HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW

Transcription

1 HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014

2 CONTENTS CONTENTS 2 EXECUTIVE SUMMARY 1 INTRODUCTION 6 1. THE ECONOMIC CONTEXT DEMAND FOR LABOUR AND SKILLS SUPPLY OF LABOUR EDUCATION AND TRAINING ACTIVITY COMPARING LABOUR SUPPLY AND DEMAND 69

3 LIST OF FIGURES FIGURE 1: UK QUARTERLY ECONOMIC GROWTH FIGURE 2: PROJECTED UK ECONOMIC GROWTH RATES IN 2014 AND FIGURE 3: TOTAL POPULATION IN 2013, AND GROWTH BETWEEN 2003 AND 2013 BY DISTRICT 18 FIGURE 4: POPULATION GROWTH IN HERTFORDSHIRE AND ENGLAND BY DECADE 18 FIGURE 5: TEN-YEAR GROWTH POPULATION RATES SINCE 1983 ACTUAL AND PROJECTED 19 FIGURE 6: GVA PER HOUR WORKED 2004 TO FIGURE 7: GVA PER HOUR WORKED IN PEER AREAS ( PER HOUR) 20 FIGURE 8: TOTAL JOBS IN HERTFORDSHIRE AND ENGLAND FROM 2000 TO FIGURE 9: CHANGE IN TOTAL EMPLOYEES IN EACH HERTFORDSHIRE DISTRICT 2009 TO FIGURE 10: GROWTH IN JOBS BETWEEN 2002 AND 2012 IN PEER AREAS 24 FIGURE 11: GROWTH IN EMPLOYEES BETWEEN 2009 AND FIGURE 12: AVERAGE WEEKLY HOURS WORKED FIGURE 13: AVERAGE HOURLY EARNINGS (WORKPLACE-BASED) INCLUDING OVERTIME IN 2008, 2011 AND FIGURE 14: EMPLOYMENT RATES IN HERTFORDSHIRE AND PEER LEP AREAS IN APRIL MARCH FIGURE 15: EMPLOYMENT RATES IN HERTFORDSHIRE DISTRICTS IN APRIL MARCH FIGURE 16: SHARE OF TOTAL EMPLOYMENT THAT IS FULL-TIME 2004 TO FIGURE 17: SHARE OF BUSINESSES IN EACH DISTRICT EMPLOYING 0-4 PEOPLE IN FIGURE 18: SHARE OF EMPLOYMENT BY FOREIGN-OWNED BUSINESSES IN FIGURE 19: SHARE EMPLOYMENT BY INDUSTRY IN HERTFORDSHIRE AND ENGLAND IN FIGURE 20: SHARE OF EMPLOYMENT BASED IN EACH LEP AREA IN OCCUPATIONAL CATEGORIES 3 AND 4 (THE MOST HIGHLY SKILLED), YEAR TO MARCH FIGURE 21: CHANGE IN SHARE OF EMPLOYMENT IN EACH SKILL LEVEL 2004 TO FIGURE 22: TOTAL NUMBER OF VACANCIES NOTIFIED TO JOBCENTRE PLUS, YEAR TO NOVEMBER FIGURE 23: CHANGE IN NOTIFIED VACANCIES BETWEEN 2007 AND FIGURE 24: NEW VACANCIES NOTIFIED EACH MONTH TO JOBCENTRE PLUS BETWEEN NOVEMBER 2004 AND NOVEMBER 2012, HERTFORDSHIRE 34 FIGURE 25: VACANCIES AS A SHARE OF TOTAL EMPLOYEES IN FIGURE 26: AVERAGE ANNUAL GROSS EARNINGS (WORKPLACE-BASED) 35 FIGURE 27: AVERAGE GROSS ANNUAL WORKPLACE AND RESIDENCE BASED EARNINGS FOR FULL-TIME EMPLOYEES 35 FIGURE 28: AVERAGE HOURLY EARNINGS INCLUDING OVERTIME (WORKPLACE-BASED) 36 FIGURE 29: HARD-TO-FILL VACANCIES AS A SHARE OF ALL VACANCIES IN FIGURE 30: SHARE OF VACANCIES THAT ARE HARD-TO-FILL BY OCCUPATION 37 FIGURE 31: IMPACT OF HARD-TO-FILL VACANCIES ON EMPLOYERS (PERCENTAGE OF EMPLOYERS) 38 FIGURE 32: REASONS WHY VACANCIES ARE HARD-TO-FILL 38 FIGURE 33: ACTUAL AND PROJECTED POPULATION CHANGE BY AGE GROUP 2003 TO FIGURE 34: ACTUAL AND PROJECTED GROWTH IN THE WORKING AGE POPULATION 42 FIGURE 35: ACTUAL AND PROJECTED WORKING AGE POPULATION IN HERTFORDSHIRE 1993 TO

4 FIGURE 36: ECONOMIC ACTIVITY RATE - SHARE OF WORKING AGE POPULATION THAT ARE ECONOMICALLY ACTIVE (IN WORK OR ACTIVELY SEEKING WORK) 43 FIGURE 37: ECONOMIC ACTIVITY RATES BY DISTRICT IN FIGURE 38: SHARE OF NON-UK POPULATION BY COUNTRY OF ORIGIN IN FIGURE 39: SHARE OF WORKFORCE QUALIFIED TO LEVEL 2+ AND LEVEL 4+ IN FIGURE 40: SHARE OF WORKING-AGE RESIDENTS QUALIFIED TO NVQ4+ IN FIGURE 41: SHARE OF YEAR OLDS (RESIDENTS) WITH NVQ EQUIVALENT QUALIFICATIONS, FIGURE 42: WORKPLACE-BASED QUALIFICATIONS (THOSE WHO WORK IN HERTFORDSHIRE BUT DON T NECESSARILY RESIDE THERE), FIGURE 43: SHARE OF EMPLOYEES WITH QUALIFICATIONS AT NVQ4+ (WORKPLACE-BASED), FIGURE 44: PERCENTAGE OF 19 YEAR-OLDS QUALIFIED TO LEVEL 3 IN FIGURE 45: PERCENTAGE OF PUPILS GAINING AT LEAST 5 A*-C GCSES INCLUDING ENGLISH AND MATHEMATICS 2012/13 48 FIGURE 46: UNEMPLOYMENT RATES FROM 2004 TO FIGURE 47: CLAIMANT COUNT RATES 2004 TO FIGURE 48: CLAIMANT COUNT RATES BY AGE IN HERTFORDSHIRE 50 FIGURE 49: LONG TERM CLAIMANTS IN HERTFORDSHIRE 51 FIGURE 50: REASONS FOR INACTIVITY, APRIL 2013 TO MARCH FIGURE 51: THE RATE OF INVOLUNTARY WORKLESSNESS FROM 2004 TO FIGURE 52: INCIDENCE OF SKILLS GAPS 54 FIGURE 53: TYPES OF SKILLS GAPS 54 FIGURE 54: IMPLICATIONS OF SKILLS GAPS 55 FIGURE 55: PREPAREDNESS FOR WORK OF SCHOOL COLLEGE AND UNIVERSITY LEAVERS 56 FIGURE 56: PREPAREDNESS FOR WORK OF YEAR OLDS RECRUITED TO FIRST JOB FROM SCHOOL (SHARE OF EMPLOYERS) 56 FIGURE 57: SHARE OF WORKERS PARTICIPATING IN TRAINING IN THE PAST 13 WEEKS 59 FIGURE 58: SHARE OF WORKING-AGE PEOPLE UNDERTAKING GOVERNMENT-FUNDED TRAINING 2012/13 59 FIGURE 59: SHARE OF WORKING-AGE PEOPLE UNDERTAKING GOVERNMENT-FUNDED TRAINING BY DISTRICT 2012/13 61 FIGURE 60: NUMBER OF LEARNERS IN HERTFORDSHIRE BY TYPE OF PARTICIPATION 61 FIGURE 61: SHARE OF ALL GOVERNMENT FUNDED FE SKILLS AND TRAINING BY TYPE 62 FIGURE 62: CHANGE IN FE SKILLS AND TRAINING BY TYPE 2010/11 TO 2012/13 62 FIGURE 63: TOP 10 SECTOR LEAD BODY BY SHARE OF QUALIFICATIONS/COURSES IN 2010/11 AND 2011/12 (COMBINED) 63 FIGURE 64: SHARE OF ESTABLISHMENTS WITH A TRAINING PLAN OR BUDGET 64 FIGURE 65: SHARE OF ESTABLISHMENTS WITH A TRAINING PLAN AND/OR BUDGET BY UPPER TIER (COUNTY OR UNITARY) AUTHORITY AREA, FIGURE 66: SHARE OF ESTABLISHMENTS THAT UNDERTAKE ANY TRAINING 67 FIGURE 67: SHARE OF ESTABLISHMENTS UNDERTAKING TRAINING BY UPPER TIER (COUNTY OR UNITARY) AUTHORITY AREA, FIGURE 68: GROWTH IN EMPLOYEES IN EACH YEAR IN HERTFORDSHIRE 72 FIGURE 69: JOBCENTRE PLUS VACANCIES NOTIFIED IN EACH 12-MONTH PERIOD, 2007 TO FIGURE 70: VACANCIES AS A SHARE OF TOTAL EMPLOYEES IN FIGURE 71: AREAS OF SIGNIFICANT OUT-COMMUTING FOR HERTFORDSHIRE RESIDENTS IN 2011 AND GROWTH IN JOBS

5 FIGURE 72 SHARE OF EMPLOYEES BY WORKPLACE AGED 50 TO 64 BY OCCUPATIONAL CATEGORY 75 FIGURE 73: SHARE OF EMPLOYED RESIDENTS AGED 50 TO 64 BY OCCUPATIONAL CATEGORY 76 FIGURE 74: SUMMARY ASSESSMENT OF LABOUR MARKET TIGHTENING IN HERTFORDSHIRE AND WHETHER EACH INDICATOR IS A SIGN OF TIGHTENING 78

6 EXECUTIVE SUMMARY HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 1

7 ABOUT THIS REPORT This report reviews and analyses available evidence about the Hertfordshire labour market, including labour demand (jobs, employment, hours worked, earnings); labour supply (workforce, participation, unemployment); training and qualifications. The data was sourced in September and October 2014, with the final report written in November INTRODUCING HERTFORDSHIRE The County of Hertfordshire has a population of 1.1 million and an economy worth 27.3 billion. Hertfordshire is the 20th largest Local Enterprise Partnership area by population size, and the 15th largest by size of its economy. It has high rates of entrepreneurship, some outstanding industries and employers, and is well placed in its infrastructure connections and access to the London economy. WHAT S UNIQUE ABOUT SKILLS AND THE LABOUR MARKET? Labour and skills have a number of unique properties that set them apart from other factors of production such as raw materials or capital equipment. Labour demand is a derived demand it aids in the production of outputs or services to meet demand in the marketplace. This makes it a challenge to provide the supply of labour to meet demand especially as demand shifts and changes over time and as market conditions dictate. The effective supply of labour is limited. There are a fixed number of residents and people nearby able to make themselves available for work at any given location. People can only work a limited number of hours per day and per week. Increasing the overall supply of labour takes time, and involves providing for population growth or increased accessibility. Labour is portable skills reside with the individual, rather than the employer and individuals effectively rent their labour and skills to employers. Individuals in the labour market can restrict their labour, or withdraw or enter the labour market at their own choosing. They can move to different jobs with different employers. Skills is a broad concept that covers a wide range of aptitudes and abilities that are necessary to make a worker competent to undertake a job. Skills can be those that are technical and learnt, or they can relate to personal characteristics such as communication and empathy. Finally, there are information asymmetries in the labour market. Skills can be hard to quantify or codify and qualifications tend to act as proxies or signals for skills attainment. STRONG ECONOMIC RECOVERY IS FUELLING LABOUR DEMAND The UK economy has performed strongly over the past 12 months, and Hertfordshire s economy has followed this trend. Although the county had rates of jobs growth slightly behind the national average between 2000 and 2012, there are a number of signs (such as increasing vacancies and increasing rates of participation in the labour market) that labour demand in Hertfordshire has been increasing markedly in the past 24 months, and that there are further demand pressures ahead. COMMUTING AND FLOWS: THE HERTFORDSHIRE LABOUR MARKET IN CONTEXT Hertfordshire is an area of net out-commuting, largely due to its proximity to London per cent of working residents commute to jobs outside of the County per cent of working residents commute to London. Many of these outcommuters are highly skilled. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 2

8 A GROWING WORKFORCE Hertfordshire has experienced significant population growth and this is set to continue. This has been fuelled mainly by births and by inmigration from the rest of the UK. A GROWING PRODUCTIVITY GAP Hertfordshire has lost a lot of ground in its productivity performance, to the extent that it is now only just above the national average and wellbelow its peer economies. Hertfordshire has one of the most skilled workforces in England and rates quite highly in terms of innovation and knowledgebased industries, so we can probably conclude that the supply of qualified workers and innovation are not significant drags on productivity performance. What is striking from evidence later in this document is that Hertfordshire s employers are less likely to train their staff than the leading local economies, which may be a contributing factor. Other reasons for Hertfordshire s poor productivity performance are more likely to be due to one or a combination of: the industrial structure of the local economy; a lack of business investment; or a lack of infrastructural and capital investment. MODERATE JOBS GROWTH OVER THE DECADE, RECENT ACCELERATING Between 2002 and 2012, jobs in Hertfordshire grew by 31,000 - or by 5.4 per cent, compared to 5.8 per cent for England as a whole. Over the past four years, total employees have increased by 18,800 or 3.6 per cent above the national rate of growth of 2.5 per cent. Job growth has differed across Hertfordshire districts. Between 2009 and 2013, the growth in the number of employees was highest in Watford (+8,700 or 13.5 per cent note that there have been continual issues with the accuracy of employment estimates for Watford); Hertsmere (+4,500 or 10.5 per cent) and Broxbourne (+3,100 or 8.3 per cent). By contrast, total employees decreased in Stevenage (-2,400 or -5.5 per cent). HIGH RATES OF PARTICIPATION IN EMPLOYMENT Hertfordshire has one of the highest employment rates in England (the third highest of all 39 LEP areas) and is one of a very small number of LEP areas which has now recovered to its pre-recession employment rate. RECENT EMPLOYMENT GROWTH HAS BEEN FUELLED BY GROWTH IN PART-TIME JOBS Although the percentage of people working fulltime is high in Hertfordshire, full-time employment is at its lowest rate for nine years. Many new jobs are part-time. HERTFORDSHIRE HAS A HIGH PERCENTAGE OF SMALL BUSINESSES WHICH ARE LESS ABLE TO PLAN FOR THEIR SKILLS NEEDS Hertfordshire has a high proportion of businesses which are micro-businesses (0-4 employees). Microbusinesses are typically less able to plan their business, HR, recruitment and skills development and are less likely to have a training plan or budget, and undertake workforce training. HERTFORDSHIRE S INDUSTRIAL SPECIALISMS Hertfordshire has strong employment amongst a number of industries, including Wholesale and retail (accounting for 104,400 employees or 19.4 per cent of the total), Administrative and support services (75,400 employees, 14.0 per cent of the total), and Professional, scientific and technical activities (58,100 employees, 10.8 per cent of the total). Construction employment is significant, with Hertfordshire having the third highest share of construction employment amongst the 39 LEP areas with 29,900 employees accounting for 5.6 per cent of Hertfordshire s total compared to 4.3 per cent nationally. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 3

9 VACANCIES INCREASING STRONGLY, RECRUITMENT CHALLENGES ON THE RISE The number of job vacancies notified in recent years has increased significantly. This signals strong labour demand and a recovering labour market. Many businesses are struggling to find the quality of applicants that they desire, particularly in associate professional and administrative roles. Between 2011 and 2012, Jobcentre Plus vacancies increased by 19,200 in Hertfordshire representing a 28.3 per cent increase compared to the average of 23.0 per cent in England. HIGH RATES OF PARTICIPATION IN THE ECONOMY Hertfordshire s workforce (the working age population aged between 16 and 64) increased by 8.0 per cent between 2003 and 2013, higher than nationally (6.9 per cent) People who move to Hertfordshire to live and/or work there are mainly from the rest of the UK and rates of immigration by overseas nationals are lower than the national average. A higher share (81.5 per cent) of Hertfordshire s working-age population are economically active (in work or actively seeking work) than nationally (77.5 per cent). HIGHLY QUALIFIED WORKFORCE Hertfordshire s workforce (working age residents) is amongst the most qualified in England - with 41.7 per cent qualified to Level 4 (degree or equivalent) or above, ranking it the sixth highest out of 39 LEP areas. However, Hertfordshire loses a proportion of its highly qualified residents through out-commuting. OVERALL ATTAINMENTS OF GCSE INCLUDING ENGLISH AND MATHS AND LEVEL 3 QUALIFICATIONS REMAINS STRONG Hertfordshire s young people s attainment levels are very high for Level 3 (A-level or equivalent) qualifications. comparing achievement of at least 5 A*-C GCSEs including English and Maths. In 2012/13, 66.1 per cent of pupils in Hertfordshire gained at least 5 A*- C GCSEs including English and Maths higher than the England average (60.4 per cent), and the 19th highest of 151 local authority areas in England. LOW UNEMPLOYMENT RATES Unemployment is very low in Hertfordshire, at 4.6 per cent in 2014 compared to England s 7.6 per cent rate. The overall unemployment rate has almost fallen back down to levels witnessed before the 2008/09 recession. CLAIMANT UNEMPLOYMENT LEVELS REMAIN HIGH FOR THOSE IN LOW-SKILLED OCCUPATIONS Claimant count levels remain well above prerecession levels for those previously working as sales and retail assistants, general office assistants/clerks, and care assistants and home carers. The claimant rate is also higher-thanaverage in Stevenage. HERTFORDSHIRE EMPLOYERS ARE MORE NEGATIVELY AFFECTED BY SKILLS GAPS THAN NATIONALLY Although skills deficiencies in the existing workforce occur no more frequently in Hertfordshire than nationally, Hertfordshire s employers have reported that skills gaps are more likely to have a negative impact on staff and business performance. HIGH PARTICIPATION IN TRAINING AMONG HERTFORDSHIRE RESIDENTS Workers living in Hertfordshire had slightly higher participation in training compared to the national average. TRAINING ACTIVITY BY EMPLOYERS IN HERTFORDSHIRE IS LOWER THAN IN PEER AREAS Hertfordshire s GCSE performance is strong when Even though the Hertfordshire workforce is highly skilled, the share of residents accessing HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 4

