Labour Market, Skills& Talent Project

Tyne & Wear City Region Economic Review

Stephen Nicol and Neil EvansEconomic Leads Group

6th July 2010

Focus of Study

Labour Market & Skills Performance

Q2 Travel to work patternsQ1a Concentrations of highly skilledQ8 Demand for higher level skillsQ3 Supply of skills & qualificationsQ1b Patterns & trends in worklessness

Population & MigrationQ4 Attraction of highly skilled workersQ5 Retention & loss of the highly skilled

Future Labour Market Prospects

Q6 Future demand for workers and skillsQ7 Meeting future skills needs

Policy ImplicationsQ9 Implications of labour market changeQ10 Options to address changes

Recent Labour Market & Skills Performance

Employment Growth

Strong jobs growth: +58,000 jobs 2000-08Narrowing of employment gap up to recession

3/4s jobs growth in Newcastle, Sunderland, Gateshead & North Tyneside

62

64

66

68

70

72

74

76

Empl

oym

ent R

ate

UK North East TWCR

Employment Rate 2000-09

6% difference3%

Nature of Change in Demand

Strong sectoral growth in public sector (+28K) & business services (+36k) 2000-08 Strong growth in higher skilled (+32k) 2005-09But growth in higher skilled skewed to Associate Profs & in public sector

Occupational Change2005-09Sectoral Change2000-08

-30,000 -20,000 -10,000 0 10,000 20,000 30,000 40,000

Land based

Utilities

Manufacturing

Construction

Retail

Hotels/Restuarants

Transportation

Financial

Business Services

Public Admin & Educ

Health and Social

-10,000-5,000 0 5,000 10,00015,00020,000

Managers & Snr Officials

Professional Occs

Assoc Prof & Tech Occs

Admin & Secretarial Occs

Skilled Trades Occs

Personal Service Occs

Sales & Cust Service Occs

Process, Plant & Machine Ops

Elementary occupations

Meeting Skill Needs

Population Strong working age population growth in historic terms (+34k or +3.3%)......prime age population fallen (- 1%) student numbers one of main drivers of overall growth

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

Prime Age Working Age

Change in Working Age Population, 2000-2008

Meeting Skill Needs

Change in Economic Activity, 2000-08

70

72

74

76

78

80

2000 2002 2004 2006 2008England North EastCity Regions Average England excl Gr SETyne & Wear City Region

-35,000 -15,000 5,000 25,000 45,000

Bristol City Region

Leeds City Region

Nottingham City Region

Manchester City Region

Sheffield City Region

TWCR

Liverpool City Region

Glasgow City Region

Change in total claimants

Sick and Disabled

Unemployed

Lone Parents

Other

Change in Claimants, 2000-08

Economic Activity & WorklessnessType of jobs growth helped to drive down worklessnessLargest falls in close proximity to centres of jobs growth Economic activity also driven up Some of gains lost since mid 2008 (JSA in particular)

Meeting Skills Needs

Skill Shortages and GapsTWCR able to meet most skill needs during expansion

Fewer shortages at higher skill levelMain shortages at craft, sales, admin and lower skill levelsFewer hard to fill vacancies except at lower skill levels

Skills gaps amongst higher skilled are low (4% of not fully proficient, England av= 20%)Overall, good match between supply & demand in TWCR

TWCR’s Labour Market for Higher Skilled Workers

Concentrations of Highly Skilled

Strong growth in KBIs in TWCR during decade

concentrated amongst public sector and......lowest private sector KBI employment of all CRs

Growth in demand for highest skileld greates in Assoc Prof & Tech (SOC 3)

Financial services (back-office functions) and lower value business servicesStrong growth in demand from public sector

% employment in highly skilled occupations (SOC 1-2) lags behind all comparator CRs except SheffieldTWCR making progress but gap with best not closing

Percentage of Employment in SOCs 1-3, 2008

26.8%

17.8%20.7% 19.7%

16.4%19.0% 20.4% 21.3%

15.2%

0%

10%

20%

30%

40%

50%

60%KBI KBI excl Public Sector

Managers & Snr Officials

Professional Occs

Assoc Prof & Tech Occs SOC1-3

Bristol CR 16.9% 14.5% 16.2% 47.6%Manchester CR 15.9% 12.7% 13.8% 42.4%Glasgow CR 13.6% 13.4% 15.4% 42.4%Liverpool CR 13.2% 12.7% 15.1% 41.0%Leeds CR 15.2% 12.3% 13.2% 40.7%Nottingham CR 14.6% 11.9% 14.0% 40.5%Tyne & Wear CR 12.9% 11.5% 13.8% 38.2%Sheffield CR 13.9% 10.4% 13.1% 37.4%

Percentage of Employment in KBI, 2008

Concentrations of KBI Jobs

KBIs main source of demand for higher skills Growth of KBIs relatively dispersed across TWCR, including key out of centre locationsNewcastle dominates recent growth

...but lower overall % than cores of most city regions

North Tyneside emerged more recently – public sector dominated

The Higher Skilled Labour Market

TWCR in middle tier in terms of numbers of highly skilled ...only Leeds and Manchester have larger pools

