East Lothian Skills Assessment January 2016 SDS-1154-Jan16
Acknowledgement The Regional Skills Assessment Steering Group (Skills Development Scotland, Scottish Enterprise, the Scottish Funding Council and the Scottish Local Authorities Economic Development Group) would like to thank Ekosgen for their highly professional support in the analysis and collation of the data that forms the basis of this Skills Assessment Update.
Introduction What is this report? This is a specific skills summary report for the East Lothian local authority area, one of a series of 32 local authority reports across Scotland. These follow the preparation of 2015 summary Regional Skills Assessments (RSA) which have been developed by Skills Development Scotland (SDS), in partnership with Scottish Enterprise (SE), the Scottish Funding Council (SFC) and the Scottish Local Authorities Economic Development (SLAED) Group. The preparation of local authority-specific reports are designed to help support local authorities and partners with skills investment planning by providing local authority level data where this exists. The reports also supports SDS in planning its provision for individuals and businesses. This series of local authority reports sits alongside the 2015 RSA update reports which highlight some of the key messages for the regions. The local authority and regional updates are summary reports, underpinned by the full data matrix, available at sds.co.uk/what-we-do/partnerships/regional-skills-assessments/. The data matrix has been redesigned to be more user-friendly, and accompanying guidance on how to use the matrix can be found alongside the full data matrix. What has changed since 2014? The economic situation in Scotland has continued to improve in the last year, and the recovery evident at the time of the last RSA is more firmly established, with rising GVA and falling unemployment. Against many indicators, Scotland has returned to prerecession levels. There continues to be a rise in the participation of women and older workers, and youth unemployment previously apparent has started to fall. Still, underemployment remains an issue and productivity growth in Scotland (and the UK) remains weak and largely consumer-driven. In policy terms, a new Economic Strategy for Scotland is in place. This puts the 4 I s Internationalisation, Investment, Innovation and Inclusive Growth as central to the strategy. Increasing exports continues to be a key policy objective, and the prominence of Inclusive Growth reflects the desire for a re-balancing form of economic growth. Innovation, including workplace innovation, continues to be highly important. Investment continues to be necessary for firms to be successful. Existing strategies and policies also remain important, including the 2010 Skills Strategy and the 2014 Developing the Young Workforce - Scotland s Youth Employment Strategy. The 2015 RSA update seeks to reflect some of these policy developments. For the first time the data matrix includes deprivation indicators, and there is greater attention paid to inequality issues such as age, disability and gender indicators. There is also more detail on school-level provision, migration, travel to work/study, claimant counts and employment projections. 2
Selected headline indicator changes East Lothian Previous year Most recent year % change Economic performance Gross Value Added (GVA) ( m) 1,318 (2012) 1,436 (2013) +9.0% GVA per worker 27,600 (2012) 29,100 (2013) +5.4% Number of businesses 3,230 (2013) 3,300 (2014) +2.2% Profile of the workforce Total employment 27,400 (2013) 28,200 (2014) +2.9% Professional occupations 6,600 (2013) 6,200 (2014) -6.1% People and skills supply Total population 101,400 (2013) 102,100 (2014) +0.7% ILO unemployed 2,900 (2013/14) 2,100 (2014/15) -27.6% 16-24 unemployed 502 (2014) 254 (2015) -49.4% Deprivation Workless households 5,870 (2012) 4,869 (2013) -17.1% % of children with free school meals n/a 34% (2015) n/a Education and training MA starts 420 (2013/14) 475 (2014/15) +13.1% College provision (headcount)* n/a 21,007 (2013/14) n/a Higher Education provision (headcount)* n/a 60,221 (2013/14) n/a Skills mismatches % of employers recruited in past 2-3 years 72% (2014) (next updated 2016) n/a % of employers reporting not all staff fully proficient 21% (2014) (next updated 2016) n/a *Please note, this data is only available at the regional level, covering Edinburgh, East Lothian and Midlothian authorities. Please note, this data is only available at the regional level, covering Edinburgh, East Lothian, Midlothian, West Lothian and Fife authorities. 1 Economic performance East Lothian generates a relatively small proportion of Scotland s output, 1.2% of the total, which is in line with the previous year, largely a reflection of the size of the population and business base. Output is dominated by the production sector (23%) and by public administration (education; health) 22%. GVA increased strongly by 9% in 2013, compared to 2.9% in Scotland, up from 0.6% in 2102. Productivity levels in East Lothian are well below the Scottish and UK averages, and have increased only slowly in recent years. GVA per worker was 29,100 in 2013, 38% below the Scottish average of 47,000 and 43% below the UK average of 51,000. GVA per worker increased by 5% between 2006 and 2013, below Scotland (18%) and the UK (17%) increases. Most recent (2014) data shows that jobs in East Lothian, at 508 per week, pay slightly below the Scottish ( 519) and UK ( 518) averages, growing 3% from 2013, slightly above the 2% rise across Scotland. Those living in East Lothian earn more - 539 per week, with commuting into nearby Edinburgh for higher paid jobs common. 3
