Ananiadou, Katerina

Jenkins, Andrew

Wolf, Alison

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Synopsis This review of the literature suggests thatindividuals benefit significantly from improving theirlevels of literacy and numeracy. The evidence onthe benefits to employers of investing in basic skillstraining is very sparse, although some studies haveindicated that such benefits may include increasesin productivity, reductions in costs and enhancedcustomer satisfaction. A much larger body ofresearch on the benefits of workforce training ingeneral suggests that this has a positive impact onfirm performance and that it is associated withlower staff turnover and higher levels ofcommitment to the organisation. An important  conclusion of the review is that thereis a real dearth of studies on the effects of basicskills training in the workplace and, therefore, anurgent need for more research in this area.Key PointsRobust evidence from large scale UK surveysshows that poor literacy and numeracy skills haveadverse effects on the earnings and employmentprospects of individuals and that these effectscannot be fully explained by the fact that individualswith poor and good basic skills also tend to differ intheir formal qualifications.The very limited UK evidence on the costs toemployers of poor basic skills suggests that, in1992, they were costing an average of £165,000 peryear in companies employing more than 50employees and up to £500,000 per year in largercompanies. However, these figures have beencriticised on methodological grounds and are alsoout-of-date.No evidence is available for the UK on thebenefits to employers of investing in basic skillstraining. International evidence is also very limitedbut  the few available studies have suggested thatemployer-provided literacy and numeracy coursescan increase productivity, improve the use of newtechnology in the workplace, save time and reducecosts.Those employers who have sponsored basicskills training have on the whole found theexperience positive, and there is no evidence tosuggest that they have found it to be eitherburdensome or an unnecessary expense. Far more evidence is available on the benefits oftraining in general and its impact on firmperformance. The literature suggests thatworkforce training is associated with improvementsin productivity and with higher levels of innovationand/or better financial performance, as well asimprovements in earnings.Despite concerns about the poaching of trainedworkers, the evidence in fact points  in the oppositedirection. Individuals who receive workplacetraining tend to have longer job tenure and be lesslikely to quit the firm, while, for the company as awhole, providing training is associated with lowerstaff turnover.This report is funded by the Department for Education and Skills as part of Skills for Life: thenational strategy for improving adult literacy and numeracy skills. The views expressed arethose of the author(s) and do not necessarily reflect those of the Department.Research ReviewThe benefits to employers of raising workforce basic skills: a literature reviewBackground and rationaleof research The aims of this paper were to review and synthesiseexisting literature on the economic and wider benefitsof basic skills improvements in the workforce, focusingin particular on the benefits accruing to the employerof providing basic skills training either through directfunding or through time off for study. We aimed toprovide a theoretical framework within which theevidence could be placed and to identify gaps in theevidence. Among the benefits we aimed to consider inthe review were increased profits, productivity, sales,turnover, growth and other direct benefits, as well asimproved workforce flexibility, product quality,customer service and ability to seize new initiatives.Because the evidence on basic skills in the workplaceis still quite sparse, particularly with regard to the UK,the review also covers the benefits to individuals ofimproving basic skills and looks at the literature on thebenefits of training for employers and employees moregenerally.Main elements of research The review was commissioned by the Department forEducation and Skills in December 2002 and wascompleted in January 2003. Relevant research wasidentified through literature searches on topicsincluding the benefits for individuals of higher basicskills levels, the benefits to employers and the widereconomy of improvements in basic skills, and on thegains deriving from more general training. The reviewaimed to be as comprehensive as possible given thetime available and covered academic literature,working papers, practitioner journals and internetsources; both case study research and large-scalesurvey evidence were included in the remit of thereview. The main focus was on UK evidence butresearch from other countries was also reviewedwhere relevant. Research teamResearch OfficersKaterina AnaniadouAndrew JenkinsDirectorAlison WolfReferences and further reading Blundell, R., Dearden, L., Meghir, C., and Sianesi, B.(1999). Human Capital Investment: The Returnsfrom Education and Training to the Individual, theFirm and the Economy. Fiscal Studies, 20(1), 1-23.Bynner, J. & Parsons, S. (1997). It doesn’t get anybetter. London: Basic Skills Agency.Dearden, L., McIntosh, S., Myck, M., & Vignoles, A.(2000). The Returns to Academic, Vocational andBasic Skills in Britain. London: DfEE.Greenhalgh, C. (2002). Does an Employer TrainingLevy Work? The Incidence of and Returns to AdultVocational Training in France and Britain. FiscalStudies 23(2), 223-263.Hollenbeck, K. (1996). A framework for assessing theeconomic benefits and costs of workplace literacytraining. Paper presented at the WorkplaceLearning: The Strategic Advantage, Milwaukee,Wisconsin.Krueger, A., & Rouse, C. (1998). The effect ofworkplace education on earnings, turnover, and jobperformance. Journal of Labor Economics, 16(1),61-94.Contact for further information Professor Alison WolfBedford Group for Lifecourse and Statistical StudiesInstitute of Education20 Bedford WayLondon WC1H 0ALTelephone: 020 7612 6661email: A.Wolf@ioe.ac.ukThe full report will be available from September 2003 in PDF and Word formatsfrom NRDC’s website at www.nrdc.org.ukPaper copies are available from:PublicationsNRDC, Institute of Education,20 Bedford Way, London WC1H 0ALTelephone: 020 7612 6476email: publications@nrdc.org.ukResearch Review

The benefits to employers of raising workforce basic skills levels : a review of the literature : October 2003

https://dera.ioe.ac.uk//22488/2/doc_2772.pdf

The benefits to employers of raising workforce basic skills levels : a review of the literature : October 2003

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