Increase of 37,000 higher skilled in TTWA between 2001-08Whilst a degree of catch-up, TWCR persists with slightly lower density rate

 

HMPs 2001

(Census)

HMPs 2008 (APS)

Density 2008

Change no

Change %

Change in Density (%

points)

Manchester CR 326,800 391,700 28% 64,900 20% 2.7

Leeds CR 226,800 286,100 27% 59,300 26% 2.6

TW CR 133,300 170,300 25% 37,000 28% 3

Bristol CR 129,800 170,700 31% 40,900 32% 3.6

Liverpool CR 102,800 124,100 25% 21,300 21% 2.6

Nottingham CR 102,000 122,500 27% 20,500 20% 1.5

Sheffield CR 83,500 106,200 26% 22,700 27% 3.4

Attraction of Highly Skilled Workers

TWCR good at retaining local graduates in jobs – but under-utilisation issueIn-migration to TWCR changed little 2001-08Net out-migration of higher skilled in 2001, ...but evidence suggests this may have reversed more recently (perhaps driven by returning graduates)

Graduate Attraction and Retention

Location of Degree Study

Domicile Retention Rate

2002/03 2007/08

Studied in TWCR 

TWCR domicile73% 66%

Elsewhere in UK20% 17%

    Attraction Rate

Studied Elsewhere TWCR domicile 36% 30%

Elsewhere in UK0.2% 0.2%

Total 1% 0%

Future Labour Market Prospects

Future Demand for Workers & Skills

We have drawn on recent CE forecasts for the North East 2009-2015 and 2030Paint a picture of jobless growth; 3% fall in employment 2009 (loss of 32k) to 2015 (but 11% increase in GVA)Have attempted to apply to T&W CR by sector and then occupationModest change in most occupations resulting from sectoral growth, bigger changes driven by occupational trends within sectors

Net Skills Demand

Changes in demand for skills within sectors more important than sectoral change as skills driver

Net growth 8k (5%) in prof./managerial occupationsSubstantial falls in admin. Sectors (-13%)

-15,000 -10,000 -5,000 0 5,000 10,000

Managers & Senior Officials

Professional

Associate Professional & Technical

Administrative & Secretarial

Skilled Trades

Personal Service

Sales & Customer Service

Process, Plant & Machine

Elementary Occupations

Net change in jobs, 2009-2015

Sector effect

Occupn. effect

Overall change

Replacement Demand

But continued replacement demand......typically each occupation needs 3.5% to 4.0% of jobs to be filled every year by new entrants

This demand dominates net change in all occupations

0 5,000 10,000 15,000 20,000 25,000

Managers & Senior Officials

Professional

Associate Profl & Tech

Administrative & Secretarial

Skilled Trades

Personal Service

Sales & Customer Service

Process, Plant & Machine

Elementary

Total Replacement Demand 2009-15

Public Sector Cuts Scenario

Various estimates of Impact: NE baseline forecast assumes jobs reduction of 9% (public admin), 4% education and 3% health (2009-2015) – loss of 10k jobsWork Foundation suggests 33k for NE out of UK total of 750kApplying latest OBR figure to T&W gives c.20k lossesApplying 25% reduction to all public sector bar health gives c.30k losses

Public sector cuts most adversely affects higher level skills and admin occupationsNote: at this stage excludes knock on effects

-10000 -8000 -6000 -4000 -2000 0

Managers and Senior Officials

Professional

Associate Professional

Administrative and Secretarial

Skilled Trades

Personal Service

Sales and Customer Service

Plant and Machine Operatives

Elementary Occupations

Public Cuts Scenario

OBR

25% cuts

Policy Implications

Short Term

Supply likely to exceed net demand, probably at most occupational levels

Actions required around labour market adjustment: Short term unemployedRedundant & vulnerable workers in public & private sectorsRetaining better skilled in city regionFocus on key labour markets groups (young, disadvantaged)

Pursuing demand side actions:Sectors & employers with large short term expansion/replacement demand

Supporting actions: In absence of RDA Response function, how will action be coordinated?

Medium and Longer Term

Agglomeration & density Sizeable pool of higher skilled – potentially good

proposition But domination of public sector & thin in private KBIs Thin at top end of higher skilled pool Longer term transport and access issues

Higher skills largely a demand side issue in TWCR Scope to stimulate enterprise and business growth

Stimulating enterprise amongst higher skilled redundant public sector workers (‘Public Sector Co. Enterprise’)

Graduate enterprise opportunities Continuing inward investment opportunities eg shared

services centres Smaller scale opportunities around niche sectors But need 4-5 stellar growth KBI employers

Improving skills of residents On-going need for skilled workers at all levels General need to push ahead in raising skills & a more

demand responsive system

Quality of life and related assets TWCR does very well in attracting/retaining students But does it have quality of life (esp housing) offer to

attract full range of higher skilled? Necessary but not sufficient condition

Worklessness Addressing long term legacy of recession/expenditure cuts Accessibility between geographically dispersed pockets of

high worklessness & out of centre employment locations