10 government-funded FE training is one-third less than the national average. It is unlikely that employers are making up for this shortfall, as a much lower proportion (50 per cent) of Hertfordshire s establishments had a training plan or budget compared to peer areas such as Slough (69 per cent) and Bracknell Forest (66 per cent). This is reflected in employer training, which is also lower than these peer areas. It is also worth nothing that Hertfordshire s very high staying-on rate (91 per cent) for year olds in full-time education may reduce the demand for government funded FE training in Hertfordshire. A TIGHTENING LABOUR MARKET In theory, Hertfordshire has an adequate effective labour supply. The workforce is projected to grow between 3,500 and 4,500 per annum from 2013 to In 2011 there were 173,800 Hertfordshire residents commuting to work outside of the county. However, labour demand is high in Hertfordshire, and in adjacent markets, and has shown recent evidence of spiking upwards. This is probably typical of emergence into recovery from recession and the release of pent-up labour demand from employers. The pressures on the Hertfordshire labour market stem from the high levels of labour demand within Hertfordshire, and in surrounding areas, coupled with high levels of mobility of the County s workforce. There is significant labour demand outside the County and a high propensity to commute. There seems to be little available additional labour capacity from existing residents as participation rates are high and unemployment is low. The Hertfordshire workforce will continue to grow but we are likely to see continued high local demand both to fill new jobs, to replace those who retire, and high external demand from areas such as London. This will make it potentially difficult to deal with sudden peaks in labour demand which are likely to become more frequent in the current context of a renewal of growth in investment and expansion by firms as the economy recovers. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 5

11 INTRODUCTION HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 6

12 SUMMARY: INTRODUCTION ABOUT THIS REPORT This report reviews and analyses available evidence about the Hertfordshire labour market, including labour demand (jobs, employment, hours worked, earnings); labour supply (workforce, participation, unemployment); training and qualifications. INTRODUCING HERTFORDSHIRE The County of Hertfordshire has a population of 1.1 million and an economy worth 27.3 billion. Hertfordshire is the 20th largest Local Enterprise Partnership area by population size, and the 15th largest by size of its economy. It has high rates of entrepreneurship, some outstanding industries and employers, and is well placed in its infrastructure connections and access to the London economy. WHAT S UNIQUE ABOUT SKILLS AND THE LABOUR MARKET? Labour and skills have a number of unique properties that set them apart from other factors of production such as raw materials or capital equipment. Labour demand is a derived demand it aids in the production of outputs or services to meet demand in the marketplace. This makes it a challenge to provide the supply of labour to meet demand especially as demand shifts and changes over time and as market conditions dictate. The effective supply of labour is limited. There are a fixed number of residents and people nearby able to make themselves available for work at any given location. People can only work a limited number of hours per day and per week. Increasing the overall supply of labour takes time, and involves providing for population growth or increased accessibility. Labour is portable skills reside with the individual, rather than the employer. Individuals in the labour market can restrict their labour, or withdraw or enter the labour market at their own choosing. They can move to different jobs with different employers. Skills is a broad concept that covers a wide range of aptitudes and abilities that are necessary to make a worker competent to undertake a job. Skills can be those that are technical and learnt, or they can relate to personal characteristics such as communication and empathy. Finally, there are information asymmetries in the labour market. Skills can be hard to quantify or codify and qualifications tend to act as proxies or signals for skills attainment. STRONG ECONOMIC RECOVERY IS FUELLING LABOUR DEMAND The UK economy has performed strongly over the past 12 months, and Hertfordshire s economy has been resilient. Although the county had relatively weak employment growth between 2000 and 2012, there are a number of signs (such as increasing vacancies and increasing rates of participation in the labour market) that labour demand in Hertfordshire has been increasing markedly in the past 24 months, and that there are further demand pressures ahead. COMMUTING AND FLOWS: THE HERTFORDSHIRE LABOUR MARKET IN CONTEXT Hertfordshire is an area of net out-commuting, largely due to its proximity to London per cent of working residents commute to jobs outside of the County per cent of working residents commute to London. Many of these outcommuters are highly skilled. HIGH RATES OF POPULATION GROWTH AND A GROWING WORKFORCE Hertfordshire has experienced significant population growth and this is set to continue. This has been fuelled mainly by births and by inmigration from the rest of the UK. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 7

13 HERTFORDSHIRE HAS A GROWING PRODUCTIVITY GAP Hertfordshire has lost a lot of ground in its productivity performance, to the extent that it is now only just above the national average and wellbelow its peer economies. Hertfordshire has one of the most skilled workforces in England and rates quite highly in terms of innovation and knowledgebased industries, so we can probably conclude that the supply of qualified workers and innovation are not significant drags on productivity performance. What is striking from evidence later in this document is that Hertfordshire s employers are less likely to train their staff than the leading local economies, which may be a contributing factor. Other reasons for poor productivity performance are more likely to be due to one or a combination of: the industrial structure of the local economy; a lack of business investment; or a lack of infrastructural and capital investment. HERTFORDSHIRE HAS EXPERIENCED A SLIGHTLY LOWER RATE OF JOBS GROWTH COMPARED TO THE NATIONAL AVERAGE, BUT RECENT EMPLOYEE GROWTH HAS EXCEEDED THE NATIONAL RATE OF GROWTH Between 2002 and 2012, jobs in Hertfordshire grew by 31,000 - or by 5.4 per cent, compared to 5.8 per cent for England as a whole. Over the past four years, total employees have increased by 18,800 or 3.6 per cent above the national rate of growth of 2.5 per cent. Job growth has differed across Hertfordshire districts. Between 2009 and 2013, the growth in the number of employees was highest in Watford (+8,700 or 13.5 per cent although there seems to be less reliability that we can place on official data for Watford); Hertsmere (+4,500 or 10.5 per cent) and Broxbourne (+3,100 or 8.3 per cent). By contrast, total employees decreased in Stevenage (-2,400 or -5.5 per cent). HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 8

14 ABOUT THIS REPORT A REVIEW AND ANALYSIS OF HERTFORDSHIRE S LABOUR MARKET This report reviews and analyses available evidence about the Hertfordshire labour market. It covers a range of topics from the size and nature of the labour market, including details about commuting patterns to an analysis of demand and jobs in Hertfordshire; and a review of the nature of participation in the labour market of Hertfordshire residents. SELECTION AND USE OF COMPARATOR LOCAL AREAS In the 2013 Economic outlook, the following comparator areas were agreed for performing comparative analysis: Buckinghamshire Thames Valley LEP Cheshire and Warrington LEP Greater Cambridge and Greater Peterborough LEP Thames Valley Berkshire LEP They are all successful LEP areas, with some neighbouring or nearby, sharing similar characteristics, including mostly: Successful economies, high rates of GVA per capita, low rates of unemployment Proximity to London with similar commuting patterns/ relationships and influence on business location Based around county geographies with small cities, large towns and rural areas Are not dominated by a large city region within their boundaries. It was considered that the SELEP or South East LEP area made for a poor comparison, as it comprises the counties of Essex and Kent and the Unitary Authority areas of Southend, Thurrock, Medway and East Sussex, and the sheer size (population 3.9 million) makes it an unreasonable comparator area for Hertfordshire. However some ONS datasets are not all available for LEP areas, namely: GVA per hour / productivity Earnings UK Employer Skills Survey data hard to fill vacancies, preparedness for work, training plans/budgets etc GCSE / A Level Qualifications pass rates only reported by education authority In this case, existing or historical county and upper tier area geographies have been used instead of LEP area definitions as the nearest approximation. In some cases, historical counties (e.g. Berkshire, which no longer exists) is available as best fit to a LEP (Thames Valley Berkshire). In other instances, the historical county data is not available and we must revert to reporting data for each unitary authority and county authority area. For the Hertfordshire districts there are 10 districts, but for some the data has been supressed by ONS as being unreliable (usually based on low survey samples). Not all datasets and measures are available at district level and in this instance we use the next largest meaningful geography which is usually based around counties or unitary areas (or in the case of productivity and GVA, NUTS3 areas). In terms of national data some are reported for GB, some for UK, most for England. England tends to be used as the comparator, apart from some headline indicators such as GVA growth rates, GVA per capita and unemployment rates. STRUCTURE OF THE REPORT LABOUR AND SKILLS: KEY ISSUES This section reviews the unique properties of labour and skills compared to other factors of production. 1. ECONOMIC CONTEXT This section explores the national economic outlook and provides an overview of the Hertfordshire economy, highlighting the main trends in economic growth, population growth and commuting. It highlights that the economy is recovering strongly from recession but that Hertfordshire has a growing productivity gap. It also shows that Hertfordshire has high rates of population growth and growth in the workforce, but that the County is an area of out-commuting, losing a large proportion of its workforce to London. 2. DEMAND FOR LABOUR AND SKILLS This section explores the numbers and types of jobs which have been created and filled in the economy along with employment growth, growth in job vacancies and recruitment difficulties in Hertfordshire. It highlights that long-term job growth has been weak in the County but job numbers have grown strongly since recession. It also shows that employment is high among Hertfordshire residents with a large proportion of employment in highskilled jobs, while job vacancies have grown strongly since the recession. 3. SUPPLY OF LABOUR This section details the available workforce and their skills and qualifications, and explores market failures such as HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 9

15 unemployment. It highlights that Hertfordshire has high rates of economic participation among its residents, who are more highly-qualified than the national average, but that a proportion of these high-skilled workers are lost through out-commuting. Unemployment is low in the County but there are concentrations of unemployment among those previously working in low-skilled jobs and with a higher-than-average rate of unemployment benefit claimants in Stevenage. 4. EDUCATION AND TRAINING ACTIVITY This section explores participation in training among workers living in Hertfordshire and propensity of Hertfordshire employers to train their workforce. It highlights that participation in training is slightly higher than average among workers living in Hertfordshire, although a lower share participate in government-funded training. The share of Hertfordshire businesses with a training plan or budget is similar to the national average but a lower share undertake training compared to peer economies. 5. COMPARING LABOUR SUPPLY AND DEMAND This section explores the extent to which Hertfordshire s labour market is tightening. It applies 20 tests for labour market tightness and concludes that, while Hertfordshire s available workforce should be able to satisfy the needs of its economy in theory, there is little in the way of spare capacity among the available and potential workforce. This will make it potentially difficult to deal with sudden peaks in labour demand as the economy recovers from the economic downturn. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 10

16 LABOUR AND SKILLS: KEY ISSUES LABOUR AND SKILLS HAVE A NUMBER OF UNIQUE PROPERTIES LABOUR DEMAND IS DERIVED DEMAND Labour demand is a derived demand; that is, hiring labour is not desired for its own sake but rather because it aids in producing output, which contributes to an employer's revenue and hence profits, or to the efficiency and effectiveness of their outputs and services. Why this matters for local economies: The demand for skills is dictated by the actual or anticipated demand for goods and services. When demand for goods and services increases or decreases rapidly, the supply of labour cannot always adjust as rapidly thus leading to excess demand (unfilled vacancies); or excess supply (unemployment) Many policies and initiatives emphasise an increase in the supply of skills, or increasing levels of qualifications amongst the workforce as a route to economic growth. It s not always clear what the demand is or where it will be in the future. Businesses and employers operate in a market environment and react to it it is not always possible or reasonable to plan five years ahead. This is illustrated by evidence that suggests 50 per cent of employers do not have a training plan or budget 1. In summary, there are many reasons why mismatches occur between demand and supply in the labour market. THERE IS A LIMITED EFFECTIVE SUPPLY OF LABOUR People have a limited amount of time to work during the day, and are only willing to travel certain distances or times to work. Why this matters for local economies: There are constraints to the effective supply of labour. In local economies such as Hertfordshire, with high levels of economic participation, it is difficult to increase supply from of the existing resident workforce. Other options may be to import labour through commuting or in-migration. Adjustments in labour supply are not smooth or frictionless. It is often difficult to increase labour supply rapidly. The ability of supply to respond will rely on existing levels of excess capacity (often signalled by high unemployment); the rate of growth in the workingage population; the ability of migrants to enter the labour market; and the mobility of workers in the local, or adjacent, areas. LABOUR MOBILITY AND PORTABILITY Skills belong to the individual and are portable, can be withdrawn and then reinstated in the market. Individuals effectively rent their labour and skills to employers. Unlike other forms of productive assets or capacities which reside with the firm, skills reside in the individual who can withdraw their labour temporarily or permanently (by leaving the workforce or moving to another job). Why this matters for local economies: Labour is mobile, people can commute, and also there are conditions where people can enter or withdraw from the labour market. Firms may also be unwilling to spend money on training on general/transferable skills as workers may then move on to other jobs and take these skills with them. INFORMATION ASYMMETRIES There are many information asymmetries where there is imperfect information in the labour market. For example, employers do not know how productive an employee will be before they employ them, no matter their qualifications. Employees do not always know about the working conditions, investment plans or the efficiency of the business they work for (which will affect their wages in the long-term). It is also often unclear what specific skills/qualifications are needed in a local economy and hence what courses training providers should offer and what training people should undertake to enhance their opportunities in the local labour market. 1 UK Employer Skills Survey (2013), UK Commission for Employment and Skills. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 11

17 Why this matters for local economies: Employers and workers often rely on proxy indicators for the quality of applicants and jobs such as qualifications, wages, terms and conditions. Employees can sometimes be reluctant to change roles, as there are perceived risks of the unknown such as working conditions, colleagues, and the prospects of employers. There may sometimes be a mismatch between the skills demanded by employers and the skills supplied by the local resident workforce. DEFINING SKILLS Skill(s) is a broad concept that covers the wide range of aptitudes and abilities that are necessary to make a worker competent to undertake their job. Skills can be obtained through a formal course of study leading to qualifications, work experience or may simply be a function of personal characteristics. Why this matters for local economies: Qualifications are often treated as proxies for skills in terms of a signal of skills being present. Many employers will use qualifications and work experience as filters to select shortlists of candidates, and then test the aptitude of candidates in interviews or other tests. Attitudes and ability to fit into a team/working culture are difficult to measure or appraise. MEASURING SKILLS Skills can be difficult to measure. In the UK government s Standard Occupational Classification, they define the concept of skill in two ways: 1) skill level - the complexity of the tasks and duties to be performed; and 2) skill specialisation the field of knowledge required for competent, thorough and efficient conduct of the tasks. Skills can be difficult to measure qualifications are sometimes used to indicate types and levels of skill, but the two concepts are not the same. Not all skills can be codified or signalled. An individual can have a skill without it being represented by a qualification. Some skills are hard to accredit to qualifications, especially personal characteristics or attributes. Why this matters for local economies: Occupational information is a much more reliable indicator of the skills in the workplace as occupations are classified according to skill levels and specialisations. Employers may demand skills that are difficult to quantify or measure such as communication skills, attitude, personality, etc. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 12

18 1. THE ECONOMIC CONTEXT HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 13

19 SUMMARY: THE ECONOMIC CONTEXT UK ECONOMY CONTINUES ROBUST RECOVERY The UK Economy has strengthened over the past 12 months, with economic growth of 3.1 per cent from Q to Q The economic recovery is being led by services and manufacturing and business investment is showing signs of recovery. HERTFORDSHIRE HAS BEEN RESILIENT TO RECESSION Hertfordshire has been resilient to the effects of recession, but faces a number of long-term challenges include declining rates of economic growth and productivity as well as a rate of jobs growth that is slightly below the national average. ONE-THIRD OF HERTFORDSHIRE S SKILLED WORKFORCE COMMUTE TO WORK OUTSIDE OF THE COUNTY Hertfordshire is an area of net out-commuting, largely due to its proximity to London per cent of working residents commute to jobs outside of the County per cent of working residents commute to London. Many of these outcommuters are highly skilled. Net out-commuting was highest in Professional, scientific and technical activities (11,300); Financial and insurance activities (10,900); and Public administration and defence, compulsory social security (7,800). HIGH RATES OF POPULATION GROWTH THAT WILL CONTINUE Hertfordshire has experienced high rates of population growth over the past 10 years, and this is set to accelerate over the next two decades to In 2013, 1.14 million people were living in Hertfordshire, compared to 1.05 million a decade previously in Over the 10 years, Hertfordshire s population had grown by 9.3 per cent. Strong population growth is expected to continue over the following two decades, with a 10.5 per cent increase projected for 2013 to 2023 and a further 8.4 per cent increase projected for 2023 to Alongside births, inward-migration from the rest of the UK is projected to be one of the main drivers of population growth in Hertfordshire. HERTFORDSHIRE HAS LOST ITS PRODUCTIVITY ADVANTAGE OVER PEER LOCAL ECONOMIES Hertfordshire s productivity advantage has been eroding over the past eight years to the extent that its productivity rates are below most of its competitor or peer areas. GVA per hour worked has fallen relative to the England average year-on year-since It has fallen from 14.8 per cent above the England average in 2004 ( GVA per hour worked) to 2.8 per cent above the England average in 2012 ( 29.10). Other peer economies have retained this productivity advantage, such as Buckinghamshire ( GVA per hour worked) and Berkshire ( 35.90) Census, Office for National Statistics Census figures are used for commuting estimates, as they are much more reliable than other estimates such as the Annual Population Survey. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 14

20 NATIONAL ECONOMIC PERFORMANCE THE UK ECONOMY HAS STRENGTHENED SIGNIFICANTLY OVER THE PAST 12 MONTHS The latest estimate of Gross Domestic Product (GDP) indicated that output grew by 0.8 per cent during Q2 2014, as indicated in Figure 1. This is the sixth consecutive quarter of growth since the minor contraction experienced in Q The domestic recovery has continued to broaden, with robust spending by businesses and households, supported by lower uncertainty and continuing improvements in credit conditions. The UK economy is now growing faster than its pre-crisis peak, with an annual growth rate of 3.1 per cent in the 12 months to Q the strongest in more than six years. The expectation is for 3.5 per cent growth for the 2014 calendar year. In Q GDP was estimated to be 0.2 per cent above the peak in Q From peak to trough in 2009, the economy shrank by 7.2 per cent. Output increased over Q in services and production, and decreased in construction and agriculture. Compared to Q1 2014, output increased to Q2 by 1.0 per cent in services and by 0.4 per cent in production. However, output decreased by 0.5 per cent in construction and by 0.2 per cent in agriculture. FIGURE 1: UK QUARTERLY ECONOMIC GROWTH QonQ Growth (%) GDP ( million) 400, ,000 Source: Office for National Statistics , , , , , , , , Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1Q ,000 HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 15

