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ONS Economic Forum 26 April 2018
The document outlines the agenda and discussions from the ONS Economic Forum held on April 26, 2018, which included topics on regional economic output, productivity trends, and the launch of the Economic Statistics and Analysis Strategy. Key presentations involved examining regional GVA growth, productivity analyses across different regions, and the future of work impacted by automation and job displacement. Recommendations were made for enhancing the benefits to struggling cities and preparing the workforce for future job demands.
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ONS Economic Forum 26 April 2018
- 1. ONS Economic Forum 26April 2018 Email: ONS.economic.forum@ons.gov.uk Twitter: @ONS #Econstats Wifi: rsnetwork Password: Newton+apple
- 2. Welcome and introduction EdPalmer Deputy Chief Economist, Office for National Statistics
- 3. Agenda 09:45 – 10:00Registration with tea and coffee 10:00 – 10:05 Welcome and introduction – Ed Palmer, Deputy Chief Economist 10:05 – 10:35 Examining Trends in Regional Economic Output and Productivity – Richard Prothero, Sebnem Oguz 10:35 – 10:45 Question and answer session 10:45 – 11:00 Refreshment break 11:00 – 11:20 Guest presenter: Andrew Carter, Centre for Cities 11:20 – 11:30 Question and answer session 11:30 – 11:40 Launch of the Economic Statistics and Analysis Strategy – Richard Heys 11:40 – 11:50 What’s next – Ed Palmer, Deputy Chief Economist
- 4. Examining Trends inRegional Economic Output and Productivity Economic Forum, 26/04/18 Richard Prothero and Sebnem Oguz Cities and Subregional Analysis Branch, Public Policy Division, ONS
- 5. Devolution Programme A programmeto improve ONS regional and local statistics. Regional Balanced GVA Regional & Sub-Regional Household Final Consumption Expenditure Regional Short Term Indicators Country and Regional Public Sector Finances Exports of Services Data Productivity Small Area Data Flexible Geographies Investigating Uses of Administrative Data Regional Prices Stakeholder Engagement
- 6. ‘Balanced’ Regional GVA •Regional GVA measured 2 different ways; Income, Production. • These have been combined to derive a single estimate, Balanced GVA. • Balanced GVA should be more stable and reliable. • Extra industry detail: NUTS1: 80 industry breakdown NUTS2: 71 industry breakdown • All of these in both current prices and ‘real’ CVMs (chained volume measures). • All regional GVA estimates (inc. small areas and derived productivity estimates) based on a consistent and coherent framework.
- 7. Economic Review Article1: Examining regional GVA growth in the UK • The article uses the newly released Regional GVA(B) data to examine economic growth performance since 1998. • It explores differences between the regional growth in the decade before the economic downturn (1998-2007) and in the more recent period of economic recovery (2010-2016). • Analysis of industrial sectors based on the level of technology (for manufacturing) and the level of knowledge intensity (for services) is provided. • A range of tools are provided with the article to examine industry structure, specialisation, and the impacts of industry and regional factors in explaining growth patterns.
- 8. Economic growth byregion/country UK UK -1 0 1 2 3 4 5 NorthEast NorthWest YorkshireandTheHumber EastMidlands WestMidlands EastofEngland London SouthEast SouthWest Wales Scotland NorthernIreland NorthEast NorthWest YorkshireandTheHumber EastMidlands WestMidlands EastofEngland London SouthEast SouthWest Wales Scotland NorthernIreland 1998-2007 2010-2016 % Annual growth rates of real GVA by NUTS1 regions, UK, 1998-2007 and 2010-2016
- 9. Economic Growth byIndustry Groups
- 10.
- 11.
