UK employers need to invest in training to overcome the economic downturn.

The ‘Simplification of Skills in England,’ an initiative launched by Sir Chris Humphries, CEO, UK Commission for Employment and Skills, on 23rd October 2008, aims to make ‘publicly funded training provision more flexible and responsive to business needs.’ Employers will be provided with a single team of brokers and a new web-based tool to apply for funding. The government has warned British employers that if they ignore skills training during tougher economic times, the UK will be left even further behind global competitors when the country eventually emerges from recession.

As unemployment approaches 2 million and job losses hit manufacturing and construction industries particularly, Sir Chris Humphries spoke to Financedaily.co.uk’s Dale Lovell, warning that lower skilled workers will be hit the hardest and tough times will put skills high on the political agenda for both the employed and unemployed.

Why should businesses invest in training when they are struggling to pay wages and need to cut costs?

Too often in the past there has been a tendency for businesses to cut back on investing in training as soon as a recession begins, but all the research suggests that this is not the best thing to do. One of the main themes of this downturn is that there will be a squeeze on credit, so getting credit will be harder for all businesses – therefore it is even more critical to get support into companies right now.

Which industries do you think will be affected most by the recession?

It is going to be a recession that impacts upon all small and medium sized companies. The truth of it is that small businesses will have far less working capital – boutique retailers at the top end of the market and the lowcost retailers at the bottom end of the market will probably be fine, but there will be real problems in the middle of the retail market. Everyone associated with the property market is also going to suffer – maintenance, building firms, estate agents – there is going to be a substantial knock-on effect for these companies. The government says they are going to be investing in major construction projects so some of the larger companies and suppliers will be protected a little, but those in the house maintenance and repair business will suffer because people will not be buying and selling homes.

Also, a new report estimates that a third of all Polish workers will be going home in the next twelve months as the work dries up. Thereby businesses that are optimised on using East European labour could suffer as they search desperately for new labour.

How long do you see the recession lasting?

The issues here are not just about economics, they are also partly about fear. There is the potential for this to run its course in a year or so at most. But if we talk ourselves into a much deeper recession – and all the signs point in this direction – then we could easily extend the recession by another year or so. If we can inject some sort of optimism into business then actually we have a good chance of shortening the recession.

Given that the financial sector is crucial to the UK economy and the high levels of personal debt will the UK be worse off than other countries in Europe?

I find it difficult to see why. We have higher employment rates than other countries, our labour market is more resilient and people are better able to cope with change. We did not have a poor performing economy before the credit crunch so I am confident we can pull out of it sooner than the rest of Europe.

How many people do you think will be made unemployed during the downturn?

I think this is one of those Armageddon predictions. The retail sector is predicted to only get 2% growth in the next 12 months; it’s the lowest growth in 16 years, but it is still growth. That doesn’t sound like Armageddon to me. We’re going to play, we’re going to have some fun and we’ll cry a bit, but we’re going to come out the other side and business will still be there. So let’s stop talking about it [recession] and talking ourselves into a deeper recession and get on with it and smile and laughing and stop being so bloody miserable.

Some of the more extreme predictions do nothing but spread fear and panic. The reality is unemployment a few months ago was 5.5% the European average is 7%. I think we will not get much above the European average. The European average will rise, but we’ll still do better than Europe. The truth is we are entering this recession better prepared than we were for the other recessions.

Are you in favour of the bail-out package the Government put together for banks?

Britain has led the way on this one. Our approach has been adopted by the rest of the world. I sincerely hope that the government actually keep their promises to get tough with the banking sector because there is no doubt in my mind that the credit crunch was caused by pure greed. If the banks, and the American banks in particular, hadn’t been chasing poor debt for short term bonuses then we would not have had short term credit.

Find out more about the Simplification of Skills in England at www.ukces.org.uk

If you run a business and are worried about your financial future and are interested in finding out more about what training programmes are available for you and your staff contact the Citizens Advice Bureau - www.citizensadvice.org.uk

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