectors: Financial services

This has the most highly-motivated trainees of all sectors. Skills gaps in information technology and languages may become significant in the next few years.

It has the highest level of employees "considering training", at 38 per cent. Nearly 75 per cent of employers provided training in IT last year, and 50 per cent offered training in customer care. Only 11 per cent of the workforce came from ethnic-minority groups, the lowest of any sector.

Skill needs: ITtelecommunications; languages; customer services; management.

Business services

There is an increasing demand for high-skilled employees, and less for semi-skilled or unskilled labour. Just under half of companies provided training for their staff last year, compared to 75 per cent the previous year. Staff interest declined as well - from nearly 50 per cent in 1997 to one-third last year. Some 65 per cent of workers said that employers contributed to training costs.

Skill needs: ITcommunications; languages; customer services; management; technical skills for specialist markets.

Public sector

It is likely that a slight decline in public administration and defence jobs will be compensated by a growth in education and health. Nearly one-third of health and community employers said their workforce had skills gaps. The vacancies hardest to fill because of skill shortages were in professional health care. Health service workers are the most interested in training (41 per cent), and then education workers (38 per cent) and public administration (35 per cent).

Skill needs: management.

Hotels and catering

Up to 2001 this sector is expected to have the highest rate of employment growth, at 4 per cent. One-third of the growth is expected to be in pubs and restaurants and 21 per cent in hotels and commercial services. "Employers should use employee training to maximise the evident commercial opportunities this forecast presents - currently the sector has the highest level of employers reporting skill shortages and a low level of employer investment in training."

Last year only 41 per cent of employers provided training, and only 28 per cent of employees are interested in further training. Only 17.5 per cent of workers are on full-time permanent contracts, with fixed weekly hours.

Skill needs: customer care; basic cookery; enhanced food preparation; health and safety; management and supervisory; waiting; interpersonal skills; IT.


Companies in essential or convenience shopping are likely to do well. Overall, the level of employer training has fallen, and this will continue if consumer spending goes down. The job of sales assistant is expanding, as they take on more responsibility and become IT-literate.

Last year one-third of employees expressed an interest in training. The sector has the lowest rate of employers contributing to the cost of training.

Skill needs: customer service; basic literacy and numeracy; basic computer and IT skills; management.


"The sector suffers from a number of significant problems, including a poor image, low rates of pay and unattractive working conditions ... it is difficult to attract graduates and skilled staff, both for management and operations." Last year employer-funded training fell to 47 per cent, down from 74 per cent. More than half of all employers provided IT training. In 1998 73 per cent of employees said they were not considering further training.

Skill needs: ITprogramming; management.


The report says the sector is "Currently experiencing severe difficulties in terms of recruiting suitable staff, exacerbated by poor provision of training by employers, and employees' distinct lack of interest in training - the least interested of any sector." Nearly half of Londoners unemployed for two or more years had previously been in manufacturing. Only 31 per cent of companies provided training last year, yet more than one-quarter of employers believed their workforce lacked relevant skills. Some 70 per cent of employers with craft-related vacancies said they were hard to fill because of skills deficiencies in applicants.

Skill needs: IT; marketing; engineering.


"While some forecasts have predicted an end to the current boom, demand for construction is likely to continue at a healthy rate after the millennium." Last year 51 per cent of companies provided training. Only 9 per cent of employers reported skills gaps, and 74 per cent of employees said they were not considering further training.

Skill needs: installation and assembly; more specialisation at higher craft levels; more multi-skilling at lower craft levels; improved literacy and numeracy; IT; middle management for supervision of site sub-contractors.

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