LEEDS CITY REGION Labour Market Analysis

LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2012/13

By Felix Kumi-Ampofo, Regional Economic Intelligence Unit, Leeds City Council Commissioned by the Leeds City Region Local Enterprise Partnership

Contents 1 Foreword 3 2 Executive Summary 4 3 Introduction and context 7 4 The Supply of Skills into the LCR Labour Market 15 5 The Economy and Implications for Skills Demand 26 6 Mismatch and alignment 37 7 Conclusions 41 A Annex A 43 B Annex B 45 The support and contribution of Sue Cooke and Nigel Guy (Leeds City Region), Michele Sutton and Louise Tearle (The Skills Network) and Ian McGregor-Brown (HEART) is especially acknowledged. LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 2

1 Foreword On behalf of the Employment & Skills Board (ESB) and Skills Network, we are very pleased to share with you our latest Labour Market Analysis for the Leeds City Region. The business-led ESB supports the Local Enterprise Partnership (LEP) in its goal of increasing skills and jobs to improve economic growth. We have developed a close working relationship with the Leeds City Region Skills Network of colleges, universities and skills providers over the last year, led by Michele Sutton, Principal of Bradford College. This relationship is based on a Skills Partnership Agreement signed between the LEP and the Network, which sets out the strategic principles for co-operation between us to ensure that skills provision better meets the needs of the economy. It is intended to inform and support colleges, universities and other skills providers operating in our city region, to help them respond more closely to the current and future skill needs of employers, particularly those in our priority sectors. Our economy continues to change in response to global pressures, demographic trends and new technology, thus generating new opportunities and threats for organisations and business. This drives new ways of working and creates demand for new jobs as other jobs decline. We would like to thank Felix Kumi-Ampofo for his detailed analysis of the changing economy and its skills base presented in this report. We must now grasp the challenge of responding to its implications and ensuring we have a competitive and flexible workforce to seize the opportunities ahead. We would like to encourage all skills providers to consider our labour market analysis and use it in both their forward business planning and course development. Further work to gather intelligence on the skills needs of businesses in Leeds City Region will be completed in July 2012 and published in a separate report Leeds City Region LEP Skills Research. This Labour Market Analysis is a key element in our attempt to understand and interpret the key skill issues in the local economy. John Anderson Regional Director, BT Chair of the LEP Employment and Skills Board Michele Sutton OBE Principal and CEO, Bradford College Chair of the LCR Skills Network 3 LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2102/2013

2 Excecutive Summary This labour market analysis builds on the first LCR Skills Priorities Analysis 2011/12 which was completed in September 2011. The report focuses on developing a more detailed evidence base and presents an assessment of how the City Region is performing in terms of the demand and supply of skills. The Economy and the Labour Market Economic activity rates have fallen across the western world since the 2008 recession and LCR has certainly not escaped this. The City Region has suffered a 1% contraction in the rate of economic activity since 2007, compared to 0.4% in the UK. Indeed, across most key indicators, LCR has had a worse experience through the recession than the UK average. This raises some questions about the economic resilience of the City Region economy and the structural imbalances within the economy and also within the labour market. The LCR economic profile (employment) largely matches the national average. However, there are some differences which reveal the distinct strengths and characteristics of the economy. Financial Services and Manufacturing employ a greater proportion of the workforce in LCR than the national average, but it is the opposite with Retail and Professional, Scientific & Technical Activities. Over the next decade Growth Value Added (GVA) is forecast by Experian to grow by 24% and total employment by 8%, both matching the national average. The population is forecast to grow by 9%, according to the latest ONS projections; working age population even more so at 12%. This will be more acute in Bradford and Leeds than in Craven, Harrogate and Wakefield and therefore has implications for the provision of school and college places. Supply side The latest data from the OECD suggests that the UK is, at best, a mid-table performer in terms of the educational attainment of its working age population. For example, 91% of 25 to 64 year olds in the Czech Republic have at least upper secondary level attainment (equivalent of A level in the UK), compared to only 74% in the UK. The OECD average is 73%. The UK s somewhat average placing in such international league tables in turn places the Yorkshire and Humber region and the LCR performance (discussed below) into sharp context. No Qualifications LCR has performed steadily in reducing the proportion of the working age population with no qualifications from 16% to 12.7%. The gap with the GB average has widened over the last decade albeit only marginally on this occasion from 0.9% to 1.4% between 2004 and 2010. GCSE Wakefield, Leeds, Bradford and Barnsley have consistently achieved GCSE attainment levels below the England average, albeit marked improvements have been made across all districts. It is worth noting though that the improvement in Wakefield district has been so rapid that it narrowed the gap to the national average from 4.3 percentage points to 1.7 percentage points. North Yorkshire, York, Kirklees and Calderdale consistently outperform the England average. LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 4

