Press Release from 2021-04-19 / Group
Coronavirus crisis sees slump in continuing education amid increasing digital skill needs
- In 2020, 38% of SMEs scaled back in-house training, half of these to zero
- Companies hit hardest by crisis more likely to reduce measures
- Need for developing digital skill sets is greatest – strong increase in 2020
In-company continuing education virtually collapsed in the SME sector in the coronavirus year 2020. Thirty-eight per cent of small and medium-sized enterprises scaled back upskilling activities for their workforce, and more than half of these (20%) reduced them to zero. This is the finding of a new analysis conducted by KfW Research on the basis of the representative KfW SME Panel. A further 29% of SMEs continued with no in-company training measures in 2020, which means that half of all small and medium-sized companies – around 1.89 million businesses – put upskilling measures for their workers on hold last year.
The main reason is obvious: The immediate priority for many enterprises has been to survive the crisis. Short-term stabilisation measures therefore take precedence. In addition, companies often lack the funds needed for continuing education because of turnover losses. Insufficient planning capacity and uncertain prospects – also in regard to staff levels – exacerbate the situation. Accordingly, the harder a business has been hit by the coronavirus crisis, the more likely it is to suspend continuing education for its workers. Half of the SMEs that see the crisis as an existential threat (25%) cancelled in-company continuing education programmes last year.
In addition to this demand shock, the coronavirus pandemic also created a supply shock. The vast majority of continuing education usually takes place in the form of face-to-face events, which is not easily compatible with infection control. Digital training offerings cannot be readily expanded at will. And apart from the major advantage of spatial and temporal flexibility they present, they also have drawbacks that can hamper participation. Digital formats require a certain degree of technical equipment, media skills and self-motivation.
But enterprises believe that the need for continuing education has remained almost unchanged in the crisis. The KfW survey confirms that there is one field in which the need for continuing education actually grew strongly in 2020: digital skills. Just under half of SMEs (46%) had a medium or high need for training in this field at the beginning of the year 2021 – more than for core occupational skills (44%) or any other topic. The abilities covered by the expression “digital skills” range broadly from the use of computers/tablets and standard software through the use of social media, specialist software and digital production machines to programming skills and data science. In the crisis, basic digital skills that can be learned relatively quickly take centre stage.
“The coronavirus crisis really put the handbrake on in-company continuing education in 2020 because many companies do not have the money, time and planning certainty they need. Short-term measures aimed at stabilising turnover and liquidity take precedence. This is a challenge for the economy as a whole, especially because we are in the midst of a digital structural transformation”, said Dr Fritzi Köhler-Geib, Chief Economist of KfW. “Lack of skills in the workforce is one of the biggest barriers to digitalisation in the SME sector. One third of enterprises were facing a digital skills shortage already before the crisis. Without a significant increase in continuing education activities – ideally throughout the crisis – SMEs will lose competitiveness”, added Köhler-Geib. “Companies are more dependent on support for continuing education than before. Besides promotional loans and cost reimbursement, this could include tax benefits for continuing education expenditure that treats investment in human capital in the same way as investment in assets and permits depreciation.”
The current analysis by KfW Research is based on a supplementary survey performed as part of the representative KfW SME Panel, which was conducted between 12 and 22 January 2021. All enterprises that had already participated in an earlier wave of the KfW SME Panel and had provided a valid email address were surveyed online by GfK SE on behalf of KfW. Responses from a total of 2,800 enterprises were evaluated. As the survey was linked to the main database of the KfW SME Panel, the data collected enable a representative evaluation for the SME sector.