The interaction between the growth of flexible forms of employment and employer funded training is important for understanding labour market performance. In particular, the idea of a trade-off has been advanced to describe potential market failures in the employment of flexible workers. This study finds that evidence of a trade-off is apparent in both the incidence and intensity of employer funded training. Flexible workers receive training that is 50–80% less intense than the workforce average. Casual workers – especially males – suffer more acutely from the trade-off. This suggests that flexible production externalities may seriously reduce human capital formation in the workforce.