Item 5 - Skills Advisory Panels Update – Progress on Toolkit Foundations of Productivity People

People Demand for labour: by industry/workplace 275,000 jobs in the area 264,000 employees (11,000 business owners) 174,000 full-time employees; 90,000 part-time Higher proportion of employment in the following broad sectors: Sector Worcestershire % of employee jobs England % of employee jobs Agriculture 1.1 0.6 Manufacturing 12.3 8.1 Motor trades 2.6 1.7 Wholesale 4.9 4.0 Transport & storage 7.5 4.8 Property Arts and recreation 4.5 Source: BRES

People Demand for labour and skills - vacancies Overall 9% of Worcestershire employers recorded having at least one hard to fill vacancy similar to WM and England 22% of all education establishments and 19% health and social work establishments had hard to fill vacancies, followed by 13% of manufacturing companies Among business services and manufacturers, over 40% of all vacancies were related to skills shortages, followed by 35% within education Worcestershire overall had a lower percentage of vacancies related to skills shortages (19%) compared with WM and England (25% and 22%) Hard to fill vacancies (reasons): Quality of applicants 66%; quantity of applicants 44% Low number with required skills – 52% Not enough interested in the type of work – 30% Attitude, motivation – 22% Poor terms and conditions – 15% 2017 Employers skill survey

People Demand for labour and skills – skills gaps Overall 13% of all employers reported skills gaps among the labour force within Worcestershire, in line with the national average At least 20% of all financial services, health and social work establishments, manufacturers and hotels and restaurants recorded having skills gaps. Within financial services, 10% of all staff were reported to be less than proficient Over 30% of all Worcestershire employers reported a mismatch of skills within their organisation (i.e. have qualifications/skills more advanced than required for their current role), marginally less than the national average. Fewer manufacturing (18%) and business service employers (21%) reported underutilised staff – as these employers also experienced the greatest level of skill shortages among the workforce, while over 40% of education providers had underutilised staff.

People Demand for labour and skills – training Over 60% of all employers in Worcestershire provided training in 2017 in line with the regional and national trends Slightly lower average number of days per staff member 2.9 compared with 3.9 nationally; 5.3 for trainees compared with 6.4 nationally Training was particularly high among education, health and social work employers, arts and other services and construction employers Methods of delivery varies by sector with: more off the job training among Construction employers more on the job training in education higher levels of online training and e-learning among ICT and financial service employers

People Demand for labour and skills – Training Future Training In the last 12 months there has been a greater proportion of training in labour intensive occupations and less than average levels of training in high skill occupations compared with other LEPs. Training (reasons given for lack of more training): Lack of funds for training/training expensive – 62% (52% average) Can’t spare more staff time – 47% Hard to find time to organise – 11% Future Training 65% of all Worcestershire employers reported the need for upskilling and training in the next 12 months. Reasons cited include: Introduction of new technologies and equipment (42% of establishments) Development of new products/services (40%) Skills that will need developing include: Digital Skills (48% of employers who anticipate the need for new skills) Adapting to new equipment or materials (45%) Specialist skills or knowledge to perform the role (41%) Knowledge of new products/services (40%) Advanced/Specialist IT (32%)

People Supply of labour: Import and export of labour The area currently has a population of 588,400 (mid 2017) of which 60.1% are working age (353,600), with a slightly lower proportion of young people and higher level of older people compared with the national picture (22.2% compared with 18.2% in GB). The population has increased steadily over the last 20 years – by approximately 9.3% in total. Import and export of labour As shown Worcestershire is a net exporter of labour, with both Bromsgrove and Worcester being net importers of labour. Jobs in the area Working residents Net balance Bromsgrove 61,500* 43,900 17,600 Malvern Hills 31,500 34,100 -2,600 Redditch 38,500 44,000 -5,500 Worcester City 54,500 54,200 300 Wychavon 55,500 67,200 -11,700 Wyre Forest 34,000 49,000 -15,000 Total 275,500 292,400 -16,900

People Economic activity and employment Worcestershire benefits from a high employment rate (78%) and lower levels of unemployment among the resident population (c.3.9% compared with 4.3% for GB), resulting economic activity levels that are consistently higher than the regional and national average (81%, 2018) Variable employment rates within the districts – with the majority staying above the national rate In addition to lower levels of unemployment, the proportion of 16-17 year olds who are not in education, employment or training (NEETs) is also below the national average of 6% at 5.1%, although this represents a slight increase on 2017 when the level stood at 4.7%

People Residents employed by industry: over 25% of all residents are employed in public admin, education and health roles – although this is less than the national average the area has a higher concentration of residents employed in manufacturing roles, construction and in distribution, hotels and restaurants – all above national trends Residents employed by occupation: higher proportion of residents in managerial roles, skilled trades and elementary occupations and approx. 1 in 5 residents employed in professional occupations lower proportion of residents employed in low skill occupations – for example, caring, leisure and other service occupations and sales and customer services

People Supply of Skills Across Worcestershire 87% of schools are rated good or outstanding (89% England), and the percentage of pupils attaining strong passes at KS4 is above the national average (e.g. 42.5% achieve grade 5 or above in English and Maths). However post 16 performance falls below the national average – e.g. average point score per entry of 28.9 (C) compares with 33.3 (C+) for England The area has a relatively high proportion of residents educated to degree level or above (NVQ Level 4+) which is ahead of the WM average but behind the national In contrast, 7.2% of the working age population have no qualifications which is marginally less than 7.8% for GB Within the county there are variations including a high level of NVQ 4 qualifications in Malvern Hills and Wychavon and Bromsgrove and a high level of workers with no qualifications in the City of Worcester

