Global Competition and Establishment Closure in the UK: Can investments into skills make a difference?

Employers finance most job-related further training. In 2013, total training spending by businesses amounted to 2.5% of the British GDP. In this report, we update and extend previous research on the positive effects of workforce training on establishment longevity using the longitudinal components of the Workplace Employment Relations Surveys 2004 and 2011. In doing so we provide new, nuanced evidence on the medium-term benefits of workforce training for employers in a globalised economy. Employers invest into people’s skills to improve their own productivity and competitiveness. However, the evidence for universal positive returns of workforce training for employers is mixed. In this report we examine a) whether training was generally able to reduce an establishment’s probability to close down and b) to what degree the effects differed by exposure to global competition. We found that in all 19% of private sector establishments had closed down between 2004 and 2011. This annual closure rate was slightly above the value for 1998-2004. The closure was also more random over the period 2004-2011 than in the earlier period. The closure rate did not greatly vary across different groups of workplaces. A possible reason was the Great Recession, which amplified the uncertainty in the economy