Regional Skills Assessment Fife Insight Report

Transcription

1 Regional Skills Assessment Fife Insight Report

2 2 Contents 1 Introduction 3 The importance of skills planning in Scotland 4 Regional Skills Assessments and Skills Planning 6 National Skills Issues 6 Content 7 Appendix 1: Oxford Economics Definitions 55 Appendix 2: Key Sectors 57 2 The Fife Region 8 Fife s Economy and Place 9 Fife s People 18 3 Demand for Skills in Fife 24 Employment 25 Occupations 27 Sectors 33 Qualifications 39 4 Implications for Skills Planning 42 Fife - Current Strengths and Weaknesses 44 Looking to the Future 46 Gaps in data/evidence 48 Implications for Skills Planning 49 Utilising the Evidence Base in Planning 52 Contact Us 54

3 1 Introduction

4 Regional Insight Report 1 Introduction 4 The Importance of Skills Planning in Scotland Skills, alongside other wider and social and economic conditions, help to achieve the stated Scottish Government purpose of: creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth Significant public sector funding (some 2 billion) is invested annually to support skills development in Scotland. This, alongside employer and other partner investment, amounts to a substantial resource. To ensure it is invested wisely it is important to ensure that there is a robust evidence base to guide decisions. Current Scottish Government Strategy for skills includes Scotland s Economic Strategy, Scotland s Labour Market Strategy and Scotland s Youth Employment Strategy and also the recent UK Industrial Strategy. These, alongside the Scottish Skills Planning Model (Figure 1.1), influence skills investment. The skills planning model is evolving. Phase 2 of the Enterprise and Skills Review that reported earlier this year included a range of proposals to achieve the dual goals of (1) a dynamic, inclusive globally competitive economy and (2) a high performing, inclusive labour market. Work is ongoing on these proposals that include regional partnership models, learner journey models and, of most relevance to skills planning, proposals for skills alignment. Figure 1.1 Scottish Skills Planning Model The vision for skills alignment is for skills services to be fully aligned to deliver the learning and skills necessary for sustainable and inclusive economic growth. A project is in place to achieve this; the purpose of which is to align the relevant functions of the Scottish Funding Council (SFC) and Skills Development Scotland (SDS) to ensure that Scotland s people and businesses are equipped with the right skills to succeed in the economy, not just now but in the future. The proposals include the development of a five step planning model (Figure 1.2) and a Governance Structure (Figure 1.3). Figure 1.2 Five Step Model At the time of writing, SFC and SDS are engaged with Scottish Government to develop a detailed implementation plan to carry through the reforms identified. Work that has been agreed to take place in the short term includes: The development of Terms of Reference for a strategic Skills Hub of the Strategic Board Skills Committee; Development of the five step model to confirm the deliverables of each stage; and

5 Regional Insight Report 1 Introduction 5 The appointment of a Director of Skills Alignment reporting jointly to the Directors of SDS and SFC. Evidence developed through Regional Skills Assessments now and in their future evolution can help inform Step One of the five step model. This iteration, unlike in previous versions, focuses much more on demand side evidence to support Step One of the proposed planning process. Figure 1.3 Governance Regional Skills Assessments and Skills Planning Regional Skills Assessments (RSAs) were first launched in 2014 and have evolved over time as a result of feedback from an independent review (2015 by the Training and Employment Research Unit) and ongoing partner consultation, as part of a continuous improvement process. Their purpose is to: Support partners in strategic skills investment planning including: The two national skills agencies SDS and SFC (in conjunction with Regional Colleges, Strategic Bodies and College Boards); Enterprise Agencies and regional and local partnerships; and Identify gaps in evidence that require to be addressed. To ensure an inclusive approach to their development, dissemination and utilisation, RSAs are produced by SDS in partnership with Highlands and Islands Enterprise (HIE), Scottish Enterprise (SE), SFC and the Scottish Local Authorities Economic Development Group (SLAED). RSAs include the use of recently published datasets..

