LEVERAGING TRAINING AND SKILLS DEVELOPMENT

IN SMES – AN OECD PROJECT

Marco Marchese, Economist (On behalf of Dr. Cristina Martinez)OECD Centre for Entrepreneurship, SMEs and Local Development Local Economic and Employment Development Division marco.marchese@oecd.org ; cristina.martinez@oecd.org

The starting point of the TSME project (I)

• 50% of small firms participated in formal CVET, compared with 90% of large firms

• Thus formal training policies risk having limited impact on SMEs.

The starting point of the TSME project (II)

• Recruitment is the main source of skills for all companies, including SMEs.

• In knowledge-based economy, though, skills upgrading is important & lack of training becomes a disadvantage for SMEs

Objectives of the project

• Characterise the types of skills development activities, formal and informal, in which SMEs participate

• Map the range of actors in the local training and skills development eco-systems

• Understand the outcomes (skills, employment, firm) of training and skills development activities

Methodology

• Quantitative data through an online firm survey (1080 firms answered)

• Qualitative data through firm interviews and workshop with stakeholders in local training ecosystems.

Geographical coverage

• East Flanders, Belgium• Zaglebie, Poland • West Midlands, UK• Ankara, Turkey • Quebec, Canada• Manitoba, Canada• Canterbury, New Zealand

Formal training vs. Knowledge Intensive Service Activities (KISA)

• Continued vocational training: formal training that employer companies set up or pay for the employees who have a working contract (leading to certification)– Vocational training courses– Workshops, lectures and seminars, job rotations and

secondments, etc.

• KISA: Learning resulting from daily activities related to work which are not organised or structured in terms of objectives, time or learning support. – e.g. interactions with co-workers, suppliers, clients,

consultants; internal work projects to improve firm processes (e.g. quality assurance)

Summary of results (I)

• SMEs use both formal and informal training but that KISA are perceived as a better source of skills and competences.

• High- and low-skilled employees have equal access to (different) training– Low-skilled: generic, routine, safety, IT– High-skilled: technical, management,

entrepreneurship, green skills. • SMEs get better outcomes out of informal

training – Divide in outcomes between low- and high-

skilled employees is smaller in KISA than in formal training

Summary of results (II)

• The case of growth-oriented SMEs (based on R&D and export)– Similar rate of participation in training – Focus on productivity enhancing skills

(business planning, management, technical) via informal training (participation rate twice as high as elsewhere)

• Motivations for SMEs’ training activities – In-house demand (new products, production

needs, financial adjustments)– External private sector activities (with

suppliers, clients)– Regulations, training policies and public

incentives

Summary of results (III)

Case study: Zaglebie, Poland

• 30% of surveyed firms did not do any training in the previous year– Main activity: compulsory occupational health and

safety training

• Main barriers – Skills identification – Lack of awareness about benefits of training – Perception of low value of training activities – Weakness of business support institutions in the region

• Training ecosystem driven by private training enterprises (tailor-made training or ESF projects)– Limited role of business associations and lack of

cooperation between SMEs and HEIs.

Key policy implications (I)

• Develop a public policy framework for the recognition of informal skills development activities

• Provide incentives for training organisations to develop special qualifications for these activities

• Prioritise productivity-enhancing skills (business planning, management, technical) for both high-skilled and low-skilled employees

• Encourage co-investment by businesses– Firms seeing training as investment and putting

market pressure to training providers

Key policy implications (II)

• Use evaluation to inform entrepreneurs and policy makers about the cost-effectiveness of different training options

• Involve actors in the local training ecosystem (esp. business associations) to enable tailoring in skills development

• Coordinate national and local level to ensure consistency in the provision of qualifications

Thank you