2 FE The switch in central Government adult skills and training policy from Train to Gain to Apprenticeships has led to a 47% increase in Intermediate Apprenticeship enrolments in LCR and a 32% increase in Advanced Apprenticeships over the last year. Overall, 18,200 apprentices enrolled at intermediate level in the City Region and a further 12,000 enrolled at advanced level in 2010/11. On the other hand, Learner Responsive enrolment at Level 2 (excluding Skills for Life) and Level 3+ both fell by 8% and 11% respectively. It is worth noting however that overall enrolment has increased by 2%. High Level Qualifications LCR has made substantial progress in increasing the proportion of the working age population with Level Four qualifications or above from 23.8% in 2004 to 26.5% in 2010. This improvement notwithstanding, the gap between the city region and the Great Britain average has widened over the last decade from 2.3 percentage points in 2004 to 4.8% percentage points in 2010. LCR bucked the recent trend and actually experienced a fall in the Level Four qualified share of the working age population the only one amongst its peers to do so. It is worth cautioning making sweeping assumptions until this actually leads to a trend. The 2011 performance will be crucial in this regard. HE The latest data from Higher Education Statistics Agency (HESA), sourced from the annual Destination of Leavers in Higher Education (DLHE) survey shows that 53% of the 2009/10 graduate cohort (18,145 graduates) from LCR Higher Education Institutions (HEI) had secured graduate level employment within 6 months of their summer graduations, compared to 50% the previous year. This suggests that the graduate recruitment market might have returned to pre-recession levels (in 2007/8, 54% of graduates secured graduate level employment within six months of completing their degree). Demand side LCR is forecast to create 42,000 additional jobs in the period to 2015. Business Services leads the way with Retail and Hotels and Catering also growing strongly. Of the 30 sectors modelled in the Regional Econometric Model, hosted by the Regional Economic Intelligence Unit, 19 are forecast to expand. In total, the LCR economy is forecast to expand its workforce by a modest 3% between 2011 and 2015. In GVA terms, Business Service, Banking & Finance, Health, Education and Retail are the 5 largest sectors in the City Region. Of these, only Education (-4%) is forecast to shrink over the medium-term whilst significant growth is forecast in Business Services and Banking & Insurance. Overall, the LCR GVA is forecast to grow by 6% over the five year period. Recent evidence has shown that the higher the proportion of highly qualified residents (e.g. Cambridge), the greater the economic resilience during the recession. Highly skilled workers are usually more mobile and thus are able access employment from further afield compared to those who are not. This is also a function of the type of employment in an area and the contribution of the university cannot be overestimated. The LCR occupational profile broadly matches the UK-wide profile, with some marked exceptions. The City Region has a greater proportion of its workforce engaged in more elementary and lower skilled occupations compared to the 5 LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2102/2013

UK. For example, whereas 10% of the LCR workforce is engaged in Elementary (clerical/service) occupations, the UK equivalent is 7%. Around 10% of the LCR workforce is in Admin & Clerical occupations compared to 9% in the UK and about 6% are Process, Plant & Machine Operatives compared to 3% in the UK. Mismatch and Alignment Ideally, if the labour market is operating in equilibrium, the supply and demand for labour will be optimised and aligned such that there is no surplus or deficit. The demandside will be able to accurately predict what the economy will require in terms of skilled personnel and the supply-side will ensure that this is provided as and when required. In the real world, however, the labour market is never in a state of equilibrium. There are always surpluses and deficits in the supply and demand of appropriately skilled personnel. It is important to understand this, monitor it and use policy and resources to coax the market towards a state of equilibrium. Evidence-based policy making requires a system which helps to determine the supply of and demand for skills as accurately as possible, identify blockages and enables the implementation of effective solutions. on mismatch in the labour market. Having said that, our initial analysis suggests that: The proportion of learners training for employment within the manufacturing sector is lower than the sector s share of employment in the economy and also lower than its forecast share by 2015. The Financial and Business Services sector, on the other hand, seems to be over represented relative to the proportion of learners in the sector perhaps due to the perception of higher wages. The Hospitality and Tourism sector traditionally offers the best entry level jobs for young people in terms of volume and thus it is no surprise that the sector is over represented in terms of learner take-up. The Creative and Digital sector is another one which is traditionally very attractive to young people and gives them valuable entry level work experience. Even though only 1% of over 19s are seeking to gain qualifications in this sector via FE colleges, 9% of under-19s are enrolling. Within the wider economy, this sector employs 4% of the workforce. The report ends with a set of conclusions which are intended to simulate some debate and help shape the policies and priorities of the LCR LEP and its Skills Network partners in the period ahead. However, the data available has limitations which make it difficult to fully and accurately capture the extent LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 6

3 Introduction and Context This report builds on the first LCR Skills Priorities Analysis 2011/12 which was completed in September 2011. That was a wide ranging report which provided an in-depth analysis of the four priority sectors as well as a view on the potential fit between skills provision and the needs of the economy. This update focuses on developing a more detailed evidence base and presents an assessment of how the City Region is performing in terms of the demand and supply of skills. This report also attempts to analyse any gaps, actual or forecast, between demand and supply. To understand the labour market, it is vital that one appreciates the wider economic context within which it operates. This chapter briefly sets out the economic context and how the City Region has performed and how it is expected to perform in the short-medium term suing the Regional Econometric Model The LCR Economic Picture - Current Figure 1 below suggests that the LCR economy grew strongly over the last decade despite the deep recession. GVA grew by 8% whilst household disposable income and household spending grew by 4% and 8% respectively. It is also clear from Figure 1 that the rate of economic growth, far out-weighed the rate of employment growth over the last decade. This throws in the sharp focus the threat of even lower employment growth in the next decade if the economy does not start growing at pre-recession levels soon. Fig 1: Summary Economic View of LCR 2002 2012 % Change 2002-2012 Total output (GVA) ( bn 2008 prices) 44.6 49.1 10% Total employment (Millions) 1.4 1.4 2% Working age population (Millions) 1.7 1.9 11% Total population (Millions) 2.8 3.0 9% Household disposable Income 35.5 37.0 4% ( bn 2008 prices) Household spending ( bn 2008 prices) 35.2 38.2 8% Economic activity rates have fallen across Europe since the 2008 recession and LCR has certainly not escaped this. Figure 2 below shows that the City Region has suffered a 1% contraction in the rate of economic activity since 2007, compared to 0.4% in the UK. The employment rate (the percentage of the working age actually in a job) has fallen more sharply (4.3%) compared to a 2.5% reduction in the UK. Furthermore, the reduction in employment rate amongst ethnic minorities is significantly sharper in LCR (3.4%) than in the wider UK economy (0.9%). 7 LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2102/2013

