State of the West Midlands 2010 report published

The State of the West Midlands 2010 report is now available, accessible through this interactive website or as a pdf download (1.74 Mb).

The report sets out the evidence about some of the key challenges facing the West Midlands and its localities. Since the general election earlier in the year, much has changed in the way that the West Midlands is governed, but the big issues that it faces remain. Issues such as the growing economic output gap, high levels of worklessness, skills levels, the ageing population, the consequences of climate change and the poor image of the West Midlands.

This year, for the first time, we have published the report in an interactive web version (as well as a pdf -1.74Mb). This will allow you to provide comments on the report, as well as providing easy access to the issues that are of most interest to you.

What will spending cuts mean for the West Midlands?

Tomorrow sees the long awaited publication of the government’s Comprehensive Spending Review. It will end months of speculation by setting up where the cuts in government spending will fall and how deep they will be. But what might it all mean for the West Midlands?

To try and answer this question, the Observatory has carried out a number of pieces of work over the last few weeks. These are summarised in a new report published today.  Amongst its findings are that:

• An estimated £43 billion as spent on public services in the West Midlands in 2008-09 and the public sector employed nearly half a million people
• More than 80,000 public service jobs could be lost in the West Midlands by 2016
• Up to 300,000 private sector jobs are at risk due to spending cuts, although actual job losses will be lower than that
• The places which will be hardest hit in the short term are those with concentrations of public sector jobs, such as Birmingham, Bromsgrove, Dudley, Shrewsbury, Stafford, Wolverhampton and Worcester
• In the longer term, some of these places are likely to recover well, but others will continue to suffer because they have weaker economies. Places most vulnerable in the longer term include Birmingham, Dudley, Sandwell, Stoke-on-Trent, Walsall, Wolverhampton and Wyre Forest (Kidderminster)

The report draws on information from a number of other reports published by the Observatory in recent weeks. These include a briefing paper on the local impact of public sector job cuts, a series of projections based on our Policy Assessment Model and a report identifying locations vulnerable to cuts in public sector spending.

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.

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).

Related links

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

• The West Midlands economy post recession: key issues and challenges (pdf, 844kb)
• Dataset: xls, 136kb | Available on Google Docs

Research published on prospects for the West Midlands economy post recession

At the end of June, the Observatory published The West Midlands Economy Post Recession: Key Issues and Challenges (pdf, 844kb), a major piece of research exploring the changing needs of the region’s economy and labour market as it emerges from recession.

The research is informing the decisions of employers, individuals, providers and the skills system as they look to focus their investment in key areas to maximise impact.

Firstly, the research considers the region’s recent poor economic performance and the key factors that have contributed to this.

We detail the weaknesses within the region’s economic structure and, in particular, the dependence on public sector and lower value added private sector activities, in terms of GVA and jobs, and the limited representation of high value added, knowledge-based sectors.

We also highlight the low rates of productivity in many of the sectors that dominate the regional economy and assess the skill gaps and shortages businesses in the West Midlands face and the impact on productivity and performance.

How is the Rural Regeneration Zone doing?

This post shares key findings from our annual monitoring report on the Rural Regeneration Zone (RRZ) carried out over 2009 and 2010.  The final report will be published shortly.

Impact of project work

Since the RRZ was set up, the area has improved in many ways.  So far 1,400 new jobs have been created and 800 existing jobs have been safeguarded.  More jobs are expected to be created (1,500) and safeguarded (200) by 2015.

RRZ investment in multi-use facilities has also improved access to services.  The main improvements have been around:

• Childcare provision – 845 more places each week
• Volunteering opportunities – 165 more places
• Library services – 37,700 more library projects
• Development of new services – 98 new or enhanced services in towns and villages

Projects such as Connections to Opportunities, Rethink and Care Farming are delivering further improvements in the RRZ.  More details are included in the report.

Key findings for West Midlands from National Employer Skills Survey 2009

Thanks to  Sam Richardson from the Young People’s Learning Agency (formerly of Learning and Skills Council West Midlands) for contributing this post.

A report on key findings for the West Midlands (pdf, 1mb) from the National Employer Skills Survey 2009 was published in March.

The survey consisted of just over 79,000 telephone interviews (8,186 in the West Midlands) with employers across England (the largest number to date) between March and July 2009.

It represents by far the largest and most comprehensive source of information on current skills issues affecting employers in England.

The UK Commission for Employment and Skills previously published a summary of national findings.

A more comprehensive description of the national results will be available in a full report due June 2010 (after the election). The survey data is available for exploration and data mining at http://nessdata.ukces.org.uk.

Economy and Labour Force newsletter: April 2010 issue

We sent out a new issue of our Economy and Labour Force newsletter today.

The newsletter summarises recent articles, new research and commentary related to the economy, skills, employment and labour market in the West Midlands.

