dt s alan mc gregor economic 16+
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SCOTLAND’S CHANGING LABOUR MARKET: CHALLENGES AND OPPORTUNITIES FOR YOUNG PEOPLE
PRESENTATION TO DETERMINED TO SUCCEED GATHERING
26 October 2009
Professor Alan McGregor
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PLAN OF PRESENTATION
1. Young people and recessions
2. Recent labour market developments
3. Impacts on young people
4. What future may hold
5. Implications for education sector
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YOUNG PEOPLE AND RECESSIONS
1. Young generally fare badly because outside labour market trying to get in
• Employers cut back on recruitment
• Employees sit tight leading to many fewer turnover vacancies
2. Young people suffer most damage from unemployment
• Increases probability of future unemployment
• Reduces long-term earning power
3. Long-standing concerns about ‘lost generation’ in labour market terms
• Big issue in 1930s
• Again in late 1970s/early 1980s
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LABOUR MARKET IN RECESSION
1. Used to long period of jobs growth (SEE CHART)
2. Since around summer of 2008 in Scotland
• Around 82,000 redundancies since April 2008
• Notified vacancies have fallen – 40% for worst 12 month period
• Employment levels have declined – hard to quantify
• Hours worked fallen on average
• Unemployment has risen – for all groups – as we will see later
3. Redundancy information less reliable but we know has hit disproportionately those traditionally most vulnerable to recession
• Manufacturing industry
• Low skilled workers
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Total Employment, UK, 1971-2007
20,000
22,000
24,000
26,000
28,000
30,000
1971 1975 1979 1983 1987 1991 1995 1999 2003 2007
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RECESSION AND YOUNG PEOPLE
1. Stats take too long to update (See Charts)
• Unemployment edged up in 2008 as SL ‘destination’ …
• … but MCMC numbers edged down
• 2009 SL destination data will be out soon
2. Often hard to tell impacts at early stage as previous recessions show ‘disguised unemployment’
• More stay on longer at school
• More go to college and university
3. Probably less scope for ‘disguised unemployment’ now
• School staying on rates much higher
• Proportions going to college and university much higher
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School Leaver Destinations (% Unemployed),
2002/03 16.0
2003/04 16.4
2004/05 13.1
2005/06 13.2
2006/07 12.0
2007/08 12.4
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16-19 Year Olds in MCMC Group (%)
2003 13.7 36,000
2004 13.3 35,000
2005 14.2 37,000
2006 12.4 32,000
2007 12.2 32,000
2008 11.9 31,000
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RECESSION AND YOUNG PEOPLE (CONT)
4. Unemployment (Job Seeker Allowance claimants) has risen significantly (SEE CHART)
• Not much difference by age group …
• … but nonetheless now around 13,000 18/19 year olds and 25,000 20/24s unemployed …
• … and this is narrowest measure, so it’s actually worse than this
5. Long term unemployment growth much higher for under 25s
• Numbers still relatively low …
• … but we need to keep close eye on them
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JSA Claimants: Total and 26 week + by Age Group
Sept 2008 Sept 2009 % Change
JSAClaimants
18-19 8,485 12,920 +52.3
20-24 15,750 24,940 +58.3
25 + 55,610 89,455 +60.9
JSAClaimants26 weeks +
18-19 855 2,210 +158.5
20-24 1,955 5,020 +156.8
25 + 16,990 33,170 +95.2
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RECESSION AND YOUNG PEOPLE (CONT)
6. On wider unemployment measure (people claiming DWP out of work benefits, including JSA)
• 73,000 unemployed under 25s (Almost twice JSA numbers)
• 31,000 unemployed for 6 months or more (4 times JSA numbers for long-term unemployed)
• Growth in numbers ‘only’ 27% over last full year – but 4 times rate of increase for 25+
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THE ECONOMY: LOOKING FORWARD
1. No one knows
• Type of recovery likely
• Timescale for recovery (SEE CHART)
2. Can look to past (SEE CHARTS)
3. Looking forward, very high level of public debt
• Needs to be serviced
• Needs to be run down
• Big implications for taxation – and household spend
• Big implications for public spending
• Big implications for public sector jobs
• Big implications for sectors selling to government
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RECOVERY SCENARIOS
1. V Shaped
2. Double Dip
3. Bumping Along
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TELLING FUTURE FROM PAST
Source: The Scottish Government
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THE ECONOMY: LOOKING FORWARD (CONT)
4. Long run higher sensitivity to risk for global investors
• Higher interest rates in the long term
• Lower growth rates
• Lower employment growth
• Underlying productivity growth around 2.0% - so economy
needs to grow above this to create extra jobs
• Last 5 years averaged only 2.3% growth
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EMPLOYMENT: LOOKING FORWARD
1. Employment levels forecast to be slow to grow (See Chart)
• May not start rising till 2012
• 2008 employment levels not expected to be achieved until
2016/2017