21 GLOBAL ECONOMY CONTINUED GROWTH IN THE GLOBAL ECONOMY, WITH GROWTH LEVELS MODERATING IN THE EMERGING ECONOMIES According to the latest IMF World Economic Outlook (October 2014), the global economy is expected to stabilise gradually, with growth in the euro area edging higher and the expansion in the US economy supported by the highly stimulative stance of monetary policy. Overall, the emerging economies are likely to grow at around their average historical rate. In China, growth is expected to slow only a little further, although the rapid growth in credit in recent years and the associated expansion of the shadow banking system continue to pose a downside risk. The global recovery appears set to continue, despite stalling slightly during the first part of 2014 although growth in the Eurozone has continued to be slow and faltering. DESPITE THE RECENT GROWTH IN BUSINESS INVESTMENT, THE VALUE OF REPAYMENT OF BUSINESS DEBTS HAS EXCEEDED NEW BORROWING FOR SEVERAL YEARS Four-quarter growth in business investment reached 11 per cent in Q and business surveys point to strength continuing. Net external finance raised by companies fell sharply in Q1 2014, as net corporate bond issuance and net lending were both negative. The Q1 numbers, however, were affected by a small number of large transactions. Those include Vodafone s sale of its stake in Verizon Wireless and the subsequent redemptions to bondholders. Developments in bank lending have, however, differed by sector. In particular, the stock of lending to real estate businesses has declined since 2010, with the rate of contraction increasing recently. That is despite gross new lending remaining relatively flat. The contraction is likely, in part, to reflect banks desire to reduce the volume of bad loans to the commercial real estate (CRE) sector on their balance sheets. And repayments of debt have increased as some CRE companies have reduced their overall borrowing, and others have refinanced loans with non-bank lenders. PROJECTIONS FOR FUTURE UK GROWTH THE CONSENSUS FORECAST IS FOR UK ECONOMIC GROWTH OF 3.1 PER CENT IN 2014 AND 2.6 PER CENT GROWTH IN 2015 The average of independent forecasters suggests that the rate of UK growth will be 3.1 per cent in 2014 and 2.6 per cent in 2015 (Figure 2), with the Office for Budget Responsibility s latest forecast (March 2014) projecting slightly lower growth at 2.7 per cent and 2.3 per cent respectively. FIGURE 2: PROJECTED UK ECONOMIC GROWTH RATES IN 2014 AND 2015 Source: Office for Budget Responsibility; HM Treasury, Forecasts for the UK economy: a comparison of independent forecasts, August Office for Budget Responsibility (Mar 14) Average of independent forecasters (Oct 13) East of England Forecasting Model (Sep 13) HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 16

22 OVERVIEW OF HERTFORDSHIRE S ECONOMY AND LABOUR MARKET THE HERTFORDSHIRE ECONOMY HERTFORDSHIRE HAS BEEN RESILIENT TO THE EFFECTS OF RECESSION, BUT HAS EXPERIENCED LOW RATES OF ECONOMIC AND PRODUCTIVITY GROWTH OVER THE PAST 10 YEARS The 2013 Economic Outlook for Hertfordshire characterised the economy as entrepreneurial, with a diverse range of industrial specialisms (from retail to professional and scientific activities), and performing well in terms of levels of innovation. Hertfordshire proved to be resilient during recession, but there are some negative long-term trends such as declining productivity, the declining rate of economic growth, and slightly lower-than-average jobs growth. LABOUR MARKET CATCHMENT AND COMMUTING 33 PER CENT OF THE HERTFORDSHIRE WORKFORCE (WORKING-AGE RESIDENTS) COMMUTES TO WORK OUTSIDE OF THE COUNTY, WITH THE MAJORITY WORKING IN LONDON. Hertfordshire is an area of net out-commuting, largely due to its proximity to London. In 2011, 568,700 working people lived in Hertfordshire. Of these, 325,900 or 57.3 per cent remained in Hertfordshire to work, while 173,800 or 30.6 per cent commuted elsewhere to work. Of these, 117,700 worked in London. 9 per cent of working residents in Hertfordshire had no fixed place of work or worked offshore/overseas. The most popular workplace destinations in London were City of London, Westminster, Barnet, Southwark and Enfield. In the same year, 477,700 people worked in Hertfordshire. With out-commuting at 173,800 and in-commuting at 134,100 - this means that Hertfordshire effectively lost 39,700 workers to outcommuting. One-quarter of all workers in Hertfordshire commute in from outside the county. Of the 477,700 people working in Hertfordshire, 71.9 per cent of workers were Hertfordshire residents while 28.1 per cent of workers commuted into the county to work. The largest numbers of in-commuters were from Central Bedfordshire (18,300) and Luton (11,800) while 45,100 commuted into Hertfordshire from London boroughs. At district level, six of Hertfordshire s districts are areas of net in-commuting, with Dacorum (29,900) and East Hertfordshire (19,700) having the highest levels of net incommuting. Four districts are areas of net out-commuting, including North Hertfordshire (12,500) and Three Rivers (8,400). MANY OF HERTFORDSHIRE S OUT- COMMUTERS ARE HIGHLY SKILLED The skills profile of Hertfordshire s working residents is higher than that for people working in Hertfordshire, suggesting that many out-commuters are highly skilled. The highest-skilled occupations accounted for 47.7 per cent of Hertfordshire s working residents and 43.7 per cent of Hertfordshire workers in There was net out-commuting from a wide range of occupations, particularly high skilled occupations: professionals (17,300), associate professionals (14,300), and managers and senior officials (9,200) while there was net in-commuting from three of the major occupational groupings: elementary occupations (4,400), sales occupations (2,500) and skilled trades (800). In terms of industrial sectors, net out-commuting was highest in Professional, scientific and technical activities (11,300); Financial and insurance activities (10,900); and Public administration and defence, compulsory social security (7,800). HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 17

23 POPULATION GROWTH AND OUTLOOK HERTFORDSHIRE HAS EXPERIENCED HIGH RATES OF POPULATION GROWTH OVER THE PAST 10 YEARS, AND THIS IS SET TO ACCELERATE OVER THE NEXT TWO DECADES TO 2033 Hertfordshire s population has been growing at a higher rate than nationally. In 2013, 1.14 million people were living in Hertfordshire, compared to 1.05 million a decade previously in Over the 10 years, Hertfordshire s population had grown by 9.3 per cent compared to the England average of 7.9 per cent (Figure 4). Population growth in Hertfordshire has been driven by strong growth in Watford and Welwyn Hatfield. These two districts (Figure 3) were responsible for 29 per cent of Hertfordshire s population growth between 2003 and 2013 or +28,000 out of the county s total growth of 95,600. Population growth in Hertfordshire between 2003 and 2013 was higher than in two of its peer areas Cheshire and Warrington (4.2 per cent) and Buckinghamshire Thames Valley (7.5 per cent) but lower than in Thames Valley Berkshire (9.6 per cent) and Greater Cambridge & Greater Peterborough (11.4 per cent). Hertfordshire s population is ageing. Hertfordshire s population is increasing across all age groups, but particularly among those of retirement age. Over the past decade, strong growth in the retirement age population meant that the share of Hertfordshire s total percentage FIGURE 4: POPULATION GROWTH IN HERTFORDSHIRE AND ENGLAND BY DECADE Source: Mid-year Population Estimates, Office for National Statistics of people aged 65 and over increased (15.2 per cent in 2003 to 16.4 per cent in 2013) while the shares of population aged 0-15 and declined. The change in the age profile of the population of Hertfordshire followed national trends. FIGURE 3: TOTAL POPULATION IN 2013, AND GROWTH BETWEEN 2003 AND 2013 BY DISTRICT Population in 2013 Growth Broxbourne 95,000 +7,200 Dacorum 148,200 +9,800 East Hertfordshire 141, ,800 Hertsmere 101,300 +6,900 North Hertfordshire 129, ,200 St Albans 143, ,900 Stevenage 85,500 +5,200 Three Rivers 89,500 +5,600 Watford 93, ,100 Welwyn Hatfield 114, ,900 Source: Mid-year Population Estimates, Office for National Statistics. Further population ageing is expected. Between 2013 and 2033, the share of total population aged 65 and over is projected to continue to increase sharply (from 16.4 per cent to 21.5 per cent), while the shares of population aged 0-15 years and years are expected decline further. This is particularly the case for the working age population, which is projected to fall from 63.4 per cent of the total population in 2013 to just 58.7 per cent by Hertfordshire England HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 18

24 STRONG POPULATION GROWTH IS EXPECTED TO CONTINUE OVER THE FOLLOWING TWO DECADES Between 2013 and 2023, population growth in Hertfordshire is expected to accelerate even faster, with a 10.5 per cent increase in population to 1.26 million. Growth is then expected to slow slightly, with an 8.4 per cent increase in population to 1.36 million by 2033 (Figure 5). Growth is expected to remain above the England average over this period, with further strong growth in Watford and Welwyn Hatfield, as well as in Three Rivers and Hertsmere. FUTURE POPULATION GROWTH WILL BE FUELLED BY BOTH NATURAL CHANGE (BIRTHS) AND NET MIGRATION, MOST OF WHICH IS FROM OTHER PARTS OF THE UK Population growth is projected to be split evenly between natural change (births) and migration. Between 2013 and 2033, over 51 per cent of projected population growth in Hertfordshire is expected to come from natural change (births minus deaths) and over 48 per cent is expected to come from net migration (people moving into the area minus people moving out of the area). Most of the population growth due to migration is likely to be driven by intra-uk migrants. The majority of net migration is expected to be net internal migration (people moving into the area from the rest of the UK minus people moving to the rest of the UK). Net international migration is expected to be minimal in all districts apart from Welwyn Hatfield, where it is projected to increase the district s population by 18, Hertfordshire England FIGURE 5: TEN-YEAR GROWTH POPULATION RATES SINCE 1983 ACTUAL AND PROJECTED Source: Mid-year Population Estimates, Sub-national Population Projections, Office for National Statistics PROJECTED projection projection HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 19

25 PRODUCTIVITY PERFORMANCE HERTFORDSHIRE S PRODUCTIVITY ADVANTAGE HAS BEEN ERODING OVER THE PAST EIGHT YEARS TO THE EXTENT THAT ITS PRODUCTIVITY RATES ARE BELOW MOST OF ITS COMPETITOR OR PEER AREAS The productivity of people working in Hertfordshire is above average. In 2012, Hertfordshire workers produced of GVA for every hour worked. This was above the England average ( 28.30) and the 18th highest level of all 99 counties and unitary authorities in England. Hertfordshire s rate of productivity growth is the 5th lowest of all the English counties and unitary authority areas. Despite increases in GVA per hour worked by 10.6 per cent in total between 2004 and 2012 and in almost FIGURE 6: GVA PER HOUR WORKED 2004 TO every year (apart from in 2009), this was the 5th lowest rate of improvement out of all English counties and unitary authorities, after Wolverhampton, York, Sunderland and Coventry. GVA per hour worked has fallen relative to the England average year-on year-since 2004 (Figure 6), from 14.8 per cent above the England average in 2004 to just 2.8 per cent above the England average in Productivity in Hertfordshire is also lower than most of the county and unitary authority areas within Hertfordshire s peer LEP areas. In 2012, GVA per hour worked was lower than five of the seven peer county and unitary authority areas (Figure 7), particularly Buckinghamshire ( 33.20) and Berkshire ( 35.90). In contrast, Hertfordshire had higher productivity levels than five out of its seven peer county and unitary areas in Hertfordshire England Source: Office for National Statistics FIGURE 7: GVA PER HOUR WORKED IN PEER AREAS ( PER HOUR) Source: Office for National Statistics. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 20

26 2. DEMAND FOR LABOUR AND SKILLS HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 21

27 SUMMARY: DEMAND FOR LABOUR AND SKILLS MODERATE EMPLOYMENT GROWTH IN THE PAST DECADE WITH RECENT ACCELERATION Between 2002 and 2012, jobs in Hertfordshire grew by 31,000 - or by 5.4 per cent, compared to 5.8 per cent for England as a whole. Over the past four years, total employees have increased by 18,800 or 3.6 per cent above the national rate of growth of 2.5 per cent. Job growth has differed across Hertfordshire districts. Between 2009 and 2013, the growth in the number of employees was highest in Watford (+8,700 or 13.5 per cent although there seems to be less reliability that we can place on official data for Watford); Hertsmere (+4,500 or 10.5 per cent) and Broxbourne (+3,100 or 8.3 per cent). By contrast, total employees decreased in Stevenage (-2,400 or -5.5 per cent). HERTFORDSHIRE HAS ONE OF THE HIGHEST EMPLOYMENT RATES IN ENGLAND 77.7 per cent of Hertfordshire s working age residents were in employment above the England average of 71.9 per cent and the third highest rate of all 39 LEP areas in England. Although the employment rate fell following the recession it has recovered sharply over the past few years. FULL-TIME EMPLOYMENT IS AT ITS LOWEST RATE FOR NINE YEARS. MANY NEW JOBS ARE PART-TIME Although the percentage of people working fulltime (75.4 per cent) is high in Hertfordshire compared to the national average and other LEP areas, it is at its lowest rate for nine years. HERTFORDSHIRE S EMPLOYERS ARE SLIGHTLY MORE LIKELY TO BE MICROBUSINESSES OR FOREIGN OWNED 79.0 per cent of Hertfordshire s businesses are microbusinesses (employing 0-4 people) and foreign-owned businesses employ a greater percentage (17.2 per cent) of workers than the average for England (14.3 per cent). In Hertsmere, foreign-owned businesses account for 63.4 per cent of employment. HIGH SHARES OF EMPLOYMENT IN ADMINISTRATIVE AND SUPPORT SERVICES; AND PROFESSIONAL, SCIENTIFIC AND TECHNICAL ACTIVITIES Hertfordshire has the highest percentages of employment in wholesale and retail trade and administrative and support services amongst LEPs in England. Hertfordshire has the third highest share of employment in both professional scientific and technical activities; and construction amongst the 39 LEP areas. HERTFORDSHIRE RANKS EIGHTH FOR HIGHLY SKILLED JOBS AMONGST LEPS 57.7 per cent of all people working in Hertfordshire were employed in the most highly skilled (Level 3 and 4) occupations, and this has been increasing since HERTFORDSHIRE HAS EXPERIENCED A STRONG INCREASE IN THE NUMBER OF JOB VACANCIES NOTIFIED TO JOBCENTRE PLUS There were almost 87,000 vacancies notified in the year to November 2012 a 34.3 per cent increase on five years previously. ALMOST ONE-THIRD OF JOBS VACANCIES ARE HARD-TO-FILL 31.1 per cent of all of their vacancies were hard-tofill, similar to the national average. Almost onethird of hard-to-fill vacancies were for associate professionals (29.0 per cent), and 18.4 per cent were for administrative and clerical staff both much higher than the national average. Overall, 80 per cent of skills shortage vacancies occurred due to the quality of applicants compared to the average of 69 per cent for England. The implications of hard to fill vacancies were mostly higher workloads for existing staff, and difficulties meeting customer service objectives and increased operating costs. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 22

28 JOBS AND EMPLOYMENT STRONG RECOVERY IN JOBS SINCE RECESSION Over much of the past decade, Hertfordshire has experienced a slightly lower than average rate of jobs growth. Between 2002 and 2012, jobs in Hertfordshire grew by 31,000 - or by just 5.4 per cent, compared to 5.8 per cent for England as a whole. More recently, figures from the Business Register Employment Survey for 2009 to 2013 point to a recent recovery in labour demand, with total employees in ,800 or 3.6 per cent higher than in 2009 compared to a 2.5 per cent increase in England over the same period. Employment growth has differed across Hertfordshire districts. Between 2009 and 2013, the growth in the number of employees was highest in Watford (+8,700 or 13.5 per cent although there seems to be less reliability that we can place on official data for Watford); Hertsmere (+4,500 or 10.5 per cent) and Broxbourne (+3,100 or 8.3 per cent). By contrast, total employees decreased in Stevenage (-2,400 or -5.5 per cent). Estimates of jobs and employment totals in Watford are subject to error. There have been various difficulties with official estimates of jobs and employment over the years. This can be partly explained by the presence of a national recruitment agency, and potential errors with the stated workplace of their employees. FIGURE 8: TOTAL JOBS IN HERTFORDSHIRE AND ENGLAND FROM 2000 TO 2012 Source: Jobs Density, Office for National Statistics. 610, , , , ,000 Hertfordshire (left axis) England (right axis) 27,500,000 27,000,000 26,500,000 26,000,000 25,500,000 25,000, ,000 24,500, ,000 24,000,000 FIGURE 9: CHANGE IN TOTAL EMPLOYEES IN EACH HERTFORDSHIRE DISTRICT 2009 TO 2013 Source: Business Register Employment Survey, Office for National Statistics. Welwyn Hatfield Watford Three Rivers Stevenage St Albans North Hertfordshire Hertsmere -2, ,200 4,500 8,700 East Hertfordshire 2,100 Dacorum 400 Broxbourne 3,100 HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 23

29 HERTFORDSHIRE OUTPERFORMS MANY OF ITS PEER ECONOMIES ON EMPLOYMENT GROWTH Despite a slightly lower-than-average rate of jobs growth in Hertfordshire, growth has been higher than three of Hertfordshire s four peer LEP areas over the past decade, as detailed in Figure 10. Between 2002 and 2012, jobs in Hertfordshire grew by 5.4 per cent, lower than the England average (5.8 per cent) and in Greater Cambridge & Greater Peterborough (6.6 per cent) but higher than in Buckinghamshire Thames Valley (0.8 per cent), Cheshire & Warrington (3.6 per cent), and Thames Valley Berkshire (1.7 per cent). Hertfordshire s recent record of employee growth is strong. With employee growth at 3.6 per cent between 2009 and 2013 (Figure 11), Hertfordshire outperforms the national economy (England = 2.5 per cent) as well as the peer areas of Cheshire and Warrington (2.2 per cent), Greater Cambridge Greater Peterborough (2.7 per cent) and Thames Valley Berkshire (3.2 per cent). Buckinghamshire Thames Valley s rate of employee growth was higher, at 4.0 per cent over this period. FIGURE 10: GROWTH IN JOBS BETWEEN 2002 AND 2012 IN PEER AREAS Source: Jobs Density, Office for National Statistics. Hertfordshire +31, % Buckinghamshire Thames Valley +2, % Cheshire and Warrington +17, % GCGP +44, % Thames Valley Berkshire +9, % England +1,489, % FIGURE 11: GROWTH IN EMPLOYEES BETWEEN 2009 AND 2013 Source: Business Register Employment Survey, Office for National Statistics. Total employees Growth in total employees 2009 to No. Per cent Hertfordshire 518, ,300 18, % Broxbourne 37,100 40,200 3, % Dacorum 58,300 58, % East Hertfordshire 56,900 59,000 2, % Hertsmere 42,200 46,700 4, % North Hertfordshire 45,800 46, % St Albans 66,100 65, % Stevenage 43,000 40,600-2, % Three Rivers 31,800 34,000 2, % Watford 65,200 73,900 8, % Welwyn Hatfield 72,100 71, % Buckinghamshire Thames Valley 203, ,700 8, % Cheshire and Warrington 430, ,100 9, % GCGP 593, ,700 16, % Thames Valley Berkshire 455, ,500 14, % England 23,064,700 23,631, , % HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 24

