Greater Manchester Labour Market and Skills Review 201819
Greater Manchester Labour Market and Skills Review 2018/19 NOVEMBER 2019
ABOUT THE LMSR 2018/19 • The Labour Market and Skills Review (LMSR) presents a series of ‘dashboards’ in Tableau format that offer a comprehensive examination of the work and skills landscape across Greater Manchester (GM). • The LMSR provides policymakers in GMCA and in GM’s constituent districts with a common dataset. District level information is available throughout the dashboards. • The dashboards cover labour market change, recruitment, pay, skills demand, skills supply and out-of-work benefits. • This set of slides summarises and discusses some of the main points from the data contained in the dashboards. It also supplements the dashboards with some additional material on skills supply-demand matching. Further Links • • • The dashboards can be accessed on this link The Labour Market and Skills Review 2017/18 can be read here For further information on GM’s work and skills policies see here
Labour Market • Unemployment continued to fall in 2018. At 4. 6% in 2018, it is at about half the level it was in 2009 just after the financial crisis. However, it remains above the level of the UK (4. 3% at the end of 2018). • GM is currently experiencing relatively high levels of employment (72. 8% of the working age population is employed). But GM’s employment rate lags the UK’s (75%). Economic inactivity is also higher in GM: 23. 6% are classified as economically inactive in GM (29. 4% among women), compared with 21. 7% in the UK. Inactivity rates have been trending down. • The biggest single sector for employment is ‘business, financial and professional services’ which accounts for well over a fifth of all jobs in GM (21. 9% or 291, 000 jobs). BFPS is also a sector where GM has proportionally more jobs than elsewhere in the country. However, this sector includes many different lines of work – from temping agencies and call centres through to jobs in banking, law and consultancy. Retail is the second biggest employer (16. 3% or 217, 000 jobs). Logistics is a sector where there are disproportionate numbers of jobs in GM (evidenced by a location quotient of 1. 21 in 2018). • ‘Professional occupations’ is the single largest occupational grouping in GM – again, though, this is at the broadest level of categorisation and includes many types of occupation. Professional jobs have been growing over recent years and accounted for a fifth of all jobs in GM in 2018 (20. 2%); in fact, professionals are the only occupational group that are notably increasing. However, there is a lower proportion of professionals than in the UK (20. 7%). ‘Elementary occupations’ – jobs seen as requiring relatively low levels of skill – accounted for 11. 5%. This is higher than the UK (10. 4%). In summary, GM’s occupational structure is becoming more ‘professionalised’, but to a lesser degree than the rest of the country. • The LMSR dashboards do not currently contain information on types of work which are important in understanding the concept of the quality of work and issues of job insecurity (eg. temporary work, self-employment and zero hours contracts).
Pay • Median pay has been falling in recent years once adjusted for inflation. • In 2018 the median annual wage in GM was £ 21, 715 including both full and part-timers. In the UK it was £ 22, 668. • For full-timers, the median wage was £ 25, 651. In the UK, the median for full timers was £ 27, 926. • For part-timers the median wage was £ 9, 442. In the UK it was £ 9, 580. • The gap between GM and UK wages is at its widest for full-timers. Typically, when converted to an hourly figure, a worker in GM on full time hours earns 94 p less per hour worked than is the norm in the rest of the country. The equivalent figure for all employees (ie. full and part-timers) is 73 p an hour less than elsewhere in the UK. • More than a decade on since the financial crisis, pay remains lower than it was. The typical worker in GM earned £ 89 p less for each hour they worked in 2018 than they did in 2009. In 2009, the average annual salary was £ 23, 842; by 2018 it was £ 21, 715, once adjusted for inflation. • GM-UK wage gaps are especially noticeable among high earners. Full time workers earning wages at the 90 th percentile of the wage distribution earned £ 56, 217 in the UK in 2018. In GM the equivalent 90 th percentile £ 49, 102. By contrast, wages at the bottom of the labour market are very similar – driven by the policy of the National Minimum Wage, and its effects across relatively low earners. • In the UK the full-time gender pay gap was 8. 5% in 2018 compared with 4. 8% in GM. This is likely explained by the generally lower and less dispersed earnings patterns in GM.
