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


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

  1. 1. Post-recession occupations and sectors in the South West Stephen Bashford SW Economy Module
  2. 2. Things to cover <ul><li>Methodology </li></ul><ul><li>Current structure of SW economy </li></ul><ul><li>Drivers of economic change </li></ul><ul><li>Post-recession scenarios </li></ul><ul><ul><li>Baseline </li></ul></ul><ul><ul><li>‘ Global Markets’ </li></ul></ul><ul><ul><li>‘ Local Communities’ </li></ul></ul><ul><li>Summary </li></ul>
  3. 3. Methodology <ul><li>Economic models developed by the SW Economy module </li></ul><ul><li>Uses Spring 2009 projections as baseline </li></ul><ul><ul><li>Median forecast in HM Treasury survey of independent forecasts </li></ul></ul><ul><ul><li>Historical relationships for Output (GVA) and Employment (FTE) </li></ul></ul><ul><li>Scenarios </li></ul><ul><ul><li>A prediction Χ </li></ul></ul><ul><ul><li>A forecast Χ </li></ul></ul><ul><ul><li>Feasible future outcomes for contemplation and debate √ </li></ul></ul>
  4. 4. Current structure of SW economy <ul><li>Largest (GVA): ‘Real estate’ (10%), ‘Health & social work’ (8%), ‘Construction’ (7%), ‘Public admin. & defence’ (7%) and ‘Education’ (6%) </li></ul><ul><li>Largest (FTE): ‘Health & social work’ (12%), ‘Construction’ (9%), ‘Retail distribution’ (9%), ‘Public admin. & defence’ (7%) and ‘Education’ (6%) </li></ul>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
  5. 5. Specialisation – Industry (2007) <ul><li>Compared to GB economy… </li></ul><ul><li>GVA </li></ul><ul><ul><li>Most specialised: ‘shipbuilding & repair’, ‘electronic components’, ‘agriculture, forestry & fishing’, ‘mining & quarrying’ and ‘tobacco manufacturing’ </li></ul></ul><ul><ul><li>(‘aerospace’ highest when compared to EU25) </li></ul></ul><ul><ul><li>Least specialised: ‘extraction of energy products’, ‘water transport’, ‘oil refining & nuclear fuel’, ‘basic metals’ and ‘chemicals’ (excl pharmaceuticals) </li></ul></ul><ul><li>FTEs broadly the same - specialisation in ‘aerospace’ </li></ul><ul><li>Since 1998, increased employment specialisation in ‘insulated wire’, ‘pharmaceuticals’, ‘shipbuilding’ and ‘research & development’ </li></ul>
  6. 6. Concentration of economic activity
  7. 7. Specialisation – Occupations (2006) <ul><li>‘ Top 10’ have similar shares to GB </li></ul><ul><li>SW specialisation: ‘agriculture & conservation’, ‘hospitality & leisure managers’, ‘other service managers’, ‘hairdressers’ and ‘textile traders’ </li></ul><ul><li>Since 2002, increased specialisation in ‘science professionals’, ‘public service professionals’ and ‘managers & senior officials’ </li></ul>
  8. 8. Drivers of economic change
  9. 9. Globalisation <ul><li>Increasing Global economic linkages </li></ul><ul><li>Shift from ‘West’ to ‘East’ (China & India) </li></ul><ul><li>Mass market manufacturing & services increasingly competitive </li></ul><ul><li>High value niche products, High skills </li></ul><ul><li>Fragmentation of production… </li></ul><ul><li>‘ 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’ </li></ul><ul><li>(Porter 1998) </li></ul>
  10. 10. Technology <ul><li>More output from given resources </li></ul><ul><li>Better quality products and services </li></ul><ul><li>Geographical patterns of innovation and technology transfer </li></ul><ul><li>‘ Enabling technologies’ i.e. ICTs, nano-technologies </li></ul><ul><li>Mass production -> Customisation? </li></ul>
