Steve Bashford: Post-recession occupations and sectors in the South West

Post-recession occupations and sectors in the South West Stephen Bashford SW 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
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%)
31.8% 26.5% Public services 16.9% 26.0% Financial & business services 27.2% 22.8% Distribution & transport 24.1% 24.6% Production Employment (FTE) Output (GVA) 2008

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 SW
Higher skills more widely dispersed
Specialisation in high skill occupations
Occupations
Broader activity base
Growth in environmental products
Specialisation in high value added products and services
Sectors
Green/Ethical products
Local suppliers preference
Niche products
Global brands preference
Consumers
Stronger concern/protection
Increase in resource costs (Demand>Supply)
Weaker concern/protection
Resource supply = demand
Environment
Weaker Expansion
Stronger Expansion
Trade
Lower
Higher
Economic Growth Scenario 2: ‘ Local Communities’ Scenario 1: ‘ Global Markets’

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/

Steve Bashford: Post-recession occupations and sectors in the South West

by South West Observatory on Feb 24, 2010

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