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Labour Market, Skills & Talent Project

Tyne & Wear City Region Economic Review. Labour Market, Skills & Talent Project. Stephen Nicol and Neil Evans Economic Leads Group 6 th July 2010. Focus of Study. Labour Market & Skills Performance Q2 Travel to work patterns Q1a Concentrations of highly skilled

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Labour Market, Skills & Talent Project

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  1. Tyne & Wear City Region Economic Review Labour Market, Skills& Talent Project Stephen Nicol and Neil Evans Economic Leads Group6th July 2010

  2. Focus of Study Labour Market & Skills Performance • Q2 Travel to work patterns • Q1a Concentrations of highly skilled • Q8 Demand for higher level skills • Q3 Supply of skills & qualifications • Q1b Patterns & trends in worklessness • Future Labour Market Prospects • Q6 Future demand for workers and skills • Q7 Meeting future skills needs • Population & Migration • Q4 Attraction of highly skilled workers • Q5 Retention & loss of the highly skilled • Policy Implications • Q9 Implications of labour market change • Q10 Options to address changes

  3. Recent Labour Market & Skills Performance

  4. Employment Growth • Strong jobs growth: +58,000 jobs 2000-08 • Narrowing of employment gap up to recession • 3/4s jobs growth in Newcastle, Sunderland, Gateshead & North Tyneside Employment Rate 2000-09 3% 6% difference

  5. Nature of Change in Demand • Strong sectoral growth in public sector (+28K) & business services (+36k) 2000-08 • Strong growth in higher skilled (+32k) 2005-09 • But growth in higher skilled skewed to Associate Profs & in public sector Sectoral Change2000-08 Occupational Change2005-09

  6. 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 Change in Working Age Population, 2000-2008

  7. Meeting Skill Needs • Economic Activity & Worklessness • Type of jobs growth helped to drive down worklessness • Largest falls in close proximity to centres of jobs growth • Economic activity also driven up • Some of gains lost since mid 2008 (JSA in particular) Change in Economic Activity, 2000-08 Change in Claimants, 2000-08

  8. Meeting Skills Needs Skill Shortages and Gaps • TWCR able to meet most skill needs during expansion • Fewer shortages at higher skill level • Main shortages at craft, sales, admin and lower skill levels • Fewer 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

  9. TWCR’s Labour Market for Higher Skilled Workers

  10. 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 services • Strong growth in demand from public sector • % employment in highly skilled occupations (SOC 1-2) lags behind all comparator CRs except Sheffield • TWCR making progress but gap with best not closing Percentage of Employment in KBI, 2008

  11. Concentrations of KBI Jobs • KBIs main source of demand for higher skills • Growth of KBIs relatively dispersed across TWCR, including key out of centre locations • Newcastle dominates recent growth • ...but lower overall % than cores of most city regions • North Tyneside emerged more recently – public sector dominated

  12. 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 2001-08 • Whilst a degree of catch-up, TWCR persists with slightly lower density rate

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

  14. Future Labour Market Prospects

  15. Future Demand for Workers & Skills • We have drawn on recent CE forecasts for the North East 2009-2015 and 2030 • Paint 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 occupation • Modest change in most occupations resulting from sectoral growth, bigger changes driven by occupational trends within sectors

  16. 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 occupations • Substantial falls in admin. Sectors (-13%)

  17. 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 2009-15

  18. 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 jobs • Work Foundation suggests 33k for NE out of UK total of 750k • Applying latest OBR figure to T&W gives c.20k losses • Applying 25% reduction to all public sector bar health gives c.30k losses • Public sector cuts most adversely affects higher level skills and admin occupations • Note: at this stage excludes knock on effects

  19. Policy Implications

  20. Short Term • Supply likely to exceed net demand, probably at most occupational levels • Actions required around labour market adjustment: • Short term unemployed • Redundant & vulnerable workers in public & private sectors • Retaining better skilled in city region • Focus 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?

  21. 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

  22. 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

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