  11. 11. Skills <ul><li>Knowledge-based economy </li></ul><ul><li>Skills for producing and delivering high-value-added products and services </li></ul><ul><li>Need for ‘soft-skills’ as well as technical </li></ul><ul><li>Increasing mobility - therefore, need to attract and retain skilled workers </li></ul>
  12. 12. Consumers <ul><li>Patterns of consumer expenditure and labour supply – longer term </li></ul><ul><li>Increasing consumption of services </li></ul><ul><li>Attitudes to health, ethics and the natural environment </li></ul><ul><li>‘ Green’ consumption </li></ul><ul><li>Localised production in response to rising energy costs? </li></ul>
  13. 13. Demographic Change <ul><li>Continued ageing of population </li></ul><ul><li>Structure of labour force – skills and experience </li></ul><ul><li>Structure of demand for goods and services </li></ul><ul><ul><li>↑ Health-related products and services </li></ul></ul><ul><ul><li>↓ Education services </li></ul></ul>
  14. 14. Environmental Resources <ul><li>Availability of natural resources as inputs to production </li></ul><ul><li>Impacts of climate change </li></ul><ul><li>Environmental policies and regulation </li></ul><ul><li>Shift to less energy-intensive production methods </li></ul><ul><li>Transport costs + ICT improvements </li></ul>
  15. 15. Policy <ul><li>Future patterns of public expenditure will determine employment in public services, education and health </li></ul><ul><li>Education/training policies will partly determine skills supply </li></ul><ul><li>Research policies will effect rate of innovation </li></ul><ul><li>Financial sector regulation </li></ul>
  16. 16. Post-recession scenarios for the SW <ul><li>Higher skills more widely dispersed </li></ul><ul><li>Specialisation in high skill occupations </li></ul>Occupations <ul><li>Broader activity base </li></ul><ul><li>Growth in environmental products </li></ul><ul><li>Specialisation in high value added products and services </li></ul>Sectors <ul><li>Green/Ethical products </li></ul><ul><li>Local suppliers preference </li></ul><ul><li>Niche products </li></ul><ul><li>Global brands preference </li></ul>Consumers <ul><li>Stronger concern/protection </li></ul><ul><li>Increase in resource costs (Demand>Supply) </li></ul><ul><li>Weaker concern/protection </li></ul><ul><li>Resource supply = demand </li></ul>Environment <ul><li>Weaker Expansion </li></ul><ul><li>Stronger Expansion </li></ul>Trade <ul><li>Lower </li></ul><ul><li>Higher </li></ul>Economic Growth Scenario 2: ‘ Local Communities’ Scenario 1: ‘ Global Markets’
  17. 17. The Baseline case <ul><li>Reflects impact of recession in SW… </li></ul><ul><li>Real GVA growth around 2.1% per year between 2011-2020 (was 3.4% for 1997-2005) </li></ul><ul><li>No net growth in total employment (FTEs) between 2009-2020 </li></ul>
  18. 18. SW Employment growth (FTEs) 2007-2020: Baseline
  19. 19. SW Employment growth by occupation (FTEs) 2007-2020: Baseline <ul><li>Increased shares in knowledge-based occupations i.e. ‘science & research professionals’, ‘librarians’, legal & conservation ‘associated professionals’ </li></ul>
  20. 20. SW Employment in 2020 relative to baseline (Sector): Scenarios
  21. 21. SW Employment in 2020 relative to baseline (Occupations): Scenarios
  22. 22. Summary <ul><li>Pre-recession, growth driven by public sector, financial services...etc. Sustainable? </li></ul><ul><li>Revealed specialisation </li></ul><ul><li>Different scenarios have implications for future economic structures and areas of specialisation </li></ul><ul><li>However, scenarios not incompatible i.e. globalisation and localisation </li></ul><ul><li>Economic, social & environmental - reconciliation is key </li></ul><ul><li>How should policy be designed? </li></ul>
  23. 23.