Fig 2: A snapshot of Economic Activity in the Leeds City Region, 2007-2011 Variable 2010 Oct 2010-Sep 2011 % Change since 2007 Economic Activity Number % Number % LCR UK Economic activity rate - aged 16-64 1,456,400 75.1 1,457,200 74.8-1.1-0.4 Employment rate - aged 16-64 1,324,600 68.3 1,314,700 67.5-4.3-2.5 aged 16-64 employment rate - 111,200 48.8 - - -3.4-0.9 ethnic minority* Economic Inactivity % who are economically inactive - 482,200 24.9 490,000 25.2 1.1 0.4 aged 16-64 % of ethnic minority aged 16-64 who 94,600 41.5 - - -0.2-0.7 are economically inactive* % of economically inactive who want a job 111,900 23.2 101,200 20.7 0.7 1.3 % of economically inactive who 370,300 76.8 388,800 79.3-0.7-1.3 do not want a job Unemployment Unemployment rate - aged 16-64 131,800 9.1 142,600 9.8 4.4 2.7 Unemployment rate - aged 16+ 132,700 8.9 143,400 9.6 4.3 2.7 16+ unemployment rate - 22,000 16.4 - - 5.9 2.2 ethnic minority* Source: NOMIS 2012 Oct 2010- Sept 2011 data not yet available. Change calculated as 2007-2010 Indeed, across all the key indicators shown in figure 2, LCR has had a worse experience through the recession than the UK average. This raises some questions about the economic resilience of the City Region economy and the structural imbalances within the wider economy and particularly within the labour market. Later in the report, analysis is presented which shows the close relationship between the level of skills in an area and economic resilience and might present some useful lessons for LCR. LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 8

3 Fig 3: Job Seekers Allowance Claimants in LCR Male Female Total April 2012 Number % Share Number % Share Number Rate % LCR 61,000 69% 28,000 31% 89,000 6.0 UK 1,092,000 68% 524,000 32% 1,617,000 5.2 April 2011 LCR 55,600 69% 24,000 31% 80,000 5.4 UK 1,034,000 68% 487,000 32% 1,521,000 4.9 Source: NOMIS 2012 The claimant rate has risen by 0.6 percentage points since April 2011. Of even greater concern is the issue of youth unemployment. Circa 30% of JSA claimants in the Leeds City region as at April 2012 were aged between 18 and 24 as shown in Figure 4 below. Fig 4: Youth JSA Claimants in LCR Male Female Total April 2012 Number % 12 mth Number % 12 mth Number % 12 mth change change change Aged 18-24 18,380 30.0 16% 8,770 31.4 20% 27,155 30.4 18% Aged 18-24, claiming 7,010 11.4 159% 3,365 12.1 164% 10,375 11.6 161% for over 6 months Aged 18-24, claiming for 11,370 18.6-13% 5,410 19.4-10% 16,780 18.8-12% under 6 months Claiming for over 14,245 23.2 82% 5,925 21.2 134% 20,170 22.6 95% 12 months all ages Claiming for over 28,555 46.6 50% 12,460 44.7 79% 41,015 46.0 57% 6 months all ages Source: NOMIS 2012 The youth claimant rate has risen by 18% over the last year. The proportion of longer term youth claimants is even more disturbing. Though this represents only 12% of all claimants, this has risen by 161% over the last 12 months. 9 LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2102/2013

Fig 5: Benefits Claimants in LCR, November 2010 LCR Male LCR Female LCR Total Number Rate GB Rate Number Rate GB Rate Number Rate GB Rate Any benefits 152,460 15.6 14.9 137,290 14.0 14.0 289,750 14.8 14.5 Job seekers allowance 51,800 5.3 4.6 20,530 2.1 2.0 72,330 3.7 3.3 (JSA) only Incapacity benefit (IB) or 24,530 2.5 2.4 17,390 1.8 1.8 41,920 2.1 2.1 Employment and Support Allowance (ESA) only IB/ESA and DLA 18,940 1.9 1.8 13,830 1.4 1.4 32,760 1.7 1.6 IS/PC, IB and DLA 13,630 1.4 1.5 9,960 1.0 1.1 23,590 1.2 1.3 DLA* and SDA* 500 0.1 0.1 1,120 0.1 0.1 1,620 0.1 0.1 Source: NOMIS 2012 SDA Severe Disability Allowance, DLA Disability Living Allowance, IS Income Support, PC Pension Credit The proportion of Leeds City region residents who claim benefits is similar to the UK average, at 15%. Males outnumber females across all benefits claimant sub-groups and LCR is equal to or matches the UK average across all combinations of claimants. Current government policy is intended to reduce the budget for benefits and the numbers of claimants. Over the last few decades, due largely, but not certainly not entirely, to industrial re-structuring, LCR has had a persistently high number of benefits claimants. If this current government policy is successful, it could have a significant impact in the area. Skills, training and the attainment of higher qualifications will have a key role to play here. It is worth noting though that the drive to reduce the number of people, and thereby the outlay, on benefits is coming at a time of relatively high unemployment. The social impact of the policy and its repercussions on inequalities will need to be monitored carefully. Figure 6 below shows that the LCR economic profile, in terms of employment, largely matches the national average. However, there are some differences which reveal the distinct strengths and characteristics of the City Region economy. Financial Services and Manufacturing employ a greater proportion of the workforce in LCR than the national average, but it is the opposite with Retail and Professional, scientific & technical activities. LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 10

