1. Regional Skills Assessments
Highlands & Islands
December 2016
Glasgow

2. Introduction An Introduction to Regional Skills Assessments (RSAs)
Key Data for the Highlands & Islands
Implications for Skills Investment Planning

3. An Introduction to RSAs

4. What are RSAs?
A single, agreed evidence base on which to base future investment in skills, built up from existing datasets
Partnership between Skills Development Scotland, Highlands and Islands Enterprise, Scottish Enterprise, the Scottish Funding Council (SFC) and the Scottish Local Authorities Economic Development Group.
Purpose:
Support 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
Highlight gaps in national and regional skills evidence

5. Why are they important for skills planning?
They provide a high quality and consistent source of evidence about economic and skills performance delivery at various spatial levels.
They can be used to identify regional strengths and any issues or mismatches arising, and so inform thinking about future planning and investment at a regional level.
They are accessible online to support all partners in their planning.
They provide a core evidence base to support the Scottish Skills Planning Model.

6. Scottish Skills Planning Model

7. What do they cover?
Economic Performance, Profile of the Workforce, People and Skills, Education and Training (Further and Higher Education, MAs and Schools), Other Economic Activity, Skills Mismatches and Forecasting
Underpinned by the 2016 data matrix of 7 workbooks, containing data on over 100 social and economic indicators
With data at various spatial levels: Regions; City Region Deal; Local Authority
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).
The data matrix is found here:
This slidepack provides a summary of the data for the area except for data on Further and Higher Education. The reason for this is provided on slide 15.

8. Highlands and Islands Overview
A large area – half the land mass of Scotland – with a diverse range of economic and social circumstances
Economic diversification has sought to reduce the dependence on declining traditional industries
Time and distances to main economic and employment centres exacerbated by terrain and sea crossings
Some parts of the region have very tight labour markets while in some more remote areas lack of jobs is a significant issue

9. Business Trends
Much stronger growth in business numbers (+5.7%) in 2015, although growth rate remains below national level (7.3% in 2015)
+1,170 businesses in 2015 to 21,750
Most growth through Business Admin & Support Services (+265) and Professional, Scientific & Technical (+240)
99% of businesses are small or micro (<50 employees) compared to 98% in Scotland
115 Highlands and Islands businesses with 100 or more employees, 35 employ 250+
445 businesses per 10,000 population, compared to 313 per 10,000 nationally
12.5% are self-employed, above the Scotland rate of 10.8%
More than half Highlands and Islands businesses are in Growth Sectors (51% compared to 47% nationally) (2015)
Much greater proportion of Growth Sector businesses in food and drink than nationally (49% v. 22%), with fewer in Financial and business services (19% v. 35%)
The higher shares in Orkney and Shetland (>60%) reflect high numbers of food and drink businesses
36% of employment is in Growth Sectors, the second highest after Aberdeen City and Shire
Highlands & Islands

10. Sector Trends and Specialisms
Very strong group of sectors in high representation and high growth quadrant, with good recent employment growth
Strong employment growth in higher value added and under-represented sectors - professional, scientific and technical and business administration
Significant job losses in the public sector – public administration and defence and education
Note: SIC Section A: Agriculture, Forestry and Fishing omitted as data for farm agriculture (SIC subclass 01000) is not available sub-nationally
Click here for explanation: Explanation of Sector Trends and Specialism diagram
Highlands & Islands

11. Population and Projections
Population of 488,500
9.1% of Scotland total but generally sparsely distributed
Increase was below national growth rate (+0.2% compared to +0.5%) and over the past ten years (+4% compared to +5%)
Highland accounts for nearly half (48%) of the region’s population
Population change :
Total Increase of 20,300 between 2005 and 2015, almost all a result of growth in the 65+ age group, and from growth in Highland and Moray
Forecast Population Growth, :
Population expected to fall by 1% (3,000 people) compared to +8% in Scotland
Highlands and Islands working age population forecast to fall by 80,000 people, (-16%, the fourth largest projected fall in Scotland)
Significant population decline forecast for Argyll and Bute (13%) and Eilean Siar (10%)

12. Employment and Travel to Work
79% of working age residents are in employment, higher than the Scotland rate of 73%
Orkney and Shetland have highest employment rates in Scotland (87%)
Place of Work of Residents, by Local Authority:
Very little out commuting from the Highlands and Islands region and between the local authority areas, reflecting presence of three islands local authorities and the very large area covered by Highland
Higher rates of out-commuting from Argyll and Bute and Moray reflect relative proximity to Glasgow and Aberdeen, respectively
Please note, location of employment figures exclude those working outside the UK, on offshore installations or
with no fixed place of work
Highlands & Islands

