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/