Regional Skills Assessment 2016

Regional Skills Assessment 2016
Highlands & Islands comprising Argyll & Bute, Moray, Highland, Eilean Siar, Shetland and Orkney OK Glasgow

Contents Section 1: Introducing the Regional Skills Assessments (RSAs)
Section 2: National Policy Context Section 3: The National Economic and Skills Context Section 4: The Highlands & Islands in Context Section 5: Economic Performance of the Highlands & Islands Section 6: The Highlands & Islands Region Business Base Section 7: Where are the jobs in the Highlands & Islands Section 8: The People of the Highlands & Islands Section 9: The Highlands & Islands Labour Market Section 10: Skills Challenges in the Highlands & Islands Section 11: Schools numbers and destinations in the Highlands & Islands Section 12: Skills Provision in the Highlands & Islands Section 13: College Activity Section14: University Provision Section 15: How are Skills and Jobs Likely to Change? Section 16: What are the key implications for the Region? Glasgow

1. Introducing the RSAs In this section:
What are Regional Skills Assessments (RSAs)? What is not covered by the RSAs? Other sources of useful information Glasgow

The 2016 Regional Skills Assessments
Regional Skills Assessments provide a coherent evidence base on which to base future investment in skills, built up from existing datasets Their purpose is to: Support Scottish Funding Council (SFC), Regional Colleges, Strategic Bodies and College Boards in negotiating Regional Outcome Agreements (ROAs) for Academic Years Provide a framework for aligning SDS investment in individuals and businesses. Assist partners in planning their strategic investment in skills. Support wider public and private investment propositions. Glasgow

The 2016 Regional Skills Assessments
RSAs are developed by Skills Development Scotland (SDS) in partnership with Highlands & Islands Enterprise (HIE), Scottish Enterprise (SE), the Scottish Funding Council (SFC) and the Scottish Local Authorities Economic Development (SLAED) Group. They cover demand for skills, supply of people and skills, skills provision and skills challenges... ….and include employment and GVA forecasts and trends to help identify future skills needs. RSA cover: Regional performance and characteristics Trends over time How does the region compare to Scotland High level implications for skills planning Provide a data matrix to allow further analysis RSAs do not: Answer every question... however can be used alongside data matrix and other national and local intelligence Tell partners what they should do – although RSAs are designed to support making better informed decisions Glasgow

RSA data sources and coverage
The Regional Skills Assessments are underpinned by the 2016 data matrix of 7 workbooks, containing data on 117 social and economic indicators. With data at 3 spatial levels: Regional Outcome Agreement areas; City Region Deal; Local Authority – with Scotland and GB/UK comparators where available 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). No primary research is involved. The data matrix is found here: The data matrix including a full user guide is available at: do/partnerships/regional-skills-assessments Data Matrix sources include: Annual Population Survey Business Register Employment Survey UKCES Employer Skills Survey UK Business Counts Census Data Scottish Government Growth Sector datasets Scottish Index of Multiple Deprivation Partner data sources include: SDS Participation Measure data SDS Apprenticeship Family data SE and HIE data on Regional Selective Assistance and Account Managed businesses supported SLAED data on major infrastructure projects Glasgow

Other useful sources and publications
Other useful sources of current and forthcoming information are available. Scottish Government Labour Market Strategy Scottish Government Economic Strategy Sectoral and Regional Skills Investment Plans UKCES Employer Survey data Fraser of Allander Institute Quarterly Economic Reports RBS Business Monitor Markit Economics Purchasing Managers' Index Glasgow

2: National Policy Context
In this section: Government Economic Strategy Labour Market Strategy Youth Employment Strategy Skills Planning Model Scotland’s Skills Agencies Enterprise and Skills Review Glasgow

Economic Strategy (1) Scotland’s Economic Strategy (2015) reaffirms the Scottish Government’s commitment to creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth. It sets out an overarching framework for achieving the two mutually supportive goals of increasing competitiveness and tackling inequality. It forms the strategic plan for existing and all future Scottish Government policy and prioritises boosting investment and innovation, supporting inclusive growth and maintaining focus on increasing internationalisation.

Labour Market Strategy (2)
Scotland’s Labour Market Strategy (2016) sets out for the first time how the labour market and wider social and economic policies interact to drive ambitions for inclusive growth. It provides a framework for the approach to the labour market, and describes the actions that will be taken to deliver the vision. Vision: “A strong labour market that drives inclusive, sustainable economic growth, characterised by growing, competitive businesses, high employment, a skilled population capable of meeting the needs of employers, and where fair work is central to improving the lives of individuals and their families.“ Five priorities: promoting the Fair Work Framework and encouraging responsible business; supporting employability and skills, so that all of our people can participate successfully in the labour market; investing in our people and our infrastructure; fostering innovation including workplace innovation which will help spur job creation; and promoting Scotland internationally to improve the competitiveness of our businesses.

Youth Employment (3) Developing the Young Workforce – Scotland’s Youth Employment Strategy (2014) sets out how the Scottish Government will implement the recommendations from the Commission for Developing Scotland's Young Workforce, with the headline target to reduce youth unemployment by 40% by 2021:

Skills Planning Model (4)
Regional Skills Assessments are at the heart of Scotland’s Skills Planning Model by providing an evidence base to understand demand for skills and to influence planning and investment to meet demand.

Scotland’s Skills Agencies (5)
Skills Development Scotland and the Scottish Funding Council are the two core skills agencies for Scotland. Skills Development Scotland Making Skills Work for Scotland: Employers are better able to recruit the right people with the right skills at the right time Employers have high performing, highly productive, fair and equal workplaces People have the right skills and confidence to secure good work, progress in their careers and achieve their full potential Across all SDS services and programmes, there is increased equality of opportunity SDS is recognised as an employer of choice, an exemplar of fair work, and internationally recognised for excellence, innovation and customer focus Scottish Funding Council, Ambition 2025: Scotland - the Best Place in the World to Learn, to Educate, to Research and to Innovate “Our ambition is that Scotland will be the best place in the world to learn, to educate, to research, and to innovate……with colleges and universities making a major contribution to Scotland’s social, cultural and economic development.” Priority outcomes: High-quality learning and teaching World-leading research Greater innovation in the economy.

