Employer investment in upskilling and reskilling in a changing economy

This research examined how and why employers invest in skills, and what could encourage them to train more. It looked across the economy, with a focus on four sectors: financial and business services; creative and cultural; clean technologies; and information and communications.

Method

Led by Learning and Work Institute (L&W), in partnership with University of Strathclyde and Ulster University, the research combined a desk-based review; secondary data analysis; interviews with employers, employees, training providers and experts; and international case studies. An advisory group included government, employer and learning and skills experts.

Key findings

Employer investment in training per employee was 29% lower in 2024 than in 2011. Although the proportion of employees receiving training remained relatively high at 60%, its average duration fell from 7.8 days per trainee in 2011 to 5.7 days in 2024. The UK has the highest proportion of training episodes lasting less than one day among the countries compared, suggesting that longer, more developmental training has been particularly squeezed.

Employers do not automatically respond to skills needs by training existing staff: they may instead recruit people with ready-made skills, outsource work or automate tasks. Their choices depend on the relative costs, benefits and risks, which are shaped by the characteristics of individual firms and sectors.

Falling investment and shorter training have been widespread, but their causes vary by sector. The decline cannot be explained simply by demographic change, shifts in the sectoral composition of the economy, or changes in product and labour markets. One major change across sectors has been the growth of online training: 88% of training days were delivered online in 2024, compared with 67% in 2015.

Implications 

The decline in training comes as demand for skills is rising: 2.5 million more jobs are projected to require higher-level skills by 2035, while artificial intelligence and net zero are reshaping business needs. Recruitment, outsourcing and automation may form part of employers’ response, but developing existing workers will be essential to improving productivity and helping employers and workers adapt.

The report calls for training to become employers’ go-to response to skills needs. It recommends stimulating demand through a growth-friendly economic environment, supporting collective action between employers, introducing a Skills Tax Credit, and providing longer-term public funding for high-quality learning providers. Isolated incentives will not be enough: policy must increase demand for skills, strengthen employers’ capacity to invest and make high-quality training easier to choose.