30 HOURS WORKED On average, Hertfordshire residents worked 39.1 hours per week in 2013, consistent with the national average (also 39.1 hours per week), as indicated in Figure 12. Average weekly working hours for residents were higher in Slough (39.5) and lower in Bracknell Forest (38.2), and Wokingham (38.6). Overtime working has decreased in Hertfordshire since On average, workers in Hertfordshire worked 1.4 hours of overtime per week in 2010, which had decreased to 0.9 hours in On average, the earnings in Hertfordshire were per hour (including overtime) in 2013, higher than the England average of As detailed in Figure 13, compared to peer areas, Hertfordshire s earnings were similar to Buckinghamshire ( 14.38), Cambridgeshire ( 14.06) and West Berkshire ( 14.48); but lower than Bracknell Forest ( 17.93), Wokingham ( 17.07) and Windsor and Maidenhead ( 16.80). FIGURE 12: AVERAGE WEEKLY HOURS WORKED Hertfordshire England Source: Annual Survey of Hours and Earnings, Office for National Statistics. Mean average hours FIGURE 13: AVERAGE HOURLY EARNINGS (WORKPLACE-BASED) INCLUDING OVERTIME IN 2008, 2011 AND 2013 Source: Annual Survey of Hours and Earnings, Office for National Statistics. Median hourly earnings HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 25

31 PARTICIPATION IN EMPLOYMENT HERTFORDSHIRE HAS STRONG EMPLOYMENT RATES A LARGER SHARE OF WORKING-AGE ADULTS ARE EMPLOYED, COMPARED TO NATIONALLY AND TO OTHER PEER ECONOMIES. Hertfordshire has one of the highest employment rates in England. In the year to March 2014, 77.7 per cent of Hertfordshire s working age residents were in employment (Figure 14) above the England average of 71.9 per cent and the third highest rate of all 39 LEP areas in England, after Greater Cambridge & Greater Peterborough and Enterprise M3 (both 77.8 per cent). Employment rates are higher than the national average in all but one district, Welwyn Hatfield, which had a 68.5 per cent employment rate (Figure 15). Employment rates in Hertfordshire fell sharply following the recession. Between March 2009 and March 2011, Hertfordshire s employment rate fell by 2.9 percentage points to 74.5 per cent a slightly sharper fall than across England (2.4 percentage points). However, employment in Hertfordshire has since recovered strongly, meaning that Hertfordshire is one of a very small number of LEP areas which has recovered to its pre-recession employment rate. FIGURE 14: EMPLOYMENT RATES IN HERTFORDSHIRE AND PEER LEP AREAS IN APRIL MARCH Source: Annual Population Survey, Office for National Statistics Hertfordshire Buckinghamshire Thames Valley Cheshire and Warrington Greater Cambridge & Greater Peterborough Thames Valley Berkshire England FIGURE 15: EMPLOYMENT RATES IN HERTFORDSHIRE DISTRICTS IN APRIL MARCH 2014 Source: Annual Population Survey, Office for National Statistics HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 26

32 FULL-TIME EMPLOYMENT WAS HIT HARD BY RECESSION, PARTLY OFFSET WITH AN INCREASE IN PART-TIME EMPLOYMENT. Male employment is particularly strong in Hertfordshire. In the year to March 2014, 84.2 per cent of working age males were in employment well above the England average of 77.2 per cent and the second highest male employment rate of all 39 LEP areas. The female employment rate is slightly lower, at 71.3 per cent in the year to March the eighth highest of all LEP areas and above the England average of 66.6 per cent. Male and female employment fell during recession but both rates are now back to pre-recession levels. Full-time employment is at its lowest rate for nine years. The percentage of people working full-time is high in Hertfordshire. In the year to March 2014, over threequarters (75.4 per cent) of people worked full-time the seventh highest of all LEP areas. The share of people working full-time fell sharply during and following recession (Figure 16), and now stands at at its lowest rate for nine years. Male full-time working is significantly higher than female full-time working in Hertfordshire. In the year to March 2014, 91.2 per cent of males worked full-time, higher than the England average (88.3 per cent). At the same time, just 56.8 per cent of females worked full-time, lower than the England average (58.0 per cent). The percentages of males and females working full-time both fell over the past year, but particularly sharply for females. FIGURE 16: SHARE OF TOTAL EMPLOYMENT THAT IS FULL-TIME 2004 TO 2014 Source: Annual Population Survey, Office for National Statistics Hertfordshire England HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 27

33 THE STRUCTURE AND CHARACTERISTICS OF EMPLOYERS HERTFORDSHIRE HAS A GREATER SHARE OF MICRO-BUSINESSES WITH BETWEEN 0 AND 4 EMPLOYEES COMPARED TO THE NATIONAL AVERAGE. Hertfordshire has a high percentage of micro businesses. In 2013, 79.0 per cent of all businesses in Hertfordshire were micro businesses, employing 0-4 people (Figure 17). This was higher than the England average of 75.8 per cent. Hertfordshire had smaller percentages of businesses employing between 5 and 99 people and a similar percentage of large businesses, employing 100 or more people. All Hertfordshire districts had higher-than-average percentages of micro businesses, particularly Three Rivers (81.8 per cent) and St Albans (81.2 per cent). However, Welwyn Hatfield, Watford and Stevenage also had higher than average percentages of large businesses (between 1.5 and 1.7 per cent, compared to 1.0 per cent across England). FOREIGN-OWNED BUSINESSES ACCOUNTED FOR 17.2 PER CENT OF TOTAL EMPLOYMENT, AND ARE MORE IMPORTANT TO THE HERTFORDSHIRE ECONOMY THAN NATIONALLY Foreign-owned businesses employ a greater percentage of workers in Hertfordshire than across England, particularly in Hertsmere. In 2010, 1.5 per cent of businesses in Hertfordshire were known to be foreignowned, similar to the England average (1.3 per cent). These businesses employed 17.2 per cent of people working in Hertfordshire (Figure 18) higher than the England average (14.3 per cent). Of the eight Hertfordshire districts for which data was available, six had higher-than-average percentages of employment by foreign-owned businesses. This was particularly significant in Hertsmere, where almost two-thirds of people (63.4 per cent) were employed by foreign-owned businesses. FIGURE 17: SHARE OF BUSINESSES IN EACH DISTRICT EMPLOYING 0-4 PEOPLE IN 2013 Source: UK Business: Activity, Size and Location, Office for National Statistics FIGURE 18: SHARE OF EMPLOYMENT BY FOREIGN-OWNED BUSINESSES IN 2010 Source: Foreign ownership of businesses in the United Kingdom, Office for National Statistics Note: data for the districts of Broxbourne and Stevenage has been supressed by the ONS due to statistical unreliability. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 28

34 INDUSTRIAL STRUCTURE HERTFORDSHIRE HAS THE HIGHEST PERCENTAGE OF EMPLOYMENT IN ADMINISTRATIVE AND SUPPORT SERVICES OF ALL 39 LEP AREAS AND THE THIRD HIGHEST PERCENTAGE OF EMPLOYMENT IN PROFESSIONAL, SCIENTIFIC AND TECHNICAL ACTIVITIES Employment in Hertfordshire is highest in wholesale and retail trade, administrative and support services, and professional, scientific and technical activities, accounting for 19.4 per cent, 14.0 per cent and 10.8 per cent of all employment respectively in 2013 (Figure 19). Hertfordshire has the highest percentages of employment in wholesale and retail trade and administrative and support services in England. Hertfordshire has the third highest share of construction employment amongst the 39 LEP areas. While employment in the construction industry is low in terms of the total share of all employment (5.6 per cent), construction employment is also the third highest of all LEP areas after Tees Valley. By contrast, the share of employment is much lower than average in human health and social work activities, public administration, manufacturing and education. Hertfordshire has the joint lowest percentage of education workers, the second lowest percentages of workers in human health and social work activities and public administration, and the fourth lowest percentage of manufacturing workers of all 39 LEP areas. Over recent years, there has been a significant increase in the share of people working in professional, scientific and technical activities. Over the four years to 2013, the biggest change to Hertfordshire s industrial structure was an increase in the percentage of people working in the industry categories of: Administrative and support service activities (+2.2 percentage points); Professional, scientific and technical activities (+1.0 percentage points) and a fall in the share of workers in Wholesale and retail trade, repair of motor vehicles and motorcycles (-2.0 percentage points). FIGURE 19: SHARE EMPLOYMENT BY INDUSTRY IN HERTFORDSHIRE AND ENGLAND IN 2013 Source: Business Register and Employment Survey, Office for National Statistics Hertfordshire England Agriculture, forestry and fishing Mining and quarrying Manufacturing Electricity, gas, steam and air conditioning supply Water supply; sewerage, waste management and remediation activities Construction Wholesale and retail trade; repair of motor vehicles and motorcycles Transportation and storage Accommodation and food service activities Information and communication Financial and insurance activities Real estate activities Professional, scientific and technical activities Administrative and support service activities Public administration and defence; compulsory social security Education Human health and social work activities Arts, entertainment and recreation Other service activities HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 29

35 THE TYPES OF JOBS AND SKILLS EMPLOYED IN HERTFORDSHIRE HERTFORDSHIRE HAD THE EIGHTH HIGHEST RATE OF EMPLOYMENT IN HIGHLY SKILLED JOBS OF ALL 39 LEP AREAS. A large share of Hertfordshire s jobs are highly skilled, with a higher-than-average percentage of people working in the most highly-skilled professions and a lower-thanaverage percentage of people working in the lowestskilled occupations. In the year to March 2014, as detailed in Figure 20, 57.7 per cent of all people working in Hertfordshire were employed in the most highly skilled (Level 3 and 4 occupations, or managers & senior officials, professional occupations, associate professional and technical professions, and skilled trades). This was higher than the England average (55.4 per cent). Hertfordshire also had the second lowest percentage of people working in the lowest-skilled (Level 1, or elementary) occupations (8.5 per cent) of all LEPs, after London. OVER THE PAST DECADE, HERTFORDSHIRE S JOBS HAVE BECOME MORE HIGHLY SKILLED Over the past decade, Hertfordshire s jobs have become more highly skilled. Since the year to March 2005 (the earliest year of data), the percentage of people working in Level 4 and Level 3 occupations (types of job) has increased (Figure 21), while the percentage of people working in Level 2 and Level 1 occupations has declined. The biggest change has been in the percentage of people working in Level 1 occupations: a 2.0 percentage point fall in the percentage of elementary workers. More detailed occupational data (on the types of job undertaken by those in work) indicates an expansion of the health service in Hertfordshire. Since the year to March 2005, there has been an increase of 8,900 people working in caring personal service occupations and 7,600 health and social care associate professionals. There has also been an increase of 8,400 other managers and proprietors. The greatest decreases have been for elementary administration and service occupations 3 (- 3,600), elementary trades (-3,500), secretarial occupations (-3,400) and skilled construction and building trades (- 3,300). 3 Note that this refers to the type of job undertaken rather than the industry worked in as cited on the previous page (39). The job type referred to here is sub-major occupation 92: Elementary administration and service occupations, part of major occupation 9: Elementary occupations. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 30

36 FIGURE 20: SHARE OF EMPLOYMENT BASED IN EACH LEP AREA IN OCCUPATIONAL CATEGORIES 3 AND 4 (THE MOST HIGHLY SKILLED), YEAR TO MARCH Source: Annual Population Survey, Office for National Statistics FIGURE 21: CHANGE IN SHARE OF EMPLOYMENT IN EACH SKILL LEVEL 2004 TO 2014 Source: Annual Population Survey, Office for National Statistics Apr 2004-Mar 2005 Apr 2013-Mar HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 31

37 VACANCIES THE LATEST DATA AVAILABLE ON VACANCIES FOR THE YEAR TO NOVEMBER 2012 SHOWS STRONG RECOVERY IN HERTFORDSHIRE S LABOUR MARKET FOLLOWING RECESSION. Hertfordshire has experienced a strong increase in the number of job vacancies notified to Jobcentre Plus, particularly for health service workers. In the year to November , employers notified almost 87,000 vacancies to Jobcentre Plus (Figure 22) a 34.3 per cent increase on five years ago higher than the England average increase of 19.3 per cent, but lower than three of Hertfordshire s four peer areas. The number of vacancies fell between the year to November 2008 and November 2009 in the midst of the economic downturn but has since recovered strongly, particularly in the latest year. During the economic downturn, the number of job vacancies fell most sharply for elementary occupations, process, plant and machine operatives and skilled trades occupations, highlighting that lower skilled workers and manual workers were hit hardest in terms of the numbers of new jobs created. This was particularly the case for construction labourers. During the five-year period between the year to November 2007 and the year to November 2012, the most notable change in vacancy numbers was a substantial increase in vacancies for personal service occupations. This was been driven by vacancies for care assistants/home carers. The only occupational group to experience a fall in vacancies was administrative and secretarial. HERTSMERE IS THE ONLY DISTRICT TO EXPERIENCE BELOW-AVERAGE GROWTH IN JOB VACANCIES. All districts in Hertfordshire experienced a fall in job vacancies during the downturn but most have recovered strongly. Between the year to November 2007 and the year to November 2012, all districts experienced a bigger increase in vacancies than the England average, apart from Hertsmere (Figure 23). Within this five-year period, Hertsmere experienced a strong rise in vacancies for personal service occupations in line with rest of the county and large falls in vacancies for sales and customer service and elementary occupations. Within these occupational groups, there were large falls in job vacancies for telephone salespersons, postal workers/couriers, waiters and waitresses, and bar staff. 4 With the introduction of the DWP Universal Jobsmatch service in 2013, the Jobcentre Plus vacancies service and data series was decommissioned. Statistical information was promised as part of the new service but has yet to be made available by DWP. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 32

38 FIGURE 22: TOTAL NUMBER OF VACANCIES NOTIFIED TO JOBCENTRE PLUS, YEAR TO NOVEMBER 2012 Source: Department for Work and pensions FIGURE 23: CHANGE IN NOTIFIED VACANCIES BETWEEN 2007 AND 2012 Source: Department for Work and pensions 90,000 HERTFORDSHIRE ( 80,000 70,000 60,000 50, HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 33

39 December 2004 May 2005 October 2005 March 2006 August 2006 January 2007 June 2007 November 2007 April 2008 September 2008 February 2009 July 2009 December 2009 May 2010 October 2010 March 2011 August 2011 January 2012 June 2012 November 2012 Of course, Jobcentre Plus vacancies do not represent all of the vacancies open or advertised in the labour market. Employers were surveyed in November 2013 about how many current vacancies they had as part of the 2013 UK Employer Skills Survey. It is estimated that Hertfordshire s employers had 22,400 vacancies at this time, representing 4.3 per cent of all employees. In comparison, there were 8,300 new vacancies (Figure 24) notified to Jobcentre Plus in November 2012 (the latest month/year for which data is available) and 8,600 unfilled vacancies during this period. The vacancy rate of 4.3 per cent is higher in Hertfordshire than the England average of 2.2 per cent, and above most peer areas apart from Bracknell Forest (6.8 per cent) as indicated in Figure 25. FIGURE 24: NEW VACANCIES NOTIFIED EACH MONTH TO JOBCENTRE PLUS BETWEEN NOVEMBER 2004 AND NOVEMBER 2012, HERTFORDSHIRE 12,000 10,000 8,000 6,000 4,000 2,000 Source: Department for Work and pensions 0 FIGURE 25: VACANCIES AS A SHARE OF TOTAL EMPLOYEES IN 2013 Source: UK Employer Skills Survey, UK Commission for Employment and Skills. 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 4.3% 3.3% 2.3% 1.9% 2.8% 1.7% 3.2% 6.8% 2.7% 2.6% 2.0% 2.1% 2.7% 2.2% HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 34

40 EARNINGS HERTFORDSHIRE S EARNINGS HAVE CONSISTENTLY BEEN HIGHER THAN THE NATIONAL AVERAGE The earnings of workers in Hertfordshire (those with jobs in the County who may or may not live there) has consistently exceeded the national average over recent years. The gross annual average earnings of full-time workers in Hertfordshire was 28,700 in 2013 above the England average of 27,400. Hertfordshire s annual average earnings decreased after 2009, with a sharp recovery in 2012, as indicated in Figure 26. By contrast, average annual earnings in England have not experienced a decrease since FIGURE 26: AVERAGE ANNUAL GROSS EARNINGS (WORKPLACE-BASED) Source: Annual Survey of Hours and Earnings, Office for National Statistics; Workplace-based median earnings for full-time employees. 29,000 28,000 27,000 26,000 25,000 24,000 23,000 Residence-based earnings (for residents who may work in the County or commute to other locations to work) have consistently exceeded workplace-based earnings in Hertfordshire. In 2013, the average annual workplace earnings were 28,700 lower than the average annual resident earnings of 31,900. This highlights the effects of commuting the difference between the types of jobs based in Hertfordshire and the higher skills and occupations of Hertfordshire residents who commute to work outside of the County (Figure 27). Hertfordshire England FIGURE 27: AVERAGE GROSS ANNUAL WORKPLACE AND RESIDENCE BASED EARNINGS FOR FULL-TIME EMPLOYEES 34,000 32,000 30,000 28,000 Workplace-based Residence-based Source: Annual Survey of Hours and Earnings, Office for National Statistics. Residence-based median earnings for full-time employees. 26,000 24,000 HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 35

41 Comparing Hertfordshire s earnings with peer local economies, as presented in Figure 28, demonstrates that Hertfordshire has experienced an increase in hourly earnings since 2011, as has Buckinghamshire, Cambridgeshire, Windsor and Maidenhead, and England. FIGURE 28: AVERAGE HOURLY EARNINGS INCLUDING OVERTIME (WORKPLACE-BASED) Source: Annual Survey of Hours and Earnings, Office for National Statistics Workplace-based median earnings for full-time employees HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 36

