Insight Magazine The Future of Work | Page 26

Rethinking Investment Such attitudes may seem intractable, but this report argues that the benefits of re-/ upskilling outweigh the costs to such an extent that companies should pursue it all the same. To do so more effectively, however, they may need to approach it differently. How? We believe one solution, to justify a focus on employee development, is for companies to rethink how they invest in re/upskilling and treat it during the accounting process. More specifically, we propose three alternative approaches for consideration, identified by The Adecco Group and supported by CFOs, senior finance professionals, public-sector executives, auditors, skill-development industry leaders and more. In parallel, we urge for a reconsideration of how taxation incentives for re/upskilling are applied, so that the credit to companies is not linked to corporation tax – as it is in many existing programmes – but instead recognised as a grant against cost, effectively making it visible above the tax line. Description Employers set up a seperate fund exclusively for re/upskilling. The employer and (potentially) the employee can contribute. Accounting approach Contributions to the fund by the emplyer are treated as an investment, which is amortised according to the difference between the total funds contributed and the total value of the fund at year end. Payments for re/upskilling are made by the fund, while retaining income from investment. What needs to change Contributions into a fund for the re/upskilling must be recognised as an investment. Description Businesses contribute to each employee’s personal, transferable training account, as established on the national level. Accounting approach N/A What needs to change Government-led, nationwide scheme. Minimum investment requirement for businesses. Description Employers pay for re/upskilling during the term of employment, in return for which employees commit to that employer for a set period (or repay). Accounting approach The initial cost is capitalised as an asset and amortised over the benefit period. It the employee resigns, the remaining unamortised cost will be repaid. What needs to change Re/upskilling must be recognised as an investment in an intangible asset.