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Steve Bashford, SWO Economy Module / South West RDA, talks to the SWO Future Skills Policy Seminar on post-recession occupations for the South West.
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www.southwestrda.org.uk
Post-recession Post-recession occupations occupations and sectors in and sectors in the South Westthe South West
Stephen BashfordSW Economy Module
Things to cover
Methodology Current structure of SW economy Drivers of economic change Post-recession scenarios
Baseline ‘Global Markets’ ‘Local Communities’
Summary
Methodology
Economic models developed by the SW Economy module
Uses Spring 2009 projections as baseline Median forecast in HM Treasury survey of
independent forecasts Historical relationships for Output (GVA) and
Employment (FTE) Scenarios
A prediction Χ A forecast Χ Feasible future outcomes for contemplation
and debate √
Current structure of SW economy
2008 Output (GVA) Employment (FTE)
Production 24.6% 24.1%
Distribution & transport 22.8% 27.2%
Financial & business services 26.0% 16.9%
Public services 26.5% 31.8%
Largest (GVA): ‘Real estate’ (10%), ‘Health & social work’ (8%), ‘Construction’ (7%), ‘Public admin. & defence’ (7%) and ‘Education’ (6%)
Largest (FTE): ‘Health & social work’ (12%), ‘Construction’ (9%), ‘Retail distribution’ (9%), ‘Public admin. & defence’ (7%) and
‘Education’ (6%)
Specialisation – Industry (2007)Compared to GB economy…
GVA Most specialised: ‘shipbuilding & repair’, ‘electronic
components’, ‘agriculture, forestry & fishing’, ‘mining & quarrying’ and ‘tobacco manufacturing’(‘aerospace’ highest when compared to EU25)
Least specialised: ‘extraction of energy products’, ‘water transport’, ‘oil refining & nuclear fuel’, ‘basic metals’ and ‘chemicals’ (excl pharmaceuticals)
FTEs broadly the same - specialisation in ‘aerospace’ Since 1998, increased employment specialisation in
‘insulated wire’, ‘pharmaceuticals’, ‘shipbuilding’ and ‘research & development’
Concentration of economic activity
Specialisation – Occupations (2006)
‘Top 10’ have similar shares to GB SW specialisation: ‘agriculture & conservation’, ‘hospitality & leisure
managers’, ‘other service managers’, ‘hairdressers’ and ‘textile traders’
Since 2002, increased specialisation in ‘science professionals’, ‘public service professionals’ and ‘managers & senior officials’
Drivers of economic change
Globalisation
Increasing Global economic linkages Shift from ‘West’ to ‘East’ (China & India) Mass market manufacturing & services
increasingly competitive High value niche products, High skills Fragmentation of production…
‘The enduring competitive advantages in a global economy are often heavily localised, arising from concentrations of highly specialised skills and knowledge, institutions, rivalry, related businesses and sophisticated consumers’
(Porter 1998)
Technology
More output from given resources Better quality products and
services Geographical patterns of
innovation and technology transfer ‘Enabling technologies’ i.e. ICTs,
nano-technologies Mass production →
Customisation?
Skills
Knowledge-based economy Skills for producing and
delivering high-value-added products and services
Need for ‘soft-skills’ as well as technical
Increasing mobility - therefore, need to attract and retain skilled workers
Consumers
Patterns of consumer expenditure and labour supply – longer term
Increasing consumption of services
Attitudes to health, ethics and the natural environment
‘Green’ consumption Localised production in response
to rising energy costs?
Demographic Change
Continued ageing of population Structure of labour force – skills and
experience Structure of demand for goods and
services ↑ Health-related products and services ↓ Education services
Environmental Resources
Availability of natural resources as inputs to production
Impacts of climate change Environmental policies and
regulation Shift to less energy-intensive
production methods Transport costs + ICT
improvements
Policy
Future patterns of public expenditure will determine employment in public services, education and health
Education/training policies will partly determine skills supply
Research policies will effect rate of innovation
Financial sector regulation
Post-recession scenarios for the SWScenario 1: Scenario 1: ‘‘Global Markets’Global Markets’
Scenario 2: Scenario 2: ‘‘Local Communities’Local Communities’
Economic Growth
• Higher • Lower
Trade • Stronger Expansion • Weaker Expansion
Environment • Weaker concern/protection• Resource supply = demand
• Stronger concern/protection• Increase in resource costs (Demand>Supply)
Consumers • Niche products• Global brands preference
• Green/Ethical products• Local suppliers preference
Sectors • Specialisation in high value added products and services
• Broader activity base• Growth in environmental products
Occupations • Specialisation in high skill occupations
• Higher skills more widely dispersed
The Baseline case
Reflects impact of recession in SW… Real GVA growth around 2.1% per year
between 2011-2020 (was 3.4% for 1997-2005) No net growth in total employment (FTEs)
between 2009-2020
SW Employment growth (FTEs) 2007-2020: Baseline
SW Employment growth by occupation (FTEs) 2007-2020: Baseline
Increased shares in knowledge-based occupations i.e. ‘science & research professionals’, ‘librarians’, legal & conservation ‘associated professionals’
SW Employment in 2020 relative to baseline (Sector): Scenarios
SW Employment in 2020 relative to baseline (Occupations): Scenarios
Summary
Pre-recession, growth driven by public sector, financial services...etc. Sustainable?
Revealed specialisation Different scenarios have implications for future
economic structures and areas of specialisation However, scenarios not incompatible i.e.
globalisation and localisation Economic, social & environmental -
reconciliation is key How should policy be designed?
http://economy.swo.org.uk/