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Source: Scottish Enterprise
Employment in Scotland 2008-2019
2,560,000
2,580,000
2,600,000
2,620,000
2,640,000
2,660,000
2,680,000
2,700,000
2,720,000
2,740,000
2,760,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Nu
mb
er
em
plo
ye
d
EMPLOYMENT FORECAST TO INCREASE, FROM 2012
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TOMORROW’S INDUSTRIES
1. Bear in mind currently 67% of Scottish 16-19s work in only 4 sectors• Hotels and restaurants• Wholesale and retail• Other community, social and personal services• Construction
2. National projections – assumes future same as past• Decline of manufacturing• Growth of services
3. Scotland’s priority sectors? (SEE CHARTS)• Numbers in some of priority industries relatively small
4. ‘Green Jobs’ – around 880,000 in UK• Environment (21%)• Renewable energy (29%)• Emerging low carbon (50%)• Pre-recession forecasting approx. 50% growth over 5 years for UK
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GOVERNMENT ECONOMIC STRATEGY - OUR SECTOR FOCUS
GES – Our sector focus
Aerospace,
Defence &
Marine
Chemical
Sciences
Forest
IndustriesTextiles
Other Growth Sectors
Key Sectors
Tourism(Destinations,
Products)
Life Sciences(Stem Cells,
Translational Medicine)
Food + Drink
Financial &
Business Services
Energy(Renewables, Oil & Gas
Thermal Generation)
Creative Industries(Digital Markets)
Enabling Technologies
Enabling Technologies
Construction
Source: Scottish Enterprise
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EMPLOYMENT IN KEY AND OTHER GROWTH SECTORS (2006)
Industry Employees
Tourism 206,600
Construction 126,100
Financial and Business Services 90,389
Creative Industries 46,700
Food & Drink 46,000
Energy 44,700
Life Sciences 27,400
Chemical Sciences 14,100
Textiles 10,400
Forest Industries 3,300
Source: Scotish Enterprise
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TOMORROW’S INDUSTRIES (CONT)
5. New Industry, New Jobs - UK industry strategy. Get in behind growth potential of:
− Low carbon
− Digital markets
− Life Science and pharmaceuticals
− Advanced manufacturing
− Professional and financial services
− Engineering construction
− Services and products for ageing society
6. Public sector …… ?
• Around 23% of Scotland’s jobs – approx 572,000
• Cuts a certainty, size of cuts unknown (10-30%?)
• … although many of jobs still need to be done
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TOMORROW’S OCCUPATIONS
1. Groups expected to show the most significant net increases at UK level:
• managers & senior officials (+ 872k, 1.7% pa)
• professional occupations (+ 643k, 1.5% pa)
• associate professional & technical occupations (+ 654k, 1.4% pa)
2. Declines projected for:
• administrative, clerical & secretarial
• skilled manual & electrical trades
• other skilled trades
3. Replacement demand will still mean many vacancies in declining areas
Source: UKCES
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DEMOGRAPHIC CHANGE
1. Young people (16-19) currently at peak levels (SEE CHART)
2. Decline in absolute and proportionate terms through next decade (SEE CHART)
3. Should make labour market entry easier
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16 to 19 Year Olds in Scotland, 2008 to 2028
160,000
180,000
200,000
220,000
240,000
260,000
280,000
300,000
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
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Change in16-19 and 16-64 Year Olds (2008 = 100)
70
75
80
85
90
95
100
105
1102
008
20
10
20
12
20
14
20
16
20
18
20
20
20
22
20
24
20
26
20
28
16-19s 16-64s
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SOME CONCLUSIONS
1. Growing unemployment for young people with particular concerns around
• More rapid growth of long term unemployment
• High percentage on IB and IS
2. Employment levels likely to be depressed for some time – probably at least 3/4 years
3. Scotland’s biggest sector – public sector – likely to take big cuts
4. What employers looking for not likely to change – basic and core/soft skills
5. Demographic trends favour younger age group over next decade
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MESSAGES FOR EDUCATION
1. Better understanding of credit and finance!!
• Risks and returns
2. Better understanding of how economy changing
• What are new industries and jobs?
• What does these actually mean – ‘green jobs’!!
• What education and skills needed to access them?
• Many traditional industries and occupations will continue to be there
3. Need flexible system on vocational skills
• Continuing demand for more traditional skills (e.g. construction)
• Which specific demands will grow most quickly out of recession - hard to call …
• … so need to identify emerging trends quickly and respond quickly
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MESSAGES FOR EDUCATION (CONT)
4. Building strong base of transferable skills – fit needs of all employers, and indeed life in general
• Basic skills
• Core/soft skills
5. Opportunity to create more enterprising attitudes and behaviours – build Scotland’s business base
• Correcting for population Scotland has only around 85% of the businesses, and new business starts compared to UK
6. Generally create more resourceful young people – which I think Determined to Succeed is all about