- 12. Impact of Specialisation 0.0 0.1 0.2 0.3 0.4 FastGrowing Average Slow Growing 1998 2007 2016 Average Krugman specialisation index for NUTS2 subregions, UK, 1998-2016
- 13. Specialisation by Subregion Locationquotients by broad industry group, UK, 1998-2016
- 14. Shift share (MFP)analysis
- 15. Labour Productivity before2007 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Growth in real GVA(B) Growth in Hours Worked Growth in GVA versus hours worked, NUTS 1, 1998-2007. Decrease in Labour Productivity Increase in Labour Productivity Chart from ONS Regional and sub-regional productivity in the UK: February 2018
- 16. Labour Productivity since2007 -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% Real GVA Growth Growth in Hours Worked Growth in GVA versus hours worked, NUTS 2, 2007-2016. Decrease in Labour Productivity Increase in Labour Productivity Chart from ONS Regional and sub-regional productivity in the UK: February 2018
- 17. Economic Review Article2: Regional firm-level productivity analysis for the non-financial business economy, Great Britain. • The article provides experimental analysis on the sources of regional differences in labour productivity in the non-financial business economy. • The relative impacts of industry mix versus levels of firm productivity within industries is examined. • Analysis of productivity based on the level of technology (for manufacturing) and the level of knowledge intensity (for services) is provided. • The article also includes analysis of the impacts of firm demography on aggregate average productivity in the regions.
- 18. Labour Productivity 2016 6080 100 120 140 160 Cornwall and Isles of Scilly Lincolnshire West Wales and The Valleys South Yorkshire Shropshire and Staffordshire Devon Northern Ireland North Eastern Scotland Berkshire, Buckinghamshire and Oxfordshire Outer London - South Outer London - East and North East Inner London - East Outer London - West and North West Inner London - West GVA per hour worked, 2016 (UK=100) Highest and lowest labour productivity - NUTS2 Regions. Chart from ONS Regional and sub-regional productivity in the UK: February 2018
- 19. Industry Mix vsFirm Productivity Effect Firm productivity and industry mix effects on aggregate average productivity for non-financial business economy, GB regions and countries, 2015 -30 -20 -10 0 10 20 30 40 50 North East North West Yorkshire and The Humber East Midlands West Midlands East of England London South East South West Wales Scotland Industry Mix Effect (pps) Firm Productivity Effect (pps) Source: ABS
- 20. Distribution of localplant productivity by industry groups, 2015 Source: ABS
- 21. Firm level GVAper worker, GB regions and countries, 2015 0.00 0.00 0.00 0.01 0.01 0.01 0.01 0.01 0.02 -40 -20 0 20 40 60 80 100 120 140 160 180 200 Density GVA per Worker, £ Thousands Great Britain North East North West Yorkshire and The Humber East Midlands West Midlands East of England London South East South West Wales Scotland Source: ABS
- 22. Drivers of firmproductivity Firm characteristics: production technology, capital intensity, investment, R&D, innovation, skills of employees, foreign ownership, managerial capability, exports, size, age, product & factor markets, market power, consumer tastes and preferences for firms’ products Location: infrastructure, agglomeration, population density, distance Prices: local price level, factor prices
- 23. Productivity by sparsity Distributionof firm level productivity (GVA per worker) for the non-financial business economy, cities and towns and villages, England and Wales, 2014 Source: ABS Chart from ONS - Exploring labour productivity in rural and urban areas in Great Britain.
- 24. Productivity by CitySize Average GVA per worker of urban built-up areas classified by population size for the business economy in north and south of England, 2014. Region Small Medium Large Major North and Midlands 79 81 77 81 South (excluding London) 84 98 101 n/a Source: ABS England & Wales = 100 Table from ONS - Exploring labour productivity in rural and urban areas in Great Britain.
- 25. Economic Review Article3: Regional and sub-regional productivity comparisons, UK and selected EU countries. • The article compares regional labour productivity in the UK, Germany, Italy, France, Spain and the Netherlands. • The appropriate choice of statistical metric and geography are important when making such comparisons – the article discusses the issues and our choices. • Additional context on regional economic performance is provided via comparable European data on employment rates and household incomes.
