The multiple risk factors of worklessness

By isolating the ‘risk factors’ and certain combinations of ‘risk factors’ associated with a person’s chance of being out of work, new analysis from the West Midlands Observatory can help decision makers get to grips with the complex interplay of issues behind the current high rate of worklessness across the West Midlands.

The research is already informing the Department for Work and Pensions in its review of welfare policy, as it provides insights into the major factors influencing a person’s chances of being in or out of work. It shows that these chances can vary greatly according to the individual’s background and personal characteristics. The research demonstrates how combinations of factors such as having no formal qualifications or a long-term health problem or disability, or being a lone parent, affect a person’s chance of being out of work.

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West Midlands sees large fall in unemployment

The latest regional labour market statistics (zip, 2.9mb), released by the Office for National Statistics, show a large quarterly fall in the unemployment rate in the West Midlands, down 23,000 people to 230,000 (8.6%) in the quarter to May. This is the largest fall of any English region.

Unemployment in the West Midlands rose sharply at the beginning of the recession and peaked in April to June 2009 at 284,000 people or 10.5% - the highest unemployment rate of any English region.

Since then, unemployment here has fallen, whereas other regions have continued to see a rise. The West Midlands now has the fourth highest unemployment rate of English regions.

There’s also been a fall in the number of people claiming Jobseeker’s Allowance, the unemployment benefit. The number of claimants in the West Midlands fell to 159,800 in June, a fall of 2,800 people. This is a smaller decrease than in previous months but is 24,800 claimants fewer than the peak in October 2009.

Within the West Midlands, nearly all local authorities have seen a fall in the number of people claiming Jobseeker’s Allowance over the last year. The biggest decreases have been in areas like Cannock Chase and Redditch which saw large increases in Jobseeker’s Allowance rates at the beginning of the recession.

Our interactive map shows how Jobseeker’s Allowance rates differ between local authorities.

The fall in unemployment has been accompanied by a rise in employment. The employment rate in the West Midlands is now 71.2% with 31,000 more people in employment than in the previous quarter.

Nationally the rise in employment was largely due to a rise in the number of part-time workers. Data on part-time workers at regional level is only available up to September 2009 (national data are for the quarter to May 2010) but does show that the number of part-time workers in the West Midlands increased during the recession even though the number of people in full-time employment fell.

More information on changes to the labour market during the recession are available in our economic inclusion annual report 2010 (pdf, 929kb).

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Open data: challenges and opportunities

Photo by Andy Mabbett - @pigsonthewing

A star sudded cast of “Open data heroes” graced our event, Open data: Challenges & opportunities, yesterday. Following clear intentions expressed recently by David Cameron and Eric Pickles on opening up public data, it was clear that this was a well timed (and hopefully useful) event. Thanks to everyone who spoke and attended the event – a really great day. Special thanks to Andrew Mackenzie (@djsoup) and Richard Wilson (@rcw1969) for all the help pulling it together.

I was struck by a number of people passionate about using data to make a difference to their community or local area. From Will Perrin’s use of public data on his Kings Cross Environment site to fix street lights, combat drug dealing and remove abandoned cars through to local council officers such as Stuart Harrison at Lichfield District Council using innovative techniques, such as “My Area“, to help people access data from a number of sources.

For now, our Pageflakes page pulls together a lot of the content from the day. Some of the speakers have already shared their presentations (via Slideshare) and they are accessible through pageflakes. We’ll sift through and pull out useful links and information over the next week and will post an update here.

For those that were at the event, or following on twitter via #wmod10, can I encourage comments below on practical steps we might take to move ideas from yesterday forward. In particular, ways that the more able authorities and organisations might be able to help the less able, through sharing tools and techniques with the wider public sector. We discussed writing a crowd-sourced report directed at high level policy makers sharing ideas and practical ways forward.  Do you think this is the best approach? What else did you pick up on? Let’s keep the discussion going.

Transformational change can generate substantial new jobs in West Midlands over next five years

The pace of economic growth in the West Midlands over the next five years is forecast to be modest. Only 11,000 net new jobs (representing growth of 5% in total employment) are expected to be created between 2010 and 2015.

However, the Observatory’s new report The West Midlands economy post recession: key issues and challenges (pdf, 844kb) includes scenarios illustrating the benefits for the West Midlands in terms of new job creation — if action is taken to support fundamental, transformational change.

Scenario one: up-skilling the workforce within existing businesses

If workforce skill levels in the West Midlands were raised to match the England average, it’s estimated that net increase in employment over the next five years would almost double to around 21,000 jobs.

