Positive training trend could help productivity and even equality

The significant mismatches we are seeing in labour markets do not bode well for either growth or inflation. I will return to this theme in a few days, attempting to answer the question, “Where is everybody?” [See also 15th of February here.] In other words, how come we are suffering from labour shortages and surpluses at the same time? [Note: this is, by the way, true in most European countries, where vacancies are hitting record levels despite significant unemployment.] Such imbalances are not very conducive to rapid recovery.

The better news, however, is that at least businesses are recognising the need to train people who are returning from furlough. This shoud mitigate some of the “scarring” effects — i.e., loss of some skills, knowledge and practices — that long-term absence from labour markets can bring about. In the latest ONS Business insights and impact on the UK economy survey, nearly a quarter of businesses said they had provided training to returning workers (cyan blue bars in chart shown). This was up from only 8% in the previous survey in July/August (black bars in the chart).

The pattern across sectors is as you would expect: businesses that had furloughed the most workers are now also training the most, broadly speaking. And this is partly where the silver lining lies: those same sectors are the ones that historically have tended to train people the least. Indeed, one of my most-but-also-least favourite #dataisbeautiful charts (Exhibit 5 here) shows how training tends to be biased towards people who are already highly educated. Since the people furloughed are more likely to have had lower skill-levels to start with, at least the training they are now receiving helps make the pandemic slightly less detrimental to the UK’s overall human capital.