Earnings inequalities in rural areas are significant and growing

Aerial shot of rural WorcestershireNew evidence from the Observatory’s Rural Skills Assessment (PDF, 0.5MB) has revealed that the gap between the average wage being earned in rural areas of the region and the average wage of the residents living in those areas is significant and growing.

The findings show that rural residents are earning, on average, far higher wages than are paid in local jobs.

The rural West Midlands as a whole shows a gap of over £3,000 per annum.

This trend is strongest in the most remote parts of the region, designated by DEFRA as Rural 80 zones, where over 80% of the district’s population live in a rural setting or local market town. In these areas the latest data shows a gap of nearly £6,000 between average resident earnings and the average wage paid locally.

One example demonstrates how the trend is developing: 1 in 3 households in South Shropshire is home to a resident of Director level, and yet 50% of the working population earns less than two thirds of the average wage.

This suggests that large numbers of rural residents are increasingly travelling away from their home areas to work, and analysis indicates that this is predominantly in higher skilled, higher value-added occupations.

The percentage of rural residents working in managerial or professional roles is considerably higher than their urban counterparts. For example, in 2008 17% of rural residents were senior managers compared to 13.5% of urban-resident workers.

Proportionally, there are more higher-skilled managers and professionals living in rural areas, but the jobs requiring those skills are mainly located elsewhere.

In contrast, local jobs in rural areas are predominantly lower skilled, lower value-added jobs such as service industry occupations, distribution and retail.

These trends are reflected in the relatively low GVA per worker levels in the region’s rural counties, examples being around £33,000 in Staffordshire and £34,000 in Worcestershire against a national average of nearly £39,000.

One of the reasons for this, cited in the Regional Skills Partnership Cross Region Research Group’s Skills and Rurality report, could be a lack of demand for higher level skills in rural workplaces. This, combined with poor or infrequent transport links which limit both labour market mobility and access to education, training and skills development, has left rural areas with a polarisation of skills availability and subsequently a greater gulf in expected annual earnings.

Perhaps the most concerning aspect of this trend is that it is mostly hidden in an otherwise very strongly performing part of the region; in terms of business creation, employment, skills levels and growth of economy, the rural West Midlands is either comparing favourably with national averages or exceeding them.

It is clear that many rural residents, and notably those with lower levels of skills and qualifications, are restricted to lower paid, lower value-added employment opportunities, which can limit their development prospects and adversely affect their career aspirations.

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