6 Regional Insight Report 1 Introduction 6 Inevitably, when using published data there is a time lag but the data contained is the most up to date available at the time of writing. Feedback from partners has indicated that an area of evidence they wished to see more was in relation to forecasting. Given this, RSAs also include forecast data that has been commissioned through Oxford Economics. These forecasts are based on three factors: National/regional outlooks all the forecasting models they operate are fully consistent with the broader global and national forecasts which are updated on a monthly basis; Historical trends in an area (which implicitly factor in supply side factors impinging on demand), augmented where appropriate by local knowledge and understanding of patterns of economic development; and Fundamental economic relationships which interlink the various elements of the outlook. As with all forecasts, certain caveats need to be applied. They are based on what we know now and include past and present trends projected into the future. They can therefore be affected by potential disruptors (e.g. Brexit) and unforeseen events and their value is in identifying likely directions of travel rather than predicting exact figures. The more disaggregated they become, especially at smaller geographical units, the less reliable they are likely to be. The historical data on which the forecasts are based is subject to revision and may be volatile, particularly at a sub-regional and sub-sectoral level. Therefore forecasts at a higher, less disaggregated level are more robust than the detailed breakdowns. They also cannot take into account recent developments that may be happening at local level or an individual firm s perspective, so inevitably they lack nuance. Finally, the occupational (SOC) and sectoral (SIC) classifications should be looked at to understand how an occupation or industry is defined. Links have been given to facilitate this in the relevant sections. Education, for example, is an industrial sector that takes in a wide variety of teaching and educative functions e.g. driving instructors. It is recommended therefore that users examine trends over time rather than focusing on changes in individual years, use caution at the more granular level and examine occupational and sectoral definitions where relevant. National Skills Issues Prior to the publication of RSAs, SDS has published a national skills assessment Jobs and Skills in Scotland. This report highlights key strengths of Scotland s skills alongside challenges to be addressed, as well as pointing to drivers that will have an impact on skills and skills planning and outlining potential forecasts for the future. Nationally, it is recognised that, following the recession: Employment in Scotland has recovered and is above pre-recession levels; Many key sectors (see Appendix 2) have had good employment growth despite difficult trading conditions; Scotland has maintained a highly skilled workforce; and The economy offered a range of opportunities for young people after school. That said, on demand for skills, growth rates for the Scottish economy remain behind that of the UK and, although productivity has improved, Scotland s record remains poor. Also, although employment has recovered since the recession we have seen: A rise in non standard jobs - part time employment, self employment and nonpermanent employment have grown;

7 Regional Insight Report 1 Introduction 7 Increases in jobs at the top, maintained jobs at the bottom and declining jobs in intermediate occupations akin to an hour glass shape. This presents challenges for progression in the workplace, underemployment and under utilisation of skills; and Low pay and in-work poverty as of continuing concern. The report points to key areas of uncertainty for the skills environment such as the impact of Brexit, productivity challenges, societal change and automation. It also provides some indicative forecasts for the future through modelling by Oxford Economics that highlight: Political uncertainty is likely to restrict the pace of economic development in the short term, and this will curtail job creation. Growth is forecast to accelerate towards the end of this decade, but Scotland is projected to underperform the UK as a whole; Total employment in Scotland is forecast to rise by 84,800 by 2027, equivalent to an average annual growth rate of 0.3 per cent. The comparable figure for the UK is 0.5 per cent; The forecast period will see a shift in the sectoral composition of employment in Scotland. Rising employment in Business services, Wholesale & retail trade, Construction, and Health & social work will be accompanied by a reduction in Manufacturing and Public administration; These sectoral changes will affect the occupational profile of Scotland s workforce. There will be an increase in the number of Elementary clerical and service occupations and Business and public service professionals. But job losses in Manufacturing will see fewer Process, plant and machine operatives and Skilled metal and electrical trades; and Scotland s largest urban centres will lead job creation. Together, Edinburgh City and Glasgow City are forecast to account for three in every four new jobs created. Employment is forecast to fall in around a third of Scottish council areas over the forecast period. Finally, the report outlines four significant challenges and opportunities in relation to jobs and skills: 1. Boosting productivity will be vital for our long term prosperity. 2. Our growth needs to be more inclusive. 3. Scotland s demographics represent some significant challenges - and Brexit may exacerbate these. 4. The world of work is changing - we need to support businesses and individuals to navigate and embrace that change. Content It is within this national context that this RSA has been developed. The RSA for Fife is in three parts (1) a summary A3 infographic (2) an insight report and (3) a slidepack of charts and tables for utilisation by partners. This report the insight report - is in three parts: The Fife Region an introduction to the region s economy and its people; Demand for skills past, current and forecast demand for total employment, occupations and sectors; and Implications for planning key issues and challenges, gaps in evidence and an assessment of implications for skills and wider economic and social development planning.

8 2 The Fife Region

9 Regional Insight Report 2 The Fife Region 9 The Fife region is made up of one local authority area; Fife. This section outlines key characteristics of the region focusing on its economy, place and people. It is intended to be a brief introduction rather than a comprehensive picture and will necessarily need to leave some elements out as a result. Fife Economy and Place GVA and Productivity In relation to the Scottish economy, Fife is a low output and high productivity region (Figure 2.1). The region is a mixed urban and rural economy and, based on 2015 data, it contributed 6,662 million in GVA; around five per cent of output for Scotland and the eighth highest regional (i.e. ROA region) output in Scotland. At 20 per cent of regional output (2015 figures), the Manufacturing sector contributed the highest sectoral output for the region, followed by Wholesale and retail trade (11 per cent) and Real estate activities (ten per cent). Regional productivity (measured as GVA per job, 2015) was 44,724, below the Scotland average of 45,900 and the fifth highest regional productivity in Scotland. 1 GVA is the measure of the value of goods and services produced. In terms of local authority performance: Fife was fifth out of the 32 local authorities in terms of share of output to the national economy in 2015; and In terms of productivity, Fife was 14 th out of the 32 local authorities in terms of productivity measured as GVA per job, above the Scottish average. Looking to the future, GVA growth in Fife is forecast 2 to average 1.4 per cent between 2017 and This is slower than forecast growth for Scotland (1.7 per cent) and the UK (2.0 per cent). Rising inflation is likely to impact sectors which are dependent on consumer spending. Meanwhile, continued political uncertainty and rising currency costs will impact business confidence generally. Manufacturing and wholesale and retail account for almost a third of the Fife economy. Given their size they are expected to drive GVA growth over the forecast period. Significant contributions to growth are also expected from real estate activities, human health and the construction sector. However, they will not be the fastest growing. The fastest growing sectors over the forecast period are expected to be Information and communication, Professional, scientific and technical activities and Administrative and support services. 2 Forecasts by Oxford Economics. Continued austerity measures are likely to impact public sector growth over the outlook period. The education sector is expected to decline slightly over the forecast period whereas the public administration sector will experience a more pronounced contraction.

