Why businesses should care about literacy

Business benefits  Effective workforce: learning pays Literacy levels in the UK

Workplace demands The role of business in education More statistics

Effective workforce: learning pays

It's not our job to teach staff the 3Rs, insist employers

Employers have rejected a report criticising their training programmes, saying that it is not their job to teach people to read and write. The Confederation of British Industry said companies should not have to make up for the failure of the school system to produce a numerate and literate workforce. Susan Anderson, director of human policy, said, "It is the responsibility of the Government to give everyone sufficient education so they are competent in reading, writing and arithmetic." She continued, "it is not a role for employers although, in reality, many are already paying for remedial lessons for staff despite their valid expectations that the Government should have equipped people with these skills by the time they have left school."

More than four in 10 employers are disappointed with the basic literacy and numeracy skills of today's school leavers and a fifth of adults have been given remedial training in the workplace for reading and writing, she said. The report, published by the National Audit Office (NAO), says that more employers need to be persuaded of the value to their businesses of employment-related education and skills training. Employers spend an estimated £23.7 billion on education and training but 6% of employers have skill shortage vacancies and a fifth have skill gaps, costing about £10 billion a year in lost revenue, said the NAO.

The report said, "Employers want their employees to be literate and numerate, but may be reluctant to fund or release employees for basic skills or level two (GCSE and equivalent) training, especially when most people might be expected to become proficient in literacy and numeracy before they leave school."

While companies were unwilling to spend money on basic skills, they generally welcomed the opportunity of work-related training and expected to bear a proportion of the cost. "The biggest barrier is time - most employers need to keep tight control on time spent out of the workplace that does not directly contribute to their business," the report said.

The report urged employers to invest more in vocational training but the CBI said that many did not rate the courses provided by further education colleges and had to pay for more suitable private sector training.

Both the CBI and the Institute of Directors condemned the Government's decision to abolish the Adult Learning Inspectorate and transfer the inspection of college and workplace courses to Ofsted, the school inspectorate. Ofsted will also take over the role of the Commission for Social Care Inspection and the family court support service remit of the court inspectorate.

The institute, however, accused the Government of "completely ignoring" the views of employers. It gave a warning that employers might be less inclined to pay the new merged inspectorate for its services, perceiving it to be a body for schools and education, not for work-based training.

(Telegraph, 14 December 2005)

Investing in basic skills could create more jobs

Spending £1.5bn to raise the basic skills of the workforce could create more than 400,000 jobs and raise total national income by more than £3bn, a government-commissioned report has argued.

Ministers published the interim conclusions of a study of Britain's skills needs in the future by Lord Leitch, former chief executive of Zurich Financial Services. Speaking to the Financial Times, he called on the Government to "raise its game" in its efforts to improve skills.

By bringing an additional 3.5m people up to the basic level of five or more GCSEs, he said, the Government could raise employment by 375,000 to 425,000 over the next 15 years. The annual cost of doing that, which Lord Leitch estimates at £1.5bn, would reap rewards to the economy of £3.1bn-£3.3bn a year, about 0.3% of national income, making the investment good "value for money", his report argued.

The gains from investment in more advanced skills, which tended to be more costly, would be greater in terms of national income, but smaller in terms of jobs. Improving in intermediate (equivalent of two or more A-levels) and higher (degree level) skills would deliver average annual net benefits of 0.4% and 0.45% of GDP respectively, largely due to higher productivity

Phil Hope, minister for skills, said the conclusions from the Leitch study had "reinforced" Government plans to concentrate spending on improving basic skills.

(Financial Times, 8 December 2005)

Cost of poor basic skills in Wales

"The National Assembly estimates that basic skills deficiencies cost the Welsh economy more than £558million a year. Problems include poor quality control, lost orders, bad communication and the need to recruit staff externally when poor skills amongst existing staff limit internal promotions. Employees with poor basic skills cost firms employing more than 50 people as much as £165,000 every year."