13. Workforce Trends Total employment in Highlands & Islands = 223,000
3.3% growth in employment over the past year ( ), compared to 3.2% nationally and 2.7% GB wide.
36% work in higher level occupations
Below Scotland average (42%)
71% work in private sector, compared to 77% nationally-Eilean Siar has lowest rate in Scotland (61%)
Orkney (11%) and Eilean Siar (9%) have the highest rates of non-permanent employment In Scotland, reflecting importance of primary sectors
29% of those in employment work part-time, higher than for Scotland (26%)
In parts of the region part time work reflects what is available rather than a positive preference
Seasonal employment – mostly in tourism is significant and particularly so in more rural/remote parts of the region
5.7% in non-permanent employment – above the 5.4% average for Scotland
Note: Data on total employment relates to 2014, having been prepared in advance of 2015 BRES release.
Highlands & Islands

14. Unemployment and Participation
Unemployment rate continues to be below the national and UK wide levels (4% compared to 6% in Scotland and 5% UK wide) although the difference has narrowed in recent years.
Participation rates are higher in Highlands & Islands than nationally, with 93% of year olds participating
The unemployment rate in the region was below the national average (4% v. 6%), unemployment fell by -1.1ppts which was greater than the national decline (-0.4ppts) from 2014 to 2015.
Within the region the unemployment rate was highest in Argyll and Bute (5%) and lower (4%) in Eilean Siar, Highland and Moray.
Unemployment rate: Unemployed as a percentage of the economically active population
Highlands & Islands

15. Qualifications and Skills
Ongoing increase in the proportion holding levels 7-12 but increase over the past ten years has not kept pace with national improvement
Fall in % holding no qualifications has also been slower than nationally:
Fewer Highlands and Islands working age adults hold SCQF qualifications at levels 7-12 than nationally, although the area outperforms the UK wide average (37%)
Significant variations by area:
Highlands & Islands

16. Skills Mismatches
Half of Highlands and Islands businesses have recruited staff over the past year (2015), slightly below national average (53%)
Skills shortages slightly more prevalent than nationally
Vacancies that are hard-to-fill due to skills shortages are equivalent to 1.0% of the workforce, compared to 0.8% in Scotland as a whole
5% of the workforce have skills gaps, the same proportion as nationally (-1pp from the 2013 Employer Skills Survey)
Highlands and Islands employers more likely to report skills gaps but less likely to state under-utilisation of skills
Skills gaps particularly prevalent in elementary occupations
74% of employers with a skills gap say there is an impact on the business (70% nationally) but are more likely to view it is a minor one

17. Modern Apprenticeships
Schools
Modern Apprenticeships
Education and Training
The secondary school roll in 2015 was 27,049, 9.6% of Scotland total
93% school leavers had a positive
destination in 2015, compared to 92% nationally
Modern Apprenticeship uptake increased by 6% from 2014/15
10% of national total in 2015/16
Construction is the most popular MA framework group
24% of uptake
Heavily gender segregated - 97% male
78% MA achievement rate in 2015/16

18. Further and Higher Education
Scotland’s colleges and universities play a major role in developing a skilled workforce. In the Highlands and Islands, the University of the Highlands and Islands (UHI) provides educational opportunities to residents and also attracts students to the region.
Due to the unique and complex tertiary nature of UHI, 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.

19. Workforce Growth
The size of the working age population is expected to fall much faster in Highlands & Islands than in Scotland as a whole over the next 20 years
Nearly 80,000 fewer people of working age, further reducing the scope to raise GVA through increasing the number of people in work
Challenge in providing the skilled labour employers need as older workers retire
This is reflected in the forecasts for employment growth, within H&I a decline in the number of people in employment is forecast from 2016 to It is expected to decline by -0.8% compared to 1.0% growth nationally. Overall 1,900 fewer people will be in employment.
This represents a slower rate of decline compared to the -1.4% fall from 2006 to 2016
Note: analysis uses total employment (people) rather than total employment (jobs).
The former figure will be higher as a person can have more than one job.
Improving productivity will become the key determining factor in increasing economic prosperity
Highlands & Islands

20. Jobs and Skills Changes (1)
Total employment (jobs) is forecast to be 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

21. Jobs and Skills Changes (2)
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

22. Jobs and Skills Changes (3)
The majority of openings in Highland and 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

23. Jobs and Skills Changes (4)
Replacement demand will result in over 71,500 openings within Highlands and Islands region 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

24. Implications for Skills Investment Planning

25. 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

26. Highlands & Islands: Key Implications (2).
Recommended Areas of Focus
Engender more enterprise. A key route to for 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 will also have care needs that need 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

27. Highlands & Islands: Key Implications (3).
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 Inverness & Highland City Growth Deal and other investment. Tackling gender imbalances in the sector can be part of meeting these needs.
Glasgow

28. 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: Sector Trends and Specialisms