42 RECRUITMENT DIFFICULTIES EMPLOYERS IN HERTFORDSHIRE REPORTED THAT 31.1 PER CENT OF ALL OF THEIR VACANCIES WERE HARD TO FILL The prevalence of hard to fill vacancies (H2FVs) in Hertfordshire is similar to the national average. In 2013, 6 per cent of all establishments in Hertfordshire reported difficulty in finding people to fill their vacancies similar to the England average (5 per cent). Hard to fill vacancies are those that employers report are proving difficult to fill. They may be hard to fill for a variety of reasons including skills shortages, lack of accessibility of site, and relatively uncompetitive pay and conditions. Employers in Hertfordshire reported that 31.1 per cent of all of their vacancies were hard to fill slightly higher than the England average of 28.6 per cent of all vacancies, but lower than many other local authority areas covered by peer LEPs, such as Warrington (69.6 per cent), Bracknell Forest (52.5 per cent) and Windsor & Maidenhead (40.7 per cent), as detailed in Figure 29. ASSOCIATE PROFESSIONAL JOBS HAVE THE HIGHEST RATE OF HARD-TO-FILL VACANCIES IN HERTFORDSHIRE MARKEDLY ABOVE THE NATIONAL AVERAGE Almost one third of all H2FVs in Hertfordshire were vacancies for associate professionals (29.0 per cent) while 18.4 per cent were for administrative/clerical staff (Figure 30). The shares of H2FVs for these two occupations were much higher than the England averages. FIGURE 29: HARD-TO-FILL VACANCIES AS A SHARE OF ALL VACANCIES IN 2013 Source: UK Employer Skills Survey 2013, UK Commission for Employment and Skills 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% FIGURE 30: SHARE OF VACANCIES THAT ARE HARD-TO-FILL BY OCCUPATION 40.0% 30.0% 20.0% Hertfordshire England Source: UK Employer Skills Survey 2013, UK Commission for Employment and Skills 10.0% 0.0% HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 37

43 LACK OF SKILLS AND POOR ATTITUDES AMONG APPLICANTS WERE THE MAIN REASONS FOR HARD-TO-FILL VACANCIES. More than half (58 per cent) of all establishments with H2FVs claimed that there were low numbers of applicants with the required skills, while 41 per cent stated that there were low numbers of applicants with the required attitude, motivation or personality (Figure 32), much higher than the England averages (41 per cent and 18 per cent respectively). Overall, 80 per cent of skills shortage vacancies in Hertfordshire occurred due to the quality of applicants compared to the average of 69 per cent for England. The majority of establishments with H2FVs reported that these had a negative impact on their business. The main implication was that H2FVs increased workloads for existing staff (84 per cent of establishments), while around half of establishments stated that H2FVs created difficulties in meeting customer services objectives and increased operating costs (Figure 31). This was similar to the national picture. Employers reported that the majority of their vacancies were hard to fill because applicants lacked the appropriate skills, qualifications or experience. In Hertfordshire, 84.1 per cent of all H2FVs were skills shortage vacancies (SSVs) (i.e. hard to fill because of skills shortages), higher than the England average of 78.0 per cent but lower than local authority areas covered by the Thames Valley Berkshire LEP. ASSOCIATE PROFESSIONAL JOBS HAVE THE HIGHEST RATE OF HARD-TO-FILL VACANCIES IN HERTFORDSHIRE MARKEDLY ABOVE THE NATIONAL AVERAGE. Skills shortage vacancies are those that are proving difficult to fill due to the establishment being unable to find applicants with the appropriate skills, qualifications or FIGURE 32: REASONS WHY VACANCIES ARE HARD-TO- FILL Source: UK Employer Skills Survey 2013, UK Commission for Employment and Skills. Job entails shift work/unsociable hours Lack of qualifications Lack of work experience Low number of applicants with required attitude, motivation or personality Low number of applicants with required skills Poor terms and conditions Not enough people interested experience. Skills shortage vacancies (SSVs) were most common among associate professional and administrative/ clerical jobs. At 38.7 per cent and 33.4 per cent of all vacancies for these occupations, SSVs were much more common than across England (26.9 per cent and 13.7 per cent of all associate professional and administrative/clerical jobs). SSVs in Hertfordshire were much less common than the national average for skilled trades occupations and machine operatives. The majority of skills lacking in applicants were technical, practical or job specific skills (67 per cent of all SSVs compared to 62 per cent across England), followed by planning and organisational skills (55 per cent compared to 41 across England) and oral communication skills (54 per cent compared to 42 per cent across England). FIGURE 31: IMPACT OF HARD-TO-FILL VACANCIES ON EMPLOYERS (PERCENTAGE OF EMPLOYERS) Hertfordshire England Lose business or orders to competitors Delay developing new products or services Have difficulties meeting quality standards Experience increased operating costs Have difficulties introducing new working practices Increase workload for other staff Outsource work Withdraw from offering certain products or services altogether Have difficulties meeting customer services objectives Have difficulties introducing technological change None 5 6 Source: UK Employer Skills Survey 2013, UK Commission for Employment and Skills. 9% 13% 16% 15% 18% 18% 18% 21% 26% 26% Hertfordshire 34% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 41% 41% England 58% HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 38

44 3. SUPPLY OF LABOUR HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 39

45 SUMMARY: SUPPLY OF LABOUR HERTFORDSHIRE S WORKING AGE POPULATION HAS GROWN RAPIDLY OVER THE PAST DECADE, AND THIS IS SET TO CONTINUE Hertfordshire s working age population increased by 8.0 per cent between 2003 and 2013, higher than nationally (6.9 per cent) and the eighth highest amongst LEP areas. Over the next 10 years, the working age population is expected to grow by a further 6.0 per cent. A HIGHER SHARE (81.5 PER CENT) OF HERTFORDSHIRE S WORKING-AGE POPULATION ARE ECONOMICALLY ACTIVE (IN WORK OR ACTIVELY SEEKING WORK) THAN NATIONALLY (77.5 PER CENT) Hertfordshire has the fourth highest rate amongst LEP areas. All of Hertfordshire s districts have a higher economic activity rate than the national average. Economic activity rates had increased in all districts between 2001 and HERTFORDSHIRE HAS A RELATIVELY LOW SHARE OF RESIDENTS BORN OVERSEAS, AND A LOWER PRESENCE OF MIGRANT WORKERS 17.5 per cent of Hertfordshire residents work foreign-born in 2011 compared to 18.9 per cent on average for England. Between 2002/03 and 2013/14, National Insurance number registrations by overseas nationals were equivalent to 11 per 1,000 working age residents, lower than the rate of 15 per 1,000 for England. HERTFORDSHIRE S WORKFORCE (WORKING-AGE RESIDENTS) HAS AMONGST THE HIGHEST QUALIFICATIONS LEVELS IN ENGLAND 41.7 per cent of Hertfordshire s working-age residents are qualified to Level 4 (degree or equivalent) or above, compared to 35.0 per cent in England ranking it the sixth highest out of 39 LEP areas. HERTFORDSHIRE HAS A HIGHER SHARE OF ITS WORKFORCE QUALIFIED TO AT LEAST LEVEL 2 Hertfordshire also has a higher share of its workforce qualified to at least Level 2 (equivalent to 5 GCSEs grades A* to C) or higher (78.4 per cent) compared to nationally (72.5 per cent). Over half (51.9 per cent) of East Hertfordshire s workforce are qualified to degree level or above. HERTFORDSHIRE IS A NET EXPORTER OF QUALIFIED LABOUR, AS THE COMMUTING DATA REVEALS The qualifications profile of those with jobs in the County is lower, and closer to the national average with 35.1 per cent of those aged qualified to Level 4 or above (equivalent to degree level or above). YOUNG PEOPLE S ATTAINMENT LEVELS ARE VERY HIGH FOR LEVEL 3 (INCLUDES A- LEVELS) In 2013, 65 per cent of 19-year-olds in Hertfordshire attained a Level 3 qualification (A- Level and equivalent), much higher than in England (56 per cent), and ranking the 16 th highest amongst the 151 upper tier local authorities in England for which data is available. HERTFORDSHIRE S LEVELS OF GCSE ATTAINMENT INCLUDING ENGLISH AND MATHS REMAINS STRONG Hertfordshire s performance remains strong when comparing achievement of at least 5 A*-C GCSEs including English and Maths. In 2012/13, 66.1 per cent of pupils in Hertfordshire gained at least 5 A*- C GCSEs including English and Maths higher than the England average (60.4 per cent), and the 19th highest of 151 local authority areas in England. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 40

46 UNEMPLOYMENT IS VERY LOW IN HERTFORDSHIRE With the unemployment rate at 4.6 per cent in the year to March 2014, this was well below the England rate of 7.6 per cent and the fifth lowest rate of all 39 LEP areas. The unemployment rate has almost fallen back down to levels witnessed before the 2008/09 recession. Although the claimant count rate is low on average in Hertfordshire, Stevenage is the only district with a rate (at 2.5 per cent) above the national average (2.3 per cent). Long-term unemployment accounts for 26.0 per cent of all claimant unemployed and remains above pre-recession levels. BEING ECONOMICALLY INACTIVE (NEITHER IN WORK NOR ACTIVELY SEEKING WORK) IS MORE OF A LIFESTYLE CHOICE IN HERTFORDSHIRE 60.4 per cent of the economically inactive in Hertfordshire are in this situation for largely voluntary reasons compared to 52.7 per cent nationally per cent of Hertfordshire s working-age residents were economically inactive in 2014, lower than the national rate of 22.5 per cent. 54,200 of Hertfordshire s working age residents wanted to work but were not in work in 2014, and were either actively seeking work, or stating that they wanted a job representing 9.2 per cent of the working-age population. This was lower than the national average of 14.4 per cent for England. SKILLS GAPS ARE NO MORE PREVALENT IN HERTFORDSHIRE THAN NATIONALLY, BUT HAVE A MORE DETRIMENTAL EFFECT ON BUSINESSES 16 per cent of Hertfordshire establishments reported that they had skills gaps (skills deficiencies in existing employees), but 75 per cent of these skills gaps were transitory and due to staff being new and training not being complete yet. These rates were very similar to the average for England (15 per cent and 75 per cent respectively). Skills gaps in Hertfordshire had a more negative effect. Although skills gaps occurred no more frequently than the national average, Hertfordshire s employers did report that they were more likely to have a negative impact on their business with 75 per cent of establishments with skills gaps reporting this compared to 63 per cent nationally. HIGHER EDUCATION LEAVERS ARE MORE PREPARED FOR WORK THAN SCHOOL LEAVERS 83 per cent of establishments recruiting graduates reported that higher education leavers were well prepared for work. The rates of satisfaction were 74 per cent for year-old FE college leavers and 72 per cent for year old school leavers. Where employers reported that leavers were poorly prepared for work the main reason was a lack of working world/life experience or maturity. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 41

47 WORKFORCE HERTFORDSHIRE S WORKFORCE (WORKING-AGE POPULATION) HAS GROWN RAPIDLY OVER THE PAST DECADE, AND A HIGHER RATE THAN NATIONALLY Hertfordshire s working age population has grown rapidly over the past decade. In 2013, Hertfordshire had a working age population (and potential workforce) of 724,000 (Figure 34). The working age population has increased faster than the national average. Between 2003 and 2013, the number of people aged years increased by 8.0 per cent higher than the England average increase of 6.9 per cent and the eighth highest increase of all 39 LEP areas in England, after London, Leicester and Leicestershire, Greater Cambridge & Greater Peterborough, Coast to Capital, South East Midlands, Swindon and Wiltshire, and West of England. The increase in the working age population has been largely concentrated among the older working age, with large increases in those aged years, years and years. During the same period, the number of people aged in their 30s has fallen. Between 2013 and 2023, further strong growth is expected among older working age groups. However, this trend will reverse over the following decade. Between 2023 and 2033, the strongest growth is expected to be among year olds and among those aged in their 40s. FIGURE 33: ACTUAL AND PROJECTED POPULATION CHANGE BY AGE GROUP 2003 TO ,800 1,150 9, ,100-8,011 10, , , ,300 6,096-7, ,300 9, ,900 4,073 6, ,600-7,851 11, ,700 3,722 4, ,925-6, ,400 15,401 4,237 Source: Mid-year Population Estimates and Subnational Population Projections, Office for National Statistics. THE WORKING-AGE POPULATION IS EXPECTED TO CONTINUE GROWING OVER THE NEXT 20 YEARS, WITH THE PACE OF GROWTH SLOWING AFTER 2023 Growth in the working age population is expected to slow over the next 20 years. Between 2013 and 2023, Hertfordshire s working age population is expected to grow by 6.0 per cent, with growth to fall further to 4.6 per cent between 2023 and 2033 (Figure 35). This slowdown in growth is expected nationally and across all peer areas, with Hertfordshire maintaining its above average growth rates. FIGURE 34: ACTUAL AND PROJECTED GROWTH IN THE WORKING AGE POPULATION projection projection Source: Mid-year Population Estimates and Subnational Population Projections, Office for National Statistics. FIGURE 35: ACTUAL AND PROJECTED WORKING AGE POPULATION IN HERTFORDSHIRE 1993 TO 2033 Source: Mid-year Population Estimates and Subnational Population Projections, Office for National Statistics , , , , , , , , ,000 0 Hertfordshire England Buckinghamshire TV Actual Cheshire & Warrington GCGP Projected Thames Valley Berkshire HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 42

48 ECONOMIC ACTIVITY 81.5 PER CENT OF HERTFORDSHIRE S WORKING AGE POPULATION ARE ECONOMICALLY ACTIVE, HIGHER THAN THE NATIONAL AVERAGE OF 77.5 PER CENT A large proportion of Hertfordshire s working age population are economically active. Economic activity measures the percentage of people that are either in work (employed) or actively looking for work (unemployed). In April 2013 to March 2014, 81.5 per cent of Hertfordshire s working age population were economically active, much higher than the England average (77.5 per cent) and the fourth highest of all LEP areas after Northamptonshire, Swindon & Wiltshire, and Greater Cambridge & Greater Peterborough. FIGURE 36: ECONOMIC ACTIVITY RATE - SHARE OF WORKING AGE POPULATION THAT ARE ECONOMICALLY ACTIVE (IN WORK OR ACTIVELY SEEKING WORK) Hertfordshire s economic activity rate fell during and after the recession (Figure 36), and more sharply than the England average but has since risen higher than its prerecession level. ALL OF HERTFORDSHIRE S DISTRICTS HAVE HIGHER ECONOMIC ACTIVITY RATES THAN THE NATIONAL AVERAGE Economic activity rates are above average in all Hertfordshire districts.. At the time of the 2011 Census, rates ranged from 70.0 per cent in Welwyn Hatfield, which was only just above the England average (69.9 per cent), to 76.6 per cent in Watford (Figure 37). Economic activity rates had increased in all districts compared to Hertfordshire England Source: Annual Population Survey, Office for National Statistics. FIGURE 37: ECONOMIC ACTIVITY RATES BY DISTRICT IN 2011 Source: 2011 Census, Office for National Statistics. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 43

49 MIGRANT WORKERS HERTFORDSHIRE HAS A RELATIVELY LOW SHARE OF ITS POPULATION BORN OUTSIDE THE UK, AND LOWER PRESENCE OF MIGRANT WORKERS COMPARED TO THE NATIONAL AVERAGE Hertfordshire has a relatively low percentage of population born outside the UK. At the time of the 2011 Census, 17.5 per cent of people aged 16 to 49 years in Hertfordshire were born outside the UK. This was slightly lower than the England average of 18.9 per cent. The profile of the non-uk population in Hertfordshire was very similar to that across England, and as Figure 38 details, the largest groups coming from the Middle East & Asia and Africa (30.5 per cent and 22.2 per cent of the non-uk population respectively). Some of the non-uk population groups participate more in employment than UK-born nationals, such as people from the EU Accession Countries, Antarctica & Oceania, Ireland and EU countries. Employment rates in Hertfordshire were lowest among people from the Middle East and Asia and the Rest of Europe. Unemployment rates were highest among those from Africa, at 7.0 per cent, followed by Rest of Europe (6.6 per cent), compared to 5.3 per cent for UK nationals in Hertfordshire. National Insurance number (NINo) registrations by overseas nationals are relatively low across Hertfordshire. NINo registrations provide an indication of immigration into an area for work purposes. Between 2002/03 and 2013/14, almost 93,000 overseas nationals registered for National Insurance numbers (NINos) in Hertfordshire. NINo registrations rose sharply between 2002/03 and 2008/09 and fell sharply during the economic downturn. Registrations have since picked up but remain below their pre-recession peak. Between 2002/03 and 2013/14, NINo registrations in Hertfordshire averaged 11 per 1,000 working age people living in the area lower than the England average of 15 NINo registrations per 1,000 working age people. Compared to its peer LEP areas, NINo registrations were higher than in Cheshire and Warrington and Buckinghamshire Thames Valley (7 and 9 per 1,000 working age people) but much lower than in Greater Cambridge & Greater Peterborough and Thames Valley Berkshire (17 and 19 per 1,000 working age people). The majority of NINo registrations in Hertfordshire are from European nationals. In 2013/14, 42 per cent of registrations were from people from the EU Accession States while a further 28 per cent of registrations were from EU nationals. FIGURE 38: SHARE OF NON-UK POPULATION BY COUNTRY OF ORIGIN IN 2011 Source: 2011 Census, Office for National Statistics Hertfordshire England HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 44

50 QUALIFICATIONS WITH 41.7 PER CENT OF YEAR OLD RESIDENTS QUALIFIED TO AT LEAST LEVEL 4 (DEGREE LEVEL OR EQUIVALENT), HERTFORDSHIRE HAS A HIGHLY QUALIFIED POPULATION. In 2013, 41.7 per cent of year old residents in Hertfordshire were qualified to at least Level 4 (degree level or equivalent). This was much higher than the England average (35.0 per cent) and the sixth highest of all 39 LEP areas: above two of its peer areas (Figure 39) Cheshire and Warrington (38.9 per cent) and Greater Cambridge & Greater Peterborough (38.6 per cent) but FIGURE 39: SHARE OF WORKFORCE QUALIFIED TO LEVEL 2+ AND LEVEL 4+ IN 2013 Source: Annual Population Survey, Office for National Statistics Hertfordshire Buckinghamshire Thames Valley bellow Buckinghamshire Thames Valley (43.9 per cent) and Thames Valley Berkshire (43.1 per cent). In the same year, 78.4 per cent of year olds were qualified to at least Level 2 (equivalent to five high-grade GCSEs). Again, this was much higher than the national average (72.5 per cent) and the third highest of all LEP areas, below just Enterprise M3 and Oxfordshire. A small minority of people had no qualifications at 7.0 per cent of working age residents lower than the national average of 9.1 per cent and the 11th lowest of all LEP areas. Thames Valley Berkshire and Buckinghamshire Thames Valley had lower rates. Level 2+ Level Cheshire and Warrington GCGP Thames Valley Berkshire England FIGURE 40: SHARE OF WORKING-AGE RESIDENTS QUALIFIED TO NVQ4+ IN 2013 Source: Annual Population Survey, Office for National Statistics. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 45

