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THE NATIONAL MINIMUM WAGE AND EMPLOYERS' TRAINING DECISIONS
Research report commissioned by the Low Pay Commission >>Back to main index Part 4 - Results from the interviews Twenty-six companies were recruited to the case study phase of the research. A list of participating companies is given below; details of the 26 case studies are reported at Appendix C. Case study companies Hospitality Hotel, North West England, one of national chain, 260 employees, 6 trainees Public House, Wales, 6 employees Hotel, Scotland, 58 employees, 10 trainees Public House and Hotel, Scotland, 6 employees Bar-café, Northern England, one of chain, 32 employees Hotel, South West England, one of pair, 25 employees, 1 trainee Hotel, Midlands, one of consortium, 120 employees Hotel, London, one of pair, 25 employees Hotel, London, one of national chain, 540 employees Retail Retail florist, North West England, 12 employees Food production and retail company, Wales, 180 employees Horticultural retailer, Scotland, 17 employees, 2 trainees Department store, Northern England, 140 employees Petrol station, South West England, 9 employees Electrical appliance store, South West England, 10 employees Convenience store and off-licence, Midlands, 9 employees Retail Florist, Midlands, 23 employees, 4 trainees Specialist Food Store, London, South West, South East and Midlands, chain, 340 employees Hairdressing Salon, North West England, 4 employees, 1 trainee Salon, Wales, 8 employees, 5 Modern Apprentices Salon with training centre accreditation, Scotland, one of pair, 11 employees, 6 Modern Apprentices Salon, Northern England, one of pair, 8 employees, 3 trainees Salon, South West England, 2 employees, 2 trainees Salon 1, Midlands, 5 employees, 4 trainees Salon 2, Midlands, 4 employees, 2 trainees Salon, London, 8 employees, 2 trainees The key themes that emerged from the interviews are identified below: Recruitment and retention One of the issues to be addressed in the study was the relationship of training to recruitment, turnover and retention of staff. Employers were asked, firstly, for their recent experience of recruitment. They were also asked whether they believed that offering training assisted when recruiting, and/or with retention of, staff. A majority of employers reported difficulties in recruiting staff, and it emerged that training was a key element in many employers’ responses to this situation. Table 4.1shows that three-quarters of interviewees reported having difficulty in recruiting staff. Some said it was not difficult to recruit staff, but it was difficult to recruit the right calibre of staff. Table 4.1: Difficulties in recruiting staff across sectors | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Problems with calibre of the recruitment pool was a recurring theme: ‘It is not difficult to attract applicants but to get the right staff is difficult, mainly in production but also retail sales.’ Food production and retail company, Wales ‘The difficulty is with quality of personnel… we operate what we call a ‘large net, small mesh’ approach. We scoop up everything from the ocean floor and then we sift them, so we interview nearly everybody that applies. But it’s the quality of staff…we have trainees, and it’s difficult to recruit these too…it’s to do with their commitment’ Hotel chain, London HQ ‘It is very easy to find staff, but difficult to find good staff.’ Hairdresser 1, Midlands Some hotels reported a situation in which recruitment (and recruitment shortages) were an ongoing feature: ‘We have ongoing, virtually monthly, recruitment…it’s getting the calibre of staff that is the main difficulty.’ Hotel, Midlands ‘We interview approximately 200 people a week, every week.’ Hotel chain, London HQ Others referred to difficulties with specific groups of staff: ‘Around five to six years ago, we would take approximately 12 trainees a year. Now, we are lucky to get three or four. With the rise of the high profile celebrity chef recruitment for the kitchens is okay, but food and beverage service is a problem area. In the last three to four years, we have had no food and beverage service trainees at all, we just don’t get them.’ Hotel, North West ‘It’s easier getting sales staff than finding people to train as florists. Recruiting a part-time sales assistant was quite easy, but recruiting the right sort of people to become florists is difficult.’ Retail florist, Midlands Of the six who did report that they found it easy to recruit staff, two were public houses or bars, and they mentioned either word-of-mouth or spot enquiries from potential recruits as being a major factor. Similarly, a convenience store manager reported that his workforce had remained stable for some years, and he only needed to occasionally recruit part-time assistance, which was done locally, again by word-of-mouth. One of the Central London hotels reported that they often recruited individuals from overseas who were in London to work and to improve their English. Reasons for recruitment difficulties Interviewees identified three main reasons for their recruitment problems: competition from other employers that paid much higher rates; demographic and economic changes that had led to changes in the options available to those from whom these sectors would usually recruit; and lastly, the attitudes of potential job applicants. Pay rates Despite the increase in pay arising from implementation of the NMW, pay rates within their sector were seen as problematic by eight of the employers. Primarily these comments were made by hairdressers, although the hospitality sector also acknowledged some problems. However, it was competition from other sectors, particularly supermarkets and call centres offering far higher rates of pay and causing distortions to the local labour market, that was seen as the major problem: ‘They see it will be a few years until they get onto good money. Many are moving out of the industry. Five or six have gone into local factories.’ Hairdresser 1, Midlands ‘It is quite difficult recruiting staff, predominantly because of competition from call centres that pay significantly higher rates.’ Public house and hotel, Scotland ‘The hotel’s main competitor for employees is retail, particularly supermarkets. We recruit from within a radius of around 15 miles, within which many supermarkets have opened in the past few years, and they offer £5 an hour just for stacking shelves.’ Hotel, North West Social and economic changes Five referred to the fact that the expansion of further and higher education provision had removed many of their traditional sources of trainees: ‘Recruiting the right type of people is difficult…it seems they leave school and go into courses now, whereas before they used to come into the service industries straight from school on apprenticeships.’ Retail florist, Midlands ‘It is difficult to get the right staff, school-leavers go straight to college.’ Hairdresser, South West ‘In the past, the people going into horticulture and engineering were from the middle-of-the-range, educationally. It’s a hands-on job. But with the increase in computerisation [in the economy] those people can now do jobs they don’t get dirty at. So it’s boys from lower down the education ladder that are coming into the trade, when actually you need higher levels of skills because of the increasing sophistication of the equipment we sell’ Horticultural retailer, Scotland Attitudes of job applicants Nine employers commented on the attitudes of recruits. ‘The suitability of the candidates was so dismal…we had advertised in the Job Centre. We arranged to interview 20 people, and just two turned up out of those twenty.’ Retail florist, North West ‘It’s their attitude to work – they are very ‘jobsworth’, never prepared to do a bit extra.’ Hairdresser, North West ‘Younger trainees look initially at hairdressing as an easy option, they don’t realise how hard it is.’ Hairdresser 1, Midlands ‘Juniors come in and then leave when they realise how difficult the work is.’ Hairdresser, North of England ‘They come in thinking they don’t have to work. The social background and the education system is all geared to make it too easy for them.’ Hairdresser 1, Midlands ‘It is difficult getting the quality required for delivery staff…they are intelligent but lack discipline’ Retailer, South West Responses to skills shortages Six interviewees spontaneously spoke of the need to ‘grow their own’ staff as a response to recruitment problems. Employers identified attempts to recruit ‘qualified’ staff (and in particular, the ‘poaching’ of staff from competitors) as exacerbating current employee shortages. The term ‘employee shortages’ is used here, rather than ‘skills’ shortage, because employers indicated that their response to these recruitment difficulties was to attempt to find people who show ‘commitment’ or ‘potential’ and then train them, either from the outset or later on, once they have seen how they perform: ‘If we advertised for fully trained people…well first of all, I don’t believe the people exist, and secondly we would simply be entering the merry-go-round on which a lot of the brand-name hotels are already on…if Hilton advertise for four people, they are simply going to take them from a competitor hotel, and so four people may leave Marriott and go to the Hilton. The Marriott will then need to employ four people, and they advertise, and people will leave Holiday Inn and so the circle goes on…we try to avoid that circle.’ Hotel chain, London HQ ‘When we realised we had a very skilful individual working here as a cleaner, we gave her training for Reception work and she has been working as a Receptionist for 8 or 9 months now’ Hotel, London ‘To be honest, if I put an advert for a florist in, we wouldn’t have any apply! I’ve advertised for florists and you just can’t get any. So rather than go and poach them from somebody…and then if you poach them you’ve got to offer them more than they’re getting, and then that would upset the balance of wages here, so that’s why we have to keep bringing people through all the time.’ Retail florist, Midlands Supervisors and managers are asked to identify any high potential employees…the strategy is to develop a ‘pipeline of talent’ for the company Hotel, North West It was of interest to determine whether those who had increased training provision were also more likely to believe that offering training gave them an advantage when recruiting. If the respondents are grouped into those who had increased training, and those whose provision had remained the same or declined, then there are indications that those who believe that training assists in recruitment are more likely to have increased provision. Interviewees were asked: ‘Do you believe that offering training to staff gives you any advantage over other employers when recruiting?’ and answered on the scale ‘yes’, ‘probably, yes’, ‘don’t know’, ‘probably not’ and ‘no’. Table 4.2: Does training give an advantage when recruiting? Counted as ‘assists with recruitment’ if respondent said ‘yes’ or ‘probably, yes’ Counted as ‘does not assist’ if respondent said ‘no’ or ‘probably not’ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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While these are small numbers, they indicate that those who believed that being able to offer training to potential staff assisted with recruitment were also more likely to have increased their training provision. Amongst those who had maintained the same level or decreased training provision, a higher proportion of employers believed that the offer of training did not help in attracting recruits. Two employers thought that the value of training varied when recruiting different groups of staff. In both cases they believed that training was valuable in attracting managerial level staff, but was arguably of less use in attracting lower level grades of staff: ‘When we’re looking at the manager and the assistant manager levels we’ve often managed to recruit people from within the industry because they recognise that we invest a bit more in training and we are seen as the leaders in the industry, so we’ve managed to pick up people from rival chains of stores. I suppose with the lower level of staff it’s possibly not such a big factor but may be still a small factor.’ Specialist food retailer, London and regions Employers were also asked if they believed that training assisted with staff retention. Table 4.3 shows their responses. Table 4.3: Does training help with retention? Counted as ‘assists with retention’ if respondent said ‘yes’ or ‘probably, yes’ Counted as ‘does not assist’ if respondent said ‘no’ or ‘probably not’ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Employers who did not think that training assisted with retention indicated that their main concern was that offering training makes employees more employable and therefore more attractive to other employers: ‘For the majority of new intakes it makes them more employable…[and] there’s a substantial number who learn and then move on elsewhere.’ Hotel chain, London HQ Types of training offered Accredited training A total of eighteen of the twenty-six employers interviewed provided access to accredited training. All of the hairdressers had traditions of providing training for young people, either for NVQs or on Modern Apprenticeships. One salon was a registered training and assessment centre offering Modern Apprenticeships at Level 2. The majority of others sent trainees/apprentices on day release to local colleges; one sent Modern Apprentices to a training company. Two of the retail employers had recently introduced NVQs for their employees: the department store in the north of England had introduced Retail NVQs for its staff, while the food production and retail company in Wales was about to introduce Performing Manufacturing Operations NVQs for production line staff, although had no plans to introduce NVQs for its Retail staff. This was being assessed in-house by managers, with the scheme administered by a local training company. Some of the staff at the horticultural retail centre in Scotland had undertaken the Amenity Horticulture SVQ at the local college. Amongst the retailers, the two florists both had trainees undertaking NVQs in Floristry. One sent their trainees to a local college, the other trained and assessed in-house (they were part of the accredited assessment centre operated by the local college). In the hospitality area, four of the hotels used NVQs/SVQs; one additionally employed people studying towards Modern Apprenticeships. Non-accredited training The specialist food chain (London, South West, South East and Midlands) was currently investigating the possibility of gaining accreditation via a relevant trade association for training modules organised and run in-house. All except one hairdresser ran in-house training in which all employees (stylists and trainees/apprentices) participated. This varied from around half a day a month to two evenings a week. The one hairdresser who did not offer in-house training for staff had previously run a similar system but had encountered difficulties. Training had been organised in the evenings, and staff had wanted to be paid for the additional time spent at the salon. The hairdresser had felt that she was unable to absorb the potential extra costs, and, rather than do this, had decreased, in fact almost completely stopped, this aspect of staff training. The bar-café in the north of England offered a fairly extensive range of in-house training, but this was not accredited externally. The two London hotels used in-house training; in particular the small chain offered in-house training right through to management development, but again this was not externally accredited. The public house and hotel in Scotland offered some limited in-house training, and occasional access to external courses. N/SVQs versus Modern Apprenticeships Out of the eighteen employers providing accredited training, only a minority – five out of the eighteen – offered Modern Apprenticeships. There was no obvious factor that appeared to discriminate between those who had staff registered for NVQs or MAs. Of the five companies that had staff registered on Modern Apprenticeships, three were hairdressing salons, and two were hotels. Both hotels had staff who were registered on NVQs as well as those registered for Modern Apprenticeships. Of the five companies with staff registered for Modern Apprenticeships, only one of these organised training and assessment in-house (the Scottish hair salon that was an accredited training school); the remaining four sent trainees or apprentices to a local college or training company. No employers indicated any reasons for choosing to use Modern Apprenticeships over N/SVQs. However, two employers indicated that Modern Apprenticeships involved too much of an additional administrative burden compared to NVQs: The original paperwork for the modern apprenticeship scheme was a nightmare - we had to appoint a training company to do the paperwork. Hotel, Midlands ‘At the time [there was] quite a lot of money on offer to start up the MAs here, and at the start we had some quite decent payments to get it started which did give us the time to sort it out. But now we just do the NVQ because the MA was involving too much…and [the apprentices] had to do the level 3 which we felt was not applicable to everyone, that’s supervisory level and not everyone is going to be a supervisor, in the level 3 there’s a big section where they have to do till reconciliation and, well, you really only have managers doing that…and without that they can’t complete…and there’s a few other things like that, so really, it was just a waste of time.’ Retail florist, Midlands Provision to different groups of staff There was some limited evidence of groups of staff being treated differently in respect of training provision. In hairdressing, the majority of the accredited training was focussed on young trainees and apprentices. However, given the time taken to go through to the achievement of Level 3 N/SVQs in this sector, it was not uncommon for employees to be in their 20’s and already employed as stylists by the time they achieved this level of award. The hotel in Scotland had initially offered SVQs only to its employees who were aged under 22, but had now decided to offer the opportunity to undertake SVQs to all members of staff (although they had had no takers so far). In two of the Retail companies, while S/NVQs were being used in developing some groups of staff (horticultural salespersons in one case, production workers in the other), there was no perceived need to develop staff in other areas of these businesses (café assistants/cook and sales assistants respectively). There appeared to be two main reasons for this. There was no need for training for certain roles that were seen as reactive, and also employers believed that in some cases training would not be well received by their employees: ‘There is no formal training for the shop staff. We see the retail staff role essentially as being a reactive role, responding to the customer care process. Many of the shop staff are more than happy just doing the job, because it’s flexible, it’s part-time work, that’s one of the big things about it… and perhaps some of the older employees would be put off by the idea of training, and some of the longer serving employees would take the point of view that ‘I’ve been doing this job for thirty years, why are you telling me something different’, and being a little afraid of it’ Food production and retail company, Wales ‘For some staff, yes, training is an attraction, but others see it as a drawback. It depends on the individual’ Horticultural retailer, Scotland Changes to training provision Those employers that had reported increasing or decreasing