Enterprise & Skills Review (6)
Report on Phase One (2016) included a series of recommendations of relevance to skills investment planning “We will align the functions of our skills agencies to better join up how learning and skills are planned and provided to learners and employers.” “We will conduct a comprehensive review of the Learning Journey focused on sustained employment, with significantly enhanced use of labour market information in skills planning at its heart.” “We will review the effectiveness of our investment in learning and skills to ensure we have the right balance of provision across age groups and sectors and maximise its contribution to productivity and inclusive growth.” Next steps; Regional partnerships Digital Enterprise support

3: Scotland’s Economic and Skills Context
In this section: Economic recession to recovery Productivity Employment Non standard jobs Occupational change In-work poverty Skills challenges Scotland’s people Looking to the future Glasgow

Economic Recession to Recovery (1)
The ‘great recession’ was the longest and deepest recession in the UK since the 1930s both in terms of depth of recession and time to recover GDP. The UK posted the slowest recovery of any advanced economy (aside from Italy and Greece) with recovery only taking hold after pause to fiscal consolidation in and consumer spending and investment. Scotland’s recession was shallower than the UK. Different sectors had different rates of recovery. Recession and Recovery in Scotland Output Source: Adapted from Fraser of Allander. March 2016 Glasgow

Productivity (2) Productivity in Scotland
Moderated growth in the international economy and Scotland and poor productivity growth presents challenging conditions for many sectors and industries. Productivity in Scotland UK trails G7 advanced economies on productivity by 18 percentage points. Scotland trails UK. UK trails US productivity across all sectors, especially manufacturing. There is evidence that UK manufacturing productivity is in line with France/ Germany. But there has been significant deterioration versus Europe in financial services and the private service sector. Productivity improvements have been muted at a Scottish level over the last six years and have fallen behind wage growth. This suggests a weakening of Scotland’s competitive advantage. Fraser of Allander Institute argue that total factor productivity in Scotland is much lower than UK. In the absence of faster Scottish population growth, sustained economic growth will require raising competitiveness. Glasgow

Employment (3) Jobs in Scotland
Total employment in Scotland continued to fall until 2012, but has risen sharply since then. Total employment in was 1.5% greater than in 2009, although this is compared to a 7% increase in the UK. Employment growth has been dominated by private sector growth alongside a fall in public sector employment. Jobs in Scotland Employment Source: Business Register and Employment Survey, Glasgow

Non Standard Jobs (4) The Rise of Non-Standard Work
Although Scotland is experiencing a growth in total employment since pre-recession times, a large part of this is due to the rise of ‘non standard jobs’ – part time, temporary and self employment. Of the new jobs created since the recovery, 50,000+ have been part time jobs, 35,000+ have been self-employed jobs and more than 13,000 have been temporary jobs. Only 9,000 or so have been full time jobs. The Rise of Non-Standard Work Employment change in Scotland and the UK, 2008 – 2015 Source: Labour Force Survey Glasgow

Occupational Change (5)
The occupational shift has seen a polarisation of employment with a strong bias towards higher skilled occupations. In effect, what we are seeing is an hour glass labour market. This represents significant challenges for progression. Occupational Shifts Source: 2011 Census, Labour Force Survey, Oxford Economics Glasgow

In-Work Poverty (6) Low Pay and In-work Poverty
Historically, being in work was seen as a way of escaping poverty, however more recently this is not the case for all. In 2014/15, 260,000 people or 55% of working age adults living in poverty were living in households where at least one adult was working, before housing costs (BHC). In 2014/15, 350,000 people or 58% of working age adults living in poverty were living in households where at least one adult was working, after housing costs (AHC). In-work poverty can be a particular challenge for some groups – women, younger people, older workers, those with no qualifications, some ethnic groups, lone parents and people with disabilities. Low Pay and In-work Poverty Source:HBAI dataset, DWP In-work poverty (relative poverty AHC) in Scotland: 1998/99 to 2014/15 Number of individuals in poverty in households with at least one adult in employment Glasgow

Skills Challenges (7) Current Skills Challenges in Scotland (From Employer Skills Survey 2015) Steep rise in vacancies from 54,000 (2013) to 74,000 (2015) – reflecting higher demand for labour. Proportion of establishments reporting Skills Shortage Vacancies (SSV) in Scotland rose from 3% (2011) to 4% (2013) and 6% (2015) – in line with UK trends. Proportion of establishments reporting skills gaps fell to 14% (2015) – same as at UK level . Increasing levels of under-employment and under-utilisation of skills – 32% of establishments reported at least one member of staff with both skills and qualifications above the level required for the job. Skills shortages and recruitment difficulties are likely to be a permanent feature of the Scottish labour market, particularly where experienced labour is required. Along with under-employment and under-utilisation of skills, skills shortages will make improving productivity a challenging task. Glasgow

Scotland’s People (8) People and Demographics
There have been strong population increases in Scotland, driven by in migration. The population is, however, an ageing one, with changing age demographics. This means there is considerable competition for young people. The majority of people in the workforce over the next 10 years are already working. People and Demographics Source: Mid Year Population Estimates Glasgow

The Future - Scotland’s People (9.1)
Over the period , the population of Scotland is forecast to grow by 9% to reach just under 5.8 million by The ageing of the population is forecast to continue however with the highest percentage of growth forecast in those age groups and 75+. Population Projections Source: General Register Office for Scotland Glasgow

The Future – GVA (9.2) Looking Forward – GVA for Scotland
Gross Value Added (GVA) is the measure of the value of goods and services produced. GVA for Scotland is forecast to steadily increase over the period Looking Forward – GVA for Scotland Source: ONS, Oxford Economics Glasgow

The Future – Employment (9.3)
Although employment is forecast to contract between , this will be followed by growth from In 2024, this would be equivalent to just under 47,500 additional jobs in the economy compared to levels. Looking Forward - Employment Source: BRES, ONS workforce jobs, Oxford Economics Glasgow

The Future – Employment by Industry (9.4)
Not all industrial sectors will fare the same in terms of employment growth. It is forecast that there will be growth in Construction, Professional, Scientific and Technical Activities and Administrative and Support Services whereas there will be a major decline in Manufacturing, Mining and Quarrying and Public Sector jobs. Looking Forward - Employment Source: BRES, ONS workforce jobs, Oxford Economics Glasgow

The Future – Total Jobs Requirement (9.5)
Although understanding growth is important, a crucial part of skills planning is being able to understand the likely jobs that will arise as a result of both expansion demand (growth/contraction) and also replacement demand (churn in the labour market). Total jobs forecast to be filled in the period is 980,600 with most of these arising due to replacement demand and a very small proportion (c.26.5k) arising from growth. Looking Forward – Total Jobs requirement Total jobs requirement from Source: Oxford Economics Glasgow

The Future – Qualifications (9.6)
Based on the total jobs requirement for , the forecast for qualifications required shows that the vast majority of requirement is for people qualified at higher level - SCQF7 and above. Only a small proportion of opportunities will be available for people with no or low qualifications. Looking Forward - Qualifications Source: Oxford Economics Glasgow

4. Highlands & Islands in Context
The context within which a region operates plays a huge part in explaining a region’s performance. Historical factors, the composition of the industrial sector, geographic location, image and demographics are all at play. It is important to provide the regional context before presenting demand and skills supply data. In this section: Highlands & Islands’ contribution to Scotland’s economy Key sectoral characteristics Key labour market performance Deprivation and living standards Earnings and commuting patterns Highlands & Islands SIP/Investment Glasgow

Highlands & Islands in Context (1)
The Highlands & Islands is a large, and largely rural region, with a combination of mainland and islands. The region has some key sectors and generates 8.6% of the total output of Scotland as measured by Gross Value Added (GVA). GVA is the measure of the value of goods and services produced. The region’s proportion of the Scotland total has remained fairly constant over the last decade. Since 2009, GVA in the region has been increasing. Total GVA in 2014 (latest data) was £10,292m in real prices. For more on GVA see Section 5: Economic Performance. The Region’s Contribution to Scotland’s Economy Total GVA in the region and the region’s share of total Scotland GVA Source: Oxford Economics Glasgow

