Skills needed to kick start the West Midlands economic recovery

While there are tentative signs of an upturn in the labour market, with more firms looking to recruit new staff and invest in training, the economic recovery is expected to be weak and protracted.

Headline regional GVA is not expected to begin to rise until 2010 and an upturn in employment is not expected until 2012:

Chart showing annual percentage change in employment and GVA forecast for the West Midlands 2007-2016

Chart: Base forecast: West Midlands trends in employment and value added. Source: Observatory Integrated Policy Model. View full size chart (png, 18kb).

High technology sectors can kick start growth

There is an opportunity to boost the pace and strength of the region’s recovery by focusing public investment in emerging high value added sectors that are part of the Government’s New Industries, New Jobs agenda.

These include high technology manufacturing, ICT, environmental technologies, digital media and medical technologies.

While these sectors and clusters have gained a foothold in the West Midlands, so far they only account for a limited share of employment and GVA.

But many businesses are in a position, providing that they have access to the right skills, to exploit a range of business and market opportunities.

There is also an opportunity to exploit the considerable expertise and research capability available at a number of the region’s universities.

Diagram plots employment growth 2001 to 2007 with share of employment in 2007

Diagram: employment growth/share matrix for the West Midlands. View at full size (png, 17kb).

The role of skills

While there is no automatic relationship between skills and productivity, skilled people are one of the building blocks of successful businesses.

Skilled workers can carry out more complex tasks, work more effectively and produce higher value products and services.

They are also better at adapting to changing working environments, enabling firms to respond better to changing global competition and technology. This tends to be particularly effective when businesses use these skills in combination with investment in innovation and technology.

Meeting the skill needs of high technology firms

In particular, to move into higher value added products, services and markets businesses need skills to help them exploit new technology, adapt to new legislation (notably relating to low carbon and sustainability issues), meet the demands of an ageing population and satisfy ever more demanding consumers.

In particular, there will be a growing need for higher level technical skills specific to sectors, industries and individual businesses and for inter-personal skills such as communication and working in teams, problem solving and customer service.

These issues will be explored in more detail in the Observatory’s 2009 Regional Skills Assessment, which will be published on our website in early February 2010.

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