Low pay • The scale of low pay can be measured in a variety of ways. The dashboard shows two definitions of low pay: the proportion earning below the level of the ‘real’ living wage (as determined by the Living Wage Foundation); and the numbers earning at or within 5 p of the legal pay floor for their age group (the National Minimum Wage/National Living Wage (NMW/NLW)). • In GM, 8% of workers earn at the level of the NMW/NLW compared with 7% in the UK. However, in some of the districts of GM such as Rochdale and Wigan the proportion of jobs paying at the very lowest legal level is as high as 12%. In 2018 the NMW/NLW for over 25 year olds was £ 7. 83 an hour. • The proportion paid less than a living wage in 2018 was 23. 8% in GM, compared with 22. 8% in the UK as a whole. In some areas of GM, the proportion earning less than a living wage was approximately 30% (Wigan, Rochdale and Oldham). • Low pay affects more women than men. In terms of the living wage, just under 17% of women full timers earn below this level; for men the proportion is 14%. • Low pay is concentrated in certain sectors. Care, cleaning, security, retail, hospitality, catering, leisure, hairdressing, food processing and employment agencies – these kinds of service sectors tend to have the highest prevalence of low paying jobs, although low pay is also prevalent in certain manufacturing fields (eg. textiles).
Out-of-work benefits • The dashboard on out-of-work benefits shows breakdowns by type of benefit claim and by local authority. • Some 11% of the GM working age population claimed some form of out-of-work benefit at the end of 2018 (194, 800 people). In February 2013 the proportion was 14. 9%. • A larger proportion claim benefits in GM than is typical elsewhere; in England the proportion was 8. 1% in 2018. In some districts of GM the proportion claiming benefits tends to be higher (eg. Rochdale, 12. 8% and Tameside, 12. 1% in 2018). • Unsurprisingly, the most notable trend is the growth of Universal Credit, which subsumes six different benefits and credits. In November 2018 about 45, 000 people were in receipt of UC (2. 5% of the population). • In terms of numbers of people, ESA and Incapacity benefit account for 120, 500 people – the largest single claim type in GM (ESA is now part of UC; there also many different types of benefit combination).
Recruitment • The job market of GM is dominated by the centre of the conurbation. Manchester has many more vacancies than any other district (the district with the second largest number of vacancies is Stockport). • The clearly dominant trend across GM is for the numbers of vacancies to rise – suggesting an increasingly lively recruitment scene as the labour market has tightened. For example, in Manchester in 2018 there were 188, 200 vacancies – up from 151, 400 in 2012. However, in terms of change over time it is Salford that has shown the largest relative change in the numbers of vacancies since 2012. • Salaries for advertised vacancies are also highest in the centre. In 2018 the average advertised job in Manchester offered a salary of £ 34, 600. The GM average was £ 32, 000. These advertised salaries are notably higher than other pay data (eg. the data from the Annual Survey of Hours and Earnings used on the pay dashboard). • The online recruitment market is dominated by professional occupations and so do not reflect the typical range of jobs in GM. There were over 104, 000 professional vacancies compared with about 13, 000 for elementary jobs.
Skills demand • The data on the skills demand dashboard is drawn from the Employer Skills Survey, a survey of employers regarding their skills needs. The dashboards enable comparisons between GM and England, between GM districts, and between GM and a small selection of broadly similar northern city regions. There are three years of data included from the last three iterations of the Employer Skills Survey (2013, 2015, 2017). • The data suggests that the proportion of firms reporting a skills shortage vacancy (SSV) in 2017 was slightly higher in GM than was typical in England (7% compared with 6% in England although it is not as high as in Liverpool City Region). This is, however, a relatively small proportion of all employers. In total there were just under 8, 000 vacancies that were identified by employers as SSVs. There was a substantial increase in the numbers of SSVs in GM between the 2015 survey and that carried out in 2017 – from just under 3, 000 SSVs to just under 8, 000, reflecting an increasingly tight labour market. • SSVs in GM account for just over a fifth of all vacancies. This is not quite as high as in England (21. 4% in GM, 22. 2% in England) and again lower than in Liverpool City Region and Sheffield City Region. Leeds City Region has a lower rate of SSV density. • In terms of the proficiency of the existing workforce (‘skills gaps’), some 15% of employers in GM have staff who are not fully proficient (over 10, 400 people). This is higher than the national rate (13%) and the rates in the comparable northern city regions. • Some 4. 8% of staff in GM are not fully proficient in their roles compared with 4. 3% in England. • Some 43% of firms have staff who are overqualified for the work that they do in GM – a fractionally higher proportion than in England. • Some 7. 3% are ‘under-utilised in their current job’ – meaning they have skills and qualifications above the level needed to undertake their current role. This is a lower proportion than in England (8. 5%).