10 Regional Insight Report 2 The Fife Region 10 Figure 2.1 Distribution of GVA ( million, constant 2013 prices) and Productivity (per job) by Region, 2015 Source: Oxford Economics Productivity Aberdeen and Aberdeenshire Low GVA, High Productivity 2 High GVA, High Productivity Edinburgh, East & Midlothian 1 West Glasgow Region Fife 2 Low GVA, Low Productivity Lanarkshire 1 Tayside 1 2 Ayrshire Output (GVA) High GVA, Low Productivity West Lothian Highlands and Islands Dumfries & Galloway Forth Valley South of Scotland 1 Borders Note: the data is scaled - the units used are standard deviations from the mean.

11 Regional Insight Report 2 The Fife Region 11 Figure 2.2 Distribution of GVA ( million, constant 2013 prices) and Productivity (per job) by local authority, 2015 Source: Oxford Economics Productivity Aberdeen City 2 Aberdeenshire Low GVA, High Productivity Moray Edinburgh City High GVA, High Productivity East Renfrewshire 1 Inverclyde South Ayrshire West Dunbartonshire East Dunbartonshire Renfrewshire Perth and Kinross Angus Fife Glasgow City Clackmannanshire South Lanarkshire North Lanarkshire East Lothian North Ayrshire Output (GVA) Highland Falkirk West Lothian Midlothian Dundee City Low GVA, Low Productivity Eilean Siar Dumfries and Galloway East Ayrshire 1 Scottish Borders Shetland Islands Stirling Argyll and Bute Orkney Islands High GVA, Low Productivity Note: the data is scaled - the units used are standard deviations from the mean.

12 Regional Insight Report 2 The Fife Region 12 The Business Base There is a total of 9,215 businesses currently operating within Fife. Of these, 18 per cent (1,645 businesses) are operating within the Professional, scientific and technical sector, with a further 12 per cent within the Construction sector (1,115 businesses). The regional business base can be said to be relatively diverse, with a reasonable share of businesses across a number of different sectors. The regional sectoral breakdown of the business base is virtually identical to the national split, with the only difference of greater than one percentage point being in Agriculture, forestry and fishing (seven per cent in Fife compared to ten per cent nationally). Table 2.1 Sectoral Breakdown of Business Base, (2016) Source: UK Business Counts. Fife Agriculture, forestry & fishing 7% 10% Production 7% 6% Construction 12% 11% Motor trades 3% 3% Wholesale 3% 3% Retail 9% 8% Transport & storage 3% 3% Accomm.& food services 8% 8% Information & communication 5% 6% Financial & insurance 1% 2% Property 2% 3% Professional, scientific & technical 18% 19% Business administration & support services 7% 7% Public administration & defence 3 0% 0% Education 1% 1% Health 4% 4% Arts, entertainment, recreation & other services 8% 7% Scotland Total 9, ,905 3 Please note from ONS: All figures are rounded to avoid disclosure. Values may be rounded down to zero and so all zeros are not necessarily true zeros. Totals across tables may differ by minor amounts due to the disclosure methods used. Furthermore, figures may differ by small amounts from those published in ONS outputs due to the application of a different rounding methodology.

13 Regional Insight Report 2 The Fife Region 13 In relation to all regions in Scotland, the business density (number of businesses per 10,000) in Fife ranks 11 th out of the 14 regions, with a density of 249 businesses per 10,000 population. At the local authority level, the area ranks 24 th out of 32 local authorities. In terms of business size (2016), Fife has an identical split to Scotland in that micro businesses employing zero to nine people comprise the majority of businesses within the region (88 per cent - Table 2.2). Table 2.2 Proportions of businesses by size band, 2016 Source: UK Business Counts % of businesses by size band Fife Scotland % 88% % 10% % 2% 250+ <1% <1%

14 Regional Insight Report 2 The Fife Region 14 The number of business births within a region can indicate dynamism in that region s economy. By business births per 10,000 of the population, Fife ranks 10th out of the 14 regions with a business birth rate of 34 per 10,000 population. At the local authority level, this rate puts Fife at 17 th out of 32. Looking at births, deaths and survival rates together over time enables us to see the broader picture however. The business birth rate peaked in 2007 before decreasing during the recession; there has, however, been almost annual growth since noticeably from Despite this - and driven by a sharp decrease 2014 to 2015 the overall trend in the business birth rate has been one of decline, from 37 per 10,000 population in 2005 to 34 in Similarly, whilst the business death rate increased sharply during the recession, the overall trend has been one of decline falling from 29 per 10,000 population in 2005 to 24 in Finally, the business survival rate, using 2010 as the baseline year, has been falling overall although less sharply since Figure 2.3 Business births and deaths per 10,000 population ( ) and Business survival index ( ) Source: ONS Business Demography and Mid-Year Population Estimates per 10,000 population Business Births per 10,000 population Business Survival Rates, Recession ( ) Business Deaths per 10,000 population Index, 2010 = Note: Business Survival Rates only available for in Evidence Base.

