UKnews Jobs growth
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4 ★ FINANCIAL TIMES FRIDAY JULY 16 2010 Total UK jobs created from 2010 to 2015 (forecast) -0.35m 1.67m Private sector Public sector North-east 22,000 2.0% Wales 4,100 0.3% Northern Ireland 21,800 2.6% London L Lo on 384,900 38 8 84 4 3 38 84 4, 8 3 3 38 ,900 8.3% 8 3 8 8. .3 3% % % 8 8 8 .3 3% % % East 151,200 5.5% West Midlands 77,900 3.1% East Midlands 56,700 2.7% Yorkshire & Humber 67,300 2.7% North-west 96,800 2.9% Scotland 65,300 2.5% South-west 105,000 4.0% South-east 265,100 6.2% Source: Oxford Economics Employment growth forecast Net number of jobs created and % growth, 2010-15, by region Regions forecast to miss out on jobs By Brian Groom, Business and Employment Editor London and south-east England are poised to create jobs at more than twice the rate of the rest of the UK during the next five years, according to forecasts made for the Financial Times. Wales and the west Midlands, by contrast, could take until 2025 or beyond to recover to pre- recession employment levels while northern and outer regions struggle to cope with public sector cuts, says Oxford Economics, a consultancy. The data show the Con-Lib coalition has a tough task to achieve its aim of rebalancing the economy and ending the country’s reliance on service industry growth in the south- east. The consultancy forecasts that London will lead the recov- ery, with growth in output aver- aging 3.8 per cent a year in 2010- 2015 – higher than its 3.4 per cent average in the 10 years before recession – and creating 385,000 jobs. That would mean it would return to its previous employment peak by 2013. It expects England’s four southern regions to generate more than two-thirds of the net 1.3m jobs it believes that the economy will create in that period. Jobs growth will be weaker in Wales, Scotland, northern England, Northern Ire- land and the Midlands – widen- ing the north-south divide. Public sector jobs are poised to fall everywhere but effects will be felt hardest in areas most dependent on the state sec- tor. Business leaders believe that faster private sector growth can be achieved – but not neces- sarily in time to fill the gap. “There will probably be a time lag between business invest- ment in some of those poorer regions picking up in time to compensate for the squeeze in the public sector,” said Richard Lambert, director-general of the CBI employers’ group. Oxford expects net jobs growth in all regions but fore- casts only 4,000 extra jobs in Wales during the five years, 22,000 in north-east England and Northern Ireland, 65,000 in Scot- land, 57,000 in the east Midlands and 67,000 in Yorkshire and the Humber. It expects 353,000 jobs to be lost in the public sector – less than the Office for Budget Responsibility, which forecasts 610,000 by 2015-16. But its fore- cast of 1.67m extra private sec- tor jobs is also lower, making its 1.3m net forecast the same as the OBR’s. Wales’s poor outlook flows from above-average reliance on manufacturing, health, educa- tion and public administration and the lowest proportion of jobs in private services of all regions except Northern Ireland. The west Midlands, forecast to generate a net 78,000 jobs, is seen doing better than the east Midlands and the north during the five years but this follows a weak performance over the pre- vious decade because of depend- ence on low-margin engineering. Oxford expects business serv- ices, including finance, to gener- ate jobs at a faster rate than manufacturing. Tim Leunig, at the London School of Economics, said even on Oxford’s optimistic forecast of output growth averaging 3 per cent a year across the UK, he would expect at least one region to suffer a net job loss. For analysis see www.ft.com/uk Back to work: how the regions are looking for a boost Renewable energy has been identified as one of Scotland’s best hopes for growth, with the Holyrood government estimating the sector could create 26,000 jobs over the next 10 years and provide up to £15bn of investment opportunities. There is also optimism that manufacturing will benefit from sterling’s decline, with Scottish Engineering reporting that orders, output volume and employee numbers have all returned to positive territory for the first time in three years. However, it also warned that companies remained cautious about capital investment and manufacturers complained there was still little evidence of banks making money available for the sector. The biggest concern is over the impact of the coming squeeze on public expenditure, with the Fraser of Allender Institute at Strathclyde University estimating Scotland could lose up to 90,000 public sector jobs over the next few years. Professor Brian Ashcroft said: “The speed of Scotland’s slow recovery from recession is threatened by the massive consolidation package introduced by the new Conservative-Liberal Democrat coalition government in the emergency Budget.” Garry Clark, head of policy and public affairs at the Scottish Chambers of Commerce, said businesses were expecting the public spending cuts at Scottish and UK level to damp down the recovery, as would next year’s rise in VAT. Andrew Bolger The north-west is looking to foreign investment to