Skills supply • The dashboards contain information on apprenticeships, further education and higher education and enable comparisons between different local areas. Data on school-age education is not included, but is available in other publications produced by GMCA. • Apprenticeships have fallen over recent years. The total number of apprenticeship starts was 22, 590 in 2017/18. This was down from 28, 420 the year before. This reflects a national decline in apprenticeships following a series of complex reforms including the introduction of the apprenticeship levy. The fall in GM was proportionally less than the fall nationally (-20% compared with -24% in England). • The decline was led by intermediate level apprenticeships, especially amongst adults over 25 years old. Advanced level apprenticeships also fell slightly. Higher level apprenticeships rose to just under 3000. • Business, administration and law is the largest sector for apprenticeships (31%). This is followed by health, public services and care, which accounted for 28%. Engineering and manufacturing accounted for 14%. • Total enrolments in further education have fallen in GM from 357, 910 in 2016/17 to 350, 820 in 2017/18. This fall is relatively slight but has been led by the 16 -18 age group. 16 -18 s still account for just under half of all learners in FE, however. Over 25 s and the 19 -24 age group enrolments were broadly flat. • GM now controls the Adult Education Budget (AEB) as part of devolution in England. The data on the dashboard reflects the situation prior to devolution. There were 150, 790 enrolments in AEB funded learning in 2017/18. • Approximately half the AEB was spent on learning below level 2, while level 2 itself – broadly equivalent in vocational terms to GCSE level – accounted for a further 25%. There were approximately 1, 500 learners at level 3 and under 50 at level 4 and above in GM. • There are over 100, 000 students in GM attending one of the five Higher Education Institutions in the conurbation. Some 75% of them study at undergraduate level. The largest institution is the University of Manchester with 40, 100 students. Manchester Metropolitan University is the second largest with 33, 085.
Skills supply vs. skills demand: assessing ‘balance’ • Assessing whether the supply of skills meets the needs of employers is at best only ever indicative and carries a high risk of inaccuracy. The exercise comes with caveats. These include: - GM is not an isolated labour market. Employers can import labour from outside GM; and individuals are not restricted to GM in their choice of jobs. This is especially true for graduates - a highly mobile population. - Sector definitions on the demand side do not match precisely with sector definitions on the supply side. Analysts need to apply ‘best fit’ rules of thumb. Sectors can also be defined in different ways. For example, the ‘digital and creative’ sector is arguably not really a sector in its own right. The same point applies to the largest single sector in GM, the ‘business, financial and professional services sector’. - There is no assessment of the quality or relevance of learning. For example, a digital course may not necessarily equip an individual for a digital career. - The UK has a flexible labour market in which there is a relatively weak relationship between qualifications and occupations. Many – probably most - jobs in the UK do not demand specific qualifications. This weak relationship opens job opportunities widely. - Many qualifications are not solely aimed at labour market relevance but have other purposes (ie. self-development, academic achievement etc. ). - Some qualifications may not be sector specific (eg. A levels and many undergraduate and postgraduate degrees), but still enable employability. For example, a maths graduate may have valuable skills, but are difficult to allocate to a sector. - Every sector contains jobs at all skill levels and none; but in skills debates level 2/GCSE is often taken as the minimum acceptable level for labour market relevance. - Data driven analysis needs to be supplemented by local labour market knowledge. - Finally, there is no such thing as a perfect balance between supply and demand: a rule of thumb is needed to assess it. In the next slide, sectors are judged to be in some form of equilibrium if supply is between 70% and 130% of demand. • In the chart on the next slide, the methodology applied is as follows: - Demand takes an average of five year’s of ‘net requirement’ data on jobs by GMCA defined sectors from the Greater Manchester Forecasting Model (GMFM). The years are between 2015 and 2020. ‘Net requirement’ refers to the jobs required owing both to the expansion or contraction of a sector and job openings caused by retirements and labour market churn. - Supply data uses one year of 2017/18. It blends data on the numbers of learners undertaking apprenticeships, further education courses and higher education courses. All learners learning below level 2 are excluded from FE data. Postgraduates are excluded from HE data. The data does not specify levels, but covers levels 2 -6. - The data sources are the GMFM, the ESFA Datacube (apprenticeships and FE), and student data form the Higher Education Statistics Agency. - ‘Balance’ is judged to operate when supply is between 70% and 130% of demand.
