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.