South West Regional Skills Enterprise and Employment Analysis 2007/2008

Final Report

3.1 Context

The context is perhaps best summed up by the Leitch Report which highlights the following:

Demographic, technological and global changes present enormous challenges and brilliant opportunities. The population continues to age. Technological developments are occurring faster than we dreamed, dramatically altering the way we work. Competitive pressures on all sectors of the economy are increasing. Manufactured goods, and increasingly services, are traded across the world. Developed nations are relying more and more on their capacity to innovate to drive economic growth. The ability to do this depends upon the skills and knowledge of their people. Our nation’s skills are not world class and we run the risk that this will undermine the UK’s long-term prosperity. (p1)

UK productivity continues to trail many of its main international comparators. Whilst there has been much progress, the UK also has serious social disparities with high levels of child poverty, poor employment rates for the disadvantaged, regional disparities and relatively high income inequality. Improving skill levels is therefore seen as critical in addressing all of these problems.

The UK economy has a number of strengths, yet there are many weaknesses, particularly with basic and intermediate skill levels. Like many Western economies, the UK has an ageing population and falling birth rates. More than 70% of the 2020 workforce has already completed their compulsory education. Encouraging the take up of training beyond compulsory education is critical.

Within the South West, the region continues to enjoy a high degree of labour demand, a well-qualified workforce, an efficient and equitable functioning between the demand and supply sides of the market. On these indicators, this region continues to be more 'healthy' than any other region with the exception of the South East.

Yet despite this relatively rosy picture, a number of indicators point to the fact that the region is operating in a low-skills equilibrium. Whilst improving, productivity is relatively low, and lower than one would expect given the region’s highly qualified workforce. Employers report relatively few skill gaps within their workforces, and little difficulty recruiting the skills they need from the external workforce. However, gaps are reported significantly in a few sectors and occupations. A significant problem is presented by the markedly differing fortunes of the region. Low output per head, low earning levels and relatively high unemployment dominate the picture for the west of the region, while the reverse is the case for the north and the east of the region.

Table 2 below sets out the key features of the South West economy and labour market.

It is also important to understand the drivers, issues and prospects in relation to skills, enterprise and employment. These are set out in Tables 3, 4 and 5 in Skills Challenges, Enterprise Challenges and Employment Challenges.

Table 2 Key features of the South West Labour Market (Click image to open in new window)