Skills Mismatch? • • • Source: GMFM; HESA; ESFA Datacube At an economy-wide level, the relationship between skills supply and skills demand can be seen as generally reasonably wellbalanced. However, there are some notable exceptions. Retail and wholesale stands out as generating many jobs, but low levels of skill formation. This is probably due to jobs in this sector being at relatively low levels of skill. The relatively high supply in ‘personal services’ – typically driven by hairdressing – is well-known. However, hairdressing courses often involve transferable skills; furthermore, some people who undertake hair and beauty courses are already in work. Logistics is also a relatively low-skilled sector. However, the sector has experienced a very rapid pace of innovation, driven by digital transformation. This may indicate skills mismatch. The primary industries and utilities sector covers both agricultural and animal related jobs as well as major industries such as gas, nuclear and electricity. These jobs cover many different skill levels, but existing data indicates relatively low levels of skill formation compared to demand. Manufacturing and engineering is a borderline case – it lies just under the threshold for ‘balance’ in supply and demand. Manufacturing jobs are declining in GM as elsewhere. However, engineering is a highly valued specialism in manufacturing and beyond. Supply appears to be slightly low relative to employment opportunities.
GM’s Skills & Work Policy response • The data contained in the dashboards paint a picture of a complex landscape. The next two slides offer some insight into the city region’s policy response. Further information is available through the links at the beginning of this set of slides. • As well as national policy, GM’s position is explained in such documents as Our People, Our Place – The Greater Manchester Strategy (2017) and GM’s Local Industrial Strategy (LIS, 2019). Our focus is on ensuring that the residents, communities and businesses in every part of GM are in a position to contribute to and benefit from the opportunities and challenges that lie ahead. Principal themes include: - Young people leaving education ready to succeed in the labour market, with a balance of academic, technical and ‘soft’ skills - Adults having access to the skills and support that they need for entering and progressing within employment at any level, from the first step on the ladder though to highly skilled careers and retraining - Employers having access to a system that is flexible, resilient and adaptable to meet their needs for driving the industrial and economic future of GM in which companies can compete on the basis of high productivity - Residents being supported by a welfare system that provides access to work for those who can, support for those who could, and care for those who can’t. • The collective evidence base arising from this analysis, together with other intelligence including (but not limited to) the GM Independent Prosperity Review that informed the LIS, have highlighted five key priorities for GM’s work and skills system, each with a strong focus on ‘place’: - Improving Quality –improvements have been made: all of GM’s general FE colleges are now graded Good or Outstanding by Ofsted and quality was and is central to commissioning of the devolved AEB for 2019/20. Skills capital investment is helping to ensure that our residents and employers have access to industry-standard training environments, equipment and facilities. But there remains more we can do to support quality improvement, including working with the Department for Education to identify ways in which we can support the education and training workforce, with a focus on improving recruitment, retention and CPD to get the best teachers and leaders in our institutions. - A clear line of sight into careers and opportunities across the city-region – residents need to be able to access the information, experiences and mechanisms needed to help link the worlds of education and work. Bridge GM has been supporting this activity for two years with activity such as building a network of Enterprise Advisers in 180 GM schools and colleges, and the Meet Your Future work-shadowing campaign. January 2020 will see the roll-out of ‘GMACS’, a UCAS-style portal that will enable young people to explore and apply for opportunities in technical careers/Apprenticeships.