You can view the newsletter in your browser or in pdf.

Related links

• Subscribe to newsletters by registering with us
• RSS and email updates from the Observatory

New plan to harness £16 billion public spending for local benefit

A new plan that could help local people benefit from £16 billion of government spending in the West Midlands was launched by Regional Minister, Ian Austin, this week.

And he said government spending would be used to boost employment for people in the West Midlands and help access “local jobs for local people.”

The new West Midlands Procurement Framework for jobs and skills has been developed by the West Midlands Economic Inclusion Panel. This brings leaders from across the public, private and third sectors together to find ways to tackle the £3bn output gap ascribed to worklessness in the West Midlands.

Set up in 2008 to address the region’s worklessness challenge, the Economic Inclusion Panel  has focussed on developing a strategic approach to public procurement as a key driver in tackling worklessness. The Observatory’s economic inclusion team works closely with the Panel to provide evidence of the challenges facing the region.

Making the skills links for Environmental Technology

There has been a fair bit of media interest in the Environmental Technology sector over the past couple of weeks, particularly from the BBC and Radio WM. This was stimulated by our recent Review of Skills in Environmental Technologies (pdf, 476kb).

In the main, the interest has concentrated around how the sector has faired better than wider manufacturing through the recession, and the huge potential for future growth – for example in renewable energy and recycling.

This is good news for the West Midlands, as the industry has the potential to create jobs for Midlanders long in to the future.

But, to capitalise on the sector’s potential, our research (pdf, 476kb) shows that businesses need to be able to access the right people with the right skills; in some cases, very specific skills that are up to date with the latest technology.

We found that Environmental Technology companies are finding it difficult to find people with the right skills, and the report (pdf, 476kb) makes some recommendations on how to overcome the barriers.

Higher level skills can help boost the region’s economic recovery

It’s no secret that the West Midlands has been harder hit by the recession than any other UK region. Indeed economic growth has been slower than that of many other regions for a number of years. This reflects long standing structural problems which mean we have relatively few high growth businesses. As a result, economic recovery in the West Midlands is expected to be difficult and protracted. Although headline regional Gross Value Added (GVA) is expected to begin to rise this year, an upturn in employment is not expected until 2012 – and projections show that it could be well into the next decade before the region reaches the peak levels of employment seen in 2008.

Regional Skills Assessment published

The Regional Skills Assessment for 2009 is now available. This extensive research gives an overview of the changing needs of the West Midlands’ labour market, along with a detailed exploration of key issues by sector, by sub-region and for key groups.

This year’s main report presents a few distinctive sections compared to previous years. It mainly focuses on recent trends, looking also at the impact of recession and prospects for recovery.

The main report is complemented by two reports identifying the main skills needs and issues in each of the region’s key sectors and clusters.

The Assessment also includes a series of six detailed sub-​regional skills profiles assessing recent trends and future prospects for both the demand for and supply of skills. The profiles highlight key issues to support, in particular, development of Local Economic Assessments by local authorities, the commissioning of 16-​19 learning provision and the work of sub-​regional Employment and Skills Boards. The sub-regional assessments cover:

• Birmingham and Solihull
• Black Country
• Coventry and Warwickshire
• Herefordshire and Worcestershire
• Shropshire
• Staffordshire

In addition, there’s an entire chapter dedicated to future prospects in the region’s labour market with forecasts covering both short-​medium term (2009 to 2014) and long term (to 2024), using the Observatory’s economic forecasting model.

View the Regional Skills Assessment 2009 pages on wmro.org

Key contact: Andy Phillips, Head of Skills Research

2009 Skills Assessment and regional skills policy

The productivity gap in the West Midlands regional economy appears to be widening, despite a narrowing skills gap.

This was one of the key issues arising at a dissemination event for the Observatory’s Regional Skills Assessment held last Friday at the Observatory.

A range of attendees, including higher education representatives and policy officers from organisations including Advantage West Midlands, Sector Skills Councils, the City Region Partnership and Jobcentre Plus, discussed the implications of the Regional Skills Assessment on policy in the West Midlands.

Environmental technologies skills in the West Midlands seminar roundup

The Observatory held an event on 20th January 2010 to present findings from their environmental technologies skills review, which determined:

• The relative importance of these industries to the regional economy and the profile of the workforce by gender, ethnicity, age and qualification attainment
• Key developments in the sector, potential market opportunities and drivers of skills change
• Current and potential labour and skill needs and any gaps and shortages
• Investment in training and up-skilling by employers
• The use of publicly funded, private sector and internally run training and any gaps or weaknesses in provision
• Recommendations and actions to address any issues identified

Seminars on the 2009 Regional Skills Assessment and the new Regional Skills Strategy

The Government has published Skills for Growth, a new National Skills Strategy.

This highlights the fact that 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.