- 26. European Comparisons: Labour ProductivityBy Nuts 1 Region
- 27. European Comparisons: Productivity byNUTS 2/3 Region
- 28. European Comparisons: Employment RatesBy Nuts 1 Region
- 29. European Comparisons: Household Incomeby Nuts 1 region
- 30. Cities Outlook 2018 Thefuture of work in UK cities
- 31. The future ofwork is shaped by many trends Source: Bakhshi et al. 2017, Future of Skills: Employment in 2030, London: Nesta and Pearson
- 32. Jobs very likelyto shrink by 2030
- 33. The risk ofjobs displacement is not evenly spread out across the country 3.6 million jobs at risk in Great Britain Source: Bakhshi et al. 2017, Future of Skills: Employment in 2030, London: Nesta and Pearson; ONS 2017, Business Register of Employment Survey; Census 2011
- 34. And places mostat risk have some common features Source: Bakhshi et al. 2017, Future of Skills: Employment in 2030, London: Nesta and Pearson; ONS 2017, Business Register of Employment Survey; Census 2011; ONS, Regional Gross Value Added (Income Approach) NUTS3 Tables; NOMIS, Mid-year population estimates, Centre for Cities calculations; DWP; HMRC; DCLG; Welsh Government; Scottish Government; NOMIS, Population estimates, ONS, Birth summary tables; National Registers of Scotland, Births by sex, year and council area.
- 35. But this isnothing new – robots and other changes have long threatened jobs… Source: Census 1911 (England and Wales only); University of Portsmouth, “A vision of Britain through time”
- 36. …And despite thismost places have more jobs than they had in 1911 1911 2016 60% jobs growth in cities Source: University of Portsmouth, “A vision of Britain through time”; NOMIS, Business Register of Employment survey.
- 37. Jobs very likelyto grow by 2030
- 38. Similarly, new jobswill be created this time too There is potential for growth for every place They are evenly distributed across the country 1.4 million jobs are in occupations likely to grow
- 39. However, the compositionof jobs likely to grow reveals three important points
- 40. 1. Most growthwill be in publicly-funded occupations All publicly- funded occupations 50%High-skill private occupations 24% Lower-skill private sector occupations 26% Source: Bakhshi et al. 2017, Future of Skills: Employment in 2030, London: Nesta and Pearson; ONS 2017, Business Register of Employment Survey; Census 2011
- 41. 2. There isgreat variation in private sector growth Source: Bakhshi et al. 2017, Future of Skills: Employment in 2030, London: Nesta and Pearson; ONS 2017, Business Register of Employment Survey; Census 2011
- 42. 3. Those placesless at risk of jobs losses also better placed to attract future high-skilled jobs Source: Bakhshi et al. 2017, Future of Skills: Employment in 2030, London: Nesta and Pearson; ONS 2017, Business Register of Employment Survey; Census 2011
- 43. And this couldwiden political as well as economic divides Source: Bakhshi et al. 2017, Future of Skills: Employment in 2030, London: Nesta and Pearson; ONS 2017, Business Register of Employment Survey; Census 2011
- 44. Recommendations – cities Improvethe benefits that struggling cities make to business
- 45. Recommendations – people •Prepare younger generations with the right set of skills • Adjust by giving the current workforce the resources needed for the future world of work • Compensate individuals least able to adapt
- 47. ONS Economic Statisticsand Analysis Strategy 2018/19 Richard Heys, Deputy Chief Economist www.ons.gov.uk/esas
- 48. ONS Economic Statisticsand Analysis Strategy 2018/19 [ESAS] ONS Economic Statistics and Analysis Strategy (ESAS) is used to prioritise and guide ONS’s work on economic statistics They cover the following themes: 1. Modern Economy and the National Accounts 2. Trade and International Statistics 3. Devolved, Regional and Local Statistics 4. Productivity, and the Supply of Labour and Capital 5. Prices 6. Beyond GDP – Broader Measures of Welfare and Activity
- 49. ONS Economic Statisticsand Analysis Strategy 2018/19 [ESAS] www.ons.gov.uk/esas
- 50. Open access via livestreamon YouTube on the Bank of England channel. For other information email: economicmeasurement2018@ niesr.ac.uk ESCOE Conference 2018
- 51. What’s coming up Tomorrow:a busy day of publications • UK Index of services, February 2018 • UK GDP, preliminary estimate, January to March 2018 • Monthly economic commentary, April 2018 • Introducing a new publishing model for GDP Further ahead • Economic Forum in London: July & October • Economic Forum on the road: September Don’t forget to feed back your thoughts and comments!
