Grant for companies

Definition and description

Grant is a public funding (subsidy) to support company’s investment in education and training. Public resources may come from general taxation, the unemployment insurance or the social security system. When companies receive grants from a levy-based training fund, these are presented under ‘training funds’ in this database.

Grants subsidising company training operate within a complex environment. Companies typically do not pay solely for tuition fees on external training market, but provide training internally with the support of external trainers or by their own in-company trainers and within their own training facilities. Moreover, companies typically face the so-called personnel absence costs, as they might have to replace workers on training and face the foregone income related to productive work not being achieved when employees participate in training activities. It is therefore crucial to specify in detail which costs should be covered by the co-funding scheme.

A part of employer-financed training activities are either mandatory (as many health and safety training programmes are) or practically inevitable for the employers (as induction training for new employees in firm-specific software). Companies must provide these training activities and cover the incurred costs, but will usually not increase related activities beyond the level required. Another part of training in companies could be understood as deliberate investment, and corporations are expected to profit from the new skills and competences of their employees later on. Public co-funding for employer’s training costs mainly intends to co-fund continuing education and training seen as an investment, which should be increased by the incentives available.

The rationale for providing grants for company training includes:

• Providing an incentive for companies to increase training provision for their employees, either in general, or in relation to the particular types of training and development activities, and groups of employees. Incentives are provided to overcome less-than satisfactory levels of training investment. Companies may fail to provide a satisfactory level of training due to involved risks and the so-called externalities. Approaches for increasing the training provision by companies include project-based funding, where companies receive co-funding for innovation and development projects and for the training used for achieving the set goals. Some schemes are part of active labour market policies, allocating resources to companies for training and not dismissing their workers in times of economic downturn. Companies are targeted as the key beneficiaries, which are expected to expand training activities as a result of the co-funding offer and therefore profit from the returns of investment in training later on, implying higher levels of productivity, innovation and therefore economic success. Current public co-funding is expected to be balanced both by companies’ higher tax contributions in the future, and by the wider social benefits of increased participation in job-related continuing education and training.
• Using the company as a platform for reaching out to particular groups of adult learners and offering them on-site training opportunities. Examples include basic skills provision for low-skilled adults, on-site language courses for foreign employees or apprenticeship schemes for adults. The key beneficiaries are the targeted individuals, while the employers receive compensation for parts of the training costs. Instruments established within the active labour market policies (not fully in the scope of this database) include schemes providing funds for training to companies which employ former (long-term) unemployed. Current public funding is balanced mainly by increased future wages and reduced social security costs of the targeted participants. Further, returns on public investments may come from increased economic performance of the companies, becoming partners in the outreach activities.