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Firm-Level Returns to Employer-Sponsored Training

Firm-Level Returns to Employer-Sponsored Training

Since 2010, the number of employer-sponsored training places with funding support from SkillsFuture Singapore (SSG) has seen a general uptrend. This partly reflects the result of the Government’s ongoing effort to encourage employers to support their employees for training.

While previous studies have established positive returns to training for individuals in Singapore, this study represents our first attempt to examine the returns that accrue to firms from sponsoring their employees for training. Specifically, the study examines the impact of employer-sponsored training on firms’ revenue, local employment, labour productivity and retention of local employees.

Our results show that there are positive returns to firms from sponsoring their workers for training. In particular, we find that for a 10 percentage-point increase in the proportion of local workers sponsored for training by firms, firms’ annual revenue was 0.7 per cent higher on average over a four-year period (i.e., in the year of training and three years after training), while their local workforce was 0.5 per cent larger on average over the four years. The increase in revenue and local employment could have come about because the training had enabled firms to expand the scale of their operations, possibly by improving the efficiency and capability of their workers. Reflecting the latter, we find evidence that even as the firms increased their local workforce, they also experienced improvements in labour productivity (2.2 per cent on average over two years). Meanwhile, investments in worker training was found to improve firms’ retention of their local employees (0.6 percentage-point in the year of training).

The positive returns from employer-sponsored training suggest that it will be beneficial for firms to invest in the training of their workers. On its part, the Government will continue to support employers in their workforce development journey.

The views expressed in this paper are solely those of the authors and do not necessarily reflect those of the Ministry of Trade and Industry, SkillsFuture Singapore or the Government of Singapore.

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