- 52. ONS Economic Forum 26April 2018 Email: ONS.economic.forum@ons.gov.uk Twitter: @ONS #Econstats
Editor's Notes
- #7 No expenditure measure due to inter-regional trade flows
- #10 Differences in types of industry that have created growth pre-and post recession.
- #11 Knowledge intensive services better pre-recession across almnost all NUTS 2 areas. Less KIS – change in pattern post recession.
- #12 Wider variety of growth pre – and post recession for medium to high tech manuf
- #13 Faster growing nuts 2 subregions are typically more specialised (relative to UK industry structure) + specialisation has been increasing.
- #14 Inner London W is example of specialised area. Herefordshire….an example of a place where a recent increase in specialisation has helped growth. See also W. Midlands NUTS 2, Cheshire etc
- #15 Shift share shows how London benefitted from its industry mix pre-recession. Post recession Herefordshire has been in growing UK industries. But also a regional effect at play.
- #16 N Ireland 33% growth in GVA, 11% growth in hours worked.
- #17 Only half of 40 NUTS 2 regions had increase in real productivity 2007-2016 NI 1% increase in GVA, 2% decline in hours worked. NOTE APS/LFS show slightly higher hours worked growth than prod hours.
- #21 London clear firm level productivity advantage in both service sector categories.
- #22 abs
- #24 abs
- #25 abs
- #32 Our work uses a study from Nesta to understand how the future of work will look like in different part of the countries Although there has been a focus mainly on AI, automation and technological changes, other trends also affect the future of work Globalisation and demographic changes are also two big ones but are not alone Nesta used a mixed-methods approach to make probabilities and made estimates on jobs very likely to decline and grow by 2030
- #34 First we looked at jobs that will decline by 2030 and where they are around the country 35 occupations identified at high risk (mostly routine works, such as sales assistants, admin occs, storage occs etc) 3.6 million jobs across GB, approximately 21% of current jobs This plays out differently across the country – places in the south are less at risk than places in the north and midlands – Oxford, Cambridge, Reading low risk, Mansfield, Sunderland, Wakefield and Stoke high risk Bigger cities have a higher absolute number of people at risk – London almost 908,000 – 25% of all jobs at risk
- #35 Cities more at risk have some features in common – they tend to be our weaker economies They are less productive, and more reliant on welfare spend per capita They also have less KIBS jobs and a lower share of high-skill workers This all look quite scary BUT if we looked at what happened in the past – this is not a new story
- #36 The world of work is in continue evolution – with jobs being created and destroyed Political protests against what is new also stretch back in the past So we looked at how automation and globalisation played out in the last century Automation - jobs like domestic servants, laundry workers and milk sellers do not exist anymore due to the advent of electrical appliances and supermarkets – they used to account for 12% of the population in 1911, and were particularly important in cities in the south Globalisation – has mainly affected mining and manufacturing as business has moved elsewhere. Used to be very important sectors, in particular in cities in the north and midlands (accounting for more than 50% of all jobs) – they now account for less than 20% of all jobs in those places. This could seem like a very bad picture BUT..
