Regional Skills Assessments West Lothian December 2016 Glasgow

Introduction An Introduction to Regional Skills Assessments (RSAs) Key Data for the West Lothian region Implications for Skills Investment Planning

An Introduction to RSAs

What are RSAs? 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 (SLAED) Group. 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 regional strengths and any issues or mismatches arising, and so inform thinking about future planning and investment at a regional level. 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 RSAs cover? Economic Performance, Profile of the Workforce, People and Skills, Education and Training (MAs, Schools), 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

West Lothian Overview The historic decline in production and agriculture has been offset by increases in sectors such as retail, construction, life sciences and electronics Some large employers and household names such as BSkyB, Tesco and Johnson & Johnson Medical Despite an overall picture of positive economic trends and a strengthening labour market, there are pockets of persistent deprivation Benefits from its location and transport links to Edinburgh and other parts of the Central Belt

Business Trends The rate of growth of the business base in West Lothian is positive at 8%, above the Scottish rate (7.3%) (2014 – 2015) 305 new businesses in 2015 concentrated in Professional, scientific and technical and Business, admin and support services. Low levels of self employment (6%) Low business density with 238 enterprises per 10,000 population (313 nationally) Very high business investment in R&D at £683 per head of population (£169 nationally and £309 UK wide) (2014) 98% of businesses are small or micro (<50 employees). 15 employ 250+ people The number of businesses in Growth Sectors increased in the year by 6% but at 42%, is lower than the national figure (46%) (2015) Greater proportion of West Lothian’s Growth Sector businesses are in Finance and businesses services and Creative industries (Including ICT) than nationally. Food and drink is below the national average (9% v. 22%) 18% of total employment is in Growth Sector businesses (compared to 28% nationally)

Sector Trends and Specialisms Very limited group of sectors in high representation and high growth quadrant, albeit with recent employment growth Strong group of important sectors with static or modest employment growth Major specialisms of information and communication and wholesale have recorded significant employment decline Note: SIC Section A: Agriculture, Forestry and Fishing omitted as data for farm agriculture (SIC subclass 01000) is not available sub-nationally Click here for explanation: Explanation of Sector Trends and Specialism diagram

Population and Projections Population of 178,550 Growing faster than nationally 3.3% of Scotland’s total population A slight increase in the population over the year (0.8%) - national growth was 0.5% (2014-15) Population change 2005-2015: Largely driven by growth in the 65+ age group, Over the past ten years 2005-2015, population has increased by 8% compared to 5% nationally Forecast Population Growth, 2014-2037 Reflecting the national picture, West Lothian is expected to have a growing and ageing population But working age population is anticipated to fall by 4%, the same as national projections. Dependency ratios will therefore increase in the region as with Scotland and the UK.

Employment and Travel to Work 73% of working age residents are in employment, mirroring Scotland’s employment rate 59% of residents work within home LA, whilst 41% travel to employment elsewhere High levels of commuting in to and out of the region to work Key destination for out-commuting is Edinburgh Please note, location of employment figures exclude those working outside the UK, on offshore installations or with no fixed place of work

Workforce Trends Total employment in West Lothian = 78,200 accounting for 3% of Scotland’s employed workforce From 2013 to 2014, employment increased by 7%, exceeding the 3.2% increase in Scotland as a whole and 2.7% GB wide. 40% work in higher level occupations (2015) Slightly below Scotland average (42%) but a 2pp increase on the previous year 81% work in private sector, compared to 77% nationally 22% of the employed population work part time with the percentage fluctuating between 20% and 26% over the past ten years 4.2% are in non-permanent employment, below the proportion for Scotland (5.3%) Note: Data on total employment relates to 2014, having been prepared in advance of 2015 BRES release.

