Future skills priorities for Birmingham and the West Midlands
Adam Crews
Lovedeep Vaid
April 2014
Commissioned by
Contents
1 Summary of findings 3
1.1 Course suggestion for Birmingham City University 4
2 Introduction 5
3 The West Midlands’ labour market 6
3.1 Employment 6
3.2 Inactivity 6
3.3 Out of work benefit claimants 7
3.4 Worklessness by qualification level (working age) 9
3.5 Employment gaps 9
3.6 Recent movements in Jobs and Earnings by Occupation 10
3.7 Future employment growth in the West Midlands 13
3.8 Replacement demand 16
4 Higher Education Provision 18
4.1 Skills matching methodology 18
4.2 Jobs demand by HE subject 19
4.3 Job Opportunities for Graduates by Subject 21
4.4 Oversupply? Additional analysis 23
4.5 Overall Profile of Provision by Subject 26
4.6 Summary 27
5 Further Education Provision 30
5.1 Jobs and occupations by sector subject areas 30
5.2 Why the mismatch? 33
6 What are the LEPs saying? 35
6.1 The Greater Birmingham and Solihull LEP 35
6.2 The Black Country LEP 36
6.3 The Coventry and Warwickshire LEP 37
7 What are employers saying? 39
8 How can local authorities help? 42
9 Appendices 43
Appendix Table 1: Future occupation growth to 2022 for the West Midlands 43
Appendix Table 2: Employee Jobs by HE subject, 2013 - 2022 45
Appendix 3: sources and limitations 46
1 Summary of findings
n The West Midlands region has a lower employment rate, higher inactivity rate and a higher rate of residents’ claiming out of work benefits compared to the rest of the country. Skill levels of those that are out of work show that proportionally there are higher numbers with no qualifications and a lower number with a level 4 or above qualification.
n The problems are more acute in the urban areas of Birmingham, the Black Country and Coventry in particular for BAME groups, women and young people.
n However, the reasons for this are not because of a lack of job opportunities, which has seen an improvement since the beginning of the recession in 2008. The reasons for the persistent under representation of certain groups in the labour market relate to a mismatch of skills of residents with those needed by employers in the West Midlands area.
n The West Midlands region has seen an increase in occupation groups requiring degrees, including Science, engineering and production technicians, managers and professionals, sales and marketing occupations and an increase in some elementary jobs (cleaning, process plant). There is also a demand in some public sector related occupations such as health and care which may not be attracting suitable staff due to stagnation in wages.
n Projections to 2022 show that demand for the highlighted occupations is likely to continue. Total employment in the region is set to increase by around 5 per cent between 2013 and 2022 (around 106,000 additional jobs), particularly driven by increasing levels of employment in managerial, professional and technical occupations.
n Subject wise, the biggest areas of increase are forecast to be in Business and Administrative studies, subjects allied to Medicine, Social studies and Education.
n But this increase will not meet demand as the largest areas of shortfall are in Business and Administrative studies, where annual student numbers are over 50 per cent below the indicative requirement, and in Medicine & Dentistry, where there was a shortfall of over 40 per cent.
n There has also been a growth in a number of Science, Technology, Engineering and Mathematics (STEM) subjects, reflecting the strategic importance of STEM to the national and regional economy.
n Demand for STEM related skills is also reflected in findings from the Local Enterprise Partnerships (LEPs) covering the West Midlands region. Growth and Skill plans from these LEPs have highlighted the demand from employers in the region for advanced manufacturing and ICT skills and also factory floor manufacturing skills.
2 Introduction
This analysis was commissioned by Birmingham City University led think tank, Idea Birmingham in order to understand the implications of the changing demand for labour and skills in the local economy to 2022, and how they can better align future curriculum development to these future opportunities.
Aligning skills needs in the economy to higher and further education provision, both today and tomorrow, is not as straight forward as it might initially seem. The data on recent job trends is not immediately comparable to the skills achievements data that is used by universities, colleges and training providers. In order to provide comparable data to ascertain how skills provision is meeting labour demand locally we have had to undertake a number of steps connecting a series of data sources.
Jobs data for the West Midlands
To generate jobs and earnings data for the West Midlands we classified jobs by 3 digit occupation groups using the Labour Force Survey (LFS) and the Annual Survey of Hours and Earnings (ASHE) – occupation classifications are available at more detailed 4 digit classifications but initial analysis showed that the results were too unreliable to derive robust findings. New occupational classifications were introduced by the Office for National Statistics in 2010 and we have used the growth in jobs and earnings since that year to the most recent time period available: 2013.
Projections to 2022
In order to provide estimates for future needs we have used the UKCES commissioned Working Futures projections which concentrate on anticipating changing skill needs, in the context of changes in general economic conditions. This data forms the basis of national skills planning and therefore is sensible for these purposes. Working Futures produces quantitative occupational and sector projections driven by an underlying view of sectoral prospects (both output and productivity) in the West Midlands. The projections in employment by occupation were used to project the jobs match to subject areas in further education and higher education.
Data limitations
The process of matching and forecasting is hindered by limitations in the data which do not allow a precise indication of supply and demand across the economy. The skills matching process is experimental and forecasting is an inexact science to we are only able to draw broad conclusions.
3 The West Midlands’s labour market
3.1 Employment
The West Midlands’s employment rate has consistently lagged the UK’s and the derived employment rate for Birmingham has consistently lagged the West Midlands average. The latest data from the Annual Population Survey (APS) uses a 12 month rolling average and shows that the West Midlands employment rate is 69.3 per cent, 3 percentage points below the UK average, see figure 2.1.