51 MOST OF HERTFORDSHIRE S DISTRICTS HAVE HIGHLY QUALIFIED POPULATIONS APART FROM BROXBOURNE AND STEVENAGE. The most highly qualified area is East Hertfordshire, with more than half (51.9 per cent) of working age residents qualified to at least Level 4 (Figure 41). Stevenage had a slightly lower-than-average percentage of people with at least Level 4 qualifications (34.5 per cent) but a higherthan-average percentage of people qualified to at least Level 2 (88.1 per cent) and a lower-than-average percentage with no qualifications (7.3 per cent). Broxbourne s qualifications profile fared worse than nationally for each indicator, and with one of the highest percentages of people with no qualifications in England (15.6 per cent, ranking 15th highest of 322 English districts for which data were available). ALTHOUGH RESIDENTS QUALIFICATIONS LEVELS ARE HIGH, THE QUALIFICATIONS PROFILE OF EMPLOYEES WORKING IN THE COUNTY ARE AVERAGE The qualifications of those whose jobs are based in Hertfordshire are slightly less impressive than for Hertfordshire residents. At the time of the 2011 Census, 35.9 per cent of people aged working in the county were qualified to Level 4 and above. This was just slightly higher than the England average (35.1 per cent). Qualification rates at Level 2 and above were very similar to the England average (70.3 per cent of people working in Hertfordshire, compared to 70.1 per cent across England). HERTFORDSHIRE LOSES A PROPORTION OF ITS HIGHLY QUALIFIED RESIDENTS THROUGH OUT-COMMUTING This highlights that Hertfordshire loses a proportion of its highly qualified residents through out-commuting. This is particularly the case in East Hertfordshire which has the highest percentage of working age residents qualified to Level 4+ and a lower-than-average percentage of people working in the district qualified to at least Level 4. At district level, just half of Hertfordshire s districts had higher-than-average percentages of people working in the area with Level 4+ qualifications. Workers were less well qualified than across England in Stevenage, Dacorum, East Hertfordshire, North Hertfordshire and Broxbourne (Figures 42 and 43). FIGURE 41: SHARE OF YEAR OLDS (RESIDENTS) WITH NVQ EQUIVALENT QUALIFICATIONS, 2013 Source: Annual Population Survey, Office for National Statistics. NVQ4+ NVQ3+ NVQ2+ NVQ1+ Other quals No quals Broxbourne Dacorum East Hertfordshire Hertsmere North Hertfordshire St Albans Stevenage Three Rivers Watford Welwyn Hatfield Hertfordshire England FIGURE 42: WORKPLACE- BASED QUALIFICATIONS (THOSE WHO WORK IN HERTFORDSHIRE BUT DON T NECESSARILY RESIDE THERE), 2013 Source: Annual Population Survey, Office for National Statistics HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 46

52 FIGURE 43: SHARE OF EMPLOYEES WITH QUALIFICATIONS AT NVQ4+ (WORKPLACE-BASED), 2013 Source: Annual Population Survey, Office for National Statistics. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 47

53 SCHOOL QUALIFICATIONS ALMOST TWO-THIRDS (65 PER CENT) OF 19 YEAR-OLDS IN HERTFORDSHIRE GAINED A LEVEL 3 QUALIFICATION (A LEVEL AND EQUIVALENT) - MUCH HIGHER THAN ACROSS ENGLAND (56 PER CENT) In 2013, almost two-thirds (65 per cent) of 19 year olds in Hertfordshire gained a Level 3 qualification (A level and equivalent). As detailed on Figure 44, this was much higher than across England (56 per cent). Hertfordshire ranked 16th highest of all 151 local authorities in England for which data were available. Hertfordshire experienced a 10 percentage point increase in the percentage of 19 year olds qualified to Level 3 over the past five years between 2008 and 2013, the same rate as across England. NINTH HIGHEST SHARE OF YEAR- OLDS STAYING-ON INTO FULL-TIME EDUCATION In 2012, 91 per cent of 16 and 17 year-olds in Hertfordshire were in full-time education ranking the education authority the ninth highest for staying-one rates, and above the national average staying-on rate of 83 per cent. Staying-on rates have steadily increased over the decade, with rates in 2002 at 83 per cent in Hertfordshire and 72 per cent in England. GCSE ACHIEVEMENT INCLUDING ENGLISH AND MATHS IS HIGHER-THAN-AVERAGE IN HERTFORDSHIRE Hertfordshire s performance is strong when comparing achievement of at least 5 A*-C GCSEs including English and Maths. In 2012/13, 66.1 per cent of pupils in Hertfordshire gained at least 5 A*-C GCSEs including English and Maths higher than the England average (60.4 per cent), and the 19th highest of 151 local authority areas in England (Figure 45). However, the rate of improvement over the past five years (an increase of 12.4 percentage points) has again been lower than across England (16.3 percentage points). FIGURE 44: PERCENTAGE OF 19 YEAR-OLDS QUALIFIED TO LEVEL 3 IN 2013 Source: Department for Education FIGURE 45: PERCENTAGE OF PUPILS GAINING AT LEAST 5 A*-C GCSES INCLUDING ENGLISH AND MATHEMATICS 2012/13 Source: Department for Education HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 48

54 UNEMPLOYMENT HERTFORDSHIRE HAS LOW RATES OF UNEMPLOYMENT Unemployment is low in Hertfordshire. In the year to March 2014, 4.6 per cent of all economically active year olds were unemployed well below the England average of 7.3 per cent and the fifth lowest rate of all 39 LEP areas, after Enterprise M3, Oxfordshire, Worcestershire and Buckinghamshire Thames Valley. Unemployment is almost back down to pre-recession levels. Between the year to March 2008 and the year to March 2010, unemployment in Hertfordshire rose sharply from 4.2 per cent to 6.5 per cent, as Figure 46 reveals. It has since recovered more quickly than the national average and is now just 0.4 percentage points above its pre-recession level, compared to 2.0 percentage points across England. Male unemployment is particularly low in Hertfordshire. At 4.6 per cent in the year to March 2014, it was well below the England average (7.7 per cent) and the fourth lowest of all LEP areas after Buckinghamshire Thames Valley, Enterprise M3 and Oxfordshire. Male unemployment in Hertfordshire is also back to prerecession levels, despite remaining above its pre-recession level across England. Female unemployment is also lower than average. At 4.7 per cent in the year to March 2014, it was lower than across England (6.9 per cent) and the ninth lowest of all LEP areas. But unlike the England average, female unemployment was higher than male unemployment in Hertfordshire and remains one percentage point above its pre-recession low. FIGURE 46: UNEMPLOYMENT RATES FROM 2004 TO Hertfordshire England Source: Annual Population Survey, Office for National Statistics FIGURE 47: CLAIMANT COUNT RATES 2004 TO Hertfordshire England Source: Jobcentre Plus HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 49

55 CLAIMANT UNEMPLOYMENT HERTFORDSHIRE HAS A LOW CLAIMANT COUNT RATE Like other labour market indicators, Hertfordshire fares better than the national average with a claimant count rate of 1.5 per cent in July 2014 (Figure 47) below the England rate of 2.3 per cent and the 12th lowest of all 39 LEP areas in England. The claimant count rate is the percentage of people aged years claiming Jobseekers Allowance and is a further indicator of unemployment. The claimant count rates for males and females in Hertfordshire are both lower than the national averages. The claimant rate for females (1.2 per cent) is lower than that for males (1.8 per cent) but is recovering more slowly following recession: the male claimant rate rose more sharply during the recession but is almost back to its prerecession low (+0.1 percentage points) while the female rate still has some way to go (+0.5 percentage points). This trend is also evident across England. THE CLAIMANT COUNT RATE IN HERTFORDSHIRE IS HIGHEST AMONG YOUNG PEOPLE The claimant count rate in Hertfordshire is highest among young people, which is also the case nationally. It is unclear whether this is because unemployment is highest among year olds or if they are more likely to claim unemployment benefit. While the claimant rate is highest among young people and rose more sharply during recession, it has also recovered quickest, as Figure 48 demonstrates. In July 2014, the claimant rate for year olds was 0.3 percentage points below its prerecession low, compared to 0.3 percentage points above pre-recession levels for year olds and year olds. Again, this was also a national trend. JOBSEEKERS ALLOWANCE CLAIMANT LEVELS ARE HIGH AMONG LOW-SKILLED OCCUPATIONS Numbers of Jobseekers Allowance claimants remain high in lower-skilled occupations, particularly among people previously working in sales and customer service occupations. In July 2014, the claimant count for sales and customer service workers was per cent higher than in July 2008 and represented over 37 per cent of all claimants in Hertfordshire up from just over 18 per cent in July This rise in sales and customer service claimants was concentrated among those in sales and retail assistants. Claimant counts were also above pre-recession levels for those previously working in administrative and secretarial occupations (+43.4 per cent) and personal service occupations (+20.5 per cent). The rise in administrative and secretarial claimants was concentrated among general office assistants/clerks while the rise in personal service claimants was concentrated among care assistants and home carers. However, claimant counts for all of these occupations are starting to fall. FIGURE 48: CLAIMANT COUNT RATES BY AGE IN HERTFORDSHIRE Source: Jobcentre Plus Aged Aged Aged HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 50

56 LONG-TERM UNEMPLOYMENT STEVENAGE HAS A HIGHER-THAN- AVERAGE CLAIMANT COUNT RATE Stevenage is the only district in Hertfordshire with an above-average claimant count rate. In July 2014, 2.5 per cent of working age people in Stevenage were claiming Jobseekers Allowance, above the England average of 2.3 per cent. Although its rate has fallen from a high of 4.0 per cent in July 2011 and July 2012, it has been above average since July 2010, indicating that Stevenage was hit harder by recession than nationally. Claimant rates in Stevenage are higher than the national average across the board, particularly the claimant rate for young people (4.2 per cent of year olds, compared to 3.8 per cent across England) and the older working age (2.2 per cent of year olds, compared to 1.6 per cent across England). LONG-TERM UNEMPLOYMENT REMAINS ABOVE PRE-RECESSION LEVELS, REPRESENTING 26.0 PER CENT OF ALL CLAIMANTS IN JULY 2014 Long-term unemployment remains above pre-recession levels. In July 2014, 0.4 per cent of working age people had been claiming unemployment benefit for more than a year, compared to an average of 0.1 per cent between July 2001 and July However, this was below the national average of 0.6 per cent and has fallen over the past two years. The number of long-term claimants represented 26.0 per cent of all claimants in July 2014, compared to an average of 11.7 per cent between July 2001 and July The share of long-term claimants continues to rise but is well below the England average of 42.2 per cent of all claimants (Figure 50). FIGURE 49: LONG TERM CLAIMANTS IN HERTFORDSHIRE % of all working age people (left axis) % of all claimants (right axis) Source: Jobcentre Plus. 0.4 % % HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 51

57 ECONOMIC INACTIVITY HERTFORDSHIRE HAS A LOW RATE OF ECONOMIC INACTIVITY Economic inactivity is low in Hertfordshire. Whilst Hertfordshire has a high percentage of economically active people, 18.5 per cent of working age people are economically inactive, i.e. neither in work nor looking for work. This is lower than the England average (22.5 per cent) and most peer areas. There are a range of reasons for inactivity, the most common of which is being a student (33.6 per cent of the economically inactive in Hertfordshire). Other reasons include looking after the family/home, being retired, and being sick. ECONOMIC INACTIVITY IS MORE OF A LIFESTYLE CHOICE IN HERTFORDSHIRE COMPARED TO NATIONALLY Being economically inactive is more of a lifestyle choice in Hertfordshire than across England. As Figure 50 details, a greater percentage of people are inactive due to being a student (33.6 per cent compared to the England average of 26.3 per cent) and looking after the family or home (26.7 per cent compared to the England average of 26.4 per cent). At the same time, a much lower percentage of people are inactive due to being long-term sick (12.5 per cent, compared to the England average of 20.5 per cent). ECONOMIC INACTIVITY HAS RISEN AMONGST YOUNG PEOPLE IN HERTFORDSHIRE Economic inactivity is high and has risen sharply among young people in Hertfordshire. In the year to March 2014, 61.7 per cent of year olds were inactive above the England average of 55.1 per cent and higher than in all peer LEP areas while 30.9 per cent of year olds were inactive higher than the England average of 26.3 per cent and, again, higher than in all peer LEP areas. This corroborates with a high percentage of inactive people being students. One fifth (20.2 per cent) of the inactive want a job lower than the England average of almost one quarter (24.5 per cent). This includes those who want a job but have not been seeking work in the last four weeks and those who want a job and are seeking work but are not available to start. This could include those that are temporarily sick, discouraged workers and those planning to return to work in the near future. The percentage of the inactive that want a job rose considerably as a result of the recession as people were forced into inactivity as a result of redundancy and/or experiencing difficulty finding work. This has since fallen back to pre-recession levels. FIGURE 50: REASONS FOR INACTIVITY, APRIL 2013 TO MARCH 2014 Source: Annual Population Survey, Office for National Statistics Hertfordshire England HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 52

58 WORKLESSNESS 54,200 OF HERTFORDSHIRE S WORKING AGE RESIDENTS WERE INVOLUNTARILY WORKLESS IN THE YEAR TO MARCH 2014 A wider definition of worklessness includes the unemployed plus those who are economically inactive but want a job (but who are not technically classified as unemployed). In the case of Hertfordshire, 26,900 working age residents were economically inactive but wanted to work in the year to March A further 27,300 working-age residents were also classified as officially unemployed. This means that a total of 54,200 residents were involuntary workless or 9.2 per cent of the economically active population much higher than the narrower unemployment measure (4.6 per cent). THE RATE OF WORKLESSNESS IN HERTFORDSHIRE (A BROADER MEASURE OF UNEMPLOYMENT) IS RELATIVELY LOW The worklessness rate in Hertfordshire is relatively low. Despite showing that worklessness is a much wider problem than highlighted by the unemployment rate, in the year to March 2014, Hertfordshire s worklessness rate was much lower than the England average (14.4 per cent) and the second lowest of all LEP areas after Worcestershire. Involuntary worklessness has also fallen sharply in Hertfordshire over the past two years and is back to prerecession levels, despite remaining 2.2 percentage points above pre-recession levels across England as revealed in Figure 51. FIGURE 51: THE RATE OF INVOLUNTARY WORKLESSNESS FROM 2004 TO 2014 Source: Annual Population Survey, Office for National Statistics Hertfordshire England HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 53

59 SKILLS GAPS SKILLS DEFICIENCIES IN EXISTING EMPLOYEES MOST SKILLS GAPS ARE TRANSITORY IN NATURE, WITH 75 PER CENT BEING DUE TO STAFF BEING NEW IN THE ROLE OR DUE TO COMPLETE THEIR TRAINING Employers in Hertfordshire have reported that skills gaps are similar to the England average. In 2013, 16 per cent of Hertfordshire establishments reported that existing staff were not fully proficient, compared to 15 per cent across England (Figure 52). Skills gaps were most prevalent among sales and customer services staff (20.2 per cent of all skills gaps), followed by elementary staff (20.0 per cent of all skills gaps) the same as nationally. The majority of skills gaps were due to staff being new to the role and/or training not being complete (75 per cent of skills gaps the same as across England). Other significant issues causing skills gaps (Figure 53) were staff performance not improving sufficiently despite being on training and lack of staff motivation (both 46 per cent of skills gaps). Employers reported that the following skills required most improvement: planning and organisational skills; technical, practical or job specific skills; problem solving skills; team working skills; and oral communication skills. This was similar to the national average. FIGURE 52: INCIDENCE OF SKILLS GAPS Source: UK Employer Skills Survey, UK Commission for Employment and Skills. 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Hertfordshire England 16% 15% 7% 5% % of establishments with any skills gap % of employment FIGURE 53: TYPES OF SKILLS GAPS Technical or practical skills or Job specific skills Literacy skills Hertfordshire 25% 24% England 58% 57% Source: UK Employer Skills Survey, UK Commission for Employment and Skills. Numeracy skills Strategic Management skills 26% 23% 32% 25% Planning and Organisation skills 58% 57% Problem solving skills 49% 58% Foreign language skills 15% 12% Team working skills 57% 53% Customer handling skills 52% 52% Written communication skills 35% 36% Oral communication skills 48% 57% Advanced IT or software skills Basic computer literacy / using IT 30% 22% 34% 25% 0% 20% 40% 60% 80% HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 54

60 SKILLS GAPS HAD A MORE NEGATIVE IMPACT ON HERTFORDSHIRE S EMPLOYERS COMPARED TO NATIONALLY Employers in Hertfordshire were much more likely to report that skills gaps had a negative impact on their business: 75 per cent of all establishments with skills gaps reported that skills gaps had an impact, compared to 63 per cent across England. As detailed in Figure 54, the most major implication was that skills gaps increased workloads for other staff (60 per cent of establishments with skills gaps in Hertfordshire, compared to 52 per cent across England). In Hertfordshire, 13 per cent of establishments with skills gaps reported that they had to outsource work as a result, compared to 10 per cent and England. The majority of employers said that they were taking steps, or planned to take steps, to improve the proficiency or skills of staff with skills gaps (91 per cent in Hertfordshire, compared to 85 per cent across England). Key actions taken to overcome lack of proficiency among staff were increasing training activity or spend, more supervision and more staff appraisals and performance reviews. FIGURE 54: IMPLICATIONS OF SKILLS GAPS Increase workload for other staff Hertfordshire England 60% 52% Source: UK Employer Skills Survey, UK Commission for Employment and Skills. Have difficulties meeting quality standards 26% 37% Have higher operating costs 26% 34% Lose business or orders to competitors 25% 21% Have difficulties introducing new working practices 25% 24% Delay developing new products or services 16% 16% Outsource work 13% 10% HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 55