15 Regional Insight Report 2 The Fife Region 15 Business Expenditure on Research and Development (BERD) The value of Business Expenditure on Research and Development (BERD) in Fife was below the national average. Measured by BERD per head of the population, expenditure in Fife was 65 compared to a Scotland average of 162. The level of expenditure in Fife was similar to the rural regions of the Borders and the Highlands and Islands. BERD expenditure in Fife seem low considering the prominence of manufacturing in the local economy, a sector that is associated with higher levels of BERD. Earnings The average weekly resident earnings in Fife were below the national average. Earnings were 426, 8 below the national average. Average weekly workplace earnings in the region had a greater gap to the national average, 39 lower in the region compared to the national average. Further information is provided in Table 2.3. Table 2.3 Resident and workplace based earnings, 2016 (Median) Source: Annual Survey of Hours and Earnings, 2016 Provisional figures. Figures based on weekly pay of all workers. Area Resident Earnings Workplace Earnings Fife Scottish Average The difference between where a person lives (resident earnings) and where they work (workplace earnings) can tell us whether: Individuals are more likely to travel to other local authorities to work and, therefore, Whether their skills are retained within that local authority or leak outside. Difference between resident and workplace earnings Commuting flows can also help us understand this.

16 Regional Insight Report 2 The Fife Region 16 Commuting According to 2011 Census data, Fife has the 13 th lowest rate of out-commuting in Scotland of all 32 local authorities, with 23 per cent of people commuting out of the area for employment. If we look at the total trips made in Fife (all trips, including those made within the region), the most common destinations are Fife (77 per cent), Edinburgh City (11 per cent), Dundee (four per cent), and Perth and Kinross (two per cent). Table 2.4 Fife out commuting proportions by occupational grouping (SOC) Source: Origin Destination statistics by Local Authority, open access (WB07BUK_la), UK Data Service Note: denominator = total trips out of the local authority 5 SOC 1-3 SOC 4-6 SOC 7-9 Fife 54% 25% 21% If we look only at those who commute out of the area by occupational grouping, we see that over half (54 per cent) are in highly skilled occupations (SOC 1 3) 4, with a relatively even split of SOC 4-6 and SOC 7-9 occupations thereafter (Table 2.5). This partially corroborates the occupational profile of the area, with highly skilled occupations the largest occupation grouping within Fife. Further, some of the largest employing sectors within the region are relatively lower skilled e.g. Wholesale and retail trade which may encourage those with higher skill levels to commute outwith the area to access appropriate skilled employment opportunities. 4. Managers, Directors and Senior Officials (SOC 1), Professional Occupations (SOC 2) and Associate Professional and Technical Occupations (SOC 3) 5 A link to the Standard Occupational Classification is here: ard-occupational-classification/ons_soc_hierarchy_view. html

17 Regional Insight Report 2 The Fife Region 17 Deprivation The main areas of deprivation in Fife are spread across the centre of the region (Figure 2.4). Of the 494 datazones in the Fife region, 37 (seven per cent) were in the top 10% most deprived in Scotland with 22 (four per cent) in the least deprived areas in Scotland. The least deprived areas in Fife are spread across the north of the region, spatially concentrated in St Andrews. The main areas of deprivation in Fife include Kirkcaldy, Lochgelly and Leven - a town previously dominated by industry. The main issues with deprivation in Fife are with education and employment (nine per cent of all Fife datazones in 10% most deprived nationally for each indicator). That said, SIMD identifies deprived areas - not people. Guidance on the use of SIMD by Scottish Government highlights that: Figure 2.4 Deprivation in Fife by SIMD (2016) 7 Deciles 1-10 Source: Scottish Government and Ordnance Survey, 2016 Fife Deprivation (SIMD 2016) Deciles 1-2 (Most Deprived) Deciles 3-4 Deciles 5-6 Deciles 7-8 Deciles 9-10 (Least Deprived) Not all deprived people live in deprived areas: Two out of three people who are income deprived do not live in deprived areas; and Not everyone in a deprived area is deprived: Just under one in three people living in a deprived area are income deprived 6. This is important when analysing deprivation, particularly in rural areas See SIMD interactive map here: TTFTT/11/ / /. Data contains Scottish Government data Crown copyright 2016.Base: Ordnance Survey Crown copyright 2016 & database right

