The impact of large scale redundancies in the East of Scotland ESEP Seminar Callendar House, Falkirk 26 November 2003

Objectives to examine the impact of 2 large scale redundancies on the local labour market –Motorola and NEC to present cameo studies of other major redundancies to review the implications for policy makers, and identify possible interventions

Today’s programme Welcome: Gordon McLaren Presentation: John Lord Commentary: Alan McGregor Break Focus groups Feedback and discussion: Alan McGregor Closing remarks: Gordon McLaren Lunch

ESEP labour market service launched January 2002 labour market information service for ESEP and its partners principal output - major annual report:  ad hoc reports and services:  ERDF/ESF-funded community development projects  strategic sector profiles autumn seminars

East of Scotland Programme Area

Presentation policy context: the PACE framework incidence of large scale redundancies case studies: Motorola and NEC –scale and phasing –labour market context –impact on the claimant count –redeployment outcomes cameo studies from the ESEP area

The PACE framework a national framework for local agencies to create effective and flexible mechanisms to identify and respond to redundancy situations precautionary planning and redundancy response local response teams

Incidence of redundancy about 8 employees in a 1,000 (<1%) were made redundant in –but twice that in manufacturing about 13% of employees changed employer in the year to 2001 –mobility greatest among the young, single, people with level 2 qualifications, workers in the private sector (especially small firms) –median job tenure in the UK 4 years

Redundancies per 1000 employees, UK ( ) Redundancy rates are increasing in the manufacturing sector in the UK (1.6%) and falling in the service sector (0.5%)

Losses and gains reported in the press since Jan 2001 LEC areaJobs lostJobs gained Edinburgh & Lothian Fife Forth Valley Grampian Tayside Total ESEP

Motorola and NEC: large site closures Motorola, Bathgate –3100 redundancies –April – December 2001(9 months) NEC, Livingston –1500 redundancies –August 2001 – December 2002 (16 months) total –4600 redundancies –April 2001 – December 2002 (20 months) –most in the year to April 2002

Impact on the West Lothian economy in 2001, there were 69,000 employees in employment –of which 17,000 were in manufacturing the Motorola and NEC closures resulted in 4,600 job losses, equivalent to: –7% of all employment –27% of manufacturing employment

Workforce characteristics: Motorola –2/3 male –2/3 aged –2/3 semi-skilled/process workers –90% employed for 3 years + –21% qualified to L4 or over, 25% L3 –…43% no post-school qualifications –motivated and able workforce –high productivity/quality environment –culture of training and development

Workforce characteristics: NEC –2/3 male –78% aged –36% operatives, 21% technicians, 17% engineers –75% employed for 3 years + –21% qualified to L4 or over, 21% L3 –…46% no post-school qualifications –motivated and able workforce –high productivity/quality environment –culture of training and development

Where employees came from Lothian 1650 (36%) Other 1190 (26%) Lanarkshire 1750 (38%) N Lanarkshire 1220 (27%) W Lothian 1420 (31%) of which local people 2640 (58%)

Residents working in manufacturing as % of all employees

Impact on West Lothian residents 1,420 West Lothian residents were made redundant in 2001, there were 82,000 West Lothian residents in employment –of whom 16,000 were in manufacturing the scale of redundancies was equivalent to: –1.7% of all West Lothian residents in employment –8.9% of those employed in manufacturing

Impact on North Lanarkshire residents 1,220 North Lanarkshire residents were made redundant in 2001, there were 144,000 North Lanarkshire residents in employment –of whom 22,000 were in manufacturing the scale of redundancies was equivalent to: –0.8% of all North Lan residents in employment –5.5% of those employed in manufacturing

Redundancies relative to claimant count stocks between April 2001and Dec 2002, the average number of claimants in each area was: –West Lothian: redundancies = 47% of claimants –North Lanarkshire: redundancies = 16% of claimants

Redundancy phasing

Redundancies by local authority

Redundancies per month relative to claimant count stocks

Claimant count stock

Claimant count rate index scale Feb 2000=100

Claimant count on-flow

Claimant count off-flows

West Lothian redundant residents relative to on-flow

North Lanarkshire redundant residents relative to on-flow

Proportion claiming 6+ months leaving count for work (%)

Proportion claiming 12+ months leaving count for work (%)

Local impacts of the Motorola and NEC closures: summing up 4,600 jobs lost in West Lothian –most in the year to April ,600 local people (WL/NL) lost jobs some impact (?) on total claimant count relative to Scotland –but a quick recovery no discernible shock in flows on and off –but proportion of LTU leaving count for work has fallen in West Lothian

Redeployment outcomes: Motorola after 6-9 months: –63% employed/self-employed –6% in FE/training –7% not seeking work –24% unemployed after 12 months: –83% employed –5% unemployed

Redeployment outcomes: NEC after 6-12 months: –80% employed/self-employed –7% in FE/training –5% not seeking work –8% unemployed

Employment outcomes analysed older workers find it harder to get a new job some transfer from full-time to part-time work –especially women a clear majority are now earning less –68% ex Motorola, 69% ex NEC people have had to acquire new skills –and switch to different industries time makes a difference –redeployment rates improve after 6 months

Cameo studies Longannet, Fife BP, Grangemouth Grampian Foods, Edinburgh Levi Strauss, Dundee

Longannet Colliery 450 redundancies: Nov 2001 – March 2002 some mining engineers, mostly semi- skilled manual large majority male wide labour market catchment, but focus on Fife/Forth Valley

Longannet: the outcome one year on: –65% in work or training –4% claiming JSA –20% claiming other benefits –15% retired, moved away limited information on destinations: –supermarkets, bus drivers, manufacturing

BP, Grangemouth 1,000 redundancies in 2 phases, starting end November released to date remainder to leave by end 2004 process workers and skilled trades most live locally 30% aged 45+

BP: progress to date of the 650 released to date: –17% redeployed by BP –49% retired –19% in employment –4% started a business –2% in FE

Grampian Foods, Lothian 550 redundancies May 2002 – Feb 2003 workforce deemed high risk 51% aged % lived in Lothian

Grampian Foods: the outcome 61% response to tracking exercise –84% employed –10% inactive –5% unemployed –33% earning higher wages; 47% earning less

Levi Strauss, Dundee 460 employees –41% response rate very stable workforce: 93% employed for 5 years+, 20% for 20 years+ 59% live in a SIP postcode

Levi’s: one year on 83% employed –most people in different occupations –a lot of churn over 12 months –more were in part-time occupations –average earnings sharply down 3% unemployed

The impact of large scale redundancies in the East of Scotland ESEP Seminar Callendar House, Falkirk 26 November 2003

Local impacts of redundancies: the historical record where the employment base is more specialised… –redundancy may affect a higher proportion of the employment base –resulting in sustained higher levels of unemployment –…and population loss, especially among the young and more skilled –causing difficulties in attracting new employers

Redundancies in large integrated labour markets effects dispersed across the labour market localised impacts difficult to see a few years down the road

Other factors affecting local impacts state of the local labour market characteristics of the employer characteristics of the redundant workers

The impact of large scale redundancies in the East of Scotland ESEP Seminar Callendar House, Falkirk 26 November 2003