The service sector, including public services, are the largest contributors of GVA in the Highlands & Islands, alongside manufacturing. The manufacturing sector remains important to the regional economy in terms of output, 11% of the total, in line with the Scotland average. Although growing, there is a weaker professional, business and financial services sector in the region than elsewhere. For more on GVA see Section 5: Economic Performance. The Industrial Structure of the Region (GVA by sector) 2014 Total GVA (£m) at 2013 prices Source: Oxford Economics forecasts Glasgow

There are pockets of deprivation within the region, although the number of data zones in the most deprived 10% has been falling in recent times. Still, under-employment and low pay jobs remain a feature of the Highlands & Islands economy and many experience weak career progression and labour market opportunities. For more information see Section 7 on the Labour Market. The average household income of residents in the region is typically slightly lower than Scotland as a whole, although again there are sub-regional variations, with proportionately more higher incomes in Moray and the Shetland Islands. Deprivation and Living Standards Source: Scottish Index of Multiple Deprivation The number of data zones in the most deprived 10% in Scotland has been falling since The Index can mask rural disadvantage which is not always spatially concentrated. Source: Scottish Household Survey Argyll and Bute, Eilean Siar and the Orkney Islands have higher than Scotland average of household incomes under £10,000 per annum. Glasgow

The Highlands & Islands region comprises six local authority areas, a combination of island, mainland and mixed island/mainland authorities. Few commute to work outside the region, and movement within local authorities within the region is modest. Most local authority labour markets are relatively self-contained. More information is at Section 8: The People of the Highlands & Islands region. Commuting Flows At the time of the 2011 Census, close to one in five of those in Argyll and Bute commute outside the region, given the proximity of the Central Belt. Some commuting is evident out of Moray, either within the region to Inverness, or outside the region to Aberdeen. Source: 2011 Census Glasgow

The Highlands & Islands Region Skills Investment Plan Launched October 2014 SDS HIE UHI SFC Local authorities Partnerships 1. Meeting the current skills needs of employers 2. Planning for the future 3. A region for young people 4. People attraction and place attractiveness 5. Strengthening employer voice in the skills system Five Key Themes

5. Highland & Islands: Economic Performance
The economic performance of the region is a critical driver of the demand for skills. Successful businesses need high levels of productivity, with skills an important component of this, although not the only one, particularly as business processes become more mechanised. Economic performance is measured using Gross Value Added (GVA) per worker as the best measure of productivity. In this section: Total GVA and GVA growth rates GVA per employee (productivity) GVA per employee by sector Forecast GVA growth Glasgow

Economic Performance (1)
Total GVA in the Highlands & Islands region has been uneven over the last 10 years, falling even prior to the global downturn. Since 2010, however – with the exception of output contraction in 2012 – total GVA has been on an upwards trajectory. The growth in output between 2013 to 2014, at 4.7% outpaced the Scotland rate of increase of 4.3%. Total GVA in Highlands & Islands ( ) Source: Oxford Economics Total GVA £m at 2013 prices 2004 £18,850 6.3% 4.1% 2005 £20,035 -0.7% 3.7% 2006 £19,897 -0.4% 1.7% 2007 £19,824 1.3% 2008 £20,075 -2.0% -3.6% 2009 £19,676 -4.3% 2010 £18,837 2.0% 1.8% 2011 £19,208 -0.6% -0.2% 2012 £19,097 2.9% 2.6% 2013 £19,647 6.4% 4.3% 2014 £20,914 3.5% 2.8% Glasgow

GVA per worker is a proxy measure for productivity. It describes the region’s output in relation to the numbers in employment and is heavily influenced by the sector composition of the regional economy. GVA Per Employee (Productivity) GVA per worker is below the Scotland average in all parts of the region. This remains a constant challenge for the Highlands & Islands economy which remains over-reliant on low wage sectors such as tourism, agriculture and some of the food and drink sector. GVA per worker is higher in Argyll and Bute and in Highland, and lowest in Orkney, although productivity has increased in Orkney over the last five years. Source: Oxford Economics Glasgow

GVA output is forecast to grow in the Highlands & Islands, but at a rate slower than the Scotland average. Growth of 12.8% is forecast 2015 to 2024, compared to 15.9% for Scotland. The forecast growth is therefore at an average annual rate of 1.4% between 2015 and 2024, 0.3 percentage points below the Scottish average of 1.7%. Uncertainty caused by the UK’s decision to leave the EU has dampened near-term growth prospects. GVA Output Growth to 2024 Source: Oxford Economics Glasgow

Sectorally, around 73% of GVA growth in the Highlands & Islands will be provided by private services with the largest contributions from wholesale & retail trade and construction. Information and communications is expected to enjoy the fastest rate of growth (average 3.6% per year), albeit from a very low base, followed professional, scientific and technical services (3.2% per year) and administrative and support services (2.9% per year). Forecast Output Growth by Sector Glasgow

6. Highland & Islands: Business Base
The business base of the region is a strong determinant of the economic performance described in the previous section. Successful businesses need skilled and effective employees. This section presents an analysis of the business base by its industrial sector composition and other characteristics. In this section: Total number of businesses and growth rates Business base by sector Growth sector businesses Business base by size Business density Business birth, death and survival rates Self employment Glasgow

Business Base (1) There were 21,750 businesses in the Highlands & Islands region in These are VAT and PAYE registered businesses. The region’s business base grew in the years 2014 and Despite the growth in the number of businesses, the rate of growth has not matched the Scotland rate. The regional increase from 2014 to 2015 was 5.7% compared to 7.3% for Scotland. Total Number of Businesses and Growth Rates Number of businesses by year from 2010 – and growth rate comparators Source: UK Business Counts Change in number of business Glasgow

Business Base (2) Business Base by Sector, 2015
Almost one in four businesses in the Highlands & Islands (24%) are in agriculture, forestry and fishing, a reflection of the rurality of much of the region. The majority of these are micro-businesses or sole-traders. Although growing, the proportion of businesses in the professional, scientific and technical services sector at 12% is less represented than the Scotland average. Tourism businesses also comprise a greater share of the total business base, with 9% in accommodation and food services, versus 8% nationally. Business Base by Sector, 2015 Source: UK Business Counts Glasgow

Business Base (3) Growth Sectors
The Scottish Government’s Economic Strategy identifies six growth sectors, detailed below, where Scotland has a distinct comparative advantage. A greater proportion of Highlands & Islands growth sector businesses are in food and drink (47% versus 23%) and sustainable tourism than nationally (20% versus 19%), with fewer in Financial and Business Services (19% versus 36%) and the Creative Industries (8% versus 19%). Growth Sectors Number of businesses by growth sector 2015 – and proportion of all growth sector businesses Scottish Government Growth Sectors Database Growth sector businesses as a proportion of all business, 2015 Glasgow