Business Base by Sector, 2014 Source: UK Business Counts Professional, scientific & technical Construction Retail Agriculture, forestry & fishing Arts, entertainment, recreation & other services Accommodation & food services East Lothian 0% 5% 10% 15% 20% Scotland There were 3,300 VAT/PAYE registered businesses in 2014, up 2.2% from 2013 to 2014, slightly below the 2.8% Scotland increase. However, overall the base has grown by 9% since 2010, well above the 5% growth in Scotland and 6% in the UK. The largest sector in the business base is the professional, scientific and technical sector, which accounts for 14% of businesses, one percentage point below the Scotland proportion. 2 Profile of the workforce 110 105 100 95 90 Index of Total Employment, 2009-14 Source: Business Register and Employment Survey Total employment has grown strongly in East Lothian since 2012. The area did not lose jobs post- the 2008-2009 downturn (as was the case across Scotland), although 2012 employment levels remained similar to 2009. At 28,200, 2014 employment in East Lothian was 6.8% higher than 2009, well above the 0.7% increase for Scotland, and out-pacing the GB growth rate over the same period.. 2009 2010 2011 2012 2013 2014 The health sector accounts for the East Lothian Scotland GB highest proportion of jobs in East Lothian, (17%, 4,800). This is above the Scotland (16%) and Great Britain (13%) proportions. East Lothian has a very high employment concentration in arts, entertainment and recreation (almost double the national level) in accommodation and food services (linked to tourism), and in the professional, scientific and technical sector, capturing some of the neighbouring Edinburgh jobs market. Education, retail and production are also concentrated and are major employment sectors. Unlike Edinburgh, however, financial and insurance employment, however, is underrepresented, at one third of the national average. Sectoral specialisation exists for those sectors with a value which is above 100%. Arts, entertainment, recreation Education Accommodation & food services Construction Professional, scientific & technical Retail Health Production Public administration & defence Wholesale Motor trades Transport & storage (inc postal) Property Business administration & support Information & communication Financial & insurance Agriculture, forestry & fishing Sector Specialisation, 2014 Source: Business Register and Employment Survey 0% 50% 100% 150% 200% 4
Reflecting the sector mix, the occupational profile in East Lothian shows a higher proportion in professional occupations (23%, 11,200), above the Scotland and UK average of 20%. East Lothian also has a larger proportion of the workforce employed in administrative and secretarial and in skilled trade occupations (both 13% versus 11%) in Scotland. There are fewer employed in lower skilled occupations as operatives in elementary jobs. Process, plant and machine operatives Caring, leisure and other services Managers, Directors & Senior Officials Occupational Profile, 2014 Source: Annual Population Survey Elementary occupations Sales and Customer Service Skilled Trades Occupations Administrative and Secretarial Associate Prof & Tech Professional Occupations East Lothian 0% 5% 10% 15% 20% 25% Scotland 3 People and skills supply The population of East Lothian increased further in 2014, by 0.7% to an estimated 102,100. The population has grown strongly since 2004, by 11%, well above the growth in Scotland (5%) and the UK (8%) over the same period. Part of this population growth has been amongst those commuting into Edinburgh for employment, and those moving out from Edinburgh into East Lothian. 115 110 105 100 95 90 Index of Total Population, 2004-14 Source: Mid-Year Population Estimates 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 East Lothian Scotland UK The employment rate for East Lothian in 2014/15 was 75%. This is two percentage points above the rate for Scotland and Great Britain, and in line with the rate from the previous year 2013/14, although slightly below the 2007/08 pre-recession employment rate of 76%. In 2014/15 there were 2,100 ILO unemployed (those out of work and actively seeking work), down from 2,900 in 2013/14. The ILO rate in 2014/15 fell to 4% in East Lothian, below the Scotland and UK rates (6%). In 2015 there were 254 recorded unemployed young people aged 16 to 24, a significant decrease of 49% since 2014. The proportion of school leavers entering Higher Education in 2014/15 was 35%, down from 39% in 2013/14, and below the Scotland rate of 38%. The percentage entering Further Education (23%) increased from 18%, while the proportion entering employment remained the same, at 29%. A higher proportion of those aged 16-64 years in East Lothian have high level qualifications (45% at SCQF 7-12), compared to 41% in Scotland. 7% have no qualifications, compared to 9% in Scotland. Amongst 16-24 year-olds, 29% have Higher-level qualifications (SCQF 6) marginally above the 27% in Scotland. 5