People Vocational Qualifications Across Worcestershire there has been a reduction in the number of apprenticeship starts over the last year, despite the introduction of the Apprenticeship Levy in April 2017. The total number of starts were down from 5580 in 2016/7 to 4070 in 2017/18. This is in line with national trends, accounted for by a large decrease in the number of intermediate starts, a decline in advanced apprenticeships and an increase in higher level starts. The number of achievements has continued to increase and of the 3080 in 2017/18, 51% were intermediate levels, 41% of achievements were Advanced; and 7% were Higher qualifications. Area 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 Bromsgrove 470 460 450 430 410 Malvern Hills 310 360 300 350 Redditch 520 530 500 560 Worcester 580 510 Wychavon 550 570 590 Wyre Forest 540 610 650 Worcestershire 2,730 3,050 2,890 2,940 3,000 3,080 West Midlands 29,620 31,530 31,380 33,270 33,350 34,190 England 250,000 253,500 258,400 269,200 277,800 276,160

People Graduate Retention Comparatively low percentage of students staying to study and work in the area and a correspondingly high number of students who leave to study and do not return LEP Stay for study and employment Leave for study, return for employment Leave for Study, do not return Stay for study, leave for employment Black Country 19.8% 27.0% 43.9% 9.2% Coventry and Warwickshire 17.9% 32.9% 43.5% 5.7% Derby, Derbyshire, Nottingham and Nottinghamshire 28.4% 29.4% 35.4% 6.8% Greater Birmingham and Solihull 24.3% 34.1% 33.6% 8.1% Greater Lincolnshire 22.3% 26.9% 46.0% 4.9% Leicester and Leicestershire 27.2% 30.4% 35.3% 7.1% Stoke-on-Trent and Staffordshire 20.0% 28.8% 45.5% The Marches 4.1% 39.6% 55.2% 1.2% Worcestershire 15.7% 26.3% 52.8% 5.3% National Average 29.3% 34.3% 6.0%

People Workplace and resident earnings Worcestershire has significantly lower workplace earnings than comparator LEPs. Full time weekly pay is approx. £500 compared with over £580 in Coventry and Warwickshire Resident earnings are on the whole, higher or the same across all LEP areas Earnings within Worcestershire also vary with the lowest levels of resident earnings in Wyre Forest at approximately £480 compared with £660 in Bromsgrove The gender pay gap in Worcestershire is currently at 15.0% (median, 12.3% mean), the fourth lowest of all LEP areas. Coventry and Warwickshire LEP has the highest pay gap at 26.7% (mean 22.4%).

People Population projections Over the next 20 years the population in Worcestershire is set to increase by approx. 8%, but at a slower rate than the growth expected for the region and England overall Within the county, population projections are mixed with very little growth expected in Redditch in contrast to Bromsgrove and Wychavon which are both expected to grow by in excess of 10%. Closer analysis of the projections show a shift in Worcestershire’s profile with: further decreases expected in the working age population an increase in the population aged 65+ fluctuations in the level of young people, resulting in a marginal overall net change Source: ONS

People Population projections The working age population in the area is also expected to fluctuate over the next 20 years but with a net decrease by 2041 and a divergence from both the national and regional trends. By 2041, only 54% of the population will be working age, compared with 58% nationally Redditch is expected to see the biggest decrease in working age population, while Worcester and Bromsgrove are set to increase their working age populations Alongside the falling working age population, the proportion of residents aged 65+ is expected to increase significantly. Source: ONS

People Population projections By 2041, approximately 1 in 3 (30%) residents will be aged 65+ compared with 1 in 4 for England – with implications for public sector spending and a range of industries across the area, most notably health and social care The current and projected old age dependency ratio (the number of state pension age residents as a proportion of the working age population) in Worcestershire is well above the England average and increasing There are a number of variations within the area, with much lower levels of old age dependency in Redditch and Worcester compared and above average in all four other districts. By 2041, there will be 2 state pension age residents for every 3 working age residents in Malvern Hills. Source: ONS Population Projections

Summary of key findings

Foundation 2: People good jobs and greater earning power for all Evidence Base Key issues Workforce Increasing old age dependency (particularly Malvern Hills) Falling working age population (60% compared with 63% GB) and lower proportion of young people WAP decreasing at faster rate than national average 53% students leave and do not return to work (national figure 34%) Attraction and retention of young people and graduates Economic activity Strong employment and economic activity rates Low levels of unemployment Skills Good level of higher qualifications 36.5% High % with no qualifications Range of employer skills challenges (9% hard to fill vacancies; 13% skills shortages) – IT; job specific; technical skills; impacts of digitalisation and automation Decrease in apprenticeship starts during 2017/18 but increasing number of higher levels and apprenticeship achievements Focus on low/no skills Reskilling, upskilling (50+) Workforce planning and matching supply and demand Occupations High % of residents in higher level occupations Lower proportion in low skill occupations Earnings Lowest of all comparator LEPs (£500 vs £580 Cov/War) Resident earnings higher than workplace Out-commuting to higher paid jobs Higher value added jobs to reduce out-commuting Priorities: Attraction/retention of YP and graduates; workforce development; upskilling & reskilling

People The wealth generating capacity (GVA per capita) of the WLEP area continues to grow but remains low in relation to comparator LEPs and the national average (83% of UK) Resident earnings much higher than workplace earnings – highlighting the continuing issue of residents commuting out of the area to high paid jobs The ageing population and falling working age population gap is projected to increase Attraction and retention of younger people and graduates – through the provision of high quality, well paid jobs and increased choice and affordability of housing Positive higher level skills performance to be retained – given their importance to improved productivity and wage premia. Focus on low or no skills required to address increasing skills shortages, and up-skilling and re-skilling given the changing demographics and technological change impacting all sectors.