Business Base (4) Growth Sector Total GVA (£m), 2013
Food and drink (44%) and sustainable tourism (20%) also comprise the largest proportions of growth sector GVA. The whisky industry is a strong contributor to the food and drink sector GVA total, alongside primary production and processing, including seafood. Although a relatively low paid sector, tourism still contributes significant GVA for the region. Growth Sector Total GVA (£m), 2013 Source: Scottish Government Growth Sectors Database Total GVA (£m) at basic prices of Scottish Government Growth Sectors by sector, 2013 Some figures are supressed due to data being disclosive Growth sector total GVA as a % of all growth sector GVA, 2013 Glasgow

Business Base (5) Business by Size, 2015 Business Density, 2015
The Highlands & Islands has a larger proportion of micro-businesses than the Scotland average, where 89% of businesses employ fewer than 10. The region has a smaller proportion of businesses employing between 50 and 249, and the region continues to need to build businesses of scale. Business density in the Highlands & Islands is 445 per 10,000 compared to 313 per 10,000 in Scotland, largely as a result of the high numbers self-employed in agriculture, forestry and fishing. Business by Size, 2015 Business Density, 2015 Number of businesses by employee size band and by proportion of all businesses, 2015 Source: UK Business Counts Glasgow

Business Base (6) Business survival rates in the Highlands & Islands region are higher than for Scotland and Great Britain. In all, 53% of businesses starting in 2010 had survived until 2014 in the Highlands & Islands, compared to 48% at both Scotland and Great Britain level. However, the business birth rate in the region is below the Scotland average, which is lower than the Great Britain average, although regional rates increased in 2013 and 2014. Business Birth and Death Rates ( ) and Survival Rates ( ) Note: A business is deemed to have survived if still active 5 years after birth. Source: ONS Business Demography and Mid-year Population Estimates Glasgow

Business Base (7) Self-Employment
Self-employment rates in the Highlands & Islands region has consistently been above the Scotland rate, and for most years have been above the UK rate. The regional rate has fallen back from a high of 15.1% in 2013 to 12.5% in 2015, still above the Scotland rate but below that of the UK. Again, those in the agriculture, forestry and fishing sector contribute to these higher rates. Self-Employment Source: Annual Population Survey – Jan-Dec each year Glasgow

7. Highland & Islands: Where are the Jobs?
Analysing the employment base of the region provides important information on the nature and functioning of the labour market. There have been significant occupational shifts in Scotland, reflected in changes in the Highlands & Islands, where higher skilled occupation employment continues to increase. There has been jobs recovery since the recession, but not all of these have been good quality jobs. In this section: Total employment and rate of change Employment by sector and change over time Sectoral specialism Employment by occupation and change Non standard jobs – part time and non permanent Resident and workplace earnings Glasgow

Where are the Jobs (1) Total Employment and Change 2009-2015
There were 221,500 employees in employment in the Highlands & Islands region in This was 1,400 fewer jobs than in These are jobs in VAT and PAYE registered businesses. The number of jobs in the region has fluctuated quite considerably since 2000, falling in both 2010 and 2012, mirroring the pattern across Scotland. There was strong jobs growth of 6% in the region in 2014, twice the rate of increase in Scotland and Great Britain, and so the fall in employment in 2015 of 1% is disappointing. Across Scotland, there has been little change in total employment numbers in 2015. Total Employment and Change Source: Business Register and Employment Survey Glasgow

Where are the Jobs (2) Employment by sector provides important information on the industrial composition of the regional economy. Employment in the health sector comprises the largest share employment in the region, and at 18% this is above the 16% for Scotland. This reflects a lower proportion of private sector jobs. Tourism-related employment (accommodation and food services) accounts for 12% of al jobs, far higher than the 8% across Scotland. Creative industries (including arts, recreation and related employment) is also well represented (5% of all employment, compared to 4% across Scotland). Employment by Sector and Proportion of Total Employment 2015 The Highlands & Islands has a lower proportion of employment in information and communications (1%) than Scotland (2%). Sectors such as these and the professional, scientific and technical sector (where the region has 5% of all jobs in this sector, below the Scotland average of 7%) are typically higher value added and higher paid service sector jobs. Source: Business Register and Employment Survey Glasgow

Where are the Jobs (3) Sector Specialisms
Marrying employment growth trends by sector with the size and concentration of the sector in a region can provide important information on the dynamics of the labour market. Concentration of a sector is the extent to which employment in the sector is above (or below) sector concentration at the Scotland level. Sector Specialisms Sectors above the horizontal line are more concentrated in the region than in Scotland, those below the line less so. Sectors to the right of the vertical line are larger in employment terms than five years ago, to the left less so. Larger bubbles reflect higher sector employment. The large and concentrated health sector is illustrated right. Although smaller the construction sector is concentrated and has grown in size in the last five years. The financial and insurance sector is less concentrated and has declined in size in the last five years. Note: SIC Section A: Agriculture, Forestry and Fishing omitted as data for farm agriculture (SIC subclass 01000) is not available sub-nationally Glasgow

Where are the Jobs (4) Employment by Occupation (2015)
The occupational profile of the region is important because occupation is often linked to skills requirements. There has been a steady and continuing shift to more professional occupations in Scotland and across Great Britain. The Highlands & Islands region is making this transition far more slowly than in many other areas, with 14% of all in employment in professional occupations, compared to the 20% average. Skilled trades, although falling as a share of the total over the last 10 years, still account for the greatest share in 2015, 15% of all those in employment. Elementary occupations are also well represented, 12% of the total, almost 30,000, again highlighting the challenge to raise wage levels in the region. Employment by Occupation (2015) Change over time Source: Annual Population Survey Glasgow

Where are the Jobs (5) Part -Time Employment 2005-2015
Almost one in three (29%) of those in employment work part-time, higher than the proportion in Scotland and Great Britain. More of the jobs created in the economic recovery have been part-time jobs. There are also 5.7% in non-permanent employment, a higher percentage than nationally (5.4%), although the proportion of jobs that are non-permanent has fallen in the region in 2014 and Nationally, 2.2% are employed on zero hours contracts. Part -Time Employment Non-Permanent Employment, Source: Annual Population Survey Non-permanent employment is the proportion of all of those of working age in employment types such as fixed- term contracts, temporary agency, casual or seasonal work. The increase in non-permanent employment reflects the changing nature of employment. Source: Annual Population Survey Glasgow

Where are the Jobs (6) Some sectors are typically better paid than others, and the industrial base of the region is often an indicator of average wage levels. The composition of the industrial base within a region also affects workplace pay levels. Average gross weekly workplace earnings in the Highlands & Islands vary by local authority, from £372 in Orkney to £491 in Argyll and Bute, which is the part of the region with earnings closest to the Scotland average of £492 per week. Resident earnings are largely similar to workplace earnings in most parts of the region, given that most local authority areas are relatively self-contained labour markets. The largest differentials are in Orkney, where there is out commuting to better paid employment, and Moray, where jobs in the area pay more on average than residents earn. Average Weekly Workplace and Residence-based Earnings, 2015 Source: Annual Survey of Hours and Earnings Glasgow

