The Global Skills

Why raise standards? – the case for change

The sector needs to be prepared to meet the growing expectations of both domestic and international visitors and take advantage of the increased visitor numbers and profile that the 2012 Games offers.

However, our ability to train and develop our workforce is being undermined by poor staff retention across the sector and the fact that few businesses have a coherent retention strategy.

Conservative estimates suggest that we are losing 590,640 number of people annually, costing £886m a year. By 2012, the sector would have lost 4.1m people costing the sector £6.2bn.

A staggering 70% of recruitment is being undertaken to replace existing staff. The sector has been very good at recruiting people again and again, but for too long we have been trying to solve the wrong problem. The sector’s recruitment crisis is less to do with the perception of the sector, but rather its reality. We are managing to recruit, but we are failing to retain our staff. We are targeting short term labour pools such as students and international workers, but the lack of career progression routes and robust training and development means that many are not staying. Poor management is at the heart of the problem with independent sector research firmly highlighting poor management and lack of recognition as the key reasons why they are not prepared to stay.

In turn the high labour turnover has hampered the sector’s attempt to tackle three critical skill priorities, as identified in the comprehensive SSA research:

1. Management and leadership skills

54% of managers do not possess the minimum level of qualification required for a manager

2. Customer service skills

63% of employers believe their staff’s customer service skills are not sufficiently proficient to meet their needs

3. Chef skills

40% of chefs do not possess a qualification at level 2, the minimum required to prepare and cook food from scratch

We’re training, but to what end?

The vast majority of employers are training their staff and spending a significant sum of money – in 2006, 6% of employers trained their staff to the cost of £144m.

• 71% of employers are offering their staff an induction
• 66% of employers trained their staff in the past year
• Smaller employers are less likely to provide training. 90% of units with 200 or more staff provide training compared to just 47% of units with 1 to 5 staff
• A third of employers are not training. Of which, a quarter of them say nothing will get them to train, but 58% say that training could increase their productivity.

Most employers are training to increase their levels of customer service and increase their effectiveness as a business.

Poor uptake of qualifications

While the sector is training, little of it is resulting in recognised qualifications. This is a result of a general confusion amongst employers about the purpose of qualifications, but also reflects the fact that few employers believe the qualifications in existence fully meeting their needs.

• The sector spends £91m on supervisory/management training compared to £6m by the Learning and Skills Council (LSC) on sector-specific provision
• The sector spends £34m on customer service training compared to £511,000 on sector-specific customer service training by the LSC on sector-specific provision
• When it comes to chef training the LSC is spending more than the sector. £54m compared to £19m.
• Only a small percentage of training is resulting in a formal qualification. For instance less than 2% of employers use Apprenticeships and 2.7% use a health and safety qualification
• Chain employers are more likely to be using National Vocational Qualifications (NVQs) – nearly 5% percent, compared to just 2.5% of independent employers. This is significant given that NVQs often draw down government funding

Is funding helping those employers that most need it?

The confusion many employers have in understanding the qualifications available carries through to the funding system. 80% of employers do not know where to access government funding and only 3% have directly accessed government funding and 5% indirectly through training providers. While slightly more small and micro employers have directly accessed government funding than larger employers, a much higher percentage of larger employers have accessed funding through a training provider. In the main this is due to the fact that it is the longer qualifications, like NVQs, that tend to be funded. These are much less likely to meet the needs of smaller employers.

The lack of qualifications that fully meet the needs of the sector also undermines the effectiveness these qualifications have in providing the right skills for new entrants. However, the targeting of students and international workers at the expense of other labour pools has meant that the sector lacks a diverse workforce that reflects the customer base. Currently a third of the workforce is under 25.

Of continuing concern is the fact that we are unaware of the true figure for how much money is being spent on skills and productivity across the sector and how that money is being directed (in particular public money). People1st’s ‘Smarter Spending’ work continues to help clarify this important area.

No significant impact on skill needs

While the sector spends around £144m training and developing its staff each year, it is not effectively tackling the skills and retention needs of the sector. What is required is a more robust and co-ordinated solution that collectively addresses the interconnected issues that are hampering the skills development in the sector. This will need to be done in terms of both new staff entering the sector as well as the existing workforce.

Employment projects suggests that the sector will require an additional 764,812 staff by 2014. However, broad calculations suggest that at the current rates there will be a shortfall of 370,870 staff.

The implications of pledging to upskill

Lord Leitch, in his report ‘Prosperity for all in the global economy – world class skills’, highlights that 70% of the working population in 2020 have already left compulsory education. This means that employers, together with key partners, will have to play a pivotal role in overcoming the skills challenge of the existing workforce.

Leitch proposed some stretching targets at levels 2 and 3[1]. In order to equip core occupations with the appropriate skills at levels 2 and 3 across the sector, broad calculations suggest that approximately, 766,551 staff will need to be trained to reach the appropriate skill needs (see Table 1). This will cost nearly £229m to achieve the desired targets and £700m if we include current rates of turnover.

It will require some radical shifts in emphasis to upskill the workforce to achieve the level of skill required. For example an additional 36% of managers will need to be trained to the equivalent of level 3. Similarly, 32% of waiting staff and 29% of travel agents will need to be trained to the equivalent of level 2.

Leitch also said that employers need to have full confidence in publicly funded qualifications and that vocational qualifications should focus on economically valuable skills.

The Department for Innovation, Universities and Skills (DIUS) published World Class Skills: Implementing the Leitch Review of Skills in England on 18 July 2007. This policy document sets out how the Government, working with our partners, will implement the recommendations of the Leitch Review of Skills in England. Government has

accepted his recommendations and targets, committing to a new skills ambition by 2020 and a review of progress across the economy in 2010.

The NSS is the hospitality, leisure, travel and tourism sector’s positive response to the Leitch Review of Skills and the ten point plan sets out what needs to be achieved if the sector is to fulfil its skills ambition. Progress in implementing the NSS will be overseen by a Monitoring and Implementation Group, chaired by the Tourism Minister. The work of this group will feed into the wider Government review of progress across the economy in 2010.