Labour Market Demand
Source: Annual Population Survey
Warwickshire’s working-age employment rate currently stands at 78.2%; down from 78.7% in the previous quarter. The employment rate continues to exceed regional and national averages of 72% and 75% respectively. A higher than average employment rate may indicate that economic growth is expected to increase, as more people are actively engaged in the labour market and will therefore wish to spend their disposable income. The biggest driver of employment change this quarter was faster growth in residents working part-time relative to those working full-time. A 0.7% drop in full-time employment nearly offset growth in part-time employment (+0.8%).
As discussed in the previous edition, firms may be utilising the labour market to employ workers flexibly so they can respond to cyclical threats most effectively. In this quarter for instance, the run-up to Christmas may have temporarily increased part-time employment. However, a general long-term shift towards part-time employment could potentially widen the productivity gap and therefore prolong wage squeezes.
Source: Annual Population Survey
Warwickshire continues to grow its entrepreneurial activity, as the proportion of working age residents in self-employment has risen at twice the rate of the national average over the last year. Figure 1 highlights Warwickshire’s considerable growth (+1.5%) relative to the West Midlands and England. The latest data shows that 14.7% of the working age population are self-employed, higher than regional and national averages of 13.2% and 14.5% respectively.
Linked to this, growth in self-employment (and part-time employment) can also be indicative of an expanding “gig economy” where there is a greater prevalence of short-term contracts and flexible working in the labour market. It is questionable whether the gig economy brings more opportunities or challenges to businesses and residents.
National studies show that a considerable number of self-employed jobs are generally characterised as low-paid with typically longer hours worked. The nature of contracts means that there is potentially less job security compared to permanent jobs. Overall, it is important to understand the drivers of both high-value and lower-skilled self-employment for supporting the changing labour market in the future.
North Warwickshire has the highest employment rate (85.3%) in Warwickshire and has experienced positive growth of over 12% over the last three years. This suggests that working age employment in North Warwickshire is growing around 12 times faster than the county average and around six times the rate of national growth. However, Nuneaton and Bedworth has seen positive quarter-on-quarter growth in part-time employment (+2.8%) relative to a decline in full-time employment, with Rugby performing fairly similarly (+2.1%). This suggests that the north of the county is a key driver of Warwickshire’s employment performance this quarter; both in terms of size and growth.
While Northern Warwickshire has seen quarterly shifts towards part-time employment, Stratford-on-Avon in particular experienced a sharp rise in self-employment of 4.9%. Historically, the area tends to be an important contributor towards Warwickshire’s high self-employment rate. Nevertheless, Warwick continues to grow its full-time employment base, with a 0.7% increase over the last quarter. Currently, three in every four (76.7%) working residents employed live in Warwick, the largest percentage share in the county.
(ii) Occupation change
Over the last three years, Warwickshire has experienced considerable growth in middle skill occupation employment as highlighted in Figure 2. The county has seen 1% growth in level 2 and 3 occupations; typically qualified at GCSE and A level equivalent, which bucks the national trend of a “hollowing out” of the middle skill workforce. The graph suggests that there are now fewer residents in Warwickshire working in level 1 and 4 occupations compared to three years ago. Higher-skilled occupations requiring a degree qualification have seen the biggest drag in growth of -1.4%. However, over the last six months there have been positive increases in higher-skilled occupations across Warwickshire (+0.9%).
Key drivers of the expansion in middle skill employment are associate professionals and process plant and machine operatives which have both seen the fastest rate of growth in the county over the last three years. However, the decline in the proportion of residents employed in professional occupations continues to have a downward drag on growth in higher skilled employment. This links closely with the demand in knowledge-intensive industries from the “Job Market Demand” section.
Warwickshire’s growth in its middle skill base mirrors the employment changes taking place in Rugby. Rugby saw a particular increase in level 2 occupations (1.2%), driven by faster annual employment growth in administration and clerical and sales and customer service. These occupations typically require lower qualifications and have a higher risk of automation relative to other occupations.
Over the last six months, Warwick experienced larger increases in higher skilled employment, due to a considerable rise in managers, directors and senior officials (3.8%). Interestingly, North Warwickshire has experienced a decline in middle skilled employment (-2.1%) over the same period, which is most reflective of what is happening nationally. This represents an hourglass labour market and a shrinking middle skilled workforce as the demand for higher and lower skilled workers continue to grow.