Aberdeen City December 2016 Skills Assessments Aberdeen City December 2016

Introduction An Introduction to Skills Assessments Key Data for Aberdeen City Implications for Skills Investment Planning

An Introduction to Skills Assessments

What are Skills Assessments? A single, agreed evidence base on which to base future investment in skills, built up from existing datasets Partnership between Skills Development Scotland (SDS), Highlands and Islands Enterprise (HIE), Scottish Enterprise (SE), the Scottish Funding Council (SFC) and the Scottish Local Authorities Economic Development Group (SLAED). Purpose: Support SFC, Regional Colleges, Strategic Bodies and College Boards in negotiating Regional Outcome Agreements (ROAs) for Academic Years 2017-2020 Provide a framework for aligning SDS investment in individuals and businesses Assist partners in planning their strategic investment in skills Highlight gaps in national and regional skills evidence

Why are they important for skills planning? They provide a high quality and consistent source of evidence about economic and skills performance delivery at various spatial levels. They can be used to identify strengths and any issues or mismatches arising, and so inform thinking about future planning and investment. They are accessible online to support all partners in their planning. They provide a core evidence base to support the Scottish Skills Planning Model.

Scottish Skills Planning Model

What do they cover? Economic Performance, Profile of the Workforce, People and Skills, Education and Training (MAs, Schools, FE and HE), Other Economic Activity, Skills Mismatches and Forecasting Underpinned by the 2016 data matrix of seven workbooks, containing data on over 100 social and economic indicators With data at various spatial levels: Regions; City Region Deal; Local Authority The matrix only draws upon official datasets (including APS, BRES, UKCES, UK Business Counts, Census, Scot Gov datasets) and partner data (SFC, SDS, SE, HIE). The data matrix is found here: https://www.skillsdevelopmentscotland.co.uk/what-we-do/partnerships/regional-skills-assessments/ This slidepack provides a summary of the data for this area

Local Authority Overview One of Scotland’s leading cities An area of historically strong and well paid employment opportunities but affected by the challenges of oil and gas downturn Strong economic linkages with Aberdeenshire

Key Economic Trends GVA grew by 5.3% year on year up to 2014, compared to 4.3% for Scotland GVA growth in Aberdeen City has been above the Scottish rate since 2010 Productivity (GVA per worker) grew by 0.6% year on year up to 2014 - less than in Scotland (1.1%). However, it remains well above the national average Aberdeen City’s GVA per resident is more than twice that of Scotland

Business Trends Aberdeen City’s business base growth in 2015 was below the Scottish rate (5.5% v. 7.3%)-having previously been above it +480 businesses including: professional, scientific & technical (+130), business administration & support services (+125) and arts, entertainment, etc. (+50) 96% of businesses are small or micro (<50 employees), compared to 98% in Scotland 75 businesses employ 250 or more people (0.8% of total) Business density is above the national rate (399 businesses per 10,000 population v. 313) Self employment rate lower than Scotland (7.1% v. 10.8%) The number of businesses in Growth Sectors in 2015 grew by 4% to 5,365. A higher representation than nationally 36% of Aberdeen City employment is in Growth Sectors, higher than in Scotland (28%) Energy and financial and business services businesses account for a large proportion of the Growth Sector total Lower than average share of food and drink sector businesses

Population and Projections Population of 230,350 in 2015 4% of Scotland’s total population Population growth over the year to 2015 (0.6%), very similar to nationally (0.5%) Between 2005 and 2015 total population rose by 10% - twice the rate in Scotland (5%) Aberdeen City population growth includes a large increase in the working age group Population change 2005-2015: Forecast Population Growth 2012-2037: Total population forecast to increase by 28%, over three times that for Scotland (9%) Working age population projected to increase by 19% in contrast to a fall (4%) across Scotland

Workforce Trends Total employment in Aberdeen City = 192,000 (8% of Scottish total) 6.0% increase 2013-2014 Higher increase than across Aberdeen City and Shire region (5.2%), Scotland (3.2%) and Great Britain (2.7%) 44% work in higher level occupations in 2015, slightly higher than Scotland (42%) 83% work in private sector, compared to 77% nationally 24% of the employed population work part time, slightly below Scotland average (26%) 4.2% of employees are in non-permanent jobs (Scotland 5.3%) Note: Data on total employment relates to 2014, having been prepared in advance of 2015 BRES release.

Employment and Unemployment Aberdeen City employment rate is 77%, higher than Scotland (73%) (2015) Vast majority (90%) of Aberdeen City residents work in the local authority area (2011) Almost all others (9% of residents) work in Aberdeenshire The remaining 1% work outside the region - mostly in Angus or City of Edinburgh The unemployment rate is 4% of the economically active working age population, 2ppt lower than the national average (6%) (2015) 89% of 16-19 year olds in Aberdeen City are participating, 1ppt below the Scottish rate. Some 5% are not participating (Scotland 4%) (2016)

Qualifications and Earnings At 48%, a higher proportion of working age adults in Aberdeen City hold SCQF qualifications at levels 7-12 than in Scotland (43%) and in the UK (37%) (2015) Both workplace earnings (£620) and residents’ earnings (£562) are above the Scottish average (2015)

