Overview of North East Strategic Economic Plan (SEP) and labour market Victoria Sutherland, Senior Economist DurhamWorks LMI Event 20 September 2017

North East Strategic Economic Plan (SEP)

North East Strategic Economic Plan North East LEP published refreshed Strategic Economic Plan in March 2017 Overall ambition is to generate ‘more and better jobs’ 6 targets to 2024 Increase the number of jobs in the North East economy by 100,000 70% of all jobs created will be better jobs Reduce the gap in the economic activity rate for people aged 16-64 with England excluding London by 50% Close the gap in the employment rate for people aged 16-64 with England excluding London Reduce the gap in private sector employment density with England excluding London by 50% Reduce the gap in GVA per FTE with England excluding London by 50%

North East Strategic Economic Plan (cont.) SEP identifies four areas of opportunity that provide distinctive growth opportunities for the North East Tech North East – Driving a digital surge Making the North East’s Future – Automotive and medicines advanced manufacturing Health Quest North East – Innovation in health and life sciences Energy North East – Excellence in subsea, offshore and energy technologies Also identifies three enabling services that support the wider economy and offer opportunities for the delivery of more and better jobs in the North East Education Financial, professional and business services (FPBS) Transport and logistics

North East Strategic Economic Plan (cont.) 6 programmes of delivery Supporting innovation Business growth and access to finance Skills Employability and inclusion Economic assets and infrastructure Transport and digital connectivity

Labour demand in North East

Employment in North East Using BRES measure 811,000 in employment in North East LEP area Equivalent to 652 jobs for each 1,000 working age residents If North East LEP had same employment density as England, would have additional 120,000 jobs Largest employing sectors in North East LEP area Human health and social work activities (15.0%) Wholesale and retail (14.2%) Education (10.6%) These are also largest employers at national (England) level Employment is higher than across England as a whole in Public administration and defence (6.6% vs. 4.0%) Manufacturing (11.4% vs. 8.0%) Human health and social work (15.0% vs. 12.5%) Education (10.6% vs. 9.0%) Accommodation and food service activities (7.7% vs. 7.0%)

Employment by sector (% of total), 2015

Employment in North East (cont.) Most common occupations in North East LEP area Professional occupations (17.8%) Associate professional and technical occupations (12.4%) Elementary occupations (12.1%) Skilled trades occupations (11.4%) Compared to England, North East LEP area overrepresented in Sales and customer service occupations (9.8% vs. 7.4%) Process, plant and machine operatives (7.8% vs. 6.4%) Elementary occupations (12.1% vs. 10.7%) Skilled trades occupations (11.4% vs. 10.2%) Compared to England, North East LEP area underrepresented in Managers, directors and senior officials (8.1% vs. 10.9%) Associate professional and technical occupations (12.4% vs. 14.6%) Professional occupations (17.8% vs. 20.4%)

Employment by occupation (% of total), 2015

Employment projections UK Commission for Employment and Skills forecasts future labour requirements Most recent projections published in 2016 for period 2014-2024 Employment projections by sector Decrease in manufacturing employment Increase in services employment Employment projections by occupation Declines in operative, administrative and secretarial and skilled trades Largest increases in managers, professionals and associate professional and technical … but most job openings will relate to replacement demand … and policy interventions (like those outlined in SEP) can lead to different outcomes

Annual average percentage employment change by sector, 2014-2024

Annual average percentage employment change by occupation, 2014-2024

Job openings by occupation (000s), North East, 2014-2024

Labour supply in North East

Labour market participation 76.1% of working age population in North East LEP area were economically active in 2016 70.9% were in employment 6.8% were unemployed Remaining 23.9% were economically inactive North East LEP area underperforms England as a whole with Lower economic activity and employment rates Higher unemployment and economic inactivity rates Economic activity and employment rates increase with age – peaking amongst 35-49 age band Gap in performance between North East LEP and England is particularly large in 50-64 population Unemployment rates decrease with age

Skills and qualifications Compared to England as a whole, North East LEP working age population are More likely to have no or low or intermediate level skills Less likely to have higher level qualifications North East LEP employers tend to have fewer staff qualified to Level 4 or above

Highest qualifications (% of those in age band), NVQ levels, 16-64 population, 2016

Commuting patterns across North East North East LEP area is relatively self-contained labour market Majority of residents work in area Majority of jobs in area taken by residents Between 41% and 58% of residents work in local authority area where they are resident Majority of rest are employed in one of the other local authority areas within North East LEP area Main exception is County Durham – with 7.7% of residents working in Tees Valley Between 42% and 78% of jobs in each local authority area are filled by residents of that area

County Durham labour market

County Durham labour market Broadly similar to North East LEP or North East as a whole Fewer jobs Employment in County Durham was 176,000 Equivalent to 537 jobs per 1,000 working age population Key sectors in County Durham are same as those across North East LEP area (although in different order) Wholesale and retail (14.9% of employment) Manufacturing (14.4%) Human health and social work (14.2%) Education (13.1%) County Durham has similar qualifications profile to NELEP

County Durham labour market (cont.) 56% of County Durham residents work in County Durham 16% work from home, no fixed work place or offshore 7% work in Sunderland 5% work in Gateshead 4% work in Newcastle 4% work in Darlington 78% of jobs in County Durham are taken by County Durham residents 6% taken by Sunderland residents

Thank you