4 Deprivation 16% of East Lothian households are workless households (2013), compared to 20% in Scotland, and 17% in the UK, 4,869 households in total. Over one third (36%) of households have incomes above 30,000, compared to 31% across Scotland. In all, 34% of those at school in East Lothian are entitled to free school meals, below the national average of 39%, reflecting income levels. 5 Education and training provision There were 5,600 pupils enrolled at secondary school across East Lothian in 2014, 28% of whom were S5 and S6, broadly in line with the 29% across Scotland. There were 475 SDS-supported MA starts in 2014/15, an increase on the 420 in 2013/14. 58% of starts were male and the remainder female (42%). There were 455 SDS-supported MA leavers in 2014/15. There is no further education institute in East Lothian. Within the wider Edinburgh and the Lothians region in 2013/14, 21,007 students (headcount) were studying at Edinburgh College. Three quarters (75%) of these were studying at FE level and 25% at HE level; 77% of Edinburgh and the Lothians region residents who are at college study locally. 1 Similarly, there is no higher education institute in East Lothian. In Edinburgh and the Lothians, 60,221 students (headcount) were studying at Edinburgh University (31,203), Napier University (13,097), Heriot-Watt Edinburgh University (10,301), Queen Margaret University (5,224) and SRUC Edinburgh (396) in 2013/14. There were 22,606 graduates from the region; 13,827 with a first degree (61%) and a further 8,779 postgraduates (39%). 2 6 Skills mismatches 3 72% of employers in Edinburgh, Fife and the Lothians had recruited in the 2-3 years prior to the UKCES survey, and 32% had taken on leavers from Scottish education institutions (above the 67% and 26% across Scotland). Just over a fifth (21%) of employers in Edinburgh, Fife and the Lothians reported that not all of their staff are fully proficient, just above the average for Scotland of 19% - with skills gaps most likely in elementary staff, operative, sales and customer services, care and leisure and skilled trade occupations. 7 Looking forward The population of East Lothian is forecast to grow strongly by 9,258 over the period from 2014 to 2024, an increase of over 9%. 1 Please note, this data is only available at the regional level, covering Edinburgh, East Lothian and Midlothian. 2 ibid. 2 3 Please ibid. note, data is from 2013 as the UKCES Employer Skills Survey is only undertaken every two 3 Please years. note, Further, data is data from is only 2013 available as the UKCES at the Employer regional level, Skills covering Survey is Edinburgh, only undertaken East Lothian, every two years. Further, data is only available at the regional level, covering Edinburgh, East Lothian, West Lothian, Midlothian and Fife local authorities. 6
This compares to 5% growth at the UK level, and a 4% rise across Scotland. The school roll is projected to decrease by 2% to 5,700 in 2016, before rising steadily to 6,000 by 2018, an overall increase of 3%. Across Scotland, the trend is for a 2% fall over the period to 2018. Based on 2012 figures, national employment figures are projected to rise by 5.3% from 2012 to 2022, with the fastest increases occurring between 2017 and 2020. The greatest levels of growth are expected in information technology (32%) and health and social work (17%). There is projected to be a fall in agriculture employment (-15%), other manufacturing (-12%) and public administration (-11%). 8 Summary The economy of East Lothian has grown strongly in recent years, benefiting from the continued success of neighbouring Edinburgh. Employment in East Lothian has grown faster than it has across Scotland and Great Britain over the last five years, with strong representation in the arts, entertainment and recreation and professional, technical and scientific sectors. Many are higher paid and higher value added jobs, and a higher proportion of the workforce are in professional occupations than is the case across Scotland. As total employment in the area has increased, unemployment has continued to fall, as it has done on average across Scotland. Youth unemployment halved in East Lothian between 2014 and 2015. The overall population is relatively affluent, with the proportion of workless households falling, and below the Scottish and UK averages, and with a lower share of school children entitled to free school meals. At the same time, those living in East Lothian continue to earn more on average than jobs pay in the area, given strong commuting flows to higher paid jobs in Edinburgh. Jobs in East Lothian pay less than the Scotland and UK averages, reflecting that a number of typically lower paid sectors still comprise a large proportion of the employment and business base, including agriculture, forestry and fishing and accommodation and food services, linked to tourism. The production sector is still important in East Lothian, with skilled trades representing a higher than average share of the workforce. The challenge in East Lothian is therefore to continue to meet the demands of growing sectors, embedding them more fully in the area, whilst meeting the needs of employers in more traditional sectors that remain a large proportion of the economy. Further increasing the number of jobs in the area, and attracting people to work in East Lothian, will help reduce effects of commuting to Edinburgh on the local economy. The population of East Lothian has grown strongly over the last decade, and is expected to continue to rise to 2024, well above Scotland and UK forecast growth, and meeting the needs of this expanded population will also be important, for example those with health and social care requirements linked to an ageing population. 7