Shifting the blame for the skills crisis achieves nothing
Four in 10 employers provide no training. Rather than blaming universities for not producing work-ready graduates, should businesses reconsider their own role in skilling up the workforce, asks Dr Fadime Sahin?
As universities face relentless pressure over graduate employability, the government’s own data tells a different and more troubling story: employer investment in workplace development has been declining for a decade.
The critique of British universities has become almost ritualistic. Graduates lack workplace readiness. Curricula are outdated. The graduate earnings premium is shrinking. Higher education, the argument goes, is failing to produce the workers the economy needs.
Some of this criticism has merit. Universities can be slow to update curricula and modernise their courses or prioritise research prestige over teaching quality. These are problems worth addressing.
Yet, the shrinking graduate earnings premium is found specifically to be a British problem, one that the Financial Times has traced to weak productivity and insufficient skilled job creation.
Skills crisis
The premium reflects the economy’s capacity to absorb educated workers as much as it reflects what universities produce.
But there is a different question, less frequently asked: what has happened to the employer side of the equation?
If Britain has a skills crisis, how much of it reflects a shortage of skilled workers and how much reflects a decade-long retreat by employers from training them?
The evidence, documented by the UK government’s own Employer Skills Survey, with a study of more than 22,000 employers published by the Department for Education in 2024, is striking.
Reduced investment
Total employer training expenditure has fallen from £62.1 billion in 2015 to £53 billion in 2024 in real terms.
That is a 15% decline in investment in workforce development over a period in which the broader economy grew. Training spend per employee fell by 24%, from £2,240 to £1,700.
The number of training days per employee has dropped to 3.6 per year, its lowest point in the survey’s history. Training days per trainee fell from 6.8 in 2015 to 5.7 in 2024.
Most significantly, 41% of UK employers now provide no training at all. That figure has risen sharply from roughly one in three employers offered a decade ago. Today, it is closer to one in two.
The apprenticeship data is equally difficult to explain away. Only around one in five employers offer apprenticeships. Just 11% have current apprentices.
For decades, governments have assumed that employers would invest in skills if the supply of graduates improved
A further 8% offer apprenticeship schemes, but have no apprentices currently. The apprenticeship levy – now known as the growth and skills levy – was introduced precisely to reverse this trend.
Instead, this has coincided with a 23% fall in training spend per employee since 2017. Fewer employers now plan to offer apprenticeships than at any point since the scheme began.
Work placements follow the same pattern. Only a third of employers offered any form of placement, down from 38% in 2016.
One in ten offered placements specifically for adults seeking to enter the workforce. Only a quarter hosted placements for learners in education.
Here is the contradiction at the heart of these figures: when employers are asked what they value most in new recruits, the majority place relevant work experience at the top.
Experience is the decisive criterion. It is also the thing labour markets increasingly fail to provide through placements, apprenticeships or early-career development.
Structural shift
Britain’s employer-driven, market-led approach to the training system is not new, and none of it is solely a product of recent economic shocks or evolving developments in AI.
UK firms historically leaned towards “buying” skills rather than “building” them, relying on external hiring and subcontracting rather than developing strong internal training systems.
Compared with the US, Germany or Japan, the UK developed weaker institutions and internal development systems for employer-led workforce development. The current figures reflect the deepening of a long-standing structural tendency, not a sudden reversal.
International comparisons remove any remaining ambiguity. UK employers invest roughly half as much per employee as the EU average, according to the think tank IPPR, offering shorter, cheaper and less substantial training than their European counterparts.
For decades, governments have assumed that employers would invest in skills if the supply of graduates improved.
Yet the evidence shows the opposite: policy has consistently rewarded external hiring over internal development, made it cheaper to poach than to train, and built no coherent national system of employer-led training.
Long-term withdrawal
The skills levy is the most recent example of a policy designed to raise employer investment in skills that has instead, in the period since its introduction, coincided with a sustained decline.
Some of the retreat reflects genuine constraint. Tight margins, volatile markets and short planning horizons make long-term investment harder to justify, particularly for small businesses.
The latest Employer Skills Survey shows that the sharpest recent fall in total training expenditure came from the smallest employers (between two and four employees), whose spend dropped by 18%, in real terms, between 2022 and 2024. These pressures are real and should not be dismissed.
But this is not simply a story of squeezed SMEs. Long-run data from the government’s Investment in Training series, analysed by the Learning and Work Institute, shows that large firms have cut training spend per employee more steeply than any other group, down by around one-third.
And although large employers remain the most likely to offer apprenticeships, their future plans to do so have fallen, from 38% in 2022 to 31% in 2024.
The long-term withdrawal from workforce development is therefore not only confined to small firms under pressure. It is a structural shift across the employer landscape, including those best placed to invest.
Broken relationship
For much of the post-war period, the relationship between employers and workers operated on a recognisable, if imperfect, logic.
The state educated, businesses trained, and workers progressed. That arrangement was not universal; it excluded parts of the workforce, including women and minority communities. But it provided a framework within which skills were developed inside firms.
This social contract, including long-term careers, employer-funded training and progression, has been increasingly weakened. Over time, market pressures, outsourcing and shareholder-driven models contributed to the erosion of employer-led training and long-term workforce development.
Businesses have arguably externalised a significant share of workforce development onto the state, universities and individuals, reflecting a division of labour between public institutions and private ones.
Over time, market pressures, outsourcing and shareholder-driven models contributed to the erosion of employer-led training and long-term workforce development
The graduate workforce has expanded substantially. In exchange for this prior investment, businesses offered wages, structured experience and investment in people’s skills and development.
Learning and Work Institute analysis also found that graduates were three times more likely to get training at work than non-graduates, suggesting that the labour market itself compounds educational disadvantage.
It is not just that non-graduates earn less. They are also excluded from the employer investment that could close the gap.
Universities are increasingly expected to compensate for the shrinking role of employers in skills formation, but that expectation only reaches those who attended one, and even then, a degree no longer guarantees the structured development that employers themselves have quietly stopped providing.
Universities should evolve. Curricula should improve. But no amount of curriculum reform can compensate for a labour market that expects fully formed workers while investing less and less in forming them.
The skills crisis is not simply a shortage of skilled workers. It is also what happens when an economy decides, over decades, that training is someone else’s problem.
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