Modern Apprenticeships Schools Modern Apprenticeships Education and Training The secondary school roll in 2015 was 8,753, 3.1% of Scotland total 91% of school leavers enter a positive destination, compared with 92% nationally In 2015/16 MA uptake fell by 5% to 880 3% of national total Hospitality and Tourism most popular MA framework group 21% of uptake Gender parity – 54% female, 46% male 74% MA achievement rate in 2015/16

Further and Higher Education In 2015/16, at North East Scotland College there were 21,475 enrolments 8% of Scotland’s total 79% FE and 21% HE Top three subjects: Full-time: Engineering, Business Admin, Computing & ICT Part-time: Care, Engineering, Languages & ESOL 67% successful completion of FE courses There were over 30,000 students at the three HEIs in the region in 2014/15 Top three subjects: Business & Admin, Subjects Allied to Medicine and Engineering HE/FE data is available at Aberdeen and Aberdeenshire regional level only, comprising Aberdeen City and Aberdeenshire. Data relates to enrolments at FE and HE Institutions in the region, not residents unless otherwise stated. Data provided by SFC and HESA

Jobs and Skills Changes (1) Total employment (jobs) is forecast to fall by 0.1% on average each year from 2016 to 2024, an equivalent rate of 0.2% growth is expected for Scotland as a whole. Within the region, Professional, scientific and technical and administrative and support activities are expected to have growth of 2,600 jobs and 2,100 jobs respectively over the period. Human health and social work (600 jobs) along with the construction and wholesale and retail trade sectors (500 jobs each) are also expected to grow. However such gains will be offset by falling employment within manufacturing and mining. The number of jobs within manufacturing is expected to fall by 5,100 over the forecast period, and those in manufacturing, by 1,400 jobs. Forecast Demand for Jobs (2016-2024) Total Employment Growth Aberdeen City Employment % annual average change Change in total jobs (‘000s), 2016-2024 2002-2015 2016-2024 Note: chart uses total employment (jobs) rather than total employment (people). The former figure will be higher as a person can have more than one job. Source: ONS / Oxford Economics Glasgow

Jobs and Skills Changes (2) Replacement demand will result in 51,000 openings within Aberdeen City over the forecast. Expansion demand is expected to fall by 2,500 between 2016-2024. Together with replacement demand, this will result in 48,500 openings over this period. Openings will be highest in professional occupations, driven by replacement demand. The total requirement for workers in elementary occupations and associate professional and technical occupations is also expected to rise significantly over the 2016-24 period in which the former is expected to experience both expansion and replacement demand. Forecast Demand for Jobs (2016-2024) Notes: table uses total requirement (people) totals may vary from previous slide due to rounding within the body of the table Source: Oxford Economics Glasgow

Implications for Skills Investment Planning

Aberdeen City: Key Implications (1) . Key Labour Market Changes and Dynamics The strong and accelerating employment growth in Aberdeen City between 2010 and 2014 came to an abrupt halt with the fall in global oil prices in 2015. Some 10,500 jobs were lost by 2015, more than 5% of all jobs, and further losses will have been incurred in 2016 that do not yet show in the data. The oil and gas downturn has resulted in 4,300 job losses directly in production, 1,500 in professional, scientific and technical services and 1,200 in construction. This is already affecting services, with 600 fewer jobs in retail, and 1,200 in business administration and support. There are also 2,200 fewer jobs in health, although accommodation and food services jobs increased (+700). There remain some 38,200 employed in production, 21% of all jobs, twice the proportion for Scotland. There are also 25,300 employed in the professional, scientific and technical sector, also twice the Scotland average representation. The health sector is third largest in employment terms. The business base continued to grow in 2015, although for the first time in recent years at a rate below the Scotland average, Output too had been growing strongly, but this too will have reversed. Aberdeen City has a major challenge to diversify and replace lost production sector and related jobs. Glasgow

Aberdeen City: Key Implications (2) . Skills Demand and Supply The population increased by 10% in the decade to 2015, and had been forecast to increase by a further 28% to 2037 before the oil and gas downturn. This level of population growth will put severe pressure on city services and infrastructure. To date, professional occupations and manager/senior officials have been less affected by job losses than associate professionals, administrative and secretarial, skilled trades, care and leisure occupations and operatives. The downturn in the oil and gas sector has far reaching consequences across employment groups. Out of work claimants increased by 75% in the year to May 2016. In all, 38% go into Higher Education and 23% to Further Education from school, similar to the national average. The top MA frameworks in the city strongly reflect services – hospitality & tourism and retail & customer services, followed by construction, health & social care (with sport) and engineering & energy. Glasgow

Aberdeen City: Key Implications (3) . Recommended Areas of Focus Priorities for Aberdeen City include: Replacing lost oil and gas sector jobs: Recent job losses have been both rapid and significant in number and Aberdeen needs to diversify quickly and effectively. A need to look outwards: Aberdeen has a tendency to look inwards, given the oil and gas focus; there is a need for businesses to develop new markets and to internationalise to find alternative competitive strengths. Retaining the skills base: As many of the skills associated with lost oil and gas sector jobs should be retained as possible and transferred where possible. Instilling a culture of employer investment. Employers urgently need to invest and innovate, which includes investment in skills, to increase competitiveness. Continuing to meet the needs of employers. Clearly engineering remains important with a need for even greater competitiveness. Replacement demand is still high, and strongest in professional and elementary occupations, and also in care and in administrative occupations linked to retail and hospitality. A need for flexible provision and pathways. Aberdeen City will need to respond positively to the challenges, with work-based learning routes an important part of this. Glasgow