18 Regional Insight Report 2 The Fife Region 18 Fife s People In introducing Fife s people, we outline information on demography, labour market participation, qualifications and attainment. Demography The total population of Fife in 2016 was 370,330. This made the region one of the smallest regions measured by population and of a similar size to the geographically larger Ayrshire. The population of Fife is older compared to Scotland as a whole, and there is a noticeable dip in the proportion of the population aged early 20 s to late 30 s compared to the national average which suggests that young working aged people are leaving the region to pursue work, training or other opportunities. The region has a noticeable number of people aged in their late 40 s and early to mid 50 s, there is also a noticeable spike for the Baby Boom generation - those aged 69 are one of the largest age groups in the region Table 2.5 Population projections, % change by age band, Source: National Records of Scotland Fife 2% -3% -8% -12% 22% 91% Scotland 1% -8% -2% -6% 27% 85% Within the region and for Scotland as a whole, the overall finding of population change by age band is growth of those aged 65 and over, with a subsequent reduction in the working age population (Table 2.6). Fife is expected to have proportionally greater losses of those aged than the national average, whilst growth of those aged 75+ in the region will surpass growth of this age group nationally. Based on 2014 population projection data, it is estimated that the population of Fife will be 386,963 by 2039; an increase of 19,713 (or five per cent). For comparison, the forecast national rate of change over this period is growth of seven per cent.

19 Regional Insight Report 2 The Fife Region 19 Labour Market Participation The overall employment rate in the region (72 per cent) was slightly below the national average (73 per cent) in As Figure 2.5 shows, Fife had low unemployment and high inactivity. As of 2016, a total of 7,700 working age people were unemployed in Fife, accounting for six per cent of the national total (128,400) 9. The ILO unemployment rate in the region was 4.4 per cent, which was lower than the national average (4.9 per cent). The economic inactivity rate for Fife was 24 per cent in 2016, slightly above than the national rate (23 per cent) 10. People can be economically inactive for a number of reasons, for instance they might be a student, looking after their family and home, long term or temporarily sick, discouraged or retired (before aged 65). In Fife, the University of St Andrews and Fife College campuses encourage young people and adults to remain or come to the region to study. Students therefore could account for some of those inactive, however many people in the region could be inactive for the other reasons mentioned above. Finally, the youth (16-24) unemployment rate 11 for Fife was 16 per cent in This was lower than the national rate (12 per cent). 9 Source: ILO Unemployment rate. 10 Source: Annual Population Survey, Economic Inactivity Rate 11 Source: Annual Population Survey, Unemployment rate

20 Regional Insight Report 2 The Fife Region 20 Figure 2.5 Unemployment (ILO) and Economic Inactivity by RSA Region, Jan-Dec 2016 Source: Annual Population Survey (resident based) Economic inactivity rate, working age population Glasgow Region Ayrshire Low Unemployment, High Inactivity High Unemployment, High Inactivity Edinburgh, East & Midlothian 1 Fife -2 West Lothian Tayside Working Age Population (ILO) Lanarkshire Dumfries & Galloway West Region Forth Valley South of Scotland Borders Aberdeen and Aberdeenshire 1 Low Unemployment, Low Inactivity High Unemployment, Low- Inactivity Highlands and Islands Note: the data is scaled - the units used are standard deviations from the mean. 2

21 Regional Insight Report 2 The Fife Region 21 Figure 2.6 Unemployment (ILO) and Economic Inactivity by Local Authority, Jan-Dec 2016 Source: Annual Population Survey (resident based) Economic inactivity rate, working age population Glasgow City Dundee City East Ayrshire North Ayrshire Low Unemployment, High Inactivity 1 Edinburgh City South Ayrshire Inverclyde West Dunbartonshire Fife Stirling East Lothian Aberdeen City Clackmannanshire High Unemployment, High Inactivity North Lanarkshire East Dunbartonshire West Lothian Dumfries and Galloway Midlothian Renfrewshire South Lanarkshire East Renfrewshire Moray Perth and Kinross Falkirk Argyll and Bute Angus Highland Scottish Borders Working Age Population (ILO) Eilean Siar 1 Aberdeenshire 2 Low Unemployment, Low Inactivity High Unemployment, Low Inactivity Shetland Islands Note: the data is scaled - the units used are standard deviations from the mean. ILO Unemployment estimate for Orkney Islands is not available since the group sample size is zero or disclosive (0-2) and thus omitted.

22 Regional Insight Report 2 The Fife Region 22 Working Age Qualifications (16-64) Fife has more intermediate qualifications and fewer advanced than the national average. The main points are detailed below: Fife has a lower level of advanced qualifications (SCQF 7-12) than the national level (39 per cent compared to 44 per cent in 2016); The level of intermediate qualifications (SCQF Levels 5 and 6) within Fife is higher than the national level - 32 per cent compared to 28 per cent national; and The level of lower qualifications (SCQF 1-4 and no qualifications) in Fife (18 per cent) is just below the national average (19 per cent).