3 Fig 6: LCR Economic Profile 2010, by Sector Industry LCR % GB % Health 13.9 12.8 Manufacturing 10.7 8.5 Retail 9.9 10.3 Education 9.8 9.1 Business administration & support services 8.0 7.8 Accommodation & food services 6.1 6.6 Professional, scientific & technical 5.9 7.4 Public administration & defence 5.3 5.4 Construction 4.7 4.9 Wholesale 4.6 4.1 Financial & insurance 4.6 3.8 Transport & storage (inc postal) 4.5 4.4 Arts, entertainment, recreation & other services 4.4 4.7 Information & communication 3.2 3.8 Motor trades 1.6 1.8 Property 1.4 1.6 Mining, quarrying & utilities 1.2 1.2 Source: ONS/NOMIS BRES The Health Sector has the largest workforce in LCR (14%) and is also the largest in the Great Britain. Even though the Manufacturing sector has endured decades of change and employment decline, it is still the second largest employer. The LCR Economic Picture - Forecast Over the next decade LCR GVA is forecast by Experian to grow by 24% and total employment by 11%. The population is forecast to grow by 9%; working age population even more so at 12%. Household spending and disposable income are both forecast to grow by 25%, having grown by 8% and 4% respectively in the last decade. 11 LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2102/2013

Such growth rates might be viewed as rather too optimistic given recent economic conditions. However, this recession is the worst since the 1930 s and this has severely dampened growth rates recorded over the last decade. Long range forecasts tend to assume that the economy will return to trend growth in the medium term, hence the optimistic projections. Fig 7: Summary Economic View of LCR 2022 % Change 2012-2022 Total Output (GVA) ( bn 2008 prices) 60.8 24% Total Employment (Millions) 1.5 8% Working-age population (Millions) 2.1 12% Total population (Millions) 3.3 9% Household disposable Income ( bn 2008 prices) 46.1 25% Household spending ( bn 2008 prices) 47.6 25% Source: Experian 2012 The recent economic recession has driven home the fact that long term forecasts are only a guide and not much more. Short to medium term forecasts are usually more accurate and as such have been deployed throughout the rest of this report. Population The overall population forecast hides some key local demographic challenges, especially relating to young people. Figure 8 shows that the 0 to 9 year group is forecast to grow by 16% in Leeds and 14% in Bradford, compared to 1% in Harrogate and none at all in Craven LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 12

3 Fig 8: Forecast change in 0-9 age group in LCR, 2011-2020 Source: ONS Population Projections Fig 9: Forecast change in 10-19 age group in LCR, 2011-2021 Yorkshire & the Humber York Craven Harrogate Selby Barnsley Bradford Calderdale Kirklees Leeds Wakefield Leeds Bradford York Selby Yorkshire & the Humber Kirklees Barnsley Calderdale Wakefield Harrogate Craven 16% 14% 11% 11% 9% 9% 8% 8% 6% 1% 0% Source: ONS Population Projections 13 LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2102/2013

Figure 9 shows that six of the ten districts that make up the City Region will have fewer teenagers by the next decade compared to present levels. Bradford, on the other hand, is forecast to experience an 11% increase in the same age group over that period. When Figures 8 and 9 are assessed together a key conclusion is that over the next decade, the youth population in the city region is forecast to rise significantly. This will be more acute in Bradford and Leeds than in Craven, Harrogate and Wakefield. Within Bradford and Leeds, there is evidence which suggest that this sharp rise in the youth population will be concentrated heavily among the black and ethnic minority population. This has implications for the provision of school and college places and also ensuring that these young people attain the right level of skills at an early age in order to make the maximum contribution to the economy and society at large. LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 14

4 The Supply of Skills into the LCR Labour Market This Chapter looks at the supply of skills into the LCR labour market and economy. It assesses whether enough people are training and attaining the right level of skills in order to access employment in the right sectors. The National Picture The latest data from the OECD suggests that the UK is, at best, a middle table performer in terms of the educational attainment of its working age population. For example, 91% of 25 to 64 year olds in the Czech Republic have at least upper secondary level attainment (equivalent of A level in the UK), compared to only 74% in the UK. The OECD average is 73%. Fig 10: Educational Attainment of 25-64 Year Old Population in OECD Countries 1, 2009 Czech Republic Slovak Republic Estonia United States Poland Canada Switzerland Sweden Germany Slovenia Finland Austria Israel Norway Hungary Korea Luxembourg Denmark United Kingdom (2) Netherlands New Zealand Ireland Australia Belgium France Chile Iceland Greece Italy Spain Mexico Turkey Portugal OECD average EU21 average (5) Percentage of 25-64 year old population Below upper secondary education Upper secondary or non-tertiary post secondary education (3) Tertiary education (4) Source: OECD/SFA Data Service 2012 1) Source: OECD, Education at a Glance 2011- http://www.oecd.org/edu/eag2011 - tables A1.2a and A1.3a. 2) Improved methodology for producing educational attainment estimates from the LFS data in England was adopted during 2010. Further details of the background to these changes are available in http://www.thedataservice.org.uk/statistics/statisticalfirstrelease/methodogy/. These changes affect the comparability of OECD's UK attainment estimates for 2009 with those for earlier years; the impact on the OECD estimates for 25-64 year-olds in the UK in 2009 was an increase of 3.4 percentage points in those with at least upper secondary level education, and 3.4 percentage points for tertiary level attainment. 3) The percentage with at least upper secondary education is broadly equivalent to the England measure of qualified to NQF Level 2 or above. 4) The percentage with tertiary education is broadly equivalent to the England measure of qualified to NQF Level 4 or above 5) Average across the 21 OECD countries that are members of the European Union for which data are available or can be estimated. These 21 countries are Austria, Belgium, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden and the United Kingdom. 15 LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2102/2013