61 THE PREPAREDNESS FOR WORK OF SCHOOL COLLEGE AND UNIVERSITY LEAVERS THE MAIN REASON FOR BEING POORLY PREPARED FOR WORK WAS LACK OF WORK EXPERIENCE AND MATURITY Where school, college and university leavers were poorly prepared for work, the main reason was lack of working world/life experience or maturity. The 2013 UK Employer Skills Survey asked employers about the skills and suitability of people that employers had recruited straight from school, college and university. In Hertfordshire, just over one quarter of establishments had recruited someone to their first job on leaving education in the past two to three years (27 per cent, the same as across England) YEAR OLD SCHOOL LEAVERS WERE BETTER PREPARED FOR WORK THAN NATIONALLY Employers in Hertfordshire were more likely to report that year olds recruited from school were well prepared for work. As indicated in Figure 55, almost three-quarters of recruiting establishments (72 per cent) in Hertfordshire stated that school leavers were well prepared, above the England average (66 per cent) and the joint highest of all peer areas, along with Windsor and FIGURE 55: PREPAREDNESS FOR WORK OF SCHOOL COLLEGE AND UNIVERSITY LEAVERS Source: UK Employer Skills Survey, UK Commission for Employment and Skills % 80.0% 60.0% 40.0% 20.0% 0.0% Maidenhead (in the Thames Valley LEP area), as detailed in Figure 56. Where skills were lacking, the most common reasons were lack of working world/life experience or maturity (15 per cent of recruiting establishments) and poor attitude/personality or lack of motivation (11 per cent). Preparedness for work among year olds recruited from further education (FE) colleges was the same as the national average: 74 per cent of recruiting establishments reported that FE leavers were well prepared for work, the same as across England, and higher than in many peer areas. Where FE leavers were poorly prepared, the main reason was lack of working world/life experience or maturity (15 per cent of recruiting establishments). PREPAREDNESS FOR WORK IS HIGHEST AMONG HIGHER EDUCATION LEAVERS 83 per cent of recruiting establishments in Hertfordshire reported that higher education leavers were well prepared for work. Again, this was the same as across England but was lower than in many peer areas. Where higher education leavers were poorly prepared, the main reason was lack of working world/life experience or maturity (10 per cent of recruiting establishments). 72% 74% 66% year olds recruited to first job from school Hertfordshire England 74% year olds recruited to first job from FE college 83% 83% university or higher education leavers recruited to first job from University FIGURE 56: PREPAREDNESS FOR WORK OF YEAR OLDS RECRUITED TO FIRST JOB FROM SCHOOL (SHARE OF EMPLOYERS) 80.0% 60.0% 40.0% 20.0% 0.0% 72% 72% 70% 70% 66% 66% 64% 64% 60% 59% 56% 48% Source: UK Employer Skills Survey, UK Commission for Employment and Skills. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 56

62 4. EDUCATION AND TRAINING ACTIVITY HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 57

63 SUMMARY: EDUCATION AND TRAINING ACTIVITY HERTFORDSHIRE HAS SLIGHTLY HIGHER PARTICIPATION IN TRAINING COMPARED TO THE NATIONAL AVERAGE 22.2 per cent of Hertfordshire residents had participated in training in the year to March 2014, compared to 19.0 per cent in England. This represented the fourth highest rate of training participation amongst the 39 LEP areas. ALTHOUGH A LARGE NUMBER OF RESIDENTS PARTICIPATE IN GOVERNMENT- FUNDED FE TRAINING, A LOWER SHARE PARTICIPATE COMPARED TO THE NATIONAL AVERAGE A LOWER SHARE OF ESTABLISHMENTS IN HERTFORDSHIRE UNDERTAKE TRAINING, PARTICULARLY IN COMPARISON TO PEER ECONOMIES In 2013, 64 per cent of establishments had funded or arranged training for staff over the past 12 months slightly lower than the England average (66 per cent), and lower than most other peer areas (e.g. Slough 79 per cent; Wokingham 78 per cent; Cambridgeshire 75 per cent). In 2012/13 65,260 residents of Hertfordshire took part in some form of government funded further education and skills training, representing a 6.3 increase since 2011/12. However, representing 9.1 per cent of the working age population, this was lower than the England average (12.6 per cent). This could be due to a lower share of the population being eligible (e.g. lower unemployment), as well as the high share of 16 and 17 year-olds staying on in full-time education. HERTFORDSHIRE HAS A LOWER SHARE OF FE SKILLS AND TRAINING IN THE FORM OF APPRENTICESHIPS COMPARED TO NATIONALLY 17.1 per cent of training was in Apprenticeships in Hertfordshire compared to 19.4 per cent in England per cent of training was in education and training in an institution or training provider. 50 PER CENT OF HERTFORDSHIRE S ESTABLISHMENTS HAD A TRAINING PLAN OR BUDGET IN 2013 This is similar to the average for England (49 per cent), but much lower than in many peer areas such as Slough (69 per cent) and Bracknell Forest (66 per cent). HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 58

64 PARTICIPATION IN TRAINING A SLIGHTLY HIGHER SHARE OF HERTFORDSHIRE RESIDENTS PARTICIPATE IN TRAINING COMPARED TO NATIONALLY Participation in training in Hertfordshire has been similar to the England average since 2007 but has increased sharply over the past year (Figure 57). In the year to March 2014, 22.2 per cent of people living in Hertfordshire that were in employment participated in training in the 13 weeks before being surveyed. This was higher than the England average (19.0 per cent) and the fourth highest of all LEP areas, after Dorset, Solent and Enterprise M3. Training was higher than average among men and women (21.9 per cent for men compared to the England average of 18.2 per cent and 22.4 per cent for women compared to the England average of 19.7 per cent). LOWER TAKE-UP OF GOVERNMENT- FUNDED TRAINING The Skills Funding Agency (SFA) funds skills training for further education (FE) in England. It is responsible for giving colleges, training organisations and employers the FIGURE 57: SHARE OF WORKERS PARTICIPATING IN TRAINING IN THE PAST 13 WEEKS right funding to help adults, young people, the unemployed and people with low skill levels to get the skills they need for employment. A large number of residents undertake government funded FE training, but the rate of participation is lower than the national average. In 2012/13, 65,260 people living in Hertfordshire undertook some form of government funded further education and skills training. This was a 6.5 per cent increase on 2011/12 and a 6.3 per cent increase on 2010/11. In 2012/13, the number of people undertaking training represented 9.1 per cent of the working age population, up from 8.5 per cent in 2011/12 and 8.6 per cent in 2010/11. However, this was lower than the England average (12.6 per cent) and lower than all but one of its four peer areas (Figure 58). This could be because Hertfordshire has lower-than-average rates of people who are unemployed and/or with low skills levels and hence low numbers of people eligible for certain funded schemes. Hertfordshire England Source: Annual Population Survey, Office for National Statistics 15.0 FIGURE 58: SHARE OF WORKING-AGE PEOPLE UNDERTAKING GOVERNMENT-FUNDED TRAINING 2012/13 Source: FE and Skills Learner Participation, Skills Funding Agency Hertfordshire 8.1 Buckinghamshire Thames Valley 13.1 Cheshire & Warrington GCGP Thames Valley Berkshire 12.6 England HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 59

65 All Hertfordshire districts had lower-than-average rates of people undertaking funded training in 2012/13. Rates ranged from 6.8 per cent of working age adults living in St Albans to 11.7 per cent in Stevenage, as indicated in Figure 59. In 2012/13, the number of people undertaking funded training increased for year olds and those aged 25 years and over but fell for those aged under 19 years (Figure 60). This was also a national trend, and may be due to the trend in increasing staying-on rates for yearolds in full time education. In 2012, Hertfordshire had the ninth highest share of year-olds staying-on into fulltime education, at 91 per cent above the national average staying-on rate of 83 per cent. Staying-on rates have steadily increased over the decade, with rates in 2002 at 83 per cent in Hertfordshire and 72 per cent in England. The profile of training by skills/qualification level was similar to the England average, with the majority of training being at Skills for Life and Level 2 (60.7 per cent in Hertfordshire and 58.4 per cent across England). More than half of funded training undertaken by people living in Hertfordshire was education and training 5. The profile of training by training type was slightly different to the national average, with smaller shares of training coming from education and training and apprenticeships and greater shares coming from workplace and community learning (Figure 61). Over the past two years, the amount of training delivered in Hertfordshire through education & training, apprenticeships and community learning has increased while training delivered through workplace learning has fallen (Figure 62). 5 Education and Training is flexible provision at all levels from ESOL, basic Maths and English to level 3 that includes academic and vocational courses that supports learners with a focus on unemployed learners seeking employment and those that wish to progress onto higher education. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 60

66 FIGURE 59: SHARE OF WORKING-AGE PEOPLE UNDERTAKING GOVERNMENT-FUNDED TRAINING BY DISTRICT 2012/13 Source: FE and Skills Learner Participation, Skills Funding Agency FIGURE 60: NUMBER OF LEARNERS IN HERTFORDSHIRE BY TYPE OF PARTICIPATION Source: FE and Skills Learner Participation, Skills Funding Agency 40, , , , / / / Education & Training Apprenticeships Workplace Learning Community Learning HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 61

67 FIGURE 61: SHARE OF ALL GOVERNMENT FUNDED FE SKILLS AND TRAINING BY TYPE Source: FE and Skills Learner Participation, Skills Funding Agency Hertfordshire England Education & Training Apprenticeships Workplace Learning Community Learning FIGURE 62: CHANGE IN FE SKILLS AND TRAINING BY TYPE 2010/11 TO 2012/13 Source: FE and Skills Learner Participation, Skills Funding Agency 40, , , / / /13 10, Education & Training Apprenticeships Workplace Learning Community Learning HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 62

68 TRAINING BY SUBJECT THE LARGEST NUMBER OF QUALIFICATIONS DELIVERED THROUGH SFA FUNDING WAS IN THE ACTIVE LEISURE, LEARNING AND WELL-BEING SECTOR, FOLLOWED BY BUSINESS, ADMINISTRATION AND GOVERNANCE. Subject information by Sector Lead Body is available for the 16 providers of education and training in Hertfordshire which have head offices in the county. In 2012/13, the top qualifications/courses delivered by Hertfordshire providers where subject area was known were active leisure, learning and wellbeing (11.4 per cent off all qualifications/courses), business, administration and governance (10.8 per cent) and adult social care (8.1 per cent) as detailed in Figure 63. FIGURE 63: TOP 10 SECTOR LEAD BODY BY SHARE OF QUALIFICATIONS/COURSES IN 2010/11 AND 2011/12 (COMBINED) Source: Skills Funding Agency. Note: A Learning Aim is a single qualification, a course or programme of activity TO NOTE: an individual learner may commence or be enrolled on more than one Learning Aim at the same time, so this is not a count of individual learners Active Leisure, Learning & Well-being Business, Administration & Governance The main differences in the profile of courses delivered by Hertfordshire providers and the England average were a greater share of courses in: retail (+5.5 percentage points) active leisure, learning and wellbeing (+5.1 percentage points) and automotive industries (+3.9 percentage points) And a smaller share of courses in: Adult Social Care Retail Creative & Cultural Automotive Industries Hospitality, Leisure, Travel & Tourism Construction Hair & Beauty Finance, Accountancy & Financial Services facilities management, housing, property, planning and cleaning (-5.3 percentage points) and business information technology and telecommunication (-3.9 percentage points) Hertfordshire England 11.4 HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 63

69 EMPLOYER TRAINING HERTFORDSHIRE PERFORMS POORLY COMPARED TO PEER ECONOMIES IN TERMS OF PLANNING AND UNDERTAKING TRAINING. Commitment to staff training in Hertfordshire is similar to the England average but lower than in many peer areas. In 2013, 50 per cent of establishments in Hertfordshire had a training plan or discrete training budget similar to the England average (49 per cent) but lower than in many other peer areas, as indicated in Figure 64. FIGURE 64: SHARE OF ESTABLISHMENTS WITH A TRAINING PLAN OR BUDGET Source: 2013 National Employer Skills Survey, UK Commission for Employment and Skills. 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 69% 66% 62% 58% 56% 56% 54% 54% 50% 49% 48% 48% 47% 46% HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 64

70 FIGURE 65: SHARE OF ESTABLISHMENTS WITH A TRAINING PLAN AND/OR BUDGET BY UPPER TIER (COUNTY OR UNITARY) AUTHORITY AREA, 2013 Source: 2013 UK Employer Skills Survey, UK Commission for Employment and Skills. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 65

71 In the same year, 64 per cent of establishments had funded or arranged training for staff over the past 12 months 6. This was slightly lower than the England average (66 per cent) and lower than in most other peer areas (Figure 66). The main types of training provided for staff were job specific (86 per cent of all establishments providing training), health and safety/first aid (71 per cent), and induction training (57 per cent). This was very similar to the national picture. SENIOR STAFF ARE MORE LIKELY TO RECEIVE TRAINING Employers were most likely to provide training for managers, directors and senior officials (64 per cent of all establishments providing training). Again, this was similar to the national picture. Of the establishments that did not provide any training, the majority stated that staff were fully proficient and did not need training (70 per cent of non-training establishments in Hertfordshire). TRAINING COSTS WERE THE BIGGEST BARRIER TO PROVIDING MORE TRAINING Lack of funds available for training, or training being too expensive was the biggest barrier to providing more training among establishments that would have provided more training if they could. In Hertfordshire, 64 per cent of establishments said that lack of funds was a barrier to providing more training, slightly above the England average of 60 per cent. Half of establishments also said that they could not spare staff time for training (50 per cent of Hertfordshire establishments and 47 per cent across England). 6 Note that this exceeds the previous figure of 50 per cent of establishments having a training plan or discrete training budget. This is because some employers without such plans or discrete budgets will still undertake training activity and expenditures as necessary even though they have not been formally planned or budgeted for. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 66

72 FIGURE 66: SHARE OF ESTABLISHMENTS THAT UNDERTAKE ANY TRAINING 100.0% 75.0% 50.0% 79% 78% 76% 75% 74% 73% 69% 67% 66% 66% 65% 64% 63% 62% Source: 2013 National Employer Skills Survey, UK Commission for Employment and Skills. 25.0% 0.0% HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 67

73 FIGURE 67: SHARE OF ESTABLISHMENTS UNDERTAKING TRAINING BY UPPER TIER (COUNTY OR UNITARY) AUTHORITY AREA, 2013 Source: 2013 National Employer Skills Survey, UK Commission for Employment and Skills. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 68

74 5. COMPARING LABOUR SUPPLY AND DEMAND HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 69

75 SUMMARY: COMPARING LABOUR SUPPLY AND DEMAND IS THE LABOUR MARKET TIGHTENING? Labour market tightening refers to the mediumto-long-term situation where employers cannot recruit the employees and skills they require due to a lack of effective supply of workers and skills. The opposite, a loose labour market, is one where there is an excess of the supply of labour and skills during the medium-to-long-term. It is evident that Hertfordshire s working-age population has grown over recent years, and this is forecast to continue. How far can this workforce growth meet demand? IN THEORY, HERTFORDSHIRE HAS AN ADEQUATE EFFECTIVE LABOUR SUPPLY In terms of labour supply, the workforce is projected to grow between 3,500 and 4,500 per annum from 2013 to In 2011 there were 460,000 people employed in Hertfordshire (workplace based employment) compared to 568,700 Hertfordshire residents who are in employment. In theory, Hertfordshire has an adequate effective labour supply to meet its needs. Overall, the pressures on the Hertfordshire labour market stem from the high levels of labour demand within Hertfordshire, and in surrounding areas, coupled with high levels of mobility of the County s workforce. There is significant labour demand outside the County and a high propensity to commute. There seems to be little available additional labour capacity from existing residents as participation rates are high and unemployment is low. THE CURRENT STATE OF THE LABOUR MARKET SUGGESTS THAT PEAKS IN LABOUR DEMAND WILL BE CHALLENGING TO DEAL WITH The Hertfordshire workforce will continue to grow but we are likely to see continued high local demand both to fill new jobs, to replace those who retire, and high external demand from areas such as London. This will make it potentially difficult to deal with sudden peaks in labour demand which are likely to become more frequent in the current context of a renewal of growth in investment and expansion by firms as the economy recovers. HOWEVER, LABOUR DEMAND IS HIGH IN HERTFORDSHIRE, AND IN ADJACENT MARKETS In terms of labour demand, the East of England Forecasting Model forecasts average growth in net new jobs of 4,300 per annum to With 32,700 workers with jobs in Hertfordshire aged between 50 and 64 in 2011, there will be approximately 2,200 retirements every year. If this translates into replacement demand some 2,000 jobs need to be replaced each year due to retirement. Labour demand has shown recent evidence of spiking upwards e.g. between 2011 and 2012 Jobcentre plus vacancies increased by 19,200 in Hertfordshire. This is probably typical of emergence into recovery from recession and the release of pent-up labour demand from employers. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 70

76 ASSESSING WHETHER THE HERTFORDSHIRE LABOUR MARKET IS TIGHTENING DEFINING THE ISSUE Labour market tightening refers to the medium-to-longterm situation where employers cannot recruit the employees and skills they require due to a lack of effective supply of workers and skills. The opposite, a loose labour market, is one where there is an excess of the supply of labour and skills during the medium-to-long-term. We tend to see labour market tightening as a feature of areas where the effective local labour supply is already utilised, with little spare capacity for growth either due to in-migration or demographic change. In the case of relatively isolated local labour markets such as rural areas, it can be the case that labour market tightening is a result of rurality and a lack of people to fill available jobs vacancies. In the case of local economies such as Hertfordshire, the challenges are not relating to isolation, but to integration with other markets such as London and the Greater South East of England. Overall high labour market demand in the wider labour market catchment, which includes London would seem to be the main feature for areas such as Hertfordshire. Why labour market tightening is of concern is that it can constrain economic growth and the expansion of industries and employment. 19 TESTS FOR LABOUR MARKET TIGHTNESS Utilising existing labour market studies and theories, 19 tests for labour market tightness are defined below. The rest of this section will examine each test in turn. 1. Susceptibility to labour market demand pressures 1-1 Demand-side self-containment 1-2 Supply-side self-containment 2. Signs of demand pressures 2-1 Sharp increase in jobs/ employment 2-2 Sharp increases in vacancies notified 2-3 Hard-to-fill vacancies 2-4 Sharp increases in migrant workers (NINos) 2-5 High average hours worked, or trend of increasing 2-6 Increasing levels of overtime/bonus payments 2-7 Increasing rate of growth in average earnings 3. Signs of supply pressures 3-1 High and increasing economic activity rates (to the extent where they couldn t go much higher i.e. pushing close to 80%) 3-2 Sharp fall-off in unemployment / claimants 3-3 High average hours worked by residents, or trend of increasing 3-4 Increasing rate of growth in average earnings of residents 3-5 Greater incidence of skills deficiencies 4. Overall assessment of demand vs. supply 4-1 External demand pressures 4-2 Forecast net commuting (EEFM) 4-3 Workforce projections 4-4 Age profile of workplace jobs 4-5 Age profile of residents in employment 1. LABOUR MARKET CONTAINMENT Labour market containment refers to the level of reliance between employers and residents. A labour market is highly self-contained if most of its jobs are filled by its residents. There are two measures of self-containment demand-side, which measures the proportion of jobs filled by residents; and supply-side, which measures how reliant a local area s residents are on local jobs. 1-1 Demand-side self-containment In 2011, there were 460,000 people working in Hertfordshire. 325,900 or 70.9 per cent of these were Hertfordshire residents both living and working in Hertfordshire. 134,100 or 29.1 per cent of these were resident in areas outside of Hertfordshire and commuted into the county to work. In-commuters were mainly sourced from adjacent areas. The top 10 sources of in-commuting workers were from the local authority districts of: HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 71