23 Regional Insight Report 2 The Fife Region 23 School Leavers Destinations In 2015/16, Fife had 36 per cent of school leavers going into Higher Education, just below the Scottish average (37 per cent). Over a quarter (26 per cent) of school leavers went into further education as their initial leaver destination, higher than the Scottish average (22 per cent). Employment as an initial leaver destination was 25 per cent, below the Scottish average. Unemployment as an initial leaver destination was eight per cent, in line with the Scottish average. Over the period 2009/10 and 2015/16, there has been a decrease in the proportion going into further education in Fife (by six percentage points), with an increase in higher education as a destination (by six percentage points). Employment as a destination has also risen (by eight percentage points) whilst unemployment as a destination declined (by eight percentage points). The recovery from the economic downturn may have affected some of these destinations as those who may normally have gone into employment were dissuaded from entering a depressed labour market or become unemployed. As the labour market has picked up, this might be a factor in explaining: The drop in the proportions going into unemployment; and The increase in leavers going into employment instead of further education. Table 2.6 School Leaver Destinations, 2009/10 and 2015/16 Destination Higher education (%) Fife 2009/10 31% 2015/16 36% Change 5% Further education (%) 2009/10 32% 2015/16 26% Change -6% Employment (%) 2009/10 17% 2015/16 25% Change 8% Unemployment (%) * 2009/10 16% 2015/16 8% Change -4% * Unemployment Seeking and Unemployment Not Seeking In terms of the 2017 Annual Participation Rate (16-19 year olds) 12, Fife had a rate of 88.7 per cent, below the Scotland average of 91.1 per cent Annual Participation Measure, % of year olds participation 1st April 2016 to 31st March dia/43580/2017_annual-participation-meas ure-report-29th-august-2017.pdf

24 3 Demand for Skills in Fife

25 Regional Insight Report 3 Demand for Skills in Fife 25 Demand for Skills 11 in Fife This section outlines past, current and forecast trends for total employment and sectors, occupations and qualifications. These forecasts have been developed by Oxford Economics 12 and, like any forecasts, they are based on what we know now and include past and present trends projected into the future. They can therefore be affected by potential disruptors (e.g. Brexit) and unforeseen events and their value is in identifying likely directions of travel rather than predicting exact figures. Finally, the more disaggregated they become, especially at smaller geographical units, the less reliable they are likely to be. Total Employment As shown in Figure 3.1, total employment (jobs) within Fife currently ( ) sits at around 150,300, representing regional employment growth of 0.7 per cent since 2000 (compared to ten per cent nationally). Employment in Fife has been subject to moderate fluctuation over this period, increasing from 149,300 in 2000 to a high of 156,000 in Note: The forecast period for skills demand is defined as follows: Total employment: 2017 and 2027; Total Requirement: 2017 to 2027 (inclusive). 14 For more information of the methodology used in the Oxford Economic forecasts, please see the Regional Skills Assessments section of the Skills Development Scotland website: partnerships/regional-skills-assessments/ 15 Note: 2017 is itself a forecast. A decline can be seen pre-recession from 2006, which carried on through the recession years, with a partial recovery from However, employment is forecast to be subject to more moderate change over the next forecast period, with a slight increase (1.3 per cent) between 2017 and This contrasts with Scotland-wide growth of 3.1 per cent. Figure 3.1 Total Employment Projections (jobs), Source: Oxford Economics '000s Total employment (jobs)

26 Regional Insight Report 3 Demand for Skills in Fife 26 Moving on to employment by gender and status (fulltime/part-time), Figure 3.2 illustrates the change in employment over time. The number of male full-time jobs peaked in 2007 (at 65,400 jobs) and, while it has been on a minor upward trend over the last five years, it is projected to level out to In contrast, female full-time jobs are projected to increase steadily over this time. Part-time employment is forecast to increase very slightly for both males and females, reflecting a national trend of increasing part-time employment. Figure 3.2 Total Employment (jobs) projections, by status and gender Source: : Oxford Economics Male full-time Male part-time Female full-time Female part-time '000s

27 Regional Insight Report 3 Demand for Skills in Fife 27 Occupations In this section, we look at two measures of forecast demand: Total Employment: the numbers within each occupational grouping. The total numbers employed in 2017 and then in 2027 are contrasted. Total Requirement: instead of overall numbers employed, we look at the numbers of positions that are actually forecast to open up, mainly due to people retiring but also net migration and movement into other occupations (replacement demand) as well as those that open up due to new, additional positions being created (expansion demand). Total Requirement is summed across the years (inclusive). At any one time, Total Employment will be higher than Total Requirement; that is, the total numbers in the occupational structure will be higher than the positions that open up within that structure. Occupational Structure Total Employment past to present Figure 3.3 illustrates how the occupational structure of Fife has changed between 2000 and Figure 3.3 Fife Occupational Structure, 2000 and 2017(people, 000s) Source: Oxford Economics. Source: ONS, Annual Population Survey Managers, directors & senior officials Professional Professional occ. & tech. occ. Admin. & secretarial occ. Skilled trades Caring, leisure & other service Sales & customer service Process, plant & machine operatives Elementary occ. Total