8. Highland & Islands: Its People
The demographic characteristics of a region are extremely important in determining current and future demand for skills. The age profile of the population, the number of young people and elderly, the increasing proportion of retirees, are all contributory factors. The movement of people within a region, and into and out of a region, also affect the labour market and the supply of skills available to employers. In this section: Population growth Population profile Population projections Net migration Travel to work data Glasgow

People (1) Population Change over Time
The Highlands & Islands’ population has grown more slowly than the Scotland average over the 10 years 2005 to 2015, with both lagging behind the rate of growth in Great Britain of 7.8%. The population of the Highlands & Islands increased slightly slower than the rate for Scotland over , +0.2% compared to +0.5%. Population Change over Time Source: Mid-Year Population Estimates Year Highlands & Islands Scotland 2005 467,760 5,110,200 2006 472,040 5,133,100 2007 476,370 5,170,000 2008 480,220 5,202,900 2009 482,520 5,231,900 2010 484,920 5,262,200 2011 487,480 5,299,900 2012 485,030 5,313,600 2013 487,500 5,327,700 2014 487,550 5,347,600 2015 488,450 5,373,000 Change 20,690 262,800 % Change 4% 5% Glasgow

People (2) Age profile of the Region
The Highlands & Islands region has an older age profile than the Scotland average. This is driven by growth of the 65+ age band since (+27%, 22,700) compared to Scotland ( +18%).The Highlands & Islands have also seen a higher decline in the age band than Scotland (-20% versus -16%) and has had a much lower growth of the age band (+3%, 2,400) than Scotland (+12%). Overall, the working age population of the region increased by 2,300 over the 10 years to 2015. Age profile of the Region Source: Mid-Year Population Estimates Source: National Records of Scotland Glasgow

People (3) Population Projections (2012-2037)
Source: National Records of Scotland The Highlands & Islands population is projected to fall compared to growth in Scotland as a whole to 2037 (- 1% compared to +8%). The working age population is also projected to fall more sharply than nationally (-16% compared to -4%). Over the longer term, the age structure of the region’s population is projected to become older. Year Highlands & Islands Scotland 2014 485,129 5,346,120 2015 485,389 5,365,420 2016 485,656 5,385,719 2017 485,991 5,406,997 2018 486,389 5,429,012 2019 486,820 5,451,660 2020 487,233 5,474,391 2021 487,584 5,497,079 2022 487,901 5,519,588 2023 488,154 5,541,816 2024 488,362 5,563,670 2025 488,524 5,585,040 2026 488,565 5,605,814 2027 488,541 5,625,892 2028 488,395 5,645,150 2029 488,153 5,663,541 2030 487,787 5,681,121 2031 487,296 5,697,808 2032 486,685 5,713,523 2033 485,950 5,728,318 2034 485,106 5,742,297 2035 484,188 5,755,558 2036 483,154 5,768,217 2037 482,032 5,780,371 Change -3,097 434,251 % Change -1% 8% Glasgow

People (4) Net Migration
There has been low levels of net migration into the Highlands & Islands in recent years. Net migration reached the lowest point in 2011/12, (263) although this has since recovered in the years to 2014/15, to 1,351. The age band has seen high net migration out of the Highlands & Islands (969) in 2014/15. Net Migration Source: National Records of Scotland Glasgow

People (5) Travel to Work (2011 Census)
There is very little out commuting from the Highlands & Islands and between the local authority areas, reflecting the nature of three island local authorities and the very large area covered by the Highlands. There are higher rates of out-commuting from Argyll & Bute and Moray which reflect their relative proximity to Glasgow and Aberdeen respectively. Travel to Work (2011 Census) Please note, location of employment figures exclude those working outside the UK, on offshore installations or with no fixed place of work Glasgow

Inflow of workers - number Outflow of workers - number
People (6) At the time of the last Census, there was net out-commuting seen in three of the Local Authorities which make up the Highlands & Islands. Moray had the largest number of net out-commuters, reflecting the proximity to Aberdeen and the greater availability of jobs in the city. On the other hand, three Local Authorities showed net in-commuting, the largest of which was Argyll and Bute. This reflects the proximity of Argyll & Bute to the largely urban central belt and the relative ease of transportation in the area. Travel to Work (2011 Census) Note: Not currently available in the data matrix Council area of workplace Total workplace population Lives and works in the area Inflow of workers - number Outflow of workers - number Net flow of workers Works in the area but lives elsewhere in Scotland Works in the area but lives in the rest of UK Lives in the area but works elsewhere in Scotland Lives in the area but works in the rest of the UK Within Scotland From the rest of the UK Total Argyll and Bute 31,574 24,447 5,826 1,301 5,031 333 795 968 1,763 Eilean Siar 9,156 8,904 160 92 364 54 -204 38 -166 Highland 83,173 79,737 2,579 857 2,768 518 -189 339 150 Moray 32,219 29,527 2,238 454 4,049 280 -1,811 174 -1,637 Orkney Islands 7,751 7,556 35 187 -27 -3 -30 Shetland Islands 10,341 9,847 372 122 146 29 226 93 319 Please note, location of employment figures exclude those working outside the UK, on offshore installations or with no fixed place of work Glasgow

9. Highland & Islands: Labour Market
The functioning of the labour market is influenced by labour market participation. Those unemployed or economically inactive will not be directly contributing to the economic success of the region, although their situation may be temporary, or indeed those inactive may be learning and studying and be a future contributor to the region. In this section: Economic activity Qualifications Participation Unemployment Glasgow

Labour Market (1) Economic Activity Rates Economic Inactivity Rates
The Highlands & Islands’ economic activity and inactivity rates have varied between 2005 and Economic activity decreased to 80% and inactivity increased to 20% between 2012 and 2013, before recovering to 82% and 18% respectively, in 2014 and Scotland’s rates have remained stable throughout, staying at 77-78% and 22-23% respectively. Economic Activity Rates Economic Inactivity Rates Source: Annual Population Survey Glasgow

Labour Market (2) Qualifications
The highest level qualifications of the resident working age population is a useful barometer of skills attainment levels. There remains a cohort in regional economies with no formal qualifications which used to be associated with older workers. Jobs increasingly require higher levels of qualification, including so-called entry level jobs. The Highlands & Islands has a less qualified working age population, with 38% qualified to SCQF Level 7-12, compared to 43% for Scotland. There is however a lower proportion of the region however with no qualifications, 8% compared to the Scotland average of 9%. Qualifications Source: Annual Population Survey Glasgow

Labour Market (3) Participation
The Participation Measure is a new measure which provides the ability to identify the status of the wider cohort – not just those who have left school. Participation of young people aged in the Highlands & Islands was 93%, above the Scottish rate of 90%. Participation Source: Skills Development Scotland Highlands & Islands Scotland Number % Total Cohort (16-19) 21,508 Participating (16-19) 20,088 93% 90% Education 15,015 70% 71% Employment 4,702 22% 17% Other Training & Development 371 2% Not Participating (16-19) 566 3% 4% Unemployed Seeking 320 1% Unemployed not Seeking 246 Unconfirmed Status (16-19) 854 6% Glasgow