provide many of its future jobs. It has been the biggest beneficiary of foreign direct investment in the UK outside London and the south-east for the fourth consecutive year. SPX, a big US manufacturer, yesterday opened its European back office centre in Manchester, which will soon employ 100 people. Chris Kearney, chief executive, said: “The language skills are here, the finance skills are here. There is a big talent pool and it is easy to get in and out with a major airport.” The company joins 1,500 foreign-owned businesses with operations in greater Manchester. The region began its move from manufacturing to a more diversified, service-led economy in the 1990s and cities such as Liverpool and Manchester, where that transition has gone furthest, are outperforming. However, big public sector relocations, such as the Health and Safety Executive and the NHS’s National Institute for Clinical Excellence, also helped it create more jobs than any region outside the south between 1998-2008. They may be harder to secure in the future and have made the region more vulnerable to public sector job cuts. The BBC’s move to Salford could transform a significant cluster of creative and digital businesses into a world-class one. The Northwest Regional Development Agency, which is being wound up, also cites tourism, advanced manufacturing such as aerospace, food and drink and the biomedical sector as providing future jobs growth. Andrew Bounds David Stevens, chief operating officer of Admiral, the insurer and Wales’ largest quoted company, was unsurprised that Oxford Economics forecast lower growth for Wales than for any other part of the UK. He said: “It is depressingly inevitable that over the next few years Wales will struggle economically because it is so reliant on public-sector employment, and that will be depressed by the correction of budgetary balances.” Wales faced a “huge challenge” to bolster its business stock. The task was hampered by low critical mass of existing companies to spawn other businesses, and geographic isolation. “The further you get from London, the harder it gets, and that is a powerful feature of the UK economy,” Mr Stevens said. Admiral plans to increase staff numbers in south Wales from 3,000 to more than 3,500, but Mr Stevens believes “another four or five Admirals” are needed. Ian Price, assistant director of CBI Wales, said devolution would soften the blow of public spending cuts. The Welsh Assembly Government had surplus funds it could use to cushion reductions in the budget allocated to Wales by Westminster. Mr Price said: “It is hard to see the number of jobs that will be lost in the public sector being absorbed in the private sector.” The historic focus of job creation programmes in Wales has been on attracting multinational manufacturers with grants. However, Mr Stevens said that results had been disappointing, because some of the companies had relocated production to lower-cost centres in eastern Europe and Asia. Jonathan Guthrie 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2025+ 2024 When will employment return to its previous peak in each region? East, South-east, South-west East Midlands Wales, West Midlands North-west North-east Northern Ireland Yorkshire & Humber, Scotland London Chris Clifford, CBI regional director in the west Midlands, said it was encouraging that the UK’s traditional manufacturing heartland was forecast to grow faster than the east Midlands and the north. “These are not figures to be despondent about, given the starting point,” he said. The west Midlands, with its weak skills base and dependence on low-margin engineering, was the region worst hit by the recession. According to Oxford Economics, employment fell 4.3 per cent between 2008 and 2010, while gross value added shrank 2.3 per cent. John Russell, chief executive of Manganese Bronze, the Coventry-based manufacturer of black taxis, said: “Since the 1970s we have had a consistent trend of underperforming against national averages.” Business leaders in Birmingham, where unemployment among young men has ballooned to almost 20 per cent in some districts, do not expect the private sector to absorb redundant public-sector workers smoothly. Mr Clifford said: “We are the only English region that has produced no growth in private-sector jobs over the last 10 years, and that is pretty damning.” Mr Russell said business would eventually take up the slack, as new enterprises flourished, but not before a hiatus that triggered another spike in unemployment. Business figures are critical of the expected abolition of Advantage West Midlands along with other regional development agencies at a time when small businesses need extra help. “We have a tough job ahead of us,” Mr Clifford said. Jonathan Guthrie “There is no doubt that if any region is going to lead the recovery it’s going to be London, if only because of its lack of dependence on the public sector,” says Colin Stanbridge, chief executive of London Chamber of Commerce and Industry. “But the job growth forecasts are really challenging.” Unemployment has crept up to 9.3 per cent of the workforce, second only to north-east England. Nonetheless, Oxford Economics believes London’s economy can grow at 3.8 per cent a year