In Canada, 50% of the 25 to 64 year group have tertiary level education, compared to 41% in the US and 37% in the UK (OECD average is 30%). The UK s somewhat average placing in such international league tables in turn places the relatively poor performance in the Yorkshire and Humber region and the LCR performance, which is discussed later in this report, into sharp context. GCSE Performance As Figure 12 below shows, Wakefield, Leeds, Bradford and Barnsley have consistently achieved GCSE attainment levels below the England average, albeit marked improvements have been made across all districts. It is worth noting though that the improvement in Wakefield district has been so rapid that it narrowed the gap to the national average from 4.3 percentage points to 1.7 percentage points. North Yorkshire, York, Kirklees and Calderdale consistently outperform the England average. Fig 12: GCSE and equivalent results, %of pupils gaining 5 or more A*- C grades at GCSE or equivalent including English and Mathematics 2005 2006 2007 2008 2009 2010 2011 2005-2011 Change North Yorkshire 51.9 53.5 54.2 54.7 58.6 61.6 63.2 11.3 York 47.8 48.8 54.5 53.8 59.2 59.1 62.1 14.3 Calderdale 41.9 43.8 45.7 50.3 50.6 54.5 59.4 17.5 Kirklees 39.3 40.8 42.8 45.6 47.4 52.8 59.3 20 Wakefield 40.4 42.9 46.5 51.3 49.3 55.8 57.4 17 Leeds 38.5 40.4 42.1 46.4 45.9 50.6 53.7 15.2 Bradford 32.6 34 36.3 36.9 41.6 44.4 47.5 14.9 Barnsley 31.7 30.7 31.5 33.1 39.3 40.2 44.4 12.7 Yorkshire & 39.2 40.3 42.5 44.4 47.3 52 54.6 15.4 the Humber England 44.7 45.6 46.3 47.6 49.8 53.5 58.9 14.2 LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 16

4 Recent research undertaken by the Centre for Cities has shown a very clear link between deprivation and school attainment as Figure 13 below shows. Pupils on free school meals are much more likely to under-achieve than those who are not, even when they are all in the same class. Fig 13: Pupils on Free School Meals are falling behind 80% 70% 60% 50% 40% 30% 20% 10% 0% Barnsley Bradford Calderdale Craven Harrogate Percentage of pupils achieving 5 or more A*-C grades at GCSE or equivalent, including Maths and English Kirklees Leeds Selby Wakefield York Source: Department for Education Statistics, 2012 Free School Meals Non Free School Meals The difference in performance across the districts with respect to pupils on Free School Meals is certainly worthy of further research. Whereas about 15% of FSM pupils in Selby achieve five or more A*-C grades including Maths and English, 36% are successful in Craven. Higher Level Qualifications LCR has made substantial progress in increasing the proportion of the working age population with Level Four qualifications or above from 23.8% in 2004 to 26.5% in 2010. This improvement notwithstanding, the gap between the city region and the Great Britain average has widened over the last decade from 2.3 percentage points in 2004 to 4.8% percentage points in 2010, as Figure 14 shows. 17 LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2102/2013

Fig 14: Change in Level 4+ Qualifications 2004-2010 Derby, Derbyshire, Nottinham and Greater Birminham and Solihull Greater Manchester Leeds City Region London West of England York and North Yorkshire Great Britain Source: ONS Annual Population Survey 2012 2004 2005 2006 2007 2008 2009 2010 Equally worrying is the indication that LCR bucked the recent trend and actually experienced a fall in the Level Four share of the working age population the only one amongst its peers to do so. It is worth cautioning though that this may only a one year blip. The 2011 performance will be crucial in this regard. LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 18

4 No Qualifications Fig 15 Change in proportion of residents with no qualifications 2004-2010 Derby, Derbyshire, Nottinham and Greater Birminham and Solihull Greater Manchester Leeds City Region London West of England York and North Yorkshire Great Britain Source: ONS Annual Population Survey 2012 2004 2005 2006 2007 2008 2009 2010 In contrast, LCR has performed steadily in reducing the proportion of the working age population with no qualifications from 16% to 12.7%, as shown by Figure 15 above. Here again the gap with the GB average has widened over the last decade albeit only marginally on this occasion from 0.9% to 1.4% between 2004 and 2010. Further Education There are 14 further education colleges in the Leeds City Region who together have students studying courses at varied levels including A Levels and HE degrees. Since the 2010 General Election, the Coalition Government has made apprenticeships a high priority for skills and employability. 19 LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2102/2013

Fig 16: % Change in Enrolments, Starts and Achievements totals by Delivery Postcode 2009/10-2010/11 Apprenticeships Learner Responsive Intermediate Level Advanced Level / Level 2 Level 3+ Total 16-18 19+ Total FE Apprenticeships Higher excl Skills Total Total (Level 2) Apprenticeships for Life (Level 3+) Enrolments 18,200 12,020 55,520 81,730 319,150 216,650 251,100 467,750 (47%) (32%) (-8%) (-11%) (-2%) (10%) (-4%) (2%) Starts 11,700 6,030 50,840 70,380 294,690 197,730 220,400 418,120 (71%) (61%) (9%) (12%) (-2%) (13%) (-3%) (4%) Achievements 7,070 3,980 41,240 54,900 220,520 139,930 182,340 322,220 (15%) (15%) (8%) (-11%) (-1%) (13%) (1%) (6%) Source: Skills Funding Agency/Data Service 2012 LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 20

4 This switch in emphasis accounts for the 47% increase in Intermediate Apprenticeship enrolments in LCR and the 32% increase in Advanced Apprenticeships over the last year. On the other hand, Learner Responsive enrolment at Level 2 (excluding Skills for Life) and Level 3+ both fell by 8% and 11% respectively. It is worth noting however that overall enrolment has only increased by 2%. Fig 17: Under 19 Enrolments in FE 2010/11 Employability * 11% Hair & Beauty, 8% Creative & Cultural, 7% Active Leisure, Learning & Well Being, 7% Construction, 7% Healthcare, 7% Business Information Technology & Telecommunication, 6% Children & Young people, 5% Hospitality, Leisure, Travel & Tourism, 5% Business, Administration & Governance, 5% Land-Based Environmental Industries, 4% Source: Skills Funding Agency/ Data Service 2012 *Employability courses designed to prepare job seekers and enhance their chances of securing employment, for example basic IT. Science, Engineering & Manufacturing Technologies, 4% Automotive Industries, 4% Central Government Including Armed Forces, 3% Process & Manufacturing, 3% 21 LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2102/2013