Labour Market (4) The way unemployment is measured is changing with the introduction of Universal Credit. As such, the data is regarded as ‘experimental’ and care is needed when comparing to previous data (all regions have recorded a fall in claimant count unemployment under the new measure). Unemployment – Claimant Count (includes Universal Credit) – experimental measure Source: Job Seekers Allowance Year Highlands & Islands Scotland Great Britain May 2005 945 12,760 115,375 May 2006 985 13,265 141,970 May 2007 860 12,490 145,310 May 2008 520 7,825 99,735 May 2009 605 10,320 123,545 May 2010 990 20,870 252,170 May 2011 960 20,340 203,195 May 2012 1,705 35,725 378,480 May 2013 1,880 38,090 410,710 May 2014 1,390 29,470 310,865 May 2015 1,040 19,145 197,275 May 2016 980 16,515 158,520 Glasgow

10. Highland & Islands: Skills Challenges
Employers can have difficulties accessing the skills they need, skills deficiencies can be amongst those they are seeking to recruit and amongst those in their existing workforce. Skills shortage vacancies (SSVs) relate to the skills shortages amongst those being recruited, and skills gaps are a deficit within the existing workforce. The 2015 UKCES Employer Skills Survey provides timely data in relation to these and other issues. In this section: Skills shortages Skills gaps Recruitment activity Skills under-utilisation Glasgow

Skills Challenges (1) Skills Shortages
The UKCES Employer Skills Survey 2015 indicates that across the Highlands & Islands skills shortage vacancies are slightly more prevalent than across Scotland at 1.0% of the total workforce, compared to 0.8% in Scotland as a whole. Hard-to-fill vacancies due to skills shortages account for 1.4% of the workforce, compared to 1.1% in Scotland as a whole. In all, 8% of establishments report at least one hard to fill vacancy in the Highlands & Islands, in line with the Scotland average. Skills Shortages Source: UKCES Highlands & Islands Scotland Hard to fill vacancies as % of workforce 1.4% 1.1% Skills shortage vacancies as % of workforce 1.0% 0.8% Glasgow

Skills Challenges(2) Skills Gaps
Skills gaps occur when employers think their employees lack some of the skills required to be fully proficient at their job. Around 5% of the workforce in the Highlands & Islands had a skills gap, which was in line with the nation average. Proportionally more employers in the Highlands & Islands reported skills gaps compared to the Scottish average. Skills gaps were particularly prevalent in elementary staff in the Highlands & Islands 74% of employers with a skills gaps say there is an impact on the business (70% nationally) Skills Gaps Source: UKCES Glasgow

Skills Challenges (3) Recruitment Challenges Skills Under-Utilisation
Overall, 50% of Highlands & Islands businesses had recruited staff in the year prior to the 2015 UKCES survey, this was below the national average. The number of vacancies however was above the Scottish average with 20% of employers in the Highlands & Islands having at least one vacancy. In addition, 29% of employers in the Highlands & Islands had staff who were under-utilised, which was below the national average. Recruitment Challenges Skills Under-Utilisation Source: UKCES Glasgow

11. Highland & Islands: Schools Data
The number of young people at school and projected school roll numbers are important as those at school will form part of the future labour market. The destination of those leaving school also has an impact on the labour market, as young people might enter employment, education and training, or none of these after school. In this section: School roll numbers School roll projections School leaver destinations Glasgow

Schools Data (1) Secondary School Roll Numbers and by Year Group
There were 27,049 secondary school pupils in the Highlands & Islands in The proportion of pupils across all the secondary year groups in the Highlands & Islands was broadly similar to the national picture. Secondary School Roll Numbers and by Year Group Source: Scottish Government Pupil Census Highlands & Islands Scotland S1 4,740 50,813 S2 4,753 49,514 S3 4,764 50,197 S4 4,994 51,078 S5 4,422 45,817 S6 3,376 33,936 Total Pupils 27,049 281,355 Glasgow

Schools Data (2) Secondary School Roll Number Projections
Based on the latest available projections (2012), secondary school roll numbers are expected to decline by 7% to 2018 in the Highlands & Islands. This is greater than the 2% drop in numbers anticipated for Scotland as a whole over the same period. Secondary School Roll Number Projections Source: Scottish Government Pupil Projections Highlands & Islands Scotland 2014 27,600 282,800 2015 26,700 278,000 2016 26,000 275,300 2017 25,700 275,100 2018 25,800 277,900 Glasgow

Schools Data (3) School Leaver Destinations
Between 2013/14 and 2014/15, the Highlands & Islands experienced no change in the proportion of school leavers entering a positive destination. Despite the decrease the proportion of pupils entering a positive destination was above the equivalent rate across Scotland (94% vs. 92%). There was a lower proportion of leavers entering Higher Education compared to Scotland (34% vs. 37%), however the proportion entering employment was greater (35% vs. 28%). School Leaver Destinations Source: Scottish Government School Leavers Destination Dataset 2013/14 2014/15 Highlands & Islands Scotland Positive Destination 94% 92% Higher Education 36% 39% 34% 37% Further Education 22% 24% 20% 23% Training 2% 3% Employment 32% 25% 35% 28% Voluntary Work 1% 0% Activity Agreement Unemployed Seeking 4% 7% 6% Unemployed Non-Seeking Unknown Glasgow

12. Highland & Islands: Skills Provision
There is a wide variety of skills and learning provision available which is designed to meet the future skills needs of the economy. Amongst this is the provision commissioned by Skills Development Scotland, notably via the Apprenticeship family of products (Modern Apprenticeships, Foundation Apprenticeships and Graduate Level Apprenticeships) and the Employability Fund and delivered by approved training providers including Colleges, Universities and Private training providers. In this section: Modern Apprenticeships by participant characteristic and framework grouping Foundation Apprenticeships Graduate Level Apprenticeships Employability Fund and Certificate of Work Readiness starts Glasgow

Skills Provision (1) MA Total Number of Starts
Modern Apprenticeships (MA) help employers to develop their workforce by training new and existing employees. For individuals, an MA lets them earn a wage while gaining a qualification. MA uptake in the Highlands & Islands was at its highest ever level in 2015/16 with 2,490 starts. Proportionally these accounted for 10% of all MA starts (up two percentage points from 2010/11). In 2015/16, 48% of apprentices were within the age group, slightly less than the percentage nationally (50%). MA Total Number of Starts MA Starts 2015/16, by Age Highlands & Islands

Skills Provision (2) MA Starts by Gender 2010-2016
From 2010/11 to 2015/16 the gender disparity in MA uptake was greater in the Highlands & Islands than in Scotland overall with over 60% male and under 40% female starts annually. More information on gender split in different frameworks can be found in Skills Provision (4). The representation of disabled individuals in MAs across Scotland remains low, 4% of individuals starting an MA in 2015/16 had a disability however 19% of the working age population in Scotland have a disability. MA Starts by Gender MA Starts by Disability Highlands & Islands

