Why STEM is important for the future growth of NI economy? Graeme Harrison Head All-Island...
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Transcript of Why STEM is important for the future growth of NI economy? Graeme Harrison Head All-Island...
Why STEM is important for the future growth of NI economy?
Graeme Harrison
Head All-Island Consultancy, Oxford Economics
Education & Library Board Careers Event – Greenmount College
9th October 2009
Outline
Economic backdrop NI future skill needs research Why STEM matters? STEM challenges STEM demand STEM supply Returns to STEM Summary
Economic backdrop
Global reach of recession …
Real GDP growth outlooks (summer 2009)
2008 2009 2010 2011 2012
NI (GVA) 0.7% -3.5% 0.2% 2.9% 3.4%UK 0.8% -4.0% 0.3% 2.2% 3.2%ROI -3.0% -8.2% -1.7% 3.2% 3.1%US 1.1% -2.8% 1.6% 3.8% 3.8%Germany 1.0% -6.3% 0.2% 1.9% 2.7%France 0.3% -3.1% -0.3% 1.6% 2.2%Spain 1.2% -4.1% -0.8% 1.7% 2.5%Sw eden -0.4% -4.9% 1.0% 2.2% 2.9%Australia 2.3% 0.0% 1.0% 4.1% 3.9%
Source: Oxford EconomicsNote: Years of negative grow th shaded in purple
Sectoral reach …
-600 -500 -400 -300 -200 -100 0 100
Heath & social work
Utilities
Education
Mining & quarrying
Agriculture
Public administration & defence
Other personal services
Transport & comms
Hotels & restaurants
Financial services
Construction
Retail & distribution
Manufacturing
Business services
000s
UK: Sectoral employment forecast (2008-2010)
Source: Oxford Economics
Recession nearing end but legacy impact …
Some modestly positive economic news is coming through in early summer 2009 with business confidence indicators, housing transactions, house prices and unemployment all showing either slight improvement, or in the case of unemployment a slow down in the rate of decline
This is however not yet sufficiently sustained or corroborated by other key labour market or output data to suggest the recession is over
While it may not be long before the recession bottoms out in terms of the scale of output and employment contraction, attention should turn towards the short, medium and long-term legacy impacts the recession may leave, several of which are ‘personal’: Excess demand for education & training (but funding constraints?) and excess
supply of education & training outputs (which will increase recruitment competition today and tomorrow)
Unemployment legacy Public finances squeeze (recessionary impact will be felt for longer in public sector)
End of NI ‘golden era’ …
OE EDF Sept 2008
OE summer 2009
650
700
750
800
850
900
950
1,000
1996 1999 2002 2005 2008 2011 2014 2017 2020
000s
NI: Total employment
Forecast
Source: DETI, LFS, Oxford Economics
Growth of previous decade unsustainable
Employment trajectory if growth of the past decade repeated
Short-term outlook now much weaker
The last decade was a spectacular period of economic performance (albeit partly ‘debt-led’) which would have been difficult to repeat even before the onset of recession
The severity of the recession is such (in net job loss terms) that the NI economy is not projected to return to its 2008 peak employment level until 2017
In other words it will take a considerable period for the economy to create the quantum of jobs lost during the recession even if the economy is officially out of recession later this year / early next year
… unemployment legacy
Unemployment no longer forecast to return to its recent historic low
1. Insufficient pace of employment growth during recovery
2. Mis-match of skills of the unemployed versus business / economy needs
3. Only a limited out-migration response to rising local unemployment (as migrant origin economies are similarly struggling with recession)
OE EDF Sept 2008
OE summer 2009
0%
2%
4%
6%
8%
10%
12%
1995 2000 2005 2010 2015 2020
% working age pop
NI: Claimant unemployment rate
Source: NOMIS, Oxford Economics
Forecast
NI future skill needs research
Scope of research
Empirical assessment of future skill needs (by NQF and NVQ level) and degree subject demand of NI economy, including for priority sectors (ICT, life sciences, hi-tech manufacturing and financial services)
Baseline (EDF Sept 08) and aspirational scenario Has very recently been updated to incorporate latest summer 2009
economic outlooks Demand focus but some supply-side elements
Evidence from consultations …
STEM graduates are and will continue to be in high demand
Though concern that the number and quality of graduates within science and engineering has been dropping at an alarming rate
The quality of degrees is becoming a weakness, with sectors such as the manufacturing being less impressed with today’s graduates, many of which it terms as ‘broad brush’ graduates
Under-supply of graduates in some sectors exists due to the lack of awareness of career opportunities
“The quality of personnel over the last decade in NI has been reducing. Lower entry requirements at universities is one of the major factors contributing to this trend”
Narrow ‘unspecialised’ subject focus
NI % total degree qualified
employed persons (UK=100)
NI % total degree qualified
employed persons
NI subject degree employed
persons per 10,000 working age population
(UK=100)
STEMMedicine and Dentistry 178 4% 160Vetinary Science, Agriculture and Related Subjects 125 1% 112Combined degree 116 20% 104History and Philosophical Studies 88 3% 79Technologies 83 1% 74Mathematical and Computer Sciences 79 4% 71Creative Arts and Design 67 4% 61
Non-STEMBusiness and Administration 137 16% 123Subjects Allied to Medicine 115 13% 104Architecture, Building and Planning 106 2% 95Education 100 7% 90Social Studies 97 6% 87Biological Sciences 76 4% 68Law 70 2% 63
Source: LFS, Oxford EconomicsNote: Cells shaded purple indicate NI's employed degree subject share is 10 per cent less than the UK average. Cells
STEM concentrations
10%
20%
30%
40%
50%
SC EM WW NE SW NW SO YH EN WM UK NI GL
% total degrees in employment
(3-year ma)
UK regions: STEM degrees (broad definition) in employment
Source: LFS, Oxford Economics
NI ranks last if exclude medical degrees
Where could NI be?