their training provision were asked to describe how this had changed. Employers described the changes that their company had made which were then checked against a set of response categories to allow comparison across organisations and between sectors. Organisations that had increased training provision Tables 4.4a – 4.4c show responses from employers who reported an increase in training, grouped by category of response. For the hospitality sector, the most frequently-reported way in which training provision had changed was that staff were being trained for a wider range of skills, and in particular interviews mentioned initiatives to increase flexibility and to facilitate multiskilling in their employees. Six out of the eight companies in this sector that reported an increase in training mentioned this. Increased training to develop more specialist skills was the second-most frequently-cited change in this sector, along with reports that training was being provided generally to more staff (five responses in both cases). In retail, training effort was most likely to have been directed at the development of specialist skills, and this was also the case in hairdressing. Across sectors, the development of specialist skills was the most frequently-cited aim of the increased training provision, with training for more staff and multi-skilling being second and third-most-frequently cited changes. Table 4.4c also gives aggregated data across the three sectors. Reasons for increasing training Employers were asked the reasons that underlay their decision to increase training. In hospitality, the two most frequently-cited reasons were to improve quality of service and to help attract staff, with five of the eight interviewees mentioning these. Producing a more highly-skilled staff and to help retain staff were the second-most cited reasons for these decisions, with half (four) of the respondents mentioning these. In retail, the most frequently cited reasons were to improve quality of service and to produce a more highly skilled or flexible staff, with three of the six retailers that had increased training citing these. In hairdressing, the need to keep up-to-date was uppermost in managers’ minds: all four managers cited this as a reason. Improving quality of service, producing a more highly skilled staff, and publicity were also key reasons for three out of the four hairdressers. Across sectors, the most frequently-cited reason for increasing training was to improve quality of service (eleven out of eighteen employers) followed by needed to produce a more highly skilled or flexible workforce (ten employers). The reasons for increasing training given in each of the three sectors are shown in Tables 4.5a – 4.5c, with the data aggregated across the three sectors shown in Table 4.5c. Table 4.4a: Hospitality sector: how has training increased? | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Table 4.4b: Retail sector: how has training increased?
4.4.c: Hairdressing sector: how has training increased?
Table 4.5a: Hospitality sector: why has training increased?
Table 4.5b: Retail sector: why has training increased?
Table 4.5c: Hairdressing sector: why has training increased?
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Organisations that had decreased training provision Initially four organisations that had indicated that they had decreased training in the past three years were selected for case-study interview. However, during the interview with one of these it emerged that in fact virtually no training had been carried out for considerably longer than this. Therefore in this section only the outcomes of the interviews with the three case study organisations that had decreased training are reported: two hairdressers and one retail florist. They were asked in what way(s) they had decreased training provision, and their categorised responses are shown in Table 4.6. One retailer and one hairdresser had cut back on training across the board for all staff; for the hairdresser this had meant the ending of almost all use of product training and demonstrations within the salon. The other hairdresser reported that the salon was taking on fewer trainees than they needed, and existing staff were less likely to be sent to external training; rather, the managers would attend external courses and then cascade the training in-house. Table 4.6: How has training decreased? | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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However, the outcome of these changes had perhaps not been entirely negative: the retailer and one of the hairdressers reported that, as a result of the contraction in training, the training had now become more focussed. The hairdresser now compiled individual training plans to ensure that staff gained training based on identified development needs, while the retailer assessed the impact of all training undertaken. Two months after any employee attends any training, the proprietor assesses their performance on the relevant skill area to determine whether there has been any improvement. Reasons for decreasing training The reasons for decreasing training provision are shown in Table 4.7. Slightly different reasons were given for the decision to reduce training in each of the three cases. In one of the hairdressing salons a combination of financial and pragmatic reasons were cited: since staff now had to be paid for any additional hours spent in training sessions at the salon and the salon could not afford this cost, they had stopped organising training sessions. However, the proprietor did not feel this was too problematic as the staff were experienced and did not need training (except juniors, for whom provision via the local college was being maintained), there was no need to improve quality as clients by-and-large were happy, and the work did not require more than the standard skill levels. Table 4.7: Reasons why training has decreased | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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The second of the hairdressers was quite clear though that he was not happy with the cut-backs imposed. The salon was no longer able to spend the same amount on training as a consequence of increased costs arising from the NMW. However, while the retailer reported that the cut-backs in training had arisen to some extent from the current economic circumstances, the main factor had been going through the Investors in People process. He believed that, as a result the training had become more targeted and had made them focus on what was important to the business.
