LEEDS CITY REGION LABOUR MARKET ANALYSIS 2018: OVERVIEW OF KEY MESSAGES

Pipeline of Talent How we’re closing the skills gap APPRENTICESHIPS: work with FE and HE to increase higher and degree apprenticeships; support businesses post reforms; and provide Apprenticeship Grants for Employers who employ their first apprentice. ENTERPRISE IN EDUCATION: support strategic links between employers and secondary schools to increase employer engagement and raise aspirations of future workplace opportunities. ATTRACTING TALENT: Discover Digital campaign which promotes digital careers in the Leeds City Region. WORKFORCE DEVELOPMENT: West Yorkshire Consortium of Colleges Skills Service supports SMEs to upskill staff. LABOUR MARKET INFORMATION: Share LMI with training providers, FE, HE to direct provision and support curriculum development. CAREER CHANGES: [re]boot initiative to support people to re-train and access careers in key sectors including digital. DELIVERY AGREEMENTS: Unique partnership with West Yorkshire colleges to realign £56m pa of Adult Education Budget spend with economic priorities. IN-WORK PROGRESSION: Career Learning Pilot and ESIF funded provision to support and address low pay and in-work progression. CAREERS CAMPAIGNS: #futuregoals campaign to raise awareness of careers within key sectors, inspiring careers choices and school resources.

Outline of the presentation Background to the labour market analysis Context: why skills are important Selected key messages around: Demand for skills Supply of skills Mismatches Conclusions

Why do we analyse the labour market? Support strategy and policy development, address market failure; measure progress against our priorities Demonstrate to sponsors the evidence base for our interventions Influence local learning provision in line with labour market demand Inform careers choice by providing information on labour market opportunities Inform action by local employers to address the skill needs of business.

CONTEXT: WHY SKILLS ARE IMPORTANT TO THE LOCAL ECONOMY

The City Region has seen a widening productivity gap with the UK average Figure: Nominal output (GVA) per hour worked (£) Productivity in the City Region is only 86% of UK average, as compared with 91% a decade previously Source: ONS, Sub-regional Productivity

There is a strong correlation between skills and productivity performance at LEP level Figure: High level qualifications and productivity by LEP area Source: Annual Population Survey; ONS LEP level estimates of productivity

Lower proportions of workers in high skilled occupations in important sectors helps to explain low levels of productivity in City Region Figure: Proportion of the sectoral workforce in higher skilled occupations Source: Annual Population Survey, workplace analysis, Jan – Dec 2017 Note: Higher skilled occupations are SOC major groups 1-3; managers, professionals and associates professional / technical

23 per cent of jobs pay below the LWF Living Wage across the City Region Figure: % of employee jobs paying below the living wage (as defined by the LWF), 2017 2017 LWF Living Wage rate: £8.45 Source: Annual Survey of Hours and Earnings 2017 Note: Workplace-based

Skills deprivation is most prevalent in Barnsley, Bradford and Wakefield Figure: Proportion of neighbourhoods in 10% most deprived nationally by domain of deprivation Leeds City Region is ranked fifth out of 39 LEP areas in terms of % of neighbourhoods that fall among most deprived nationally on education training and skills Source: Department of Communities and Local Government, Index of Multiple Deprivation Note: The Education, Skills and Training Domain measures the lack of attainment and skills in the local population.

Neighbourhoods with the worst overall deprivation tend to also face skills deprivation Neighbourhoods falling into 10% most deprived nationally in City Region Overall deprivation Education, skills and training Source: Department of Communities and Local Government, Index of Multiple Deprivation

WHAT SKILLS ARE NEEDED, NOW AND IN THE FUTURE?

Overall demand for labour continues to strengthen Figure: Trend in employment level and rate (% of working age population) Leeds City Region Source: Annual Population Survey

Main sources of demand are higher skilled occupations and lower skilled caring occupations Figure: Trends in occupational employment, Leeds City Region Source: Annual Population Survey and Annual Survey Hours and Earnings, 2017 Note: Pay data is for Yorkshire and the Humber; bubble size reflects employment level in each occupation

Variety of occupational areas represented among jobs with greatest recruitment need Figure: Top occupations in greatest demand overall, Leeds City Region, August 2017 to July 2018 Source: Labour Insight Note: Analysis limited to management, professional and associate professional occupations

Communication is the most widespread “baseline” skill requirement Figure: Top “baseline” skill types in greatest demand in three priority areas, Leeds City Region, August 2017 to July 2018 Source: Labour Insight Note: Analysis limited to management, professional and associate professional occupations

Online job postings suggest that demand is greatest for digital workers Figure: Top occupations in greatest demand in three priority skill areas, Leeds City Region, August 2017 to July 2018 Source: Labour Insight Note: Analysis limited to management, professional and associate professional occupations

Skills like project management and teamwork / collaboration feature alongside core technical skills as the most in-demand Figure: Top specialised skill types in greatest demand in three priority areas, Leeds City Region, August 2017 to July 2018 Source: Labour Insight Note: Analysis limited to management, professional and associate professional occupations

Priority skill areas have differing exposure to automation % of employment at high risk of automation by priority skill area, Leeds City Region Estimates based on Frey and Osborne analysis, 34 per cent of jobs in City Region are at high risk over next 20 years, similar to national average – equates to 430,000 jobs Source: LEP estimates based on Frey and Osborne (2013) and EMSI

Routine and lower-skilled occupations are at greatest risk of automation in City Region % of employment at high risk of automation by occupational category, Leeds City Region Source: LEP estimates based on Frey and Osborne (2013) and EMSI

Across wider economy agriculture, hospitality, distribution and manufacturing at greatest risk % of employment at high risk of automation by industry sector, Leeds City Region Source: LEP estimates based on Frey and Osborne (2013) and EMSI

WHAT SKILLS ARE AVAILABLE AND WHAT IS BEING PROVIDED THROUGH THE LOCAL LEARNING SYSTEM?