If NI had same sectoral and occupation skill and subject structure … 9,000 more NQF 4-8 employed persons in work 49,000 more managers and professionals in work 7,000 more creative / art degree holders and 3,000 more STEM degree
holders in work (9,000 less with Business and Administration in work)
But not easy for NI to quickly attract or create jobs genuinely requiring more graduates, managers, STEM degrees etc
High share of these jobs locate in Greater South East It is a demand and supply issue!
3k more STEM graduates in workforce
-10 -5 0 5 10
STEM (broad definition)
Medecine & Dentistry and Subjects Alliedto Medecine
Physical Sciences, Mathematical &Computer Sciences, Engineering &
Law
Business and Administration
Arts *
Creative Arts and Design
Education
Combined degree
NI actual minus expected workforce degree subjects (000s, average 2006-2008)
NI: Actual minus expected workforce degree subjects
Source: LFS, Oxford Economics
3,000 more STEM (narrow definition) and 7,000 more creative / arts graduates in employment if NI had same sectoral graduate subject structure as UK
Actual > Expected
Actual < Expected
* Linguistics, Languages, Literature, History & Philosophy
Recession impact – over-supply in short-run
Baseline
24
21
18
12
-7-8
38
2523
33
-10
0
10
20
30
40
1997 2000 2003 2006 2009 2012 2015 2018
Annual flow
NI: Net requirement from education system and in-migration
Source: Oxford Economics
ForecastEstimate
2008-2010 annual
average (000s)
Expansion demand (people-based) -19
Net replacement demand (approximate) 12Leavers (including out-migration) 58Joiners 46
Net requirement from education and in-migration -8
Entrants from education to employment 17-20
Residual in-migration Negative
Source: Oxford Economics
Recovery – still a significant demand for labour
Even without a return to growth of the past decade still a significant demand for labour
On average 16,000 jobs available pa without any net increase in total jobs
Growth of 7,000 net new jobs pa is more sustainable for NI – consistent with education outturn and moderate in-migration
But not just about flows – non-employed stock from recession era?
Baseline
2010-2020 annual
average (000s)
Expansion demand (people-based) 7
Net replacement demand (approximate) 16Leavers (including out-migration) 58Joiners 42
Net requirement from education and in-migration 23
Entrants from education to employment 17-20
Residual in-migration 3-6
Source: Oxford Economics
Need for a balanced supply …
Two-fifths of net requirement for NQF 4 and above
Still almost 1 in 4 available positions will require NQF 1 and below (not to confuse flows with stocks!)
Historical (2003-2008)
Baseline (2010-2010)
Postgraduate (NQF 7-8) 2.1 1.9First degree and sub-degree (NQF 4-6) 8.4 7.1Intermediate a (NQF 3) 6.6 5.6Intermediate b (NQF 2) 5.7 3.1Low (NQF 1 and below ) 7.6 5.3
Total 30.4 22.9
Postgraduate (NQF 7-8) 7% 8%First degree and sub-degree (NQF 4-6) 28% 31%Intermediate a (NQF 3) 22% 24%Intermediate b (NQF 2) 19% 13%Low (NQF 1 and below ) 25% 23%
Source: Oxford Economics
Net requirement from education and migrants (annual average)
Why STEM matters?
Manufacturing – a declining sector?