28 Regional Insight Report 3 Demand for Skills in Fife 28 Professional occupations increased by 69 per cent over this period, becoming the largest occupational group, with 31,900 people employed in these roles. In 2000, Professional occupations was the third largest group, behind Skilled trades - which increased slightly over this period, and Elementary occupations, which declined over the same period. The highest level of growth has been in Professional occupations, followed by Caring, leisure and other services, which increased by 61 per cent. Four occupational groups decreased between : Process, plant and machine operatives (34 per cent), Administrative and secretarial roles (22 per cent), Managers, directors and senior officials (16 per cent), and Elementary occupations (four per cent). Occupational Structure Forecast Total Employment The occupational structure of the Fife region is forecast to remain relatively stable between 2017 and 2027, with only minor increases or decreases in occupational groups. The largest such changes are in Skilled trades and Process, plant and machine operatives, both of which will decrease by 150 jobs. Again utilising the Oxford Economics data, we can analyse the occupational structure in 2027 by total employment (people) and total requirement (people). Firstly, in terms of employment (people), the largest occupational grouping across the region is Professional occupations, with 8,800 people projected to come under this category in 2027 (Figure 3.4). The next largest occupational groupings are Elementary occupations and Skilled trades, both with 7,400.

29 Regional Insight Report 3 Demand for Skills in Fife Figure 3.4 Total employment (people, 000s) by occupation, 2017 and 2027 Source: Oxford Economics. Note: Data labels for 2027 only. Managers, directors & senior officials 11.1 Professional occupations 32.1 Associate professional & technical 16.8 Administrative & secretarial occupations 13.5 Skilled trades occupations Caring, leisure & other service Sales & customer service occupations 16.3 Process, plant & machine operatives 8.6 Elementary occupations 20.8

30 Regional Insight Report 3 Demand for Skills in Fife 30 As shown in Table 3.1, by 2027 the proportion of occupations which are higher skilled is 38 per cent, with the 2027 figures identical to Table 3.1 Proportion of occupations at higher, middle and lower levels of labour market, 2027 Source: Oxford Economics Forecast data. N.B. These groupings are categorised as follows: Higher level 16 SOC codes 1 to 3; Middle level SOC codes 4 to 6; and Lower level SOC codes 7 to 9. Fife Higher level jobs 38% Middle level jobs 33% Lower level jobs 29% The occupational structure of Fife is such that the highest proportion of jobs are at the top of the occupational structure, followed by the middle and then the bottom. Occupational Structure Forecast Total Requirement Employment, described above, refers to total employment numbers within the sector. Total requirement refers to job openings that arise as a result of: Expansion demand increases in jobs as a result of growth in the economy; and Replacement demand jobs generated as result of people who retire, change jobs or move away. In terms of total requirement (people), 61,500 people in total are forecast to be required over the period (Table 3.2). This is driven predominantly by replacement demand, with only very small expansion demand (400 people). 16 See the following for the use of SOC 1-3 to define high level jobs: forms/technotes/graduates

31 Regional Insight Report 3 Demand for Skills in Fife 31 Table 3.2 Expansion demand, replacement demand and total requirement (people, 000s), Fife, Source: Oxford Economics Forecast data. Occupation Expansion Demand Replacement Demand Managers, directors & senior officials Professional occupations Associate professional & technical occupations Administrative & secretarial occupations Skilled trades occupations Caring, leisure & other service occupations Sales & customer service occupations Process, plant & machine operatives Elementary occupations Total Total Requirement

32 Regional Insight Report 3 Demand for Skills in Fife 32 Professional occupations are forecast to have the highest levels of total requirement (16,100 people). This is followed by Elementary occupations (14,100 people) and Sales and customer service occupations (7,800). Some other key points are: At a finer level of detail (two-digit SOC level), the Elementary occupations which have the highest requirement are Elementary clerical and service occupations (11,000 people). The requirement for Professional occupations is driven by Teaching and research professionals (7,300 people) and Science and technology professionals (3,600 people) at the two-digit SOC level. Finally, at this disaggregated level there is also a high requirement for Sales occupations (7,900 people), Caring personal services (3,700 people), and Health professionals (3,000 people). Occupational demand therefore takes on an hourglass shape, as shown in Table 3.3, with demand strongest near the top and bottom of the occupational structure, largely due to Professional occupations and Elementary occupations. Table 3.3 Percentage of total requirement at higher, middle, and lower levels of labour market, Source: Oxford Economics Forecast data. N.B. These groupings are categorised as follows: Higher level SOC codes 1 to 3; Middle level SOC codes 4 to 6; and Lower level SOC codes 7 to 9. Fife Higher level jobs 37% Middle level jobs 25% Lower level jobs 38% Conclusions on Occupational Demand For Total Employment, the occupational structure of Fife in both 2017 and 2027 is such that the highest proportion of occupations are at the top of the occupational structure and lowest at the bottom. However for Total Requirement, actual forecast job openings (total requirement) takes on an hourglass shape, with demand highest at the top and bottom of the structure. The number of people falling into each occupational group will remain largely consistent from 2017 to Therefore, very minimal expansion demand is forecast for each group.