Impact of NMW on employer training decisions Following the employers’ description of the ways in which training had increased or decreased and the reasons for this, interviewees were specifically asked if the introduction of the NMW had played any part in their decision about training. If they said that it had, they were asked to explain how it had affected their thinking. Looking first at the responses from those employers who reported an increase in training, five out of 17 said that the national minimum wage had played some part in these decisions. However, inspection of the explanations given by the five employers revealed that in only two cases did their comments relate directly to their increase in training activity: ‘It [the NMW] forced the hotel industry to consider the whole package they offered in order to compete against employers outside the industry.’ Hotel, Scotland ‘We [increased the training] because we need to increase profits to meet the increased costs.’ Public house, Wales The responses of the other three interviewees indicated that the NMW had not affected their decision to increase training, but rather, had led to their decision to actively recruit younger people as trainees. The issue of the recruitment of younger workers is dealt with in the following section. Amongst the three employers who had reduced their training level, two indicated that the NMW had influenced their decisions. They were both hairdressers: ‘We used to have a rep in every week doing demos, models coming in…since the introduction of the national minimum wage, trainees only want to do set hours. If they stay on to do training they expect to be paid, consequently we have been forced to cut back. We have been through two inspections by the Inland Revenue over the NMW because the staff have complained about this. So now we provide no training for the staff because of this.’ Hairdresser 2, Midlands ‘We haven’t cut back on in-house training but we have cut back on external training because obviously we haven’t got as much money floating around. The impact of the NMW on the money available meant that we can no longer afford to spend the same amount. The partners go on courses and then bring that expertise into the shop and then cascade it down, rather than sending the staff.’ Hairdresser, Wales In addition, one of the hairdressers who had increased training generally reported that the NMW had nevertheless led the salon to cut back on the number of trainees they took on: ‘In a service industry it is difficult paying people an adult rate when they are not contributing. The NMW has made me look carefully at how many trainees I employ. Proportionally (given the number of stylists I employ now) I have halved the number of trainees relative to stylists.’ Hairdresser 1, Midlands Table 4.8 summarises the numbers of employers who reported that the NMW had, or had not, had an impact on their training decisions. Table 4.8: Did NMW influence your training decision? | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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The impact of the NMW on age of trainee recruits Three interviewees who had increased training reported that the NMW had affected their views regarding the age of trainees they recruited. These were all hairdressers, and, in each case, said that the NMW had led them to decide to actively seek to recruit younger trainees: ‘Maybe before I would have considered taking on someone older for training but because the trainee does not bring in revenue to the salon, and because providing training costs money, having to pay the minimum wage as well, it just doesn’t work out as profitable…employers can’t afford to take them on because of the minimum wage.’ Hairdresser, London ‘The impact was that we couldn’t afford to pay the adult rate for trainees, so we had to change our policy with respect to the age of the trainees we recruited and we are looking to employ younger ones.’ Hairdresser, North of England ‘At the beginning we thought ‘how are we going to manage?’ now, we [try to recruit] 16 year-olds. It has a definite bearing, we recruit young and train…if the trainee starts at an age older than 16 then they will be earning the NMW while they are not really contributing to the salon. They need to be bringing in some money to the salon if they are earning £4.10 an hour. But if they start at 16 and do all the training then they will be earning more than the minimum wage by 19.’ Hairdresser, Scotland In addition, a hairdresser in the North West who had maintained training levels for the past 18 months was now starting to consider abandoning attempts to recruit and train young trainees. ‘I would like to recruit an older junior but I would have to pay them more. 15-16 year olds are basically hopeless. I have had two trainees in the past but think I will try to carry on with just the stylists. It’s so difficult to get the trainees to continue through that I think I will just abandon the initiative.’ Hairdresser, North West One of the hairdressers who had cut back on training also commented that they were trying to avoid recruiting older people as trainees: ‘To be honest, we try to avoid recruiting [older trainees], because we like to recruit 16 –17 year olds because at the end of the day they’re non-productive while they’re on a training programme.’ Hairdresser, Wales Development Rate for Adult Workers In the previous section, it was reported that several of the hairdressers mentioned that there were perceived problems with recruiting older trainees. One of the additional aims of the research was to determine whether any factor was affecting uptake and use of the Development Rate for Adult Workers. It emerged that very few of the interviewees had used the Adult Development Rate (ADR), and this was for one main reason: only four of those interviewed had heard of it. When it emerged, following the first six interviews, that most employers had not heard of the ADR, the interviewers acquired the guidance material from the Dti regarding the ADR and accredited training [see Appendix D] and, following the interview question about the ADR, gave each interviewee a copy of the guidance material. Interviewees were generally pleased to have been supplied with this information. In the concluding weeks of the fieldwork, the last hairdresser to be interviewed reported that she had just read an article that mentioned the ADR in the Newsletter that had been published the previous week by the National Hairdressers’ Federation. In general, hairdressers saw the ADR as potentially being more helpful than did interviewees in the other two sectors, although there was a view that six months did not take into account the real length of time over which the trainee would not be fully contributing to the income of the establishment. The nature of the comments received from hairdressers is indicated below: ‘Well I agree that 18 year-olds should be on the minimum wage but trainees go to college one day a week and they have one day’s training in the salon so really, they’re only working three days a week, so there should really be something to take this into account…anyone of any age who is about to embark on training, their wages should take this [the fact that training is being provided] into account.’ Hairdresser, London ‘I would consider it in future. In a service industry it is difficult paying people an adult rate when they are not contributing.’ Hairdresser 1, Midlands ‘The problem is, we have the trainees for two years, and the ADR only lasts six months. But if we get approval for the Level 3, then this, together with the ADR, might make a sufficient difference for us to take on adult trainees.’ Hairdresser, Scotland Within the hospitality and retail sectors interviewees were very uncertain as to the feasibility of introducing the Adult Development rate. In general, three main problems were anticipated by the interviewees: hotels in particular, and some retailers, tended to take on people on full wages (i.e. as full employees rather than as ‘trainees’ per se) whilst training them, and did not think that a reduced wage would be viewed very favourably by recruits (especially given their reported difficulties with recruitment); the problem of defining or identifying ‘one day a week training’ if training is being given in-house on-the-job; and the fact that, for most people following NVQs or Modern Apprenticeships, they do not become productive for a much longer period of time than six months. ‘We operate in a very competitive market and one of the results of the minimum wage was that wage gaps narrowed between certain employers and others. If we were to start recruiting people at below the minimum wage, for whatever reason, we may simply be uncompetitive.’ Hotel chain, London HQ ‘Recruiting the right type of people is difficult…the main thing is, our trainee rate is £4.25 an hour and I think I’d find it very hard to recruit the right people if I advertised at £3.50 an hour.’ Retail florist, Midlands ‘The problem lies with day-release out of work – if we recruit a person then typically it’s because we need that pair of hands. What would help would be to have some clarification of ‘receiving accredited training for at least one day a week’. If we have staff doing NVQs on the job then effectively they are receiving training towards an accredited award while they’re working. Would this count? Does it actually require them to be released for a day? If someone was doing two evenings, would this count?’ Hotel, Midlands External training provision One of the intended aims of the research was to determine, where employers utilised external training providers, employer views as to the value and utility of the external training. A majority of hairdressers used external training, with most sending trainees to local colleges. More than half of the hairdressers were not complimentary about the quality of training provided, and spoke of providing better quality training in their own salons. Employers in the hospitality and retail sectors were on the whole happier with external training, but there were still some reservations. Those employers with sufficient experience of N/SVQs or Modern Apprentices (i.e., not those who had just recently introduced N/SVQs) were asked to rate their satisfaction with three different aspects of external training: standard of performance at the end of the course; relevance of skills developed; and knowledge (1). Their responses are shown in Table 4.9. Table 4.9: Employer satisfaction with external training | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Scale: 5 = yes; 4 = on the whole, yes; 3 = don’t know/not sure; 2 = on the whole, no; 1 = no
The standard of performance achieved was of concern to the majority of hairdressers and to some retailers(2) and hoteliers. Below are some of the comments made in response to the question ‘Are you happy with the standard of performance that trainees/apprentices attain?’ ‘Not really. In the salon it’s more hands on and they get to learn the real practicals of hairdressing. They are burdened with paperwork in college and they miss out on practical hairdressing.’ Hairdresser, London ‘Perming, cutting and colouring are not done in sufficient depth…the practice is done on a block not on a head which moves.’ Hairdresser, North of England ‘Some level of one-to-one training should be provided rather than just taught all the time in classes of 30.’ Hairdresser 2, Midlands ‘The classes are too big, it’s too difficult for one person to train all those people. If the trainee needs extra help it is not possible to give that at the college. I have seen poor work being assessed as OK at the college.’ Hairdresser, Scotland ‘Work-based training is much better across the board. The [college-based] NVQ is just rubbish.’ Hairdresser, North West That’s why we ended up [moving to in-house NVQ] really. The main thing about people going to college is the speed factor, because they don’t get enough practice’ Retail florist, Midlands ‘The level of coverage could be better. Housekeeping is one area of concern. The lecturers do not seem to have the expertise gained ‘out there’ – trainees seem to be taught straight from a text book’ Hotel, North West Two of the hairdressers reported that trainees rapidly became bored at college and soon dropped out. One reported that, in eight years, only one of her trainees had completed the course; another reported that his trainees typically lasted just a few months before becoming disaffected and leaving. This did not appear to be something that related just to his salon: he reported that the local college had started with 34 trainees in December, and three months later they were reportedly down to just 12 trainees. One retailer, while being happy in general with the quality of training provided by the local college, nonetheless had concerns about the nature of the equipment on which trainees were being trained: ‘One of the problems from the point of view of the business is that the college was training them on obsolete machines because they are reliant on companies giving them the machines to strip down and repair etc. They need to have more modern machinery – and similarly on the horticultural products side, too – more effort should be put into getting something more modern for the boys to work on.’ Horticultural retailer, Scotland The level of satisfaction with skills acquired was somewhat higher, with hairdressers again expressing the most concerns. Knowledge was seen as the strongest aspect of external provision: ‘I think the knowledge aspect is probably the better part of it’ ‘College is OK for theory, the problem really was with the practical work’ Hairdresser, Scotland Lastly, employers were asked if they were aware of the inclusion of key skills within Modern Apprenticeships. Those who were aware of these units were asked their views on the utility of the key skill components. Only ten employers were aware of these units: two florists, two hoteliers and six hairdressers. The mean ratings for utility of the key skill units are given in Table 4.10 Table 4.10: Employer views of utility of key skill units | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Scale: 5 = yes; 4 = on the whole, yes; 3 = don’t know/not sure; 2 = on the whole, no; 1 = no