(Tools for the Learning Country, Basic Skills Agency and the Institute of Welsh Affairs, 2002)

Better education brings significant rewards, in terms of employment and pay prospects

"The labour-force participation rates of men are generally higher for those with higher educational qualifications, with the exception of Mexico and Turkey where the trend is less pronounced."
(Education at a Glance 2000, Organisation for Economic Development, www.oecd.org)

"There have been many comparative studies of similar companies in Britain and their counterparts in continental Europe. A clear pattern emerges. Even where capital equipment is very similar, there is a productivity gap of between 20% and 30% between UK companies and their equivalents in Germany, France or Holland.  Qualifications levels are far lower in the UK than elsewhere. For example: there is a massive gap between the qualifications of the workforce in German manufacturing companies and those in the UK. The gap is non-existent at the highest levels, but is huge at the intermediate and lowest levels."
(Learning Pays, National Advisory Council for Education and Training Targets 1999)

"Of 128 companies surveyed about their involvement in education, 85% gave recognition to the development gains achieved by their employees."
(Survey of Business Involvement in Education, Business in the Community and CEI, Warwick University, 1999)

"Poor basic skills costs UK industry more than £4.8 billion a year. It costs every company employing more than 50 employees £165,000 every year in poor quality control, lost orders and poor communication. 
"The average company employing 1,000 people or more could save £500 per person if the basic skills of employees were improved."
(The Cost to British Industry: Basic Skills and the Workforce, ALBSU - now Basic Skills Agency, 1993)   

In 1996, six million adults (15%) had difficulties with reading and writing; a quarter of  nineteen-year-olds were functionally illiterate; four out of ten unemployed people had no qualifications. 
(Basic Skills Agency) 

In 1998, a report by the British Chambers of Commerce revealed that businesses were dissatisfied with the basic literacy levels in new entrants to the labour market. In an earlier chambers of commerce report 61% of small firms surveyed said schools leavers lacked the ability to write clearly. 38% said the same of graduates. 
(Skills for Competitiveness, British Chambers of Commerce, 1998) 
 

"A survey of the 1.3 million middle and lower level jobs carried out in 1993 by the Institute of Employment Studies found that almost every job now requires some competence in basic skills." 
(A Fresh Start, Improving Literacy and Numeracy. The report of the working group chaired by Sir Claus Moser, 1999 and Basic Skills and Jobs, Institute for Employment Studies/ALBSU 1993) 

"We estimate that between 65% and 70% of employment opportunities will require a Level 3 qualification by 2010. Only 41% of UK 25-28 year olds held such qualifications in 1998. Of 19-21 year olds, the figure was 43%. "
(Skills for all: Proposals for a National Skills Agenda, Final report of National Task Force, DfEE, 2000) 

"The life-blood of any business is innovation and key to innovation is education" 
Gail Rebuck, chairman and chief executive, Random House 

"After discussion with teachers who visited us we added a new product to our range. This was furniture for a group reading area which included hangers to accommodate oversize books". Schools can bring fresh insight to business activity, and help improve company morale and teamwork: "The main benefit to the company [of working with young people and schools] has been a recognition of the characteristics needed to create a learning culture ... Staff have benefited as  the company has adopted a much more open culture. Now everyone has a personal development plan. Training is aimed at the individual's needs."
(Draft DTI report on the benefits to small and medium sized enterprises working with schools, 2000)

"Britain needs a quantum leap in skills if it is not to slip further down the league of world competitiveness." Andrew Sethe, former chief executive of Lever Brothers, UK and founder member of the Campaign For Learning steering group speaking at its launch in 1996.

In 1995 the World Economic Forum recorded the UK slipping a further 4 places down the league, from 14th to 18th place - from low to very low standing. 

"So far, employers often still fail to match rhetoric with significant investments" 
(Adult illiteracy and economic performance, Organisation for Economic Cooperation and Development, 1992)