2017 saw an improvement in % qualified at level 4 and above Profile of highest qualification held by working age (16-64) population by district, Leeds City Region residents Source: Annual Population Survey, Jan – Dec 2017

Qualification profile is highly variable at district level Profile of highest qualification held by working age (16-64) population by district, Leeds City Region residents Source: Annual Population Survey, Jan – Dec 2017

Participation in FE and Skills programmes continues to fall Participation on FE and Skills programmes, Leeds City Region Source: Department for Education

Apprenticeship starts declined by 3 per cent in 2016/17 following two years of growth Figure: Trend in apprenticeship starts, Leeds City Region Source: Education and Skills Funding Agency

Intermediate and young (<25 years) apprenticeship starts fell Figure: change in apprenticeship starts between 2015/16 and 2016/17 by type, Leeds City Region Source: Education and Skills Funding Agency

Engineer and construction starts fell but ICT remained steady Figure: Trend in apprenticeship starts, Leeds City Region Source: Education and Skills Funding Agency

Apprenticeship achievement rates remain similar to national average but with variations between apprenticeship types Figure: Overall achievement rates by apprenticeship type, 2016/17 Source: Education and Skills Funding Agency

Disadvantaged pupils are less likely to participate in apprenticeships Figure: % of pupils entering apprenticeships following completion of key stage 4 Source: Department for Education. 2015/16 destinations for the 2014/15 cohort (state-funded mainstream schools)

There has been a reduction in HE qualifiers in priority subjects Figure: Number of qualifiers by subject area from Leeds City Region HEIs Engineering and technology saw growth in qualifiers but computer science and built environment subjects both declined Source: Source: Higher Education Statistics Agency Note: UK domiciled students only

Disadvantaged pupils less likely to participate in higher education Figure: % of pupils entering higher education by free school meal status Source: Department for Education

Many employers would like to invest more in skills Figure: Training equilibrium summary, Leeds City Region 65% Train 35% Don’t train 41% wanted to train more 54% do sufficient training Don’t know 5% 28% wanted to train more 72% no training needed All employers 59% in training equilibrium 41% wanted to undertake more training Source: Employer Skills Survey 2017. Base: all establishments in Leeds City Region (3,943)

WHAT ARE THE AREAS OF SKILLS MISMATCH

Shortages most acute in primary, construction and manufacturing Figure: Density of skill shortage vacancies by industry sector, Leeds City Region Source: Employer Skills Survey 2017 Note: Density measure shows skill-shortage vacancies as a proportion of all vacancies

And in professional, skilled trades and machine operative occupations Figure: Density of skill shortage vacancies by occupational major group, Leeds City Region Source: Employer Skills Survey 2017 Note: Density measure shows skill-shortage vacancies as a proportion of all vacancies

Digital and engineering professionals face acute shortages Figure: Occupational minor groups with highest density of skill shortage vacancies, Yorkshire and the Humber Source: Employer Skills Survey 2017 Note: Density measure shows skill-shortage vacancies as a proportion of all vacancies

Admin and sales and customer service staff most prone to skills gaps – but managers also affected Figure: Incidence of skills gaps by occupational major group Source: Employer Skills Survey 2017 Note: incidence measure shows the % of employers skills gap(s) who report a gap in a given occupation.

Operational, analytical and digital skills need to be improved to address technical skills gaps Figure: Technical / practical skills that need improving in occupations with skills gaps Source: Employer Skills Survey 2017 Base: All skills gaps followed up

Self-management, management and leadership and sales / customer service are key areas for soft skills deficits Figure: Soft / people skills that need improving in occupations with skills gaps Source: Employer Skills Survey 2017 Base: All skills gaps followed up

Financial services prone to skills gaps in City Region Figure: Density of skills gaps by industry sector Source: Employer Skills Survey 2017 Note: density measure shows skills gaps as proportion of total employment in each sector.

Mismatches in profile of HE and local market demand Figure: Comparison of profile of HE achievements versus projected job openings in related occupations, Leeds City Region Source: HESA achievements data for 2016/17; Working Futures

Nonetheless many workers in medium / lower skilled roles are notionally over-qualified for their job Figure: Medium and lower-skilled occupations with the greatest proportion of workers (aged 25+) qualified at level 4+; Yorkshire and the Humber 11% of workers in region are high qualified but employed in medium / lower skilled occupations Source: Labour Force Survey, Oct – Dec 2017

Brexit poses potential labour supply challenges Figure: Occupations with the highest level of EU migrant employment, Yorkshire and the Humber Source: Labour Force Survey, Oct – Dec 2017

Conclusions 1 Priorities Digital, engineering / manufacturing and construction confirmed as skills priorities Project management, team working and collaboration and budget management skills important General need to maintain supply of people with high level skills across most areas including health, business etc but less evidence of market failure Management skills gaps a key priority in view of business performance and productivity context Considerable recruitment need for care roles – less about skills deficit than general attractiveness of these roles Replacement need across all occupations, some of which face acute shortages currently – but what are longer term prospects for young people?

Conclusions 2 Issues Higher apprenticeships key element of response to rapidly changing higher level skill needs but current availability is limited Does local skills system have capacity to respond to reskilling challenge presented by automation? Impact of Brexit on labour supply could also stimulate demand for workforce development support Progress on graduate retention relies on increase in demand for high level skills in the local economy Ensuring that investment in high level skills generates best economic returns Improved outreach mechanisms key to increasing the contribution of skills development to inclusive growth