77 Central Bedfordshire 18,300 Luton 11,800 Barnet 9,100 Harlow 8,700 Harrow 6,400 Hillingdon 5,500 Enfield 5,500 Aylesbury Vale 4,500 South Cambridgeshire 4,400 Epping Forest 2,900 At 70.9 per cent, demand-side self-containment is moderately high much of the employment demand in Hertfordshire could be satisfied by the available workforce within the county, and many of the in-commuters were from adjacent local areas. 1-2 Supply-side self-containment In 2011, there were 568,700 residents in Hertfordshire who worked. Out of these, 325,900 or 57.3 per cent of working residents worked in Hertfordshire. 173,800 or 30.6 per cent of these worked outside of the county and were therefore out-commuters. The remaining 9 per cent of residents in work had no fixed place of work, worked overseas/offshore or had an unspecified place of work. 117,700 or 20.7 per cent of working residents commuted to work in London. At 57.3 per cent, supply-side self-containment is low a significant share of Hertfordshire s resident workforce commute to work outside of the County. 1. IS THERE EVIDENCE OF LABOUR MARKET TIGHTENING? Labour market self-containment Demand for labour 1-1 Demand-side selfcontainment significantly met by workforce in the county 1-2 Supply-side selfcontainment External demand for labour is high and accounts for a large proportion of resident workforce 2. SIGNS OF DEMAND PRESSURES 2-1 Sharp increase in jobs/ employment 2012 and 2013, significantly higher than the annual growth of 3,500 experienced in the previous year as demonstrated in Figure 68 below. FIGURE 68: GROWTH IN EMPLOYEES IN EACH YEAR IN HERTFORDSHIRE Source: Business Register and Employment Survey, Office for National Statistics. With +15,400 employees in the previous 12 months, there has been a sharp increase in employment demand in Hertfordshire recently. 2-2 Sharp increases in vacancies notified Jobcentre Plus vacancies increased by 19,200 between 2011 (67,600) and 2012 (86,809). This represents a 28.3 per cent increase, compared to a 23.0 per cent average increase for England. FIGURE 69: JOBCENTRE PLUS VACANCIES NOTIFIED IN EACH 12-MONTH PERIOD, 2007 TO ,000 80,000 70,000 60,000 50,000-2,900 2,400 3,500 Source: Jobcentre Plus, Department for Work and Pensions. 15, HERTFORDSHIRE (left axis) ENGLAND (right axis) 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 Employers were surveyed in November 2013 about how many current vacancies they had as part of the 2013 UK Employer Skills Survey. It is estimated that Hertfordshire s employers had 22,400 vacancies at this time, representing 4.3 per cent of all jobs employment. This is higher than the England average of 2.2 per cent, and above most peer areas apart from Bracknell Forest (6.8 per cent) Hertfordshire has a significant level of job vacancies, with Jobcentre Plus Vacancies increasing by 28.3 per cent between 2011 and 2012, and surveyed vacancies at almost twice the national rate. Between 2002 and 2012, jobs in Hertfordshire grew by 31,000 - or by 5.4 per cent, compared to 5.8 per cent for England as a whole. Over the past four years, total employees have increased by 18,800 or 3.6 per cent above the national rate of growth of 2.5 per cent. In the most recent year where data is available, total employees in Hertfordshire increased by 15,400 between HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 72

78 FIGURE 70: VACANCIES AS A SHARE OF TOTAL EMPLOYEES IN % 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 4.3% 3.3% 2.3% 1.9% 2.8% 1.7% Source: UK Employer Skills Survey, UK Commission for Employment and Skills. 2-3 Hard-to-fill vacancies Employers in Hertfordshire reported that 31.1 per cent of all of their vacancies were hard-to-fill slightly higher than the England average of 28.6 per cent of all vacancies, but lower than many other local authority areas covered by peer LEPs, such as Warrington (69.6 per cent), Bracknell Forest (52.5 per cent) and Windsor & Maidenhead (40.7 per cent). In the case of Hertfordshire s employers, 80 per cent of hard-to-fill vacancies were due to the quality of applicants, compared to 69 per cent nationally. Hard-to-full vacancies are slightly more prevalent in Hertfordshire than nationally. 2-4 Sharp increases in migrant workers (NiNos) 3.2% National Insurance number (NINo) registrations by overseas nationals are relatively low across Hertfordshire. NINo registrations provide an indication of immigration into an area for work purposes. Between 2002/03 and 2013/14, almost 93,000 overseas nationals registered for National Insurance numbers (NINos) in Hertfordshire. NINo registrations rose sharply between 2002/03 and 2008/09 and fell sharply during the economic downturn. Registrations have since picked up but remain below their pre-recession peak. Between 2002/03 and 2013/14, NINo registrations in Hertfordshire averaged 11 per 1,000 working age people living in the area lower than the England average of 15 NINo registrations per 1,000 working age people. Hertfordshire has a low presence of migrant workers with no significant increase in recent years. 2-5 High average hours worked in jobs in Hertfordshire, or trend of increasing Overtime working has decreased in Hertfordshire since On average, each worker with a job in Hertfordshire worked 0.9 hours of overtime in 2013 compared to 1.4 hours in % 2.7% 2.6% 2.0% 2.1% 2.7% 2.2% Overtime working has decreased recently. 2-6 Increasing levels of overtime/bonus payments of Hertfordshire jobs The difference between growth in gross weekly pay and growth in weekly pay excluding overtime is not sufficient to conclude that there have been increasing levels of overtime/bonus payments. Between 2011 and 2012, gross weekly pay increased by 3.5 per cent and pay excluding overtime increased by 4.0 per cent. Between 2012 and 2013, the increases were 1.5 per cent and 2.7 per cent respectively. There is insufficient evidence to claim that levels of overtime/bonus payments have markedly increased over the most recent year where data is available. 2-7 Increasing rate of growth in average earnings for jobs based in Hertfordshire After a fall in the years immediately after the recession, average annual pay rates for jobs in Hertfordshire increased sharply during between 2011 and 2012, from 27,200 to 28,700 but were static between 2012 and Hourly pay rates have increased in successive years since 2011 to reach per hour in 2013 compared to in England. There is no evidence of a sharp increase in earnings recently. 2. IS THERE EVIDENCE OF LABOUR MARKET TIGHTENING? Demand-side factors 2-1 Sharp increase in jobs/ With +15,400 employment employees in the previous 12 months, there has been a sharp increase in employment demand in Hertfordshire recently. 2-2 Sharp increases in Vacancies have vacancies notified increased sharply 2-3 Hard-to-fill vacancies Hard-to-full vacancies are slightly more prevalent in Hertfordshire than nationally. 2-4 Sharp increases in migrant workers (NiNos) 2-5 High average hours worked, or trend of increasing 2-6 Increasing levels of overtime/bonus payments Hertfordshire has a lower rate of NINo registrations than average, which demonstrates that demand pressures are not sufficient to drive up the demand for foreign labour A recent trend in decreasing overtime hours (increasing overtime hours would signal increasing demand) Insufficient evidence to suggest increasing HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 73

79 2-7 Increasing rate of growth in average earnings overtime/bonus payments No evidence of a sharp increase in earnings recently 3. SIGNS OF SUPPLY PRESSURES 3-1 High and increasing economic activity rates (to the extent where they could not go much higher i.e. pushing close to 80%) A higher share (81.5 per cent) of Hertfordshire s workingage population are economically active (in work or actively seeking work) than nationally (77.5 per cent), with the fourth highest rate amongst LEP areas. All of Hertfordshire s districts have a higher economic activity rate than the national average. Economic activity rates had increased in all districts between 2001 and Rates of economic activity are very high in Hertfordshire which demonstrates there is little spare capacity in the local workforce. 3-2 Sharp fall-off in unemployment / claimants Unemployment is very low in Hertfordshire, at 4.6 per cent in the year to March 2014, well below the England rate of 7.6 per cent and the fifth lowest rate of all 39 LEP areas. The unemployment rate has almost fallen back down to levels witnessed before the 2008/09 recession. Unemployment is well below the national average, and rates and claimant numbers have fallen back sharply. 3-3 High average hours worked by Hertfordshire residents, or trend of increasing Average hours of overtime worked by Hertfordshire residents increased slightly from 3.4 hours per week in 2012 to 3.7 hours per week in This compares to the England average of 4.0 hours per week in 2012 and 3.9 hours per week in There is evidence of average hours of overtime worked increasing slightly by Hertfordshire residents. 3-4 Increasing rate of growth in average earnings of residents Between 2012 and 2013, the average annual earnings of Hertfordshire residents grew by 1.3 per cent compared to 2.0 per cent in England. Average earnings have not experienced a sharp increase in recent years for Hertfordshire residents. 3-5 Greater incidence of skills deficiencies in existing workers 16 per cent of Hertfordshire establishments reported that they had skills gaps (skills deficiencies in existing employers) 7, but 75 per cent of these skills gaps were transitory and due to staff being new and training not being complete yet. These rates were very similar to the average for England (15 per cent and 75 per cent respectively). Skills gaps in Hertfordshire had a more negative effect. Although skills gaps occurred no more frequently than the national average, Hertfordshire s employers did report that they were more likely to have a negative impact on their business with 75 per cent of establishments with skills gaps reporting this compared to 63 per cent nationally. Skills deficiencies in existing workers are no more prevalent than the national average. 3. IS THERE EVIDENCE OF LABOUR MARKET TIGHTENING? Supply-side factors 3-1 High and increasing Rates of economic economic activity rates activity are very high in Hertfordshire which demonstrates there is little spare capacity in the local workforce. 3-2 Sharp fall-off in unemployment / claimants 3-3 High average hours worked by residents, or trend of increasing 3-4 Increasing rate of growth in average earnings of residents 3-5 Greater incidence of skills deficiencies Unemployment is well below the national average, and rates and claimant numbers have fallen back sharply. There is evidence of average hours of overtime worked increasing slightly by Hertfordshire residents. Average earnings have not experienced a sharp increase in recent years for Hertfordshire residents. Skills deficiencies in existing workers are no more prevalent than the national average. 4. OVERALL ASSESSMENT OF DEMAND VS. SUPPLY This section covers a strategic assessment of workforce growth/projections compared to vacancies, jobs growth etc. 4-1 External demand pressures Hertfordshire has a fairly open labour market, as demonstrated by the high proportion of residents who commute to work outside of the County. It is therefore relevant to examine labour demand trends in the local areas adjoining Hertfordshire, particularly those that 7 Based on evidence from the 2013 UK Employer Skills Survey, undertaken and published by the UK Commission on Employment and Skills. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 74

80 already have high numbers of commuting workers who are resident in Hertfordshire. As can be seen from Figure 71, the two areas which account for the largest number of Hertfordshire residents out-commuting to work in 2011 have both experienced significant jobs growth. In 2011, 117,700 Hertfordshire residents commuted to jobs in London, representing 20.7 per cent of working residents. London experienced significant jobs growth in the decade from 2002 to 2012, with 16.4 per cent growth in jobs, or +738,000 over this period. Essex was the next largest destination for Hertfordshire s out-commuters, accounting for 15,300 working residents or 2.7 per cent of total working residents. Essex experienced a 7.8 per cent growth in jobs, or +47,000 jobs over this period. FIGURE 71: AREAS OF SIGNIFICANT OUT-COMMUTING FOR HERTFORDSHIRE RESIDENTS IN 2011 AND GROWTH IN JOBS Number of Hertfordshire residents working in/ commuting to these areas in 2011 Growth in jobs Per Area No. cent No Per cent London 117, , Essex 15, , Buckinghamshire 7, , Luton 6, , Cambridgeshire 5, , Central Bedfordshire 4, , Milton Keynes 2, , Bedford 1, , Slough 1, , Oxfordshire , Hertfordshire , Source: 2011 Census; Jobs Density Office for National Statistics. There are substantial external demand pressures on the Hertfordshire workforce, particularly from London. 4-2 Forecast net commuting The 2013 East of England Forecasting Model projected that net commuting will continue at present levels into the future with net out-commuting at between -13,000 and - 15,000 per year to However, these projections were made before the commuting data from the 2011 Census which estimates that net commuting was -39,700 in The current EEFM projections are therefore likely to be revised upwards. Net commuting is negative and high (-39,700 in 2011) with similar net commuting rates likely to continue. 4-3 Workforce projections Hertfordshire s working age population has grown rapidly over the past decade, and this is set to continue. Hertfordshire s working age population increased by 8.0 per cent between 2003 and 2013, higher than nationally (6.9 per cent) the eighth highest amongst LEP areas. Over the next 10 years, the working age population is expected to grow by a further 6.0 per cent. In terms of understanding the growth in the workforce: It grew by 5,300 per annum on average between 2003 and 2013 It is forecast to grow by 4,300 per annum between 2013 and 2023 It is forecast to growth by 3,500 per annum between 2023 and 2033 Hertfordshire s workforce has grown historically and this will continue. 4-4 Age profile of workplace jobs For those employees working in Hertfordshire, there is no significant evidence of an ageing workforce in any of the broad categories of job types and skills. As revealed in Figure 72 below, the age profile of workers by occupation in Hertfordshire and England is very similar. A similar analysis of workplace employment by industry reveals that Hertfordshire is little different from the national average. Only in public services, is the age profile of workers slightly older than nationally. In 2011, 30.8 per cent of employees in public administration, education and health were aged between 50 and 64 in Hertfordshire compared to 28.6 per cent nationally. There is no evidence that employers in Hertfordshire are facing demand pressures as a result of workforce ageing. FIGURE 72 SHARE OF EMPLOYEES BY WORKPLACE AGED 50 TO 64 BY OCCUPATIONAL CATEGORY All categories: Occupation 1. Managers, directors and senior officials 2. Professional occupations 3. Associate professional and technical occupations 4. Administrative and secretarial occupations 5. Skilled trades occupations 6. Caring, leisure and other service occupations 7. Sales and customer service occupations 8. Process, plant and machine operatives 9. Elementary occupations Hertfordshire Source: Annual Population Survey, Office for National Statistics. England 26.0% 25.3% 29.1% 28.8% 27.0% 25.0% 21.7% 20.1% 31.8% 29.0% 27.0% 27.7% 24.2% 24.2% 18.0% 18.6% 33.6% 32.7% 22.5% 23.8% HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 75

81 4-5 Age profile of residents in employment As Figure 73 shows, Hertfordshire does not have an especially older resident workforce with regard to the general type and skill level of job with a similar share of year-olds in every occupational category to the national average. The age profile of resident employment by industry is also similar to the national average, apart from in public services where 30.0 per cent of Hertfordshire residents employed in public services were aged compared to 28.5 per cent nationally. FIGURE 73: SHARE OF EMPLOYED RESIDENTS AGED 50 TO 64 BY OCCUPATIONAL CATEGORY All categories: Occupation 1. Managers, directors and senior officials 2. Professional occupations 3. Associate professional and technical occupations 4. Administrative and secretarial occupations 5. Skilled trades occupations 6. Caring, leisure and other service occupations 7. Sales and customer service occupations 8. Process, plant and machine operatives 9. Elementary occupations Source: 2011 Census, Office for National Statistics. There is no evidence that workers in Hertfordshire are creating supply pressures as a result of workforce ageing. 4. DEMAND VERSUS SUPPLY Overall assessment 4-1 External demand Significant external pressures demand pressures from London in particular 4-2 Forecast net Net out-commuting is commuting high 4-3 Workforce projections Workforce projections are positive and are higher than the national average 4-4 Age profile of workplace jobs 4-5 Age profile of residents in employment Hertfordshire There is no evidence that jobs in Hertfordshire are facing demand pressures as a result of workforce ageing. England 25.6% 25.2% 28.3% 28.6% 26.0% 24.9% 20.4% 20.0% 30.7% 28.8% 27.2% 27.5% 24.0% 24.1% 18.0% 18.5% 33.5% 32.5% 22.8% 23.6% Overall assessment of supply and demand It is evident that Hertfordshire s working-age population has grown over recent years, and this is forecast to continue. How far can this workforce growth meet demand? There are a few interesting points below: Labour supply: The workforce is projected to grow between 3,500 and 4,500 per annum from 2013 to 2033 In 2011 there were 173,800 Hertfordshire residents commuting to work outside of the county Overall Hertfordshire has an adequate effective labour supply in theory. Labour demand The EEFM forecasts average growth in net new jobs of 4,300 per annum to 2031 With 32,700 workers with jobs in Hertfordshire aged between 50 and 64 in 2011, there will be approximately 2,200 retirements every year. If this translates into replacement demand some 2,000 jobs need to be replaced each year due to retirement. Labour demand has shown recent evidence of spiking upwards e.g. between 2011 and 2012 Jobcentre Plus vacancies increased by 19,200 in Hertfordshire. This is probably typical of emergence into recovery from recession and the release of pent-up labour demand from employers. Overall, the pressures on the Hertfordshire labour market stem from the high levels of labour demand within Hertfordshire, and in surrounding areas, coupled with high levels of mobility of the County s workforce. There is significant labour demand outside the County and a high propensity to commute. In a crude analysis, replacement demand from retiring workers (2,200 per annum) plus net jobs growth (4,500 per annum) would seem to outstrip local workforce growth (3-4,500 per annum) with the added potential for increasing demand from the London economy. The Hertfordshire economy would seem to face the need to either utilise more of its existing workforce (and reduce out-commuting); or utilise the workforce resident outside the county (and increase in-commuting). It is unlikely that labour supply could be significantly increased by encouraging many more of the working age population into economic activity or employment, with such a high rate of economic activity coupled with a low unemployment rate. HERTFORDSHIRE SKILLS AND LABOUR MARKET REVIEW 2014 PAGE 76