- #37 If we look at the total number of jobs in 1911 and 2016, there are more jobs now than there used to be Globalisation and automation might have destroyed some jobs but in aggregate we are better off now than a 100 years ago Technological changes have for example created jobs in IT and related occupations, some other sectors such as education and healthcare have become more important to reflect demographic changes and increased appetite for lifelong learning As a result, most cities are better off now than in 1911, there are 9 times more jobs in Slough now and most cities have more than doubled their total number of jobs. Only 7 places have less jobs now than they used to.
- #38 Similarly to what has happened in the past, the continue evolution of the world of work will make some jobs more important in the future and will create some new jobs We can’t predict what new jobs there will be in 2030 but we can look at what jobs that already exist will likely become more important in 2030.
- #39 1.4 million jobs in cities across GB is expected to grow by 2030, this means approximately 8% of the current workforce is in occupations that are expected to grow by 2030 By looking at the distribution of these jobs around the country, it is possible to see they are evenly spread – every city has in between 5 and 10% jobs likely to grow by 2030 This means that every place has potential for growth
- #40 What it is interesting however, is the composition of those jobs likely to grow By linking this information to what we know about the past evolution of the labour market we can draw some important implications
- #41 Firstly 50% of all jobs likely to grow are in publicly funded occupations, in particular higher-skilled occupations such as health professionals and teaching and educational professionals This is reflective of past trends, since 1951 publicly-funded jobs have become increasingly more important reflecting demographic changes and increased appetite for lifelong learning However, the growth in publicly-funded occupations is not evenly spread around the country and seems concentrated in weaker places which already have experienced a large growth in publicly-funded occupations Furthermore, these places have also become increasingly more reliant on welfare and incapacity benefits These things all suggest that the government have tried to compensate poor performance by private sector jobs in these places with public sector interventions
- #42 In aggregate, as the previous pie shows, growth in private sector jobs is evenly spread out among high-skill and lower-skill occupations HOWEVER, there is great variation across cities – in Cambridge almost 50% of jobs growth will be in high-skill private sector jobs such as natural and social science professionals, whereas in Bradford and Blackburn only 10% of jobs creation will be in high-skill private sector jobs. In some parts of the country most of the jobs growth in the private sector will be driven by lower-skill occupations, such as food preparation, hospitality and other elementary occupations, as it is the case for Mansfield or Stoke and Swansea. This has important implications as the current distribution of jobs is reflective of how businesses choose their location around the country
- #43 Furthermore, places which have a higher share of job growth in high-skill private sector jobs are more insulated from job losses than other cities This has an important implication as it suggests that those places that will suffer the most are also those places with less growth in high-skill private sector jobs which are the ones that make places successful
- #44 These three points suggest that GB has become a divided nation with winners and losers across the country Not only the country is economically divided, but these different economic outlooks are being reflected in the political decisions made by different parts of the country So GB is not only economically but also politically divided as the vote in the last general election and EU referendum suggest Furthermore, those places that are already considered as ‘left behind’ are also among those most exposed to this new wave of change. If the policy response we give to them is the same as the one we have given them in the past inequality will increase and some places will not receive the boost in living standards they need to catch up with the rest of the country
- #45 City centres Devolution Skills – next slide
- #46 cities should start acting now to ensure their people are prepared for this new wave of automation or able to adjust or be compensated for the changes this new wave will bring. Prepare: cities should ensure their young generations get an education tailored to the changing world of work – so schools and FE should adjust to incorporate those changes and ensure more emphasis is given to the creative element of education Adjust: people already in the workforce should be given the tools to re-invent themselves in the face of a rapidly changing labour market. The national retraining scheme proposed in the budget is a step forward but more should be done to make life-long learning part of every workers’ life perhaps by allocating a numbers of hours to training. Compensate: some individuals will be worse off, at least in the short term. These people need to be compensated and given support and this should be associated with the opportunity to retrain and develop their skills further to give them the chance to reinvent themselves.