0
40
80
120
160
200
1971 1975 1979 1983 1987 1991 1995 1999 2003 2007
000s
Self-employment
Employee jobs
NI: Manufacturing employment
Source: DETI, LFS, Oxford Economics
172,000 employee jobs and 7,000 self-employed in 1971
88,000 employee jobs and 5,000 self-employed in 2008
NI
UK
30
40
50
60
70
80
90
100
1971 1975 1979 1983 1987 1991 1995 1999 2003 2007
1971=100
NI and UK: Manufacturing employment excl textiles
Source: DETI, ONS, LFS, Oxford Economics
Productivity driver
NI
UK
5%
10%
15%
20%
25%
30%
1971 1975 1979 1983 1987 1991 1995 1999 2003 2007
% total GVA (2003 prices)
NI and UK: Manufacturing GVA share of total excl textiles
Source: Regional Accounts, Oxford Economics
Manufacturing
Whole economy
Professional services
Health & social work
0
10
20
30
40
50
60
70
1971 1976 1981 1986 1991 1996 2001 2006 2011 2016
£000s (2003 prices)
NI: Sectoral productivity
Source: Regional Accounts, DETI, LFS, Oxford Economics
Forecast
Out-performing UK
Employment growth last decade
NI UK Diff (pp)
Food products, beverages & tobacco -5% -17% 11Textiles & leather -87% -65% -22Wood & w ood products 43% -17% 60Pulp, paper & printing -13% -24% 11Coke, oil refining & nuclear fuel -40% -6% -33Chemicals & man-made fibres -11% -29% 18Rubber & plastic products 1% -30% 31Other non-metallic minerals 34% -25% 60Metals 42% -30% 72Machinery & equipment nec 8% -27% 36Electrical & optical equipment -15% -43% 28Transport equipment -21% -23% 2Manufacturing nec 53% -20% 73
Total -17% -30% -
Source: DETI, ONS, Census, Oxford Economics
Towards export-led growth …
Year Exports (£bn) Year Exports (£bn)
2005/06 4.59 2005 0.312006/07 5.03 2006 0.36
Source: DETI Manufacturing Sales & Exports Survey; DETI Exporting NI Services Study
Manufacturing (including services)
High export potential service sectors and
manufacturing & construction services
STEM Review supporting arguments
STEM in education – application and problem-solving skills STEM in society – equipping people to adapt to new technologies STEM in economy
Link to productivity (and thereby Government PSA targets) Attract FDI Support realisation of MATRIX vision
Advances engineering (transport) Advanced materials Agri-food ICT Life & health sciences
Solutions to today’s global problems Climate change GM food Renewable energy
STEM challenges
Headlines from STEM Review
Young people disengaged from STEM High STEM drop out rates at local universities One-quarter of NI-domiciled STEM graduates at UK HEIs choose not
to live and work in NI Recognition of STEM importance and policy response only catching up
with ROI and GB now Rise in STEM education and science research spending in emerging
economies is growing at a staggering rate – risk of being left behind if not proactive
STEM demand
Still a positive net requirement …
-12 -8 -4 0 4 8 12
Agriculture, forestry and f ishing
Mining & quarrying
Manufacturing
Utilities
Construction
Retail & distribution
Hotel & restaurants
Transport & communications
Financial services
Business services
Public administration & defence
Education
Health & social w ork
Other personal services
Expansion demand (annual average flow 2010-2020)
NI sectors: Expansion demand (2010-2020)
Source: Oxford Economics
Manufacturing a declining sector but large positive net
requirement
-12 -8 -4 0 4 8 12
Agriculture, forestry and f ishing
Mining & quarrying
Manufacturing
Utilities
Construction
Retail & distribution
Hotel & restaurants
Transport & communications
Financial services
Business services
Public administration & defence
Education
Health & social w ork
Other personal services
Net requirement education and migration (annual average flow 2010-2020)
NI sectors: Net requirement from education and migration (2010-2020)
Source: Oxford Economics
STEM shortfalls could occur
Potential STEM shortfall under aspirational scenario (pa):
Physical sciences: 100 Mathematics: 40 Computer Science:
220 Engineering &
Technology: 290
… Before even considering downward STEM enrolment trend
Demand Supply
2010-2020 (annual average
net degree requirement)
HESA NI domiciled
graduates from UK HEIs entering
employment in NI (2003-2007
annual average grossed up)
STEM 4.2 3.6 -0.64Medicine & dentistry 0.2 0.3 0.04Subjects allied to medicine 1.2 1.4 0.26Biological sciences 0.4 0.4 0.00Veterinary science 0.0 0.0 0.00Agriculture & related subjects 0.0 0.1 0.03Physical sciences 0.3 0.2 -0.10Mathematical sciences 0.1 0.0 -0.04Computer science 0.8 0.5 -0.22Engineering & technology 0.6 0.3 -0.29Architecture, building & planning 0.6 0.3 -0.30