Figure 2.1: Working Age Employment rates in the UK and the West Midlands
Source: APS (12 month average)
3.2 Inactivity
The same pattern of underperformance is also seen on measures of inactivity. Figure 2.2 shows the West Midlands’s resident working age inactivity rate is 24.4 per cent, 2.3 percentage points higher than the UK average.
The employment rate for Birmingham is lower than the West Midlands overall but has been rising recently. The inactivity rate in Birmingham is higher than the West Midlands but narrowing recently.
Figure 2.2: Inactivity rate (working age) in the UK and the West Midlands
Source: APS (12 month average)
3.3 Out of work benefit claimants
Figure 2.3 shows the West Midlands’s working age rate for those claiming out of work benefits is 1.1 percentage points higher than the UK average. The reasons for inactivity proportionally are similar to the UK as a whole: the main difference being the higher proportion looking after family.
In Birmingham the proportion claiming out of work benefits has been consistently higher than the West Midlands as a whole and the reasons for being inactive offer a clue as to why, with a very large proportion who are students in Birmingham and a higher proportion who are retired in the West Midlands.
Figure 2.3: Out of work benefits claimant rate in Great Britain and the West Midlands
Source: DWP, Nomis
Figure 2.4: Inactivity by reason in the UK and the West Midlands
Source: DWP, Nomis
3.4 Worklessness by qualification level (working age)
There is a marked difference between the West Midlands and UK when looking at the qualification levels of workless residents. Figure 2.5 shows the total workless population and their qualification levels. In the UK 20 per cent of the workless population have a level 4 or above qualification compared to just under 15 per cent in the West Midlands while at the other end of the scale, 24.7 per cent of the workless in the West Midlands have no qualification compared to 20.4 per cent in the UK as a whole.
Figure 2.5: Qualification levels of workless in the UK and the West Midlands
Source: APS (12 month average to Dec 2012)
3.5 Employment gaps
Although employment rates are up recently the differences in rates for those more disadvantaged groups in the labour market show that young people, women and ethnic groups are under-represented in the job market in Birmingham compared to West Midlands as a whole. The gender and ethnic difference for the West Midlands is similar to the UK as a whole indicating that under representation for these groups equates with living in the urban areas of the West Midlands.
Figure 2.6: Employment rate gaps for groups, Birmingham, the West Midlands and the UK
Source: APS (12 month average)
3.6 Recent movements in Jobs and Earnings by Occupation
Analysis of jobs growth data against pay growth by occupation demonstrates some interesting trends in the West Midlands’s labour market that suggests the region’s economy, like the UK’s, is still underperforming post recession. However, rather than seeing unemployment reach the heights many analysts predicted, what we have seen is wage stagnation as wages have not kept pace with inflation.[1]
Table 2.1 shows the occupation groups in the West Midlands that are showing a rise in numbers and a rise in pay.
The subjects associated with these occupations (see later chapters) are the best ones to study at colleges and Universities, the jobs are being filled but there is still demand as wages are also rising.
This shows a mix of high level jobs requiring degrees (E.g. Science, engineering and production technicians, managers and professionals, sales and marketing) and elementary jobs (cleaning, process plant) that used to require no qualifications and minimal training. However, recent LFS analysis shows that some people entering these types of jobs have above level 2 qualifications. These could be students looking for part time work as some of these elementary jobs offer evening jobs and weekend jobs and recent graduates who may have taken subjects that do not align with skills needed within the ‘in demand’ occupations. Unfortunately they may be taking these entry level jobs away from those with low qualifications, those from ethnic groups and older people without the right skills. Lone parents need school time jobs (9am to 2pm) – which could be achieved but will need ‘family friendly’ employers willing to offer part time jobs that are reserved for under qualified parents.
Table 2.1: Rising job numbers and rising wages in the West Midlands
Occupation / Volume (000's) / Volume change / Pay change / Job starters average qualificationScience, engineering and production technicians / 30 / 36.4% / 2.7% / 3.4
Welfare professionals / 14 / 27.3% / 5.5% / 3.7
Sales related occupations / 5 / 25.0% / 11.1% / 2.1
Financial institution managers and directors / 10 / 25.0% / 6.1%
Engineering professionals / 32 / 23.1% / 6.7% / 3.2
Information technology technicians / 17 / 21.4% / 2.7% / 3.5
Nursing and midwifery professionals / 65 / 20.4% / 2.6% / 3.6
Production managers and directors / 45 / 18.4% / 5.0% / 3.4
Public services and other associate professionals / 34 / 17.2% / 3.0% / 3.1
Customer service managers and supervisors / 7 / 16.7% / 5.4% / 3.5
Process operatives / 23 / 15.0% / 0.7%
Metal forming, welding and related trades / 8 / 14.3% / 8.5%
Mobile machine drivers and operatives / 8 / 14.3% / 0.6%
Functional managers and directors / 49 / 14.0% / 16.8%
Elementary cleaning occupations / 57 / 11.8% / 1.5%
Information technology and telecommunications professionals / 40 / 8.1% / 3.0% / 3.5
Sales, marketing and related associate professionals / 65 / 6.6% / 6.0%
Elementary process plant occupations / 22 / 4.8% / 6.4%
Caring personal services / 91 / 3.4% / 1.7%
Protective service occupations / 33 / 3.1% / 5.3% / 4.0
Metal machining, fitting and instrument making trades / 45 / 2.3% / 9.7% / 2.4
Source: Labour Force Survey and Annual Survey for Hours and Earnings 2011 to 2013
Table 2.2 lists those occupations that have seen a growth in job numbers but a fall in pay. There are opportunities if a student takes subjects associated with these occupations but there may be a ready supply of people going into these occupations as pay is falling. The market has responded as there is a ready supply of people moving into these jobs and therefore there is no need to raise wages to attract further people. Some wage stagnation is also due to wage freezes in some public sector related occupations such as health and care.