Unemployment and Participation Unemployment rate is 7% of the working age population and is above the UK (5%) and Scotland average (6%). It is currently above pre-recession levels. 90% of young people aged 16-19 in West Lothian are participating, slightly below the Scottish rate of 90.4%. The same proportion in West Lothian (4%) are not participating as nationally. The remainder are unconfirmed. Unemployment in the region increased by 1.4ppts whilst nationally it declined (-0.4ppts) from 2014 to 2015. Unemployment measure = ILO definition, i.e. those who are available for and actively seeking work Unemployment rate: Unemployed as a percentage of the economically active population

Qualifications and Skills An increasingly highly qualified workforce 2005 – 2015: There has been a steady upwards trend in the proportion of adults with SCQF levels 7 and above The proportion of working age adults with SCQF qualifications levels 7-12 increased by 2pp (2014-15), the same rate as Scotland. At 37%, a lower proportion of working age adults hold SCQF qualifications at levels 7-12 than in Scotland (43%) West Lothian is in line with the UK wide average

Skills Mismatches 52% of employers in West Lothian have recruited staff over the past year (2015) Proportion of the workforce with a skills gap is lower than national (4% compared to 5%) Hard to fill vacancies account for 1.0% of the workforce and skills shortage vacancies account for 0.8% of the workforce. West Lothian employers are more likely to report skills gaps Skills gaps most prevalent in skilled trades 63% of employers with skills gaps say it impacts on the business

Modern Apprenticeships Schools Modern Apprenticeships Education and Training The secondary school roll in 2015 was 10,835, 3.9% of Scotland total 92% school leavers had a positive destination in 2015, in line with the national trend Modern Apprenticeship (MA) uptake increased by 7%, from 2014/15 3% of national total in 2015/16 Construction most popular MA framework group 16% of uptake Gender segregated course, 100% male 77% MA achievement rate in 2015/16

Further and Higher Education In 2015/16, at West Lothian College there were 7,025 enrolments 3% of Scotland’s total 69% FE and 31% HE Top three subjects: Full-time: Care, Engineering, Hairdressing, beauty and comp therapies Part-time: Business & admin, Care, Special programmes 64% successful completion of FE courses There were 185 students at the one HEI, SRUC Oatridge, in the region in 2014/15 Top three subjects: Veterinary Sciences & Agriculture, Physical Sciences, Architecture, Building and Planning HE/FE data is available at regional level only. Data relates to enrolments at FE and HE Institutions in the region, not residents unless otherwise stated. Data provided by SFC and HESA

Workforce Growth In line with the majority of regions, the size of the working age population is expected to fall over the period to 2037 Over 4,500 fewer people of working age, so reducing the scope to raise GVA through an increase in the number of people in work Challenge is to ensure the pipeline of skilled labour that employers need as older workers retire and their skills are lost to the labour market Despite this, West Lothian is forecast to have the third highest level of employment growth in Scotland 2016-2024 (1.6% v. 1.0% nationally). This equates to an additional 1,100 people in employment This is in contrast to a decline in West Lothian from 2006 to 2016. The number of people in employment fell by 4,200 (-5.4%). Note: analysis uses total employment (people) rather than total employment (jobs). The former figure will be higher as a person can have more than one job. With a fall in the workforce, improving productivity will be the key determining factor in increasing economic prosperity

Jobs and Skills Changes (1) Total employment (jobs) is forecast to grow by 0.3% per year on average over 2016-2024, marginally ahead of the Scottish average of 0.2%. This is equivalent to the creation of 2,300 additional jobs in the area by 2024. Construction and administrative & support activities are expected to account for the majority of new jobs (1,700) in the area over the forecast. The professional, technical & scientific activities sector is also expected to experience growth, creating 500 jobs. By contrast, manufacturing is expected to continue to decline with the loss of 900 jobs by 2024. Public administration and education jobs are also expected to experience job losses of 300 & 100 respectively by 2024. Forecast Demand for Jobs (2016-2024) Total Employment Growth West Lothian 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) West Lothian’s occupational mix is highly concentrated in process, plant & machine operatives relative to the Scottish average. Modest growth is expected across nearly all of West Lothian’s occupational groupings with the exception of process, plant and machine operatives, with a decline (100 people) over the forecast period 2016-2024. The biggest increases are expected in elementary occupations. Professional and caring, leisure and other service occupations are also to increase over the forecast (200 people each). Forecast Changes in Occupational Demand West Lothian Employment Change in number of workers (‘000s), 2016-2024 Note: chart uses total employment (people). Source: Oxford Economics ‘000s Glasgow

Jobs and Skills Changes (3) The majority of openings in West Lothian over the forecast, will require individuals with higher level qualifications, in part a consequence of the expected growth within the professional services sector. Individuals qualified to SCQF level 7 or above will account for over 50% of the 30,900 openings expected between 2016 and 2024. Of this, over 6% will require postgraduate level qualifications at SCQF level 11-12. The remaining opportunities available will mainly be for individuals qualified to level 5/6, equivalent to 37% of openings over the forecast period. There will be limited demand for those with qualifications below this level. Forecast employment change by Qualification (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