Employability (11%) courses proved to be the most popular for students aged under-19 in FE, followed by Hair and Beauty (8%) and Creative and Cultural studies (7%). Students aged over 19 showed markedly different preferences. Only 1% enrolled on Creative and Cultural courses, 3% on Hair and Beauty and 2% on Employability (the top 3 preferences for under 19s). Fig 18: 19+ Enrolments in FE 2010/11 Business Information Technology & Telecommunication, 9% Construction, 8% Adult Social Care / Health Care, 7% Customer Service & Contact Centre, 6% Business, Administration & Governance, 5% Retail, 5% Hospitality, Leisure, Travel & Tourism, 4% Freight Logistics & Wholesale, 4% Adult Social care, 4% Healthcare, 4% Management & Leadership (Including HR & Recruitment), 3% Source: Skills Funding Agency/Data Service 2012 Science, Engineering & Manufacturing Technologies, 3% Children & Young People, 3% Business Information Technology and Telecoms (9%) was the most popular option amongst students aged over 19. This was followed by Construction (8%) and Adult Social Care/Healthcare (7%). Hair & Beauty, 3% Building Services & Engineering, 3% Passenger Transport, 3% LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 22

4 Higher Education The latest data from Higher Education Statistics Agency (HESA), sourced from the annual Destination of Leavers in Higher Education (DLHE) survey shows that 53% of the 2009/10 graduate cohort from LCR Higher Education Institutions (HEI) had secured graduate level employment within 6 months of their summer graduations, compared to 50% the previous year. See Figure 19 below. Fig 19: Graduate level Employment 2007/8 2009/10 Graduate Employment 2009/10 % 2008/9 % 2007/8 % In graduate-level employment 18,145 53% 15,969 50% 16,875 54% Not in graduate-level employment 6,815 20% 6,172 19% 5,637 18% Not applicable 9,120 27% 9,777 31% 8,474 27% (mainly due to further studies) Unknown 65 0% 58 0% 41 0% Total 34,145 100% 31,976 100% 31,027 100% Source: HESA 2012 This marginal improvement is perhaps due to the relatively more depressed jobs market at that time. The 2009/10 profile suggests that the graduate recruitment market has begun to recover after 2008/9 recession although this might well be a premature assessment given the prevailing economic climate and the muted forecasts for growth. A further 20% of the graduate cohort has secured non-graduate level employment and another 27% had moved on to further studies. An analysis of the occupations entered into by those graduates who have secured graduate level employment shows some more detail. Fig 20: Graduate Occupations Occupation Destination of Leavers in Leeds City Region Higher Education survey Average Managers and senior officials 11.3% 23.9% Professional occupations 42.8% 20.6% Associate professional and technical occupations 45.3% 22.2% Administrative and secretarial occupations 0.5% 17.7% Skilled trades occupations 0.1% 15.6% Source: HESA 2012 23 LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2102/2013

For example it is no surprise that, of the graduates who had secured graduate-level employment, 11% had entered management and senior roles, a role performed by 24% of the general workforce. This is self evident as new graduates are often relatively young and inexperienced men and women, most of who would only be at the beginning of their careers. About 43% were in professional occupations and another 45% had secured associate professional and technical occupations compared to 21% and 22% respectively of the general workforce. Less than 1 percent had entered administrative and secretarial occupations. Fig 21: Sectoral Breakdown of Graduate Level Employment in Leeds City Region Sector Destination of Leavers in Higher Education survey Human health and social work activities 23.9% Education 23.1% Professional, scientific and technical activities 10.8% Public administration and defence; compulsory social security 7.9% Wholesale and retail trade; repair of motor vehicles and motorcycles 6.8% Information and communication 5.4% Manufacturing 4.3% Arts, entertainment and recreation 3.7% Financial and insurance activities 3.5% Administrative and support service activities 2.9% Other service activities 2.0% Construction 1.8% Accommodation and food service activities 1.7% Transportation and storage 0.6% Real estate activities 0.6% Electricity, gas, steam and air conditioning supply 0.4% Water supply; sewerage, waste management and remediation activities 0.2% Agriculture, forestry and fishing 0.1% Mining and quarrying 0.1% Source: HESA HESA Higher Education Statistics Authority, DLHE Destination of Higher Education Leavers LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 24

4 Figure 21 (previous page) shows that 24% of the graduate cohort secured jobs in Human Health and Social Work Activities with 23% in education. This is primarily because such sectors often require a greater proportion of highly skilled labour and thus have more entry level opportunities for graduates. It is also likely that HE institutions have been very successful at tailoring their provision to suit these sectors. On the other hand, 4% of the graduate cohort had secured employment in the manufacturing sector. This could be because the skills acquired by graduates in the city region are not well suited to the sector or that the nature of the sector is such that only a limited number of gradate level opportunities are required. If this is true then the issue deserves closer attention as several manufacturing employers often report difficulties in filling specialist engineering positions. On the other hand there is the potential issue of engineering graduates being in high demand for a number of occupations not least the financial services sector and perhaps there is work required from employers and providers in changing perceptions of the range of job opportunities within the manufacturing/engineering sector. The map in Annex B shows that majority of LCR university graduates tend to live and seek employment in West Yorkshire and South Yorkshire after graduation but many also return to towns and cities across the UK. Annex A presents more detail about the occupations graduates have entered into within the sectors. About the HESA/DLHE data The survey is conducted six months after graduation and although quite accurate, and from a large percentage of the graduate population concerned, it may be prone to a distorted picture of reality (i.e. how many of the graduate level jobs are in LCR as compared to those moving out of the region and equally how many graduates from outside the region move in?). This could be worth further research if the city region is to be better informed about the graduate labour market and its dynamics and characteristics. A further caveat on this data is the fact that it is for the Higher Education Institutions (HEIs) only (i.e. not including the FE colleges, Open University, or private degree providers). It also does not include part-time student numbers (stripped out to enable the HEIs access to completely comparable information), post-graduate students or for that matter non university validated qualifications, e.g. ILM, CMI, CIPD etc. 25 LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2102/2013