There was a mixture of views regarding the key skill units: ‘They are useful but I can’t see why they need to do these – they should come out of school with them. It distracts from the course and is used to pad it out.’ Retail florist, North West ‘Working with others and Communication could perhaps be improved. I haven’t really seen enough people come through the system yet, but yes, they should be useful.’ Hotel, North West ‘The [key skills] standard is too basic and much of it is done at school anyway.’ Hairdresser, North of England ‘They are relevant but the teachers at college do not make them relevant. For example, application of number is not contextualised into the types of problem they need to solve in the salon, such as dilution of peroxide/colourants etc. as the lecturers do not make them relevant the students do not turn up for classes. I have offered to help with contextualising examples but the key skill teachers are not interested.’ Hairdresser 1, Midlands ‘It depends on the individual – we had the problem that [one of the trainees] came to us with GCSEs and she’s had to do the key skills and she finds them really unnecessary and uninteresting, except for IT. They made her do English and Mathematics [Communication and Application of Number] again, and she’d done all that at GCSE level. They’re very basic, the key skills that they do, although the IT is definitely important.’ Hairdresser, London Overall, despite reservations about some aspects of provision, the hoteliers generally appreciated the value of external training. ‘The hotel likes its employees to get out of the hotel and do training. It gives them the opportunity to mix with other employees. Plus it’s possible to track the training inputs and it is more structured overall. The nature of the business means that, if [in-house] training was programmed and two people phone in sick, then the training would not happen – on-the-job training gets eaten up by the demands of the guest.’ Hotel, North West ‘You can learn from external training how others work.’ Hotel, South West ‘I have a preference for sending people to external courses, even if only occasionally, because the employee’s perception of the value of the training is enhanced to a greater extent – it’s a psychological factor rather than a real factor.’ Hotel, Scotland It should be noted that, across the sectors, none of the employers who were using training companies to provide training complained about quality of provision. Other findings The timing of the research project was, perhaps, unfortunate, commencing just three months after the attacks on the World Trade Centre and following the foot and mouth crisis. The resultant impact on the hospitality sector, and indirectly on retail, was mentioned by several people in the early profiling stage and in the later interviews. When asked about the impact of the NMW therefore, many employers commented that it was difficult to discriminate between any impact of the NMW and difficulties arising from loss of trade arising from the foot and mouth restrictions and following September 11th. In one interview the following picture of the situation in retail following the foot-and-mouth crisis was described: ‘Foot and mouth has had a devastating effect on business. If we had been located on the borders where it was rife, the farmers would now have compensation and be re-stocking. Here, although it was not a foot-and-mouth ‘hotspot’ there was the trauma of farmers not being able to move livestock – and we supply foodstuffs for the farmers. I continued to give farmers the supplies but because of restrictions on movement the farmers had no income, and because they were not in an affected region they are not receiving any compensation, and so now they cannot pay me…’ Horticultural retailer, Scotland Coping with the impact of the NMW on Business In general, employers had experienced difficulties in coping with the national minimum wage. In particular the rise in October 2001 had shocked some employers: ‘Our Managing Director made a commitment to keep wage rates 50p above the national minimum wage, but we were shocked when it went up so much in November, and we were not able to fulfil that commitment.’ Hotel, Scotland ‘The October rise has definitely had an impact. It has affected our profits and, since October, our labour costs. I will have to keep an eye on this and watch the labour costs.’ Bar-café, North of England In most cases the only option was to put up prices or try to increase sales: ‘It has added a bit more of a burden. We are not able to put that cost onto the customer in any way. The only way we can recoup this extra is by doing extra business, but it is very hard, there is no doubt.’ Horticultural retailer, Scotland ‘ It’s hard to get extra sales. We are creeping the margins up a little bit where we can, we’ve had to, but finding extra sales is very difficult, it’s difficult to come up with something new’ Convenience store, Midlands ‘We have tried to increase business…the extra costs have to come from somewhere. We must upsell everything to afford to do these things.’ Hotel, Scotland Some had been forced into more radical changes as well as increasing prices: ‘We literally had to go back to the drawing board and redesign the business, how it operates. We’ve had to restructure the hours of everyone and cut back on the workforce. We had to force an increase in charges which was a bit scary because you don’t know how your customers are going to react.’ Hairdresser, Wales Cumulative impact of recent legislation In general though, the majority of employers believed that the NMW in and of itself was perhaps not the main issue – it was the NMW in combination with other recent legislation, particularly holiday pay for casual workers, that caused real difficulties. ‘The minimum wage is not such an issue on its own – it’s the cumulative impact of this, together with the requirement now to pay holiday pay for part-time/casual staff – this has to be factored in on top of standard pay and together this pushes people’s wages over the level at which we have to pay national insurance. So these things taken together have had an enormous impact on wage costs, of which the NMW itself is just a small part.’ Public house and hotel, Scotland For smaller businesses, the sick pay system is more of an issue than the minimum wage. I have had a member of staff off for around twenty weeks, they were only employed for ten weeks before that, then they went off with back pain. It’s costing us £63 a week, and we get nothing back from the Government. As far as I understand, this can go on for 28 weeks, and then if the employee returns for just one week, they can then go off for a further 28 weeks. Altogether the situation means that, instead of contributing to the business, they are a burden. Horticultural retailer, Scotland Other legislation was also causing concern. In one case a hotel group had massively increased its training budget, but this was almost entirely as a reactive measure to ensure that employees were aware of the implications of recent legislation: We have tripled our HR/training personnel. This is an extra £100,000 in terms of extra costs, and it is all going on the wrong things. We are spending all the extra time training to avoid litigation and prevent various scenarios. We are using some external training providers for some of the statutory provisions now, but the whole process [requires] that in order to prove yourself to be non-discriminatory and non-sexist you basically have to go through the process with everybody in the same way. And that’s why we tend to interview everybody, because there’s no reason why we would choose one person or another since we have no fixed entry criteria, and that whole process of industrial relations regulation is costing us dearly in resource that we could, perhaps, could certainly, be using in another way. I’d say in terms of time and resource employed, it’s more than three times, it’s perhaps five or six times more people involved than in years previously, and I believe that’s because of the legislation and statutory provision... we have more people going through training and more people tied up in recruitment. We are spending an inordinate amount of time and money in “dotting i’s and crossing t’s” and following matters of procedure which ultimately don’t assist anybody.’ Hotel group, London HQ There was resentment regarding additional burdens arising from changes arising from other government initiatives: ‘We are being used as unpaid tax collectors. We have to keep track of student loan repayments, and there is the income guarantee scheme…these and other additional requirements has doubled the time per week it takes to calculate the wages for the staff. My wife was previously an accountant, so we can deal with this, but if we had to pay someone to do this it would be a big burden’ Public house and hotel, Scotland Such concerns were combined with doubt regarding whether the government really listened to the concerns of small businesses: ‘We could do with more opportunities for small businesses to talk to the Dti. The Small Business Federation has contact with the Dti but I wonder if the Dti listens.’ Horticultural retailer, Scotland NMW and the structure of reward packages The NMW had forced two of the interviewees to think about the whole structure of the employment and reward package: ‘The reason why we [altered the shift pattern] was that we were paying a lot of overtime payments, and we needed to cut the overtime bill, it had gone up astronomically in the last four years and the NMW exacerbated this too.’ Retail florist, Midlands ‘The NMW has affected how we think about the way in which we construct remuneration packages. At present, shift premia/bonuses are lost by not attending, and we would like to put more money into the attendance bonus but we would still have to pay the NMW.’ Food production and retail company, Wales Advice on implementing the NMW Employers were also confused about some specific points concerning the NMW. For example, there was some uncertainty regarding whether training provided outside of the normal working day (i.e. in the evenings) would nonetheless be counted as part of the working week. This was of concern to them because, if staff were not paid to attend the training, but the training was considered to be part of the hours of work, then this might be viewed as reducing the average hourly rate below the NMW. The corollary to this was whether they were required to pay staff for any additional hours spent in training. Related to this, in one case there was evidence of potentially disastrous confusion over the status of apprentices and trainees. The case involved a hairdressing salon that had employed a large number of Modern Apprentices (see case study 18) who, according to the employer, were registered at, and attended, a Modern Apprenticeship training programme run by a local training company. Around a year after the introduction of the NMW the salon had been inspected and it emerged that the employees' contracts, rather than stating that they were employed as 'modern apprentices', instead said 'national traineeship'. The salon managers said the inspector told them that, because the employees were trainees rather than apprentices, they would have to be paid the national minimum wage(3). The costs of back pay arising from this decision had amounted to somewhere between six and seven thousand pounds and the subsequent increase in the overall wages bill came to around a further £6000 a year. The increased costs brought the salon to crisis, with the managers facing a situation in which they considered themselves to be on the verge of bankruptcy. When they discussed the problem with the inspector they were apparently told that they had no alternatives: they had to pay the national minimum wage, they were not allowed to make any redundancies, and they were not allowed to make any reductions in the hours worked. When they asked if they effectively had to go bankrupt they were told ‘yes’. The interviewee said: ‘I think that what got our goat was that whether they were called a trainee or an apprentice was irrelevant but that was the crux of the problem. The problem we faced was that when all this was going on, we phoned people for advice and they were, like, ‘well we can’t really tell you that because it’s all new and there’s no precedent set’. We felt we were operating within the letter of the law and they came along and said the wording of the contract was wrong, we had ‘trainee’ on the contract not ‘apprentice’ and that was that.’ Hairdresser, Wales In the end the managers decided they had no choice available to them other than to re-structure the work arrangements, as they could not afford to keep on all the staff at the existing hours and rates. The managers decided to reduce the hours and by doing this managed to avoid reducing the number of people employed. The interviewee commented that they could do with perhaps three more apprentices but simply could not afford to employ them. Does training work? While only two of the interviewees made a direct link between the NMW and training as a response to this, nonetheless several said that training had been increased in order to improve some aspect of business performance – in order to increase sales or to improve quality to attract more customers, for example. The last word should perhaps go to one interviewee from a successful and expanding chain of specialist food stores operating in London, the South East, the South West and the Midlands. He commented: ‘From our point of view, if you’re having to pay people a higher level then in some ways it makes sense to pay a bit more on training so you get value for money from them…rather than being able to employ four people at very low rates to do the job you can employ three people but they’ll be much more effective in what they’re doing.’ Specialist food retailer, London and regions His reasons for believing this came from his own experience of observing managers across the chain of shops: ‘We know from the results coming back from our stores that where we have managers and assistant managers that have really good knowledge of the products then sales grow much quicker than in the other stores. A good example of that is where we have a store and we get a person with really good sports nutrition knowledge and we put that person into a store, then you can always see, really quite quickly, increases in sports nutrition sales.’ Footnotes 1. Those employees who had moved from external provision to in-house training and assessment were asked to comment on their experiences while using external providers 2. It should be noted though that none of the retailers who commented in this stage of the interview had employees undertaking the retail NVQ. Two had trainees undertaking floristry, and the other had employees undertaking horticulture N/SVQs 3. Under the NMW provisions, apprentices under the age of 19 do not have to be paid the NMW. When the NMW was originally introduced, this exemption did not extend to employees undertaking National Traineeships, who were entitled to the NMW. In its second report the Low Pay Commission recommended that this anomaly should be removed. 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