GM’s Skills & Work Policy response (cont. ) - Core skills and talent must be developed and nurtured – this is not only to expand the knowledge and skills recognised by qualifications but also the competencies and attributes needed to get ahead in life and in work. These include English, maths and digital skills as well as things like creativity, problem-solving and entrepreneurship. The devolved AEB will play a significant role in this. GM has already introduced a number of flexibilities that will make it easier for those most in need of core skills to access training. For young people, the Future Workforce Fund will support over 7, 000 young adults not currently in education, employment or training to gain skills that will help them enter GM’s labour market through a programme supported by investment from government and employers. Best practice models for digital inclusion are also being developed and rolled out in each GM district. - Supporting people to enter and progress within employment – we are tackling barriers for residents such as older workers, those with adverse health conditions and/or disabilities, individuals with caring responsibilities, and those who need to retrain in order to (re)enter employment or take their next steps, with a broad, integrated offer that aligns skills and employment support, such as the devolved AEB and GM Working Well (Work & Health Programme). Personalised packages of skills activity, employment support and health interventions are available for individuals who are out of work, or at risk of falling out of work, as well as for workers who need to up-skill or retrain in response to shifting labour market demand. GM’s Work & Health programmes will support to over 22, 000 GM residents across a range of activity, including Early Help and the Specialist Employment Service for individuals with serious mental health conditions and autism; 4, 500 participants have already entered employment as a result. We will also pilot new models for supporting our residents, including a proof-ofconcept pilot for supporting workers in low-paid employment out of in-work poverty, as well as considering how best to work with employers around retention of older workers. - Increasing Technical Skills and ensuring that employers can access a suitably skilled workforce, now and in the future, will require a boost in the availability of mid-to-higher-level technical and professional skills, as well as better skills utilisation for individuals whose work is not commensurate with their existing level of skills. This will be supported by our preparations for the roll-out of T-levels (working in partnership with colleges and the Gatsby Foundation) and boosting uptake of apprenticeships (including though GM’s SME support package and Levy Matchmaking Service). Responding to the needs of GM’s priority sectors – especially the frontier industries and high employment sectors identified in the LIS – will provide a particular focus, with ‘test and learn’ activity underway with employers (such as the Fast Track Digital Workforce Fund which has been launched to upskill workers in digital roles) that might be applicable/scalable in other occupational areas.
Conclusions • Positive elements in GM’s labour market experience include falling unemployment, rising employment, improving skill levels at level 4+ and a buoyant recruitment scene. The falling numbers relying on out-of-work benefits is likely due to welfare reform as well as employment growth. • However, job quality is a significant question. Over a fifth of jobs do not pay enough to live on (as defined by the living wage). Policies aimed at supporting good jobs, such as the GM Good Employment Charter, are likely to be relevant in encouraging employers to move to higher standards in working arrangements and improved pay. • Real median pay has fallen in recent years. Wages remain below the level they were a decade ago. • GM has experienced rapid growth of skills at relatively high levels (level 4+) within the overall population over the last decade - consistent with a picture of increasing numbers of graduates. However, there are proportionally fewer level 4+ skilled people in GM than there are nationally. This implies a mixture of strategies aimed both at supporting more level 4+ skills and encouraging graduate retention through good quality jobs. At the other end of the skills spectrum about 10% of people do not have any qualifications. Again, this is higher than is typical nationally and reinforces a need for upskilling provision to be accessible and high quality. • Apprenticeships have fallen in GM reflecting the national pattern. In FE, the numbers of 16 -18 learners have fallen while the numbers of 19+ learners are broadly stable. Within FE, there is a notable tendency for learning at low skill levels to be declining. That said, this type of learning (ie. sub level 2 provision) accounts for the vast majority of the devolved Adult Education Budget. • Employers often say they struggle to recruit people with the right skills. Evidence of the scale of ‘skills shortage vacancies’ in GM suggests both that they have risen and are fractionally higher than in England. But relatively few firms are affected by SSVs (7%). However, GM also suffers disproportionately from ‘skills gaps’ – existing staff not being proficient. Levels of skills underutilisation, that is, having skills and qualifications that are above the level needed to do the job, are significant but slightly below that of England overall. • Assessing whether the supply of skills is in balance with the job demands of employers needs careful handling. Applying the methodology outlined, there are five sectors where a mismatch may be in operation. In some of these, there may be sector-specific reasons; for example, retail and logistics may not need large numbers of highly skilled staff. In some more ‘technical’ fields, however, including engineering and some of the primary industries, there is potential for growing learner volumes and encouraging closer collaboration around skills between employers, skills providers and local policymakers. • GM’s labour market and skills system presents complex challenges necessitating investment, innovative programmes and coordinated policymaking and service delivery to give residents of GM the best opportunities to learn and to work.
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