State of the Region dialogue on the knowledge economy

The new state of the region process aims to engage with the region’s policy and decision makers on a range of key issues.

One of these is the knowledge economy. While UK demand for higher level skills is mediocre by international standards (with 28% of the working age population qualified to level 4 or above the UK was 11th of the 30 OECD countries in 2006), this is even weaker in the West Midlands. Less than 24% of those working in private sector industries in the West Midlands region had higher level skills and qualifications, well below the England average of 28%.

While the region’s public sector knowledge economy is well developed relative to other regions, with significant numbers of highly skilled employees working in education, health & social care and public administration, knowledge intensive private sector industries, like IT consultancy, IT manufacturing, R&D, medical technologies, aerospace and electronics, are poorly represented in the region.

Key issues

What needs to be done to strengthen the region’s knowledge economy?

A dialogue event held on 18th September 2008 was the first stage of the process, drawing together a wide range of participants to include policy decision makers and the regional research community. A lively debate ensued, with a range of issues raised:

The emphasis needs to be on progressing and up-skilling the 70% of the working age population already in work, which will have the greatest impact on the supply of higher level skills.

There are likely to be significant levels of commuting among knowledge workers, as well as home and mobile working. For example, many may work in urban parts of the region (where residents’ qualification and skill levels are low) but live outside the conurbation (where they are relatively high and sometimes above the national average). Traditional administrative boundaries are not really relevant and travel to work areas and/or ‘functioning economic geographies’ may be more so.

The role of manufacturing in the knowledge economy (especially in the West Midlands) needs to be recognised. While employment has fallen, GVA remains high and the sector is being transformed with more knowledge-based activity as basic manufacturing functions are transferred to cheaper locations overseas but value added activity is retained.

Lower value, ‘back office’ functions, that require predominantly lower/intermediate level skills is a key feature of the region’s financial and business services sector.

To encourage more of the region’s businesses to recruit graduates, marketing activity is required to stress the bottom line benefit and return on investment.

But it was also suggested that this may be negligible in the short term as ‘newly minted’ graduates need to acquire skills and experience first. Those who have taken a first job elsewhere (for example in London) and return at a later stage in their career may be more economically valuable.

Work to improve perceptions of the region as a place to invest and work is critical if businesses, jobs and skills are to be attracted here. There is a need to move away from negative, outdated stereotypes, often still reinforced by the national media, to the ‘new reality’.

Those that live and work here are more likely to be positive and be aware of the regeneration or renaissance of places like Birmingham but those from elsewhere or who have never been here are more likely to have a negative, outdated view. It was felt that clearer, more decisive, unified and confident leadership is needed (along the lines of the ‘team Manchester’ approach).

It was felt that improvements to the information infrastructure (notably fibre optic cable technology and next generation broadband) are critical to strengthen the knowledge economy. The Walsall Gigaport, where leading edge expertise from Aston University and Quinetiq is developing a USB for high speed internet, is critical in this.

A poor or fragmented understanding of the range of relevant expertise available from the region’s universities was highlighted. This is a key gap in the range of key assets we promote to potential investors in the region. There is a need to develop a database that demonstrates the breadth and depth of this expertise.

Data suggests that the productivity of foreign-owned businesses attracted into the region, while higher than indigenous businesses, is lower than that of foreign-owned businesses elsewhere in the country. It would be useful to identify the reasons for this.

What next?

Do you have any thoughts or comments on the above points? How can we encourage the development of a knowledge economy in the West Midlands?

Add a comment below and let us know!

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