5 The Economy and Implications for Skills Demand Using the Regional Econometric Model, it is possible to forecast the performance of the LCR economy over the short, medium and long term. The REM splits the economy into 38 sectors and produces forecasts on GVA, employment, population and several other indicators. For the purposes of this report, we have focused on the medium term forecasts for employment and GVA (2011-2015). Of the 30 sectors modelled in the Regional Econometric Model, hosted by the Regional Economic Intelligence Unit, 19 are forecast to expand. In total, the LCR economy is forecast to expand its workforce by a modest 3% between 2011 and 2015. Fig 22: Employment Growth (absolute) in LCR by Sector, 2011-2015 Employment Growth (Total Employment) Business Services 18,800 Banking & Insurance 1,500 Retailing 9,300 Minerals 1,400 Hotels & Catering 8,200 Communications 1,200 Construction 6,200 Rubber & Plastics 1,100 Transport 5,300 Wholesaling 900 Other Services 5,200 Gas, Electricity & Water 400 Other Financial & 3,800 Wood & Wood Products 400 Business Services Paper, Printing & Publishing 2,200 Machinery & Equipment 200 Health 1,900 Oil & Gas Extraction 100 Agriculture, Forestry & Fishing 1,500 Total* 42,300 Source: Regional Econometric Model 2012. *Total takes into account all 30 sectors and not just the growth sectors. In total, LCR is forecast to create 42,000 new jobs in the period to 2015, as Figure 22 above shows. Business Services leads the way with Retail and Hotels and Catering also growing strongly. LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 26

5 Figure 23 shows that Health remains the largest sector in the city region, employing over 175 thousand people (14% of the workforce). However, this sector is only forecast to marginally increase headcount over the medium term. Business Services and Retail are the second and third largest sectors in the city region, (as measured by employment). These sectors are forecast to grow strongly, 11% and 6% respectively. The two sectors, especially Retail, traditionally have a high rate of churn so should the forecasts be borne out, there could be plenty of opportunity for new employees. Education, the fourth largest sector is forecast to reduce headcount. Fig 23: LCR Employment Forecast 2011-2015 Total Employment 2011 Sector 2011- Total Employment 2011 Sector 2011 Share 2015 Share 2015 Health 175,100 13.8% 1.0% Metals 18,800 1.5% -5.6% Business Services 170,900 13.4% 11.0% Other Manufacturing NEC 16,600 1.3% -1.5% Retailing 150,200 11.8% 6.1% Machinery & Equipment 15,800 1.2% 0.8% Education 129,900 10.2% -4.4% Rubber & Plastics 14,800 1.2% 7.4% Hotels & Catering 91,200 7.2% 8.9% Textiles & Clothing 14,200 1.1% -19.9% Other Services 86,400 6.8% 6.0% Electrical & Optical Equipment 12,400 1.0% -33.5% Wholesaling 85,900 6.7% 1.0% Agriculture, Forestry & Fishing 11,900 0.9% 12.5% Banking & Insurance 69,300 5.4% 2.0% Minerals 8,700 0.7% 16.1% Construction 69,100 5.4% 8.8% Gas, Electricity & Water 6,800 0.5% 5.2% Public Admin & Defence 64,800 5.1% -12.1% Chemicals 6,300 0.5% -16.2% Transport 61,600 4.8% 8.5% Transport Equipment 5,200 0.4% -8.0% Paper, Printing & Publishing 37,700 3.0% 5.6% Wood & Wood Products 4,900 0.4% 6.5% Food, Drink & Tobacco 29,000 2.3% -7.4% Other Mining 1,900 0.1% -27.8% Other Financial & Business Services 28,700 2.3% 13.0% Fuel Refining 300 0.0% -42.5% Communications 23,200 1.8% 4.8% Oil & Gas Extraction 200 0.0% 15.9% Source: Regional Econometric Model 2012 Public Administration and Defence is forecast to shrink by 12% over the next five years. Food, Drink & Tobacco (7%) is also forecast to experience a reduction in workforce over the medium term. 27 LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2102/2013

Fig 24: Forecast LCR Growth Value Added (GVA) by sector, 2011/2015 GVA-Category 2011 Sector 2011- GVA-Category 2011 Sector 2011- Share 2015 Share 2015 Business Services 5.12 10.5% 10% Gas, Electricity & Water 0.93 1.9% 1% Banking & Insurance 4.75 9.7% 4% Machinery & Equipment 0.81 1.7% 16% Health 4.26 8.7% 4% Metals 0.80 1.6% 1% Education 3.79 7.8% -4% Other Manufacturing NEC 0.79 1.6% 6% Retailing 3.41 7.0% 6% Chemicals 0.72 1.5% 7% Wholesaling 3.27 6.7% 5% Textiles & Clothing 0.55 1.1% -11% Construction 2.91 6.0% 9% Rubber & Plastics 0.51 1.0% 32% Public Admin & Defence 2.63 5.4% -3% Minerals 0.49 1.0% 43% Transport 2.43 5.0% 9% Electrical & Optical Equipment 0.49 1.0% -24% Other Services 1.94 4.0% 12% Transport Equipment 0.28 0.6% -2% Paper, Printing & Publishing 1.58 3.2% 9% Agriculture, Forestry & Fishing 0.20 0.4% 10% Food, Drink & Tobacco 1.55 3.2% 1% Wood & Wood Products 0.12 0.2% 15% Other Financial & Business Services 1.49 3.1% 11% Other Mining 0.04 0.1% -14% Communications 1.48 3.0% 7% Fuel Refining 0.03 0.1% -46% Hotels & Catering 1.40 2.9% 13% Oil & Gas Extraction 0.02 0.0% 22% Source: Experian 2012 In GVA terms, Business Service, Banking & Finance, Health, Education and Retail are the 5 largest sectors in the City Region. Education (-4%) is forecast to shrink over the medium-term with significant growth projected in Business Services and Banking & Insurance. Overall, the LCR GVA is forecast to grow by 6% over the five year period. LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 28