Law 0.5 0.2 -0.28Business and Administration 1.4 1.3 -0.08Languages 0.2 0.2 0.01Creative Arts and Design 0.5 0.3 -0.18Education 0.9 1.5 0.63Combined degree 0.2 0.1 -0.14Other * 1.0 1.1 0.13
Total 8.9 8.4 -0.56
* Social studies; mass communication and documentation; and historical and philiosophical studies
Source: Oxford Economics, HESA
Balance
Note: NQF 4-8 requirement from education and migration adjustred for LFS subject degree % NQF 4-8
STEM supply
STEM degree workforce pool
2008 (3-yr average)
STEM 70,800Subjects Allied to Medicine 23,800Engineering 8,800Medicine & Dentistry 8,100Mathematical & Computer Sciences 8,200Biological Sciences 7,300Physical Sciences 6,600Architecture, Building & Planning 4,400Vetinary Science, Agriculture & Related Subjects 2,600Technologies 1,000
Non-STEM 111,600Combined Degree 37,100Business & Administration 28,700Education 12,800Social Studies 11,500Creative Arts & Design 6,400History & Philosophical Studies 5,800Law 4,500Other 4,800
Source: LFS, Oxford EconomicsNote: Rounded to nearest hundred
STEM UCAS acceptances (NI HEIs)
Change 2002-2008 (%)
Change 2002-2008 (absolute)
H1 - General Engineering 277% 36D4 - Agriculture 83% 49B4 - Nutrition 55% 31A1 - Pre-clinical Medicine 40% 75B7 - Nursing 33% 94J9 - Others in Technology 31% 13G1 - Mathematics 30% 21A2 - Pre-clinical Dentistry 29% 12H3 - Mechanical Engineering 28% 25F1 - Chemistry 27% 11H2 - Civil Engineering 27% 38C1 - Biology 1% 1G6 - Softw are Engineering -5% -1F3 - Physics -25% -14H4 - Aerospace Engineering -26% -12H6 - Electronic and Electrical Engineering -30% -29G4 - Computer Science -30% -207H7 - Production and Manufacturing Engineering -51% -33C4 - Genetics -56% -10
Source: UCAS
Returns to STEM
First occupation returns
Managers & professionals
Sales, customer service, process and elementary
Managers & professionals
Sales, customer service, process and elementary
(H2) Civil engineering 82% 5% (N1) Business studies 30% 16%(H3) Mechanical engineering
66% 13% (R1) French studies 30% 13%
(G6) Softw are engineering 61% 12% (L2) Politics 29% 16%
(H4) Aerospace engineering
60% 13% (L4) Social policy 28% 16%
(F1) Chemistry 53% 12% (C8) Psychology 28% 16%(G3) Statistics 51% 10% (V5) Philosophy 25% 22%(H6) Electronic & electrical engineering
51% 16% (C6) Sports science 24% 18%
(F3) Physics 50% 14% (N5) Marketing 22% 17%(G1) Mathematics 47% 12% (W4) Drama 17% 25%(G4) Computer science 46% 16% (P5) Journalism 11% 13%
Source: HESA Source: HESA
STEM Non-STEM
% total first destination % total first destination
Wage returns
0 5 10 15 20 25 30
Engineering
Architecture & related
Maths & computing
Medicine
Physical / environmental
Technology
Biological sciences
Medical related
Agricultural sciences
Business & financial
European languages
Other languages
Social sciences
Linguistics
Librarianship & information
Humanities
Education
Arts
% more than £1,000 per week
UK: Weekly earnings by degree subject (2008)
Source: LFS
STEM
Summary
Facing a new world
The end of a debt era Who can spend (not business, not consumer, not government?) Tomorrow will have to be export-led not debt-led – manufacturing of
growing importance? Economies need to diversify
UK over-dependent on financial services NI over-dependent on public sector / too small a private sector
Growing international competition – STEM skills build up in India and China
Could industrial production return to the UK as production and transportation costs rise elsewhere?
The environment will be ever more global - skills will therefore be even more crucial – NI not competing on cost
Leading not following matters (e.g. MATRIX)
Economist’s questions
Is the mix of skills appropriate – too general at top end? How to future skills match – STEM demand and supply? Important to
avoid ‘boom bust’ situation as has occurred for ICT – what is being done to avert this?
How to reverse STEM supply-side trends? What should the message be? Is it a demand issue? Would bursaries work – how generous would they need to be? More UCAS points for STEM subjects?
International best practice – US National Defence Education Act 1958 at start of ‘space race’
Key not to shield future generations from the growing challenge posed by emerging economies
Supplying niche skills in some STEM areas – good return but expensive – does it fit funding model in schools, FE and HE?
Skills in energy sectors – how well do we know (green technology etc)?
Contact:Graeme HarrisonHead All-Island Consultancy, Oxford EconomicsTel: 028 9266 0669Email: [email protected]