Return of investment
Making the return of investment in basic skills programs visible is of key importance when outreach strategies and awareness raising campaigns aim at involving people as learners and employers as co-funders in learning programs. It is essential to show that the investment in training can be a source for further financial benefits besides the social return and other positive outcomes to the employee (e.g. increasing efficiency in task completion).
Read the summary of the Canadian UPSKILL project funded by the Government of Canada’s Office of Literacy and Essential Skills. The objective of the UPSKILL demonstration project is to provide a credible test of the effectiveness of workplace LES training by measuring its impacts on workers and firms and estimating the return on investment for all those engaged.
Return of Investment in the UPSKILL project
In Canada the longitudinal study called UPSKILL between 2010 and 2014 investigated the effects of workplace basic skills training on the individual and the employer, and the extent of the return of investment regarding the employee, employer and the government. The main conclusion of the research seemed clear despite the fact that the tools applied were rather complex. Workplace basic skills training programs do return the investment costs and can benefit especially the SMEs employee skills development.
Investment costs
The skills training program’s investment costs were 2 247 Canadian dollar (CAD) per individual, which was increased by 288 CAD resulting from worker release time. Investment costs were fully funded, and the worker release costs were only partially covered by the government during the pilot phase. According to the study, these costs can be significantly reduced by the standardisation of learning materials and performance optimalisation.
Return of investment
The results of the study show that UPSKILL participants received just over $1,400 in earnings gains during the 12-month follow-up period, but with few additional costs. The primary costs were indirect, arising from income taxes and foregone EI benefits in the amount of $558. In terms of direct costs, while participants did not pay for LES training under the UPSKILL model, some did engage in learning activities on their own time (an average of 1.9 hours) which represents an equivalent cost of $27 at their current wage rate. As a result, with substantial earnings gains and trivial training costs, participants have a substantial positive return on investment. In terms of benefits, firms experienced gains in revenue, cost savings from increased productivity, and reductions in hiring costs that amounted to nearly $4,600 per participant. In terms of costs, firms paid the increased earnings to participants (the amount that arises from improved retention), along with increased corporate taxes. When firms are assumed to bear full costs of training ($2247) and release time ($288), their net benefit is $577 per participant, for an average return on investment of 23 per cent. Governments experienced gains in terms of increased income, corporate, and sales tax revenue, as well as a small reduction in transfers (EI benefits). These gains more than offset the costs of sector-level activities to support the launch of workplace LES training including the initial engagement, sector needs analysis, and the design of the core curricula. The net impact on government budgets is positive at $679 per participant, for an average return on investment of over 200 per cent, under the assumption that governments cover only start-up costs. Of course, this positive return is contingent on the employers making investments in LES training and the increased tax revenues that these investments bring about.