Skills Provision (3) MA Starts by Ethnicity 2015/16
The uptake of MAs in the Highlands & Islands shows a less diverse ethnic mix than in MAs across Scotland. Fewer than 1% of MA starts in the Highlands & Islands came from a Black Minority and Ethnic (BME) background compared to 1.6% across the country. The overall BME working population in Scotland is around 3.1% (APS 2014) . MA Starts by Ethnicity 2015/16

Skills Provision (4) In the Highlands & Islands the most popular MA framework group in 2015/16 was Construction & Related (includes trades such as plumbing) it was also one of the most gender segregated groups with 97% male starts. Other male dominated groups included Automotive (99%), Transport & Logistics (95%) and Engineering & Energy related (93%). Proportionally females accounted for most starts in Personal Service (includes hairdressing) (96%) and Administration and Related (88%). Modern Apprenticeship Starts by Framework Group and Gender Note: figures rounded to the nearest 5, figures less than 5 have suppressed. Percentages have been calculated on unrounded figures. Highlands & Islands

Skills Provision (5) MA Achievement Rates 2010/11- 2015/16
MA achievement rates give the proportion of MA starts who completed their apprenticeship: gaining their target qualification and reaching work-based learning aims. Achievement rates in the Highlands & Islands have been largely in line with the average rates for Scotland (within two percentage points). In 2015/16, in the Highlands & Islands, 78% of candidates successfully completed their MA, 75%. This was above the national achievement rate, 76%. MA Achievement Rates 2010/ /16 Glasgow

Skills Provision (6) Foundation Apprenticeships (FA) were developed to help school pupils gain work experience and access work-based learning. S4 and S5 students spend time at college or with a local employer, and complete the FA alongside other subjects like National 5s and Highers. The qualification takes two years and can lead to employment or further study at college or university. FAs were piloted in some regions in 2014 and participation has grown over the past three years. The data shows uptake from the past two years and anticipated uptake for 2016/18. Foundation Apprenticeships, National Uptake 2014/ /18 Foundation Apprenticeships In 2016/18, the national uptake of FLA is expected to be over 300. In 2016/18 there are eight frameworks available, linked to six key sectors: Business Skills, Civil Engineering, Engineering, Financial Services, IT Hardware, IT Software, Social Services CYP, Social Services & Healthcare SDS aims to make FLA part of every secondary school’s offer by 2020. Glasgow

Skills Provision (7) Graduate Level Apprenticeships Future Development
Graduate Level Apprenticeships (GLAs) provide work-based learning opportunities up to Master’s degree level for employees. They have been created in partnership with industry and the further and higher education sector. Graduate Level Apprenticeships Future Development GLAs are currently available in: ICT/Digital: Software Development ICT/Digital: IT Management for Business Engineering: manufacturing and Design Civil Engineering Over the course of 2017 the intention is to expand the offer to include: Business and Management SCQF Level 10 Engineering (Instrumentation, Measurement and Control SCQF Level 10) IT and Digital (Cyber Security SCQF Level 10) IT and Digital (Digital Media SCQF Level 10) Life Sciences SCQF Level 10 Children and Young People SCQF Level 8 Glasgow

Skills Provision (8) The Employability Fund (EF) supports locally delivered services that are designed to encourage unemployed people to move towards work. SDS administers the EF on behalf of the Scottish Government*. The EF starts in the Highlands & Islands represented almost 5% of total EF participants in Scotland. The EF participation of females in the Highlands & Islands was proportionally lower than in Scotland, 27% of starts were females compared to 36% nationally. Employability Fund Starts 2015/16, Total and by Gender *All data provided relates only to SDS funded activity. As other entities administer EF programme the data will not reflect total participation Highlands & Islands

Skills Provision (9) The Certificate of Work Readiness (CWR) addresses the challenge that young people have of gaining work experience and workplace skills prior to entering the labour market. The CWR provides young people with 190 hours of work experience and an assessment from an employer to certify that they have established workplace competencies. In 2015/16, 6% of the individual starts and 9% of employers involved in the scheme were located in the Highlands & Islands. Certificate of Work Readiness 2015/16, Starts and Employers Highlands & Islands

13. Highlands & Islands: College Activity
Colleges provide a range of opportunities for students, from courses for those with low or no skills, up to degree level qualifications to meet national, regional and local economic needs. Qualifications include National 4 & 5s, NQ, HNC, HND and Degrees. Colleges also provide qualifications towards Foundation and Modern Apprenticeships. Due to the unique and complex tertiary nature of the University of Highlands and Islands, data for UHI and its associated campuses has not been included. The Scottish Funding Council (SFC) and Skills Development Scotland (SDS) are working with UHI to develop the most appropriate way of presenting these complex data sets. Glasgow

14. Highlands & Islands: University Provision
Scotland has strong university provision with more world-class universities than any other country by head of population. There are five universities in Scotland that are ranked in the world’s top 200 (2015 Times Higher Education rankings). Scotland’s universities play a major role in developing a skilled workforce. In the Highlands and Islands the University of the Highlands and Islands provides educational opportunities to residents and also attracts students to the region. Due to the unique and complex tertiary nature of the University of Highlands and Islands, data for UHI and its associated campuses has not been included. The Scottish Funding Council (SFC) and Skills Development Scotland (SDS) are working with UHI to develop the most appropriate way of presenting these complex data sets. Glasgow

15. Highlands & Islands: Jobs and skills changes
This section will outline forecasted changes in employment from 2015 to 2024, and the nature of changing demand for qualifications in specific occupational areas. It will also consider longer term changes in the labour market and future expansion and replacement employment demand. In this section: Forecasts demand for jobs and how these may change Changing occupational and qualification demand Long-term changes in the labour market Glasgow

Jobs and Skills Changes (1)
Total employment (jobs) is forecast to remain static over the period, average annual growth of 0.2% is expected for Scotland as a whole. In the period to 2024, the labour market is forecast to contract marginally, shedding 1,400 jobs. Job shedding is expected to be greatest in the public sector and manufacturing, experiencing respective declines of 2,000 and 1,400 jobs in the period. In contrast, construction is forecast to create an additional 1,400 jobs forecast by Administrative & support and professional, scientific & technical activities are also expected to increase by 1,100 and 1,000 jobs respectively. Forecast Demand for Jobs ( ) Total Employment Growth Highlands & Islands Employment % annual average change Change in total jobs (‘000s), 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

Most occupational groupings are expected to show a decline over the forecast period The biggest decreases are expected in administrative and secretarial occupations (600 people) and associate professional and technical occupations and process, plant and machine operatives (both 500 people). Small increases are forecast for skilled trades and caring, leisure and other service occupations (both 100 people) with elementary occupations remaining largely static. Forecast Changes in Occupational Demand Highlands & Islands Employment Change in number of workers (‘000s), Note: chart uses total employment (people). Source: Oxford Economics ‘000s Glasgow

