Directors call for retraining tax breaks to prepare UK for ‘post-Brexit labour market’

Companies and individuals should be offered incentives in the form of retraining tax breaks to prepare the United Kingdom’s labour market for a post-Brexit world.

So urge the Institute of Directors (IoD) in a paper titled “Education for an Evolving Economy” that forms the fifth of a series of manifestos that makes several recommendations for the government that will be in place following the general election on 8 June.

The IoD make reference to the fact that the Conservative Party has announced it would give workers more time off for training.

retraining tax breaks - app developer - pixabay-787980App developer is an example of a job that barely existed 10 years ago, and now, half of the adults in the world have smartphones. Image: pixabay-787980

The business body – which represents 30,000 business leaders in the UK – says such regulation needs to be matched with financial incentives that make it easier for employers and workers to invest in training.

Two types of retraining tax breaks

They say there should be two types of retraining tax breaks: one aimed at companies and another aimed at individuals.

Companies should get tax relief on corporation tax for spending money on training, and individuals who want to learn new skills or re-train for new industries should have a higher personal allowance thresholds for income tax.

The IoD say that the tax incentive for individuals is particularly important for those workers who need to adapt to the effect that increasing automation and digital technology is having on the workplace.

Many of today’s jobs did not exist 10 years ago

Whether the half-life of a learned skill really is as short as 5 years (that is, half the skills we learned 5 years ago are now obsolete), few would deny that the pace of change certainly feels that way. Half-life refers to how long it takes before something’s impact has declined by 50%.

In a 2015 human capital outlook report, the World Economic Forum predicts that the employment landscape is going to change profoundly over the coming years. Jobs will be displaced as new jobs are created; there will be a drive for higher productivity, and the skills gap will get wider.

The report cites one estimate that suggests 65 percent of children now entering primary education will be working in jobs that do not yet exist.

In many countries and industry sectors, there are many jobs that did not even exist 10 years ago. Consider, for example, the following list:

– App developer (the iPhone arrived in 2007, and now nearly half the adults in the world have a smartphone)
– Uber driver (founded in 2009, the world’s most valuable app-based start-up is now worth over $62bn)
– Cloud computing specialist (the term “cloud computing” was first mentioned in a conference in 2006)
– Social media manager (social media are now indispensable marketing tools, especially for consumer brands)
– YouTube “vlogger” (some of the top stars are attracting large amounts of money in sponsorship and advertising)
– Drone operator (the global market for drones is growing rapidly, creating jobs for operators)
(source: WEF)

Marketing tools are tools that businesses use to boost sales. Most companies use multiple tools simultaneously.

Education needs to match changing pace of labour market

In their business manifesto, the IoD set out the economic challenges that the next government will face, many of them shaped not only by technological and demographic change, but also by Brexit.

In addition to retraining tax breaks, the IoD also call for:

– School curricula to be decided by independent bodies and not by politicians and made more relevant to needs of the labour market
– Work experience to be made mandatory
– All pupils to have access to a full-time career coach
– Better collaboration between industry and education
– More focus on pressing concerns like the shortage of teachers and less on distractions like creating extra grammar schools

Seamus Nevin, IoD Head of Employment and Skills Policy, says:

“As we find ourselves at a political crossroads, there is a real opportunity to make the right changes, not only to fix the current skills gaps, but also pre-emptively deal with future changes to the labour market. There are a number of challenges, however, so the next Government will have to use all of the tools at its disposal across the education, tax and regulatory systems.”