33 Regional Insight Report 3 Demand for Skills in Fife 33 Sectors Total Employment by Industrial Sector 17 The highest current employing industrial sectors are Wholesale and retail trade, with around 24,100 jobs, and Human health and social work, with around 21,400 jobs (Figure 3.5). The same sectors are forecast to still be the highest employing sectors in 2027, and both sectors are set to grow to around 25,100 and 22,000 jobs, respectively. Other key changes over the forecast period include a decline in Manufacturing (1,600 jobs) and in Public administrative and defence (1,200 jobs). 17 See definitions of Industrial Sectors (SIC) down to 4 digits here: standard-industrial-classification/ons_sic_hierarchy_view. html Figure 3.5 Total employment (jobs) by industrial sector, 2017 and 2027 Source: Oxford Economics. Note: Data labels for 2027 only. Wholesale and retail trade Human health and social work Manufacturing Education Public admin. and defence Construction Accommodation and food services Professional, scientific and technical Admin. and support services Other service activities Transport and storage Arts, entertainment and recreation Financial and insurance activities Information and communication Agriculture, forestry and fishing Water supply, sewerage, waste management Real estate activities Electricity, gas, steam and air conditioning Mining and quarrying

34 Regional Insight Report 3 Demand for Skills in Fife 34 Other large sectors in terms of total employment in 2027 are Manufacturing (15,000 jobs), and Education (12,500 jobs), which both represent a larger proportion of total employment in Fife than they do at the national level. The largest two-digit sectors within Manufacturing in Fife are Manufacture of machinery and equipment and Manufacturing of other transport equipment (both 2,300 in 2017), both of which will decline slightly by Breaking down total employment (jobs) further in Fife (by two-digit SIC code), the Retail trade 18 currently has 16,300 jobs, projected to increase slightly to 16,900 by This is therefore the largest sector at 2 digit level within Wholesale and retail trade activities, which also includes Wholesale trade (except of motor vehicles - 5,000 by 2027) and Wholesale and retail trade (3,000 in 2017). The second largest sector by two-digit SIC code is Public administration and defence, which currently has 13,100 jobs, projected to fall by nine per cent to around 11,900 by The third largest sector by two-digit SIC code is Education, accounting for 12,900 jobs, and also forecast to decline to 12,500 in Formal definition = Retail trade (except of motor trades, SIC 4.7).

35 Regional Insight Report 3 Demand for Skills in Fife 35 Total Requirement ( ) by Industrial Sector 19 We now move from total employment to total requirement i.e. job openings (Table 3.4). Overall, there are a projected 60,700 jobs forecast over the period in Fife. This is primarily driven by replacement demand (59,100 jobs), with some expansion demand also anticipated (1,700 jobs). Wholesale and retail is the sector in Fife which is forecast to have the highest level of job openings, with around 15,900 people in total required over the period , of which 900 are expansion demand. The forecast requirement in Human health and social work activities, which has the next largest total, is 6,400 people. This is followed by Accommodation and food services (6,200 people) and Education (4,900 people). 19 Note: there are no 2 digit SIC breakdowns for total requirement Table 3.4 Expansion demand, replacement demand and total requirement (jobs, 000s), Fife Source: Oxford Economics Forecasts Sector Expansion Demand Replacement Demand Agriculture, forestry and fishing Mining and quarrying Manufacturing Electricity, gas, steam and air conditioning Water supply, sewerage, waste management Construction Wholesale and retail trade Transport and storage Accommodation and food services Information and communication Financial and insurance activities Real estate activities Professional, scientific and technical Admin. and support services Public admin. and defence Education Human health and social work Arts, entertainment and recreation Other service activities Total Requirement Total Note that the total here will be different to equivalent tables for Occupations (Table 3.2) and Qualifications (Table 3.5) as Sectoral requirement is defined by jobs whereas requirement for Occupations and Qualifications is defined by people.

36 Regional Insight Report 3 Demand for Skills in Fife 36 Employment by Key Sector 20 By key sector, Health and social care and Construction are the largest employing sectors in Fife (Figure 3.6), with 21,400 and 13,200 jobs, respectively. Both sectors are forecast to grow over the forecast period, and will continue to have the highest amount of jobs in 2027, with 22,000 jobs forecast in Health and social care and 14,300 in Construction. Conversely, Engineering, the third largest key sector in terms of employment numbers, will decline in size by 700 jobs over this period, the biggest change of any key sector. Figure 3.6 Total employment (jobs, 000s) by key sector, 2017 and 2027 Source: Oxford Economics. Note: Data labels for 2027 only Health and social care Construction Engineering Tourism Financial and business services ICT/digital Food and drink Creative industries 3.7 Energy 2.2 Life sciences Chemical sciences See Appendix 2 for definitions of Key Sectors

37 Regional Insight Report 3 Demand for Skills in Fife 37 Total Requirement ( ) by Key Sector Tourism is the key sector in Fife which is forecast to have the highest requirement of jobs over the period , with around 7,200 jobs required (Table 3.5). Health and social care is also projected to have a high requirement for jobs, with a forecast requirement for 6,400 people, largely due to replacement demand. Of all key sectors, Construction and Tourism have the highest level of expansion demand, with 1,100 and 600 new jobs forecast respectively. Table 3.5 Expansion demand, replacement demand and total requirement (jobs, 000s), Fife, Source: Annual Survey of Hours and Earnings Key Sector Expansion Demand Replacement Demand Total Requirement Chemical sciences Creative industries Construction Energy Engineering Food and drink Financial and business services Health and social care ICT/digital Life sciences Tourism Total