5 Vacancies through the Recession As Figure 25 below shows, the Banking, Finance and Insurance sector advertised the most number of vacancies in the city region during 2011, 145,000 in total. This represents 66% of the total, greater than the England average of 61% of all jobs advertised through Jobcentre Plus. This shows the heavy reliance of LCR on the financial services sector and underlines its importance to the area. This is probably dominated by call centre vacancies as opposed to high level banking jobs as the occupational analysis further below indicates. Fig 25: Vacancies in the Leeds City region by Sector, 2011 Banking, finance and insurance etc (sic j,k) Distribution, hotels and restaurants (sic j,k) Public administration, education & health Other services (sic o, p, q) Construction (sic d) Manufacturing (sic d) Transport and communications (sic i) Agriculture and fishing (sic a,b) Energy and water (sic s,e) 145, 453 22,882 21,304 11,164 6,132 5,784 4,481 27,600 1,246 Source: NOMIS/Jobcentre Plus 2012 When viewed through the prism of occupations, it is clear that the majority of vacancies advertised through Jobcentre Plus were in elementary occupations followed by Sales and Customer Service Occupations. This is not entirely surprising as senior level jobs are not often advertised through that avenue. 29 LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2102/2013

Fig 26: Jobcentre Plus advertised Vacancies in LCR, 2007-2011 Occupation unknown Managers and senior Professional occupations Associate professional and Administrative and Skilled trades occupations Personal service Sales and customer service Process, plant and machine Elementary occupations Source: NOMIS/Jobcentre Plus 2012 2007 2008 2009 2010 2011 Recent research from Centre for Cities, conducted on behalf of LCR, has underlined the strong correlation between the proportion of residents with high level skills (level 4+) and the rate of employment. This was brought into sharp focus when data collected during the recession was analysed. See Figure 27 over the page. LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 30

5 Fig 27: Correlation between Skills, Employment and Economic Resilience Cambridge Residents with NVQ4+ Bristol Leeds Manchester Birmingham Hull Liverpool Change in claimant count, Feb 08 - Oct 09 %pt Source: NOMIS 2012 The graph shows that areas with a higher proportion of higher qualified residents (e.g. Cambridge) tended to be more resilient during the recession compared to areas that had a lower proportion of highly qualified residents (e.g. Hull). Highly skilled workers are often more mobile and thus are able access employment from further afield compared to those who are not. On the other hand, the recession affected sectors like manufacturing, construction and financial and business services more than proportionately and these sectors are fundamental to economies like Manchester and Leeds. This is also a function of the type of employment in an area and the contribution of the university cannot be over-estimated. Thus the self fulfilling and reinforcing cause and effect phenomenon cannot be over-estimated as innovative companies which require highly skilled labour will tend to congregate in locations where that labour is more readily available. This then ensures that more of such highly qualified people will choose to reside in that area (and stay on after university). 31 LEEDS CITY REGION Labour Market Analysis LEP Employment and Skills Board 2102/2013

Fig 28: Nominal GVA per filled job, in Yorkshire and Humber 2002-2009 -4.8-2.9-1.9-4.8-2.3-2.5-4.6-9.4-3.5-2.5-6.2-2.1-3.6-3.4 North Yorkshire CC Kingston upon Hull, Citty of Barnsley, Doncaster and... Calderdale, Kirklees an d... Sheffield Bradford East Riding of Yorkshhire York North and North East... Leeds North Yorkshire South Yorkshire East Yorkshire and Northern West Yorkshire Source: ONS * This graph is presented at Nomenclature of Territorial Units for Statistics (NUTS) level 2. This refers to Counties, Unitary Authorities and groups of Unitary and District Authorities. Performance is indexed to the UK (thus UK= 100). ** Note (1) left hand axis is index (2) growth rate is on right hand axis 2009 2002-2009 LCR Economic Performance Productivity: An analysis of the productivity of the workforce is often a useful gauge when assessing the economic performance of an area and the prospects for growth as well as opportunities for improvement. Figure 28 above shows the GVA per job filled in Yorkshire and Humber. The graph shows that with the exception of Leeds, the whole of the Yorkshire and Humber region has a productivity level which is below the UK average (100). Even more worrying is the fact that key economic centres like York have experienced a very significant drop in the GVA per filled job index relative to the UK since 2002 (9.4%). This is out of keeping with the rest of the region which, even though it has also experienced a fall due to the recession, has been much more resilient. The story is the same when GVA per hour worked is measured, as shown in Figure 27. Again, Leeds is the only economic area which matches the UK average. York had seen a 5% drop in GVA per filled job index relative to the UK, a key measure of productivity and suggests some imbalances and ineffectiveness in that economy. The potential of the York economy is such that if this inefficiency is successfully addressed, the LCR economy could benefit significantly. The pronounced fall in productivity in York is due, at least in part, to the fact that the city has lost a significant amount of high value-added economic activity, especially in manufacturing. In most cases this has been replaced with lower paid, lower skilled jobs in retail and tourism. LEP Employment and Skills Board 2102/2013 LEEDS CITY REGION Labour Market Analysis 32