Up-skilling and diversification are key to growth and job creation across the West Midlands

Targeting investment on higher value added sectors such as digital media and medical technologies, and developing a workforce with the right skills to service those sectors would significantly increase job growth and the prosperity of the West Midlands according to new research.

The research (pdf, 498kb), undertaken by the West Midlands Observatory, shows that the potential benefits of targeting investment are substantial. If workforce skill levels in the West Midlands were increased to match the England average, growth in Gross Value Added (GVA) — the measure of economic output per head of population — over the next 5 years would increase by 2 percentage points from 10% to 12% and net new job creation would nearly double from 11,000 to 21,000. If in addition more businesses in higher value added sectors and clusters were attracted to the West Midlands, so that their share of economic activity reflected the position nationally, GVA would grow by some 23% by 2015 and more than 200,000 net new jobs would be created.

Local authorities, business groups and other key partners across the West Midlands are looking to achieve sustainable economic growth in jobs and GVA over the next 5 years. This new research shows how, in a time of austerity and funding cuts, the Observatory can provide authoritative and objective research to help decision makers target limited resources and do more with less.

The research (pdf, 498kb) provides an insight into the region’s existing and likely future skill needs. It has been produced to inform the development of skills and investment priorities that focus shrinking levels of public sector investment in areas that will maximise  impact.

A range of key investment locations across the region, including Longbridge and Eastside in Birmingham, Ansty Park in Coventry, i54 in Staffordshire, Coventry and Wolverhampton city centres and Dudley, Telford, Walsall and West Bromwich town centres, can play a key part in diversifying local economies.

But radical, transformational change is needed. Upgrading workforce skills within existing businesses, and attracting and developing more businesses in higher value added sectors, is key to improving economic performance and generating more new highly skilled jobs.

Lower value added private sector activities remain a key source of employment and GVA in most parts of the West Midlands. These activities, including retail, hospitality & leisure, transport and low value business services together with the lower value added elements of manufacturing and public sector services, are an important source of jobs for people with fewer skills, and can play an important role in reducing worklessness and economic and social deprivation.

But they have low rates of productivity and limited prospects for growth. Indeed employment levels in lower value added manufacturing industries and the public sector are forecast to fall over the next 5 years. Overall the region is expected to see GVA grow by just 11% by 2015 and to create only 11,000 net new jobs.

There are significant potential business and market opportunities in sectors such as higher value added business & professional services, environmental technologies, digital media and medical technologies – and this is reflected in the aspirations within a series of ‘skills position statements’ produced by local authorities.

ENDS

Notes to Editors:

– Based at Birmingham’s Millennium Point, the West Midlands Observatory was established in 2002 to provide decision makers with high quality, independent information on the West Midlands

– The Observatory is responsible for helping the West Midlands to develop better access to well organised information. Better evidence will lead to better policy, strategy and funding in the West Midlands, so that services and ultimately people’s lives are improved.

– The West Midlands Regional Observatory is part financed by the European Regional Development Fund and the European Social Fund

The report, Regional strategic and investment skills priorities for 2011-2012: policy supplement, was published 12th July 2010:

For further information please contact Oliver Nicholls at the Observatory on 0121 202 3244, 07525 703 137 or oliver.nicholls@wmro.org

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