Jobs and Skills Changes (4) Replacement demand will result in over 29,500 openings within West Lothian region over the forecast period. These openings will occur across all types of occupations including those that are expected to decline in net terms. Expansion demand is expected to result in 1,200 openings between 2016-2024. However together with replacement demand, will result in 30,700 openings over this period. Openings will be highest within professional and elementary occupations. Combined these will account for over 40% of openings in the region. They each are expected to experience both expansion and replacement demand over the forecast. 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

West Lothian: Key Implications (1) . Recommended Areas of Focus Increasing the number of local jobs. There are 3,000 fewer jobs in the region than in 2009, and despite future employment growth forecasts, there were job losses rather than gains in 2015. There is a need to galvanise new job creation and business growth in the region. Meet the needs of professional service sectors and occupations. These are forecast to grow, and higher level skills will be needed in the region, including those in the strong information and communications sector. There is a need for the region to remain competitive, given the dominance of neighbouring Edinburgh. Engender more enterprise and business growth. One route to new job creation is more business start-up and growth. Although business birth rates increased in 2013 and 2014 they lag the Scotland rate. Self-employment rates are well below average and traditional employment is more the norm. Creating a culture of employer investment. Employers continue to need to be encouraged to invest and innovate, including skills investment. There will continue to be extreme competitive pressures in manufacturing, as well as services, that will demand high levels of business innovation and a skilled workforce. Glasgow

West Lothian: Key Implications (2) . Recommended Areas of Focus Sectorally, there is a need to meet the needs of employers (1). There are key sectors and occupations in the regional economy where growth and replacement demand is strong, including construction and skilled trades. Construction is forecast to grow in West Lothian. These require work-based learning routes into, and upwards, within sectors. Sectorally, there is a need to meet the needs of employers (2). The business administration and support services sector is strong in the region, including back office functions for Edinburgh-based firms. Strong replacement demand in administration, sales and customer service will need to be met. A need to meet the needs of the growing (and ageing ) population. The health and social care sector is an important sector, and the growing ageing population in the region will have care needs that will need to be met over time. Whilst there is good skills activity in the region, the ageing demographic will further increase demand. Glasgow

West Lothian: Key Implications (3) . Recommended Areas of Focus A need for progression routes and pathways. Demand for skills in the region is strongest at the upper and lower skills levels – professional and elementary occupations – and so progression to upper skills levels needs to be engendered and facilitated. A need to increase the pool of labour and to reduce inequality. There are emerging inequalities in the region, and there is a need to ensure that some groups do not become distanced from the labour market, or become entrenched in low pay sectors with limited progression opportunities. A need for flexible provision. Non-permanent employment is increasingly a feature of the Scotland economy and more of the future jobs are expected to be part-time. Non traditional employment also means less conventional career paths, and movement between sectors. Skills provision must be equally flexible, with work-based learning a feature of this. Glasgow

Explanation of Sector Trends and Specialism diagram The Sector Growth diagram allows three pieces of sector information to be displayed, providing a useful overview of the local economy. The diagram includes: Sector size (in terms of employment) – shown through the relative size of the dot representing the sector. Sector concentration relative to the Scottish average – The level of concentration is illustrated on the vertical axis through the Location Quotient. The Location Quotient is a measure of the concentration of industry in an area compared to the national average. It produces an index whereby a score of 1 indicates the industry employment concentration is the same both in the local area and nationally, more than 1 represents a higher concentration and less than 1 a lower concentration. Sector average annual growth rate – The horizontal axis shows the average annual employment growth rate of each sector over the past five year period. The diagram includes four quadrants: Top right quadrant - sectors that have shown employment growth and are more highly concentrated in the local area than the national average Bottom right quadrant – sectors that have shown employment growth but are less highly concentrated in the local area than the national average Top left quadrant – sectors that sectors that have shown employment decline and are more highly concentrated in the local area than the national average Bottom left quadrant - sectors that sectors that have shown employment decline and are less highly concentrated in the local area than the national average Click here to go back to the main presentation: Sector Trends and Specialisms