Executive summary
Small and medium-sized enterprises (SMEs) constitute a large part of the economy in all OECD countries. To remain competitive and adaptable to the challenges brought about by globalisation, technological progress, demographic and climate change, SMEs must maintain and expand their access to skills and talent.
Despite this imperative, SMEs often experience severe shortages of skills and in particular digital talent. They are less successful in attracting and retaining skilled workers; they face higher direct and indirect costs of training the workforce; and they tend to lack information on the state of the labour market and the available training opportunities and support mechanisms. Public intervention is therefore needed to facilitate training in SMEs and greater access to the existing talent pool, above and beyond the support given to large firms.
Drawing from national examples across Europe, this report identifies policies and programmes that have proved successful in supporting SMEs’ investment in skills, highlighting implementation features, governance structure, and other success factors. The overview table at the end of this section summarises the measures identified as good practices, and classifies them into four main groups, depending on the barrier they help overcome, and the financial or non-financial nature of the initiative.
Financial incentives are aimed at lowering the costs of training employees and hiring talent. Among the financial incentives that governments can mobilise, subsidies and vouchers are the most used and suitable instrument to target SMEs. Schemes can target small employers exclusively or provide them with more comprehensive or greater support or simplified procedures. Subsidies are flexible, and can easily be tailored to respond to specific needs and target groups, but should be designed to minimise the administrative burden for employers. Vouchers, in particular, are scalable and transferrable.
Pay-back clauses, which make employees liable for some or all of the costs of their training if they leave their employer within some stipulated period, are non-financial measures that strengthen firms’ incentives to offer train by decreasing the risk associated with poaching. To be effective, they need to strike a good balance between the employee’s right to move across jobs, and the employer’s need to recover the training expenses incurred. They must include clauses in case the training participant is insolvent, and spell out in detail the content of the training and the provisions for extra-judicial settlement.
Learning on the job is the most common form of training but it is mostly not formally recognised. Encouraging its recognition not only helps employers and workers to reap its benefits but also allows policy makers to support it financially. Job rotation schemes, albeit relatively rare in micro and small-sized firms, can also support the informal sharing of knowledge among peers of different units or functions, while benefiting the firm as a whole.
Skill Assessment and Anticipation (SAA) services are used to assess the firm’s skills gaps relative to current and future needs. They can be offered by operators such as Public Employment Services, learning networks or consultants. They can also be developed in-house by SMEs with public support. Diagnostic tools for SAA are affordable and can be implemented through simple online employee surveys. The promotion of modern HR systems, High Performance Working Practices and other forms of workplace innovation usually combine co-funding or sharing of costs to implement workplace interventions with other services, including guidance and knowledge and best practice dissemination.
The attitude of managers and entrepreneurs towards learning in the firm is also crucial in the firm’s investment in skills. Investing in the competences of managers and entrepreneurs, and their understanding of human capital as a productive investment, can therefore enhance SMEs’ growth and survival. Coaching, mentoring and peer learning among managers promote knowledge sharing and transfer, and build on concrete practices from successful entrepreneurs. Firms, however, also require operational support when it comes to implementing solutions. Measures that combine peer learning and individual support services, for example through subsidised consulting or coaching services, seem to be best placed to support investment in the key competences for the digital transformation.
Co-operation among companies and between companies and other stakeholders allows for the pooling of resources, economies of scale, and the building of a critical mass in the demand for training that decreases the per-worker cost of training. Learning and training networks often provide companies with subsidies for the development of the networks, subsidies for the training activities themselves, guidance on financial incentives available to cover the costs of training, or direct expertise through public skills assessments.
Similarly, the promotion and strengthening of skills ecosystems and of partnerships between companies, e.g. via competence centres, can be successful in promoting digitalisation and knowledge transfers to SMEs. The centres are one of several effective measures facilitating the creation of skills ecosystems.
While available, these policy instruments are not all equivalent in their take-up by SMEs, nor in their ability to successfully increase investment in skills in SMEs. Existing monitoring and evaluation data for these policies, albeit not frequently available, suggest that many of the described policies reach an overall limited share of the potential SMEs. If this is the result of a complex set of economic and institutional factors that falls outside the scope of this report, the joint analysis of good practices allows identifying a number of common elements of policy design, which can increase the take-up and effectiveness of such policies.
Participation and satisfaction about reskilling initiatives are higher when the administrative burden is low, and when there is certainty of funding.
For financial instruments, the generosity of the funding received is an incentive to participation, but private-public co-funding or cost-sharing models remain the most effective and most common.
Larger investments in skills can be obtained by factoring-in the indirect costs of training, and informal learning activities besides formal and non-formal ones.
Many programmes combine financial and non-financial support, as this can increase the uptake and raise the return on the financial support. Non-financial tools help firms that do not recognise the need to invest or are uncertain about how to set up the investment.
Programmes should respond to specific needs of individual companies. Measures that include good-practices and knowledge sharing are therefore most suitable for SMEs.
Policies should allow for flexible delivery, especially for the training of managers, which can be achieved with modular courses and online training.
Open and proactive communication between companies and the agencies managing training support measures increases the take up of these measures by SMEs. Indeed providing accurate but accessible information on the availability and functioning of the policy instrument is a key component of the policy’s success.
Strategies to increase participation in networks with other companies or other stakeholders include awareness raising activities, early and personal contact with companies, and peer learning activities for managers and entrepreneurs.