The majority of openings in the Highlands & Islands over the forecast will require individuals with higher level qualifications, in part a reflection of the sectoral and occupational trends expected over this period. Individuals qualified to SCQF level 7 or above will account for 54% of the 70,500 openings expected to be created between 2016 and The net requirement will be greatest for individuals qualified to SCQF level 7-10 (47%). The remaining opportunities will mainly be for individuals qualified to SCQF levels 5-6, equivalent to 36% of openings over the forecast period. There will be limited demand for workers with qualifications below this. Forecast employment change by Qualification ( ) 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

Replacement demand will result in over 71,500 openings within the Highlands & Islands over the forecast. These openings will occur across all types of occupations including these that are expected to decline in net terms. Expansion demand is expected to result in a fall of 1,100 workers between However together with replacement demand, will result in a total requirement of over 70,000 over this period. Openings will be highest within elementary occupations, with a total requirement of 15, There will also be a significant requirement for professional occupations (13,000) and skilled trades occupations (10,300) over the forecast. Forecast Demand for Jobs ( ) 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

16. Highlands & Islands: What are the key implications?
The Regional Skills Assessments provide the national policy context, the national economic picture and trends and the regional position. The regional perspective covers in some depth the demand for skills, current and forecast, as well as skills activity in place to meet these needs. There is a wide range of data, with further data available in the accompanying data matrix. This final section draws out some of the key implications for improving the performance of labour markets. These are not solutions for partners, but rather implications from the analysis upon which skills investment planning decisions can be made. In this section: Review of the demand for skills Review of current skills activity to meet need Key implications for skills investment planning and recommended focus for action Glasgow

Highlands & Islands: Headline Summary (1)
. Key Labour Market Changes and Dynamics The strong jobs growth in 2013 and 2014 in the Highlands & Islands, which was above the Scotland rate of increase, was not continued in There were 1,400 fewer in work in 2015, a loss of 1%, at a time of a very modest jobs increase across Scotland. At the same time, there are still 2,200 more jobs in the region than in The number of businesses also increased by 5% in 2015, although more slowly than for Scotland. Public sector employment and services dominate employment in the region. There is a larger proportion of employment in the health sector than for Scotland as a whole, and at 29%, there are more employed in the public sector than in any other region in Scotland. This reflects what has become the relative weakness of the region’s private sector. At 12% of all employment, tourism (accommodation and food services) are more concentrated than for Scotland and Great Britain. Some sectors have grown, notably accommodation and food services (+2,700), education (+500) and the health sector (+400 jobs). Production still employs 20,800, the fourth largest employment sector, but this fell by a further 1,200 jobs in Professional and business services employment also declined. Glasgow

. Key Labour Market Changes and Dynamics (continued) Overall, there is weaker professional and financial services base in the Highlands & Islands, and job numbers in these sectors remained static or fell in Those employed in professional occupations is lower than 10 years ago, at a time of significant increases for Scotland as a whole. The number of areas of deprivation in the region that are in the most deprived 10% in Scotland fell again in the latest 2016 measure, although the Index often masks rural deprivation. Argyll and Bute, Eilean Siar and the Orkney Islands have more low earners – and fewer high earners – than the Scotland average. Although the new measure of unemployment including Universal Claimants has shown falling claimants, this has been the case nationally. The claimant rate remains above the Scotland average. Fewer are qualified to SCQF 7-12, when demand for these qualifications continues to increase. Population growth has been just bellow the Scotland average over the last decade and is projected to fall to 2037 at a time of continued Scottish growth. The working age population is projected to fall by some 16% to 2037. Glasgow

. Skills Challenges Out-migration from the region remains a challenge for parts of the Highlands & Islands, particularly of younger people, where the region can find it difficult to compete with better paid jobs elsewhere in Scotland and the UK. The most recent employer survey indicates higher levels of hard-to-fill and skills shortage vacancies than average. More employers in the region are also likely to report skills gaps. Highest in elementary occupations, but also above the Scotland average in administration and clerical occupations, and professional occupations. Glasgow

Highlands & Islands Headline Summary (5)
. Skills Activity to Meet Current and Future Demand Work-based learning is critical to meeting skills development needs. There were 2,490 MA starts in 2015/2016, and this has risen year on year since 2010/2011 when the numbers have been falling slightly across Scotland. The top five MA frameworks largely reflect the composition of the regional economy – construction, hospitality & tourism, food & drink, health & social care (with sport), engineering & related. The first four of these account for more than 60% of all MA starts. There is a continuing gender imbalance in many MA frameworks and MAs are still not commonplace in some sectors such as the Creative Industries and the Land & Water based sector, despite their prominence in the regional economy. Glasgow

. Future Trends There are expected to be 1,400 fewer jobs in the region by Further losses are expected in manufacturing, but also in the public sector, on which the region remains overly reliant. There will however be some increases in construction, professional, scientific & technical services and administrative & support services. Despite fewer overall jobs, replacement demand means that more than 70,000 openings are expected to More than half of these will be SCQF level 7 and above and 90% will be level 5 and above. This reaffirms the need for a strong skills base. 40% of openings will be in professional and elementary occupations, some 28,000 in all, and also skilled trades (9,700+), sales and customer service (+9.100), and administration and sales (7,000+). Glasgow

Highlands & Islands: Key Implications (1)
. Recommended Areas of Focus Continuing to increase the number of private sector jobs. The recent strong employment growth has gone into reverse, and there remains an over-reliance on public sector jobs, a sector forecast to decline in employment terms. Growing the private sector jobs base is a regional priority. Increasing the quality of jobs. As well as more jobs, there is a requirement for more better quality jobs. Recent private sector jobs growth in accommodation and food services, for example, will be relatively low pay and low value added. There remains more that needs to be done to move to a greater knowledge-based economy in the region. A need to grow the professional occupations. At a time when the proportion in these occupations continues to grow in the central belt and across the UK, these occupations have not increased regionally. A focus on higher level skills and jobs is imperative for the region. Creating a culture of employer investment. Employers continue to need to be encouraged to invest and innovate, which includes investment in skills. The supply of skills must be available to satisfy increased and stimulated demand. Glasgow

. Recommended Areas of Focus Engender more enterprise. A key route to more private sector jobs is to increase the start-up rate and business density. Although birth rates have increased, they still lag the Scotland average. Sectorally, there is a need to meet the needs of employers (1). This includes the important health and social care sector. The ageing population have increasing care needs that need to be met over time. Sectorally, there is a need to meet the needs of employers (2). There are other key sectors and occupations in the regional economy where replacement demand is strong, including skilled trades and tourism. These require work-based learning routes into, and upwards, within sectors. The specific needs of the engineering sector continue to be met. There will be challenging times ahead for the sector, forecast to contract in employment terms, yet it still contributes a disproportionate amount of output in the region. Glasgow

. 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 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. A need to meet the region’s infrastructure needs. This will require adequate construction, engineering and professional skills given anticipated levels of demand arising from the Inverness & Highland City Growth Deal and other investment. Tackling gender imbalances in the sector can be part of meeting these needs. Glasgow

Appendix: 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: Where are the Jobs (3) - Sector Specialisms

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