over the next five years – above its 3.4 per cent average in 1998-2008 – and generate 385,000 jobs. The London mayor’s office says employment could surpass pre-recession levels by 2015 or earlier. It foresees business and financial services growing from 1.56m in 2007 to 1.98m in 2031 and strong growth in leisure, personal services, hotels and restaurants. Mr Stanbridge says conditions must be right, including avoiding a double- dip recession and being “incredibly careful” about regulation. Transport is vital. “Things like CrossRail and the Tube upgrade have to go through.” Brian Groom For north-east England, restructuring has been the key theme of the last 30 years as the economy confronts the move from traditional, heavy industry to a more diversified base. Now it faces more restructuring as the public sector is forcibly shrunk – a challenge underlined yesterday by immediate funding cuts imposed by One NorthEast, the regional development agency, on 25 bodies which are drivers of growth. These include the National Renewable Energy Centre and the Centre for Process Innovation. To counter the growth in the north-south divide, the region needed to foster digital companies, said Jon Bradford, chief executive of The Difference Engine, an acceleration programme for new businesses. “You are less dependent on your geographical location and can serve national and global markets.” Martyn Pellew, president of the north-east Chamber of Commerce and group development director of PD Ports, the UK’s third-biggest port, said that the region needed clarity quickly about government policies in areas such as green energy so the private sector could build on the north-east’s strengths. Brian Moore, a Newcastle- based entrepreneur who is managing director of Sino UK, which brings overseas students to the UK, has experienced both business failure and growth during the recession. There was no point in opting for old, failed policies of trying to attract outposts of overseas-based companies. “We need to subsidise people to create their own business,” he said. Chris Tighe London North-east Scotland Wales North-west West Midlands Wind farm in Caithness Salford Quays, Manchester Capital is eyeing an upturn Open arms for local talent Geared for growth: Land Rover’s Solihull plant Alamy Rebalancing the economy North-south divide is set to widen Wales and Midlands to be among worst hit
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Transcript of UKnews Jobs growth
4 ★ FINANCIAL TIMES FRIDAY JULY 16 2010
Total UK jobs createdfrom 2010 to 2015 (forecast)
-0.35m
1.67mPrivatesector
Publicsector
North-east
22,0002.0%
Wales
4,1000.3%
Northern Ireland
21,8002.6%
LondonLLoon
384,900388844338844,83338 ,9008.3%8 388..33%%%888.33%%%
East
151,2005.5%
WestMidlands
77,9003.1%
EastMidlands
56,7002.7%
Yorkshire& Humber
67,3002.7%
North-west
96,8002.9%
Scotland
65,3002.5%
South-west
105,0004.0%
South-east
265,1006.2%
Source: Oxford Economics
Employmentgrowth forecastNet number of jobs created and % growth,2010-15, by region
Regions forecast to miss out on jobs
By Brian Groom,Business and Employment Editor
London and south-east Englandare poised to create jobs at morethan twice the rate of the rest ofthe UK during the next fiveyears, according to forecastsmade for the Financial Times.
Wales and the west Midlands,by contrast, could take until2025 or beyond to recover to pre-recession employment levelswhile northern and outerregions struggle to cope withpublic sector cuts, says OxfordEconomics, a consultancy.
The data show the Con-Libcoalition has a tough task toachieve its aim of rebalancingthe economy and ending thecountry’s reliance on serviceindustry growth in the south-east.
The consultancy forecasts
that London will lead the recov-ery, with growth in output aver-aging 3.8 per cent a year in 2010-2015 – higher than its 3.4 percent average in the 10 yearsbefore recession – and creating385,000 jobs. That would mean itwould return to its previousemployment peak by 2013.
It expects England’s foursouthern regions to generatemore than two-thirds of the net1.3m jobs it believes that theeconomy will create in thatperiod. Jobs growth will beweaker in Wales, Scotland,
northern England, Northern Ire-land and the Midlands – widen-ing the north-south divide.
Public sector jobs are poisedto fall everywhere but effectswill be felt hardest in areasmost dependent on the state sec-tor. Business leaders believethat faster private sector growthcan be achieved – but not neces-sarily in time to fill the gap.“There will probably be a timelag between business invest-ment in some of those poorerregions picking up in time tocompensate for the squeeze in
the public sector,” said RichardLambert, director-general of theCBI employers’ group.
Oxford expects net jobsgrowth in all regions but fore-casts only 4,000 extra jobs inWales during the five years,22,000 in north-east England andNorthern Ireland, 65,000 in Scot-land, 57,000 in the east Midlandsand 67,000 in Yorkshire and theHumber. It expects 353,000 jobsto be lost in the public sector –less than the Office for BudgetResponsibility, which forecasts610,000 by 2015-16. But its fore-
cast of 1.67m extra private sec-tor jobs is also lower, making its1.3m net forecast the same asthe OBR’s.