The main beneficiaries would be sectors where skill gaps and shortages act as a significant constraint on growth, such as:

  • ICT
  • High value added business & professional services
  • Wholesale & retail distribution
  • Transport

Scenario two: up-skilling plus diversification of the economy

If more businesses in higher value added sectors and clusters were also attracted to the West Midlands, such that their share of GVA matched the England average, the impact would be much more significant with the creation of more than 200,000 net new jobs.

High value added activities such as high value added business & professional services (where more than 100,000 net new jobs would be created) and ICT (30,000 net new jobs) are notable beneficiaries.

There would also be modest increases in employment levels in engineering (nearly 3,000 net new jobs) and manufacturing (nearly 6,000 net new jobs).

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Read more about the future of the West Midlands economy in our report:

Only modest economic growth is forecast for the West Midlands over the next 5 years

A continuing under–representation of higher value added sectors means that the pace of economic growth in the West Midlands over the next five years is forecast to be modest.

Gross Value Added (GVA)

The Observatory’s new report The West Midlands economy post recession: key issues and challenges (pdf, 844kb) forecasts GVA to grow by just 11% (£9 billion) between 2010–2015. This compares with growth of 15% (£11 billion) between 2000–2007.

While the pace of growth is forecast to be strongest in higher value added private sector activities (such as ICT & telecoms and high value added business & professional services), they account for only a limited share of GVA. Growth is expected to be much weaker in sectors that dominate the regional economy such as lower value added, traditional private sector activities and the public sector.

Geographically, GVA is forecast to grow most strongly (by some 13% between 2010–2015) in areas identified as those with potential to lead the region’s recovery such as Solihull, Warwick and Stratford-on-Avon.

The weakest growth (less than 9% over the period) is expected in areas identified as having long-term issues that may inhibit recovery such as Wolverhampton, Walsall, Stoke-on-Trent and Sandwell.

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Recovery from the recession remains fragile in the West Midlands

According to recent research by the Observatory, recovery from the recession has been fragile. After rising in the second half of 2009, recruitment activity faltered in the early months of 2010.

Geographically, the areas expected to experience the most fragile economic recovery in terms of growth in GVA and jobs are traditional industrial areas, such as the Black Country and Stoke-on-Trent. These areas have historically been dependent on industries such as engineering, manufacturing and construction.

Recovery is expected to be strongest in areas clustered in the south and east of the West Midlands, in Solihull and Warwickshire. These areas benefit from a strong presence of high value added knowledge-based industries,  good communication links and environmental quality.

The pace of economic growth in the West Midlands over the next five years (2010–2015) is forecast to be modest. GVA is forecast to grow by 11% (£9 billion) over the period. This compares with growth of 15% (£11 billion) between 2000–2007.

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Weaknesses in the West Midlands economy act as a drag on future prospects

There’s a need to drive sustainable economic growth in the West Midlands, which in turn can foster the investment and business success that will create job growth. This requires giving priority to growth sectors and the development of a world class skills base.

However, the Observatory’s new report, The West Midlands economy post recession: key issues and challenges (pdf, 844kb), highlights continuing under representation of higher value added sectors.

Lower value added private sector activities such as low value business services, wholesale and retail, hotels and catering, and cultural, recreational and sporting activities make a particularly significant contribution to the regional economy. These account for more than half of GVA and employment.

Share of employment in the West Midlands by broad sector in 2008

Share of employment in the West Midlands by broad sector in 2008

Source: Office for National Statistics Annual Business Enquiry
Share this chart | Data on Google Docs

Traditional private sector industries such as engineering and transport technologies, other manufacturing activities such as the interiors and lifestyle, and food and drink clusters, construction and building technologies also make a significant contribution. So do public sector activities such as public administration, education, and health and social care.

These sectors are an important source of jobs for people with fewer skills and can play a key role in reducing worklessness and economic and social deprivation.

But reducing the dependence of the West Midlands economy on these activities and attracting and developing more businesses in higher value added sectors such as higher value added business & professional services, environmental technologies, digital media and medical technologies is key to improving the West Midlands’ economic performance and generating more new highly skilled jobs.

However, to date, these sectors have generated only limited levels of GVA and employment.

As a result, the private sector in the West Midlands has grown relatively slowly in recent years. Between 1998–2008 employment increased by just 30,000 (growth of 2% which compares to an increase of 19% across the UK as a whole).

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