Poorly educated staff cost £10bn a year, CBI warns

One in three businesses are being forced to send staff for remedial lessons in basic literacy and numeracy because schools have failed to teach them to read, write or add up properly, business leaders warned yesterday.

Poor standards are costing the economy £10bn a year, and could see jobs lost to China and India if skill levels among workers do not improve, according to a government-commissioned report by the CBI.

The findings came as teenagers prepared to receive their GCSE results on Thursday. Figures last year showed less than half of students passed five GCSEs at grade C or better. Employers condemned the standard of spelling, grammar, handwriting and oral communication, warning that many staff cannot "string a sentence together", write a report, read safety instructions or speak to customers properly.

Many staff do not know their times tables or understand percentages, making them a liability for their employer when they are giving change to customers or calculating discounts.

Firms have lost faith in GCSE exams because they have seen so many employees with exam passes who are unable to function properly in the workplace, Richard Lambert, the CBI's director general, warned.

"Employers' views on numeracy and literacy are crystal clear," he said. "People need to be able to read and write fluently, and to carry out basic mental arithmetic. Far too many school leavers struggle.

"The fact that one in three employers ran remedial courses for their staff in the last year is a sad indictment of how the education system has let young people down. Acknowledging the problem and commissioning this report are first steps but the Government must show a far greater sense of urgency and purpose."

Firms also expressed concern about declining practical skills. One employer commented: "We'll soon have a nation of people unable to put up shelves." They also criticised young people's social skills and their "general attitude", warning that many were ill prepared for the workplace. Too many don't turn up on time, look scruffy, and communicate only in "grunts", they warned. One employer complained that young applicants turned up for interviews in track suit bottoms and training shoes.

Ministers have promised a renewed drive to improve literacy and numeracy among 16-year-olds. The CBI surveyed 140 member companies and conducted detailed studies of 19 for the report, Working on the Three Rs, which was sponsored by the Department for Education and Skills.

Jim Knight, the Schools minister, said plans were underway to tackle employers' concerns. Trials will begin in the autumn of new GCSE modules that will examine whether students have mastered the "functional" literacy and numeracy skills that they will need.

The present system allows pupils to get a pass in English or maths without mastering some important skills, as long as they get enough points overall. Under the new system this will no longer be the case.

"In the future, employers will have a guarantee of the quality of the school leavers they are taking on," Mr Knight said. "A good pass in future will mean young people are equipped with the basics and know how to apply them - that means being able to write and speak fluently, carry out mental arithmetic, give presentations, and tally up a till. This is what they are calling for and this is what we will deliver."

However, the CBI report expressed concern about the new tests. Employers called for candidates' marks in these tests to be released to employers, as well as their grades. They said it was vital they knew which recruits scraped through and which had "sailed through".

They also warned against multiple choice tests, saying this would allow candidates with poor writing skills to escape detection.