Wales’s poor outlook flowsfrom above-average reliance onmanufacturing, health, educa-tion and public administrationand the lowest proportion ofjobs in private services of allregions except Northern Ireland.
The west Midlands, forecast togenerate a net 78,000 jobs, isseen doing better than the eastMidlands and the north duringthe five years but this follows a
weak performance over the pre-vious decade because of depend-ence on low-margin engineering.
Oxford expects business serv-ices, including finance, to gener-ate jobs at a faster rate thanmanufacturing.
Tim Leunig, at the LondonSchool of Economics, said evenon Oxford’s optimistic forecastof output growth averaging 3per cent a year across the UK,he would expect at least oneregion to suffer a net job loss.
For analysis see www.ft.com/uk
Back to work: how the regions are looking for a boost
Renewable energy has beenidentified as one ofScotland’s best hopes forgrowth, with the Holyroodgovernment estimating thesector could create 26,000jobs over the next 10 yearsand provide up to £15bn ofinvestment opportunities.
There is also optimism thatmanufacturing will benefitfrom sterling’s decline, withScottish Engineeringreporting that orders, outputvolume and employeenumbers have all returned topositive territory for the first
time in three years. However,it also warned thatcompanies remained cautiousabout capital investment andmanufacturers complainedthere was still little evidenceof banks making moneyavailable for the sector.
The biggest concern isover the impact of thecoming squeeze on publicexpenditure, with the Fraserof Allender Institute atStrathclyde Universityestimating Scotland couldlose up to 90,000 publicsector jobs over the next fewyears. Professor BrianAshcroft said: “The speed ofScotland’s slow recoveryfrom recession is threatenedby the massive consolidationpackage introduced by thenew ConservativeLiberalDemocrat coalitiongovernment in theemergency Budget.”
Garry Clark, head of policyand public affairs at theScottish Chambers ofCommerce, said businesseswere expecting the publicspending cuts at Scottishand UK level to damp downthe recovery, as would nextyear’s rise in VAT.
Andrew Bolger
The northwest is looking toforeign investment to providemany of its future jobs. Ithas been the biggestbeneficiary of foreign directinvestment in the UK outsideLondon and the southeastfor the fourth consecutiveyear.
SPX, a big USmanufacturer, yesterdayopened its European backoffice centre in Manchester,which will soon employ 100people.
Chris Kearney, chiefexecutive, said: “Thelanguage skills are here, thefinance skills are here. Thereis a big talent pool and it iseasy to get in and out with amajor airport.” The companyjoins 1,500 foreignownedbusinesses with operations ingreater Manchester.
The region began its movefrom manufacturing to amore diversified, serviceledeconomy in the 1990s andcities such as Liverpool andManchester, where thattransition has gone furthest,are outperforming.
However, big public sectorrelocations, such as theHealth and Safety Executiveand the NHS’s NationalInstitute for ClinicalExcellence, also helped it
create more jobs than anyregion outside the southbetween 19982008. Theymay be harder to secure inthe future and have madethe region more vulnerable topublic sector job cuts.
The BBC’s move to Salfordcould transform a significantcluster of creative and digitalbusinesses into a worldclassone. The Northwest RegionalDevelopment Agency, whichis being wound up, also citestourism, advancedmanufacturing such asaerospace, food and drinkand the biomedical sector asproviding future jobs growth.
Andrew Bounds
David Stevens, chiefoperating officer of Admiral,the insurer and Wales’largest quoted company, wasunsurprised that OxfordEconomics forecast lowergrowth for Wales than forany other part of the UK. Hesaid: “It is depressinglyinevitable that over the nextfew years Wales will struggleeconomically because it is soreliant on publicsectoremployment, and that will bedepressed by the correctionof budgetary balances.”
Wales faced a “hugechallenge” to bolster itsbusiness stock. The task washampered by low criticalmass of existing companiesto spawn other businesses,and geographic isolation.“The further you get fromLondon, the harder it gets,and that is a powerfulfeature of the UK economy,”Mr Stevens said.
Admiral plans to increasestaff numbers in south Wales
from 3,000 to more than3,500, but Mr Stevensbelieves “another four or fiveAdmirals” are needed.
Ian Price, assistant directorof CBI Wales, said devolutionwould soften the blow ofpublic spending cuts. TheWelsh Assembly Governmenthad surplus funds it coulduse to cushion reductions inthe budget allocated toWales by Westminster.
Mr Price said: “It is hard tosee the number of jobs thatwill be lost in the publicsector being absorbed in theprivate sector.”
The historic focus of jobcreation programmes inWales has been on attractingmultinational manufacturerswith grants. However, MrStevens said that results hadbeen disappointing, becausesome of the companies hadrelocated production tolowercost centres in easternEurope and Asia.
Jonathan Guthrie
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2025+2024
When will employment return to its previous peak in each region?
East,South-east,South-west
East Midlands
Wales,WestMidlands
North-west North-east NorthernIreland
Yorkshire& Humber,Scotland
London
Chris Clifford, CBI regionaldirector in the west Midlands,said it was encouraging thatthe UK’s traditionalmanufacturing heartland wasforecast to grow faster thanthe east Midlands and thenorth. “These are not figuresto be despondent about,given the starting point,” hesaid.
The west Midlands, with itsweak skills base anddependence on lowmarginengineering, was the regionworst hit by the recession.According to OxfordEconomics, employment fell4.3 per cent between 2008and 2010, while gross valueadded shrank 2.3 per cent.
John Russell, chiefexecutive of ManganeseBronze, the Coventrybasedmanufacturer of black taxis,said: “Since the 1970s wehave had a consistent trendof underperforming againstnational averages.”
Business leaders in
Birmingham, whereunemployment among youngmen has ballooned to almost20 per cent in somedistricts, do not expect theprivate sector to absorbredundant publicsectorworkers smoothly. Mr Cliffordsaid: “We are the onlyEnglish region that hasproduced no growth inprivatesector jobs over thelast 10 years, and that ispretty damning.”
Mr Russell said businesswould eventually take up theslack, as new enterprisesflourished, but not before ahiatus that triggered anotherspike in unemployment.
Business figures are criticalof the expected abolition ofAdvantage West Midlandsalong with other regionaldevelopment agencies at atime when small businessesneed extra help. “We have atough job ahead of us,” MrClifford said.
Jonathan Guthrie
“There is no doubt that ifany region is going to leadthe recovery it’s going to beLondon, if only because of itslack of dependence on thepublic sector,” says ColinStanbridge, chief executive ofLondon Chamber ofCommerce and Industry.“But the job growth forecastsare really challenging.”
Unemployment has crept
up to 9.3 per cent of theworkforce, second only tonortheast England.Nonetheless, OxfordEconomics believes London’seconomy can grow at 3.8 percent a year over the nextfive years – above its 3.4 percent average in 19982008 –and generate 385,000 jobs.
The London mayor’s officesays employment couldsurpass prerecession levelsby 2015 or earlier. It foreseesbusiness and financialservices growing from 1.56min 2007 to 1.98m in 2031and strong growth in leisure,personal services, hotels andrestaurants.
Mr Stanbridge saysconditions must be right,including avoiding a doubledip recession and being“incredibly careful” aboutregulation. Transport is vital.“Things like CrossRail andthe Tube upgrade have to gothrough.”
Brian Groom
For northeast England,restructuring has been thekey theme of the last 30years as the economyconfronts the move fromtraditional, heavy industry toa more diversified base.
Now it faces morerestructuring as the publicsector is forcibly shrunk – achallenge underlinedyesterday by immediatefunding cuts imposed by OneNorthEast, the regionaldevelopment agency, on 25bodies which are drivers ofgrowth. These include theNational Renewable EnergyCentre and the Centre forProcess Innovation.
To counter the growth inthe northsouth divide, theregion needed to fosterdigital companies, said JonBradford, chief executive ofThe Difference Engine, anacceleration programme fornew businesses. “You areless dependent on yourgeographical location and canserve national and globalmarkets.”
Martyn Pellew, president ofthe northeast Chamber ofCommerce and groupdevelopment director of PDPorts, the UK’s thirdbiggestport, said that the regionneeded clarity quickly about
government policies in areassuch as green energy so theprivate sector could build onthe northeast’s strengths.
Brian Moore, a Newcastlebased entrepreneur who ismanaging director of SinoUK, which brings overseasstudents to the UK, hasexperienced both businessfailure and growth during therecession. There was nopoint in opting for old, failedpolicies of trying to attractoutposts of overseasbasedcompanies. “We need tosubsidise people to createtheir own business,” he said.
Chris Tighe
London
NortheastScotland
Wales
Northwest
West Midlands
Wind farm in Caithness
Salford Quays, Manchester
Capital is eyeing an upturn
Open arms for local talent
Geared for growth: Land Rover’s Solihull plant Alamy
Rebalancing the economy
Northsouth divideis set to widenWales and Midlandsto be among worst hit
