February 2018

Labour Market Bulletin

Labour Market Supply

(i) Labour market participation


Economic activity is a measure of labour participation and remains an important driver for the future supply of labour available locally. Economic activity includes those of working-age that are both employed and unemployed. Table 5 summarises the latest changes in labour participation and shows that 80% of Warwickshire’s population is actively engaged in the labour market. This is a slight dip from the last quarter but comfortably exceeds regional and national averages of 76% and 78% respectively. High labour force participation is good for the economy and reflects healthy job demand and the changing demographic profile of Warwickshire.

Across districts and boroughs, there has generally been little change in the proportion of working-age residents who are economically active. However, North Warwickshire has seen significant quarterly growth of nearly 10%. This suggests that the labour supply is expanding which is improving the state of the labour market, particularly if supply is beginning to match demand. Warwick meanwhile has seen a drop in economic activity, which means that labour force participation has decreased over the last quarter. Falling labour force participation can affect business capacity and therefore economic growth in the longer term, if the pool of labour available to work continues to shrink.

(ii)     Unemployment

The latest data shows that only 2.6% of Warwickshire’s working-age population are currently unemployed, nearly halving the national average of 4.6% and far exceeding the West Midlands unemployment rate (5.5%). All areas have seen a downward trend in the number of residents unemployed over the last year, excluding Coventry which has seen working-age unemployment nearly double to 5.3%. A low unemployment rate suggests that it is relatively easier to access job opportunities in Warwickshire compared to other areas. As fewer people are looking for work, this will increase the incentive for employers to boost pay. While this is good for the economy, a historical trend of low unemployment could mask the degree of “under-employment” in the labour market i.e. the proportion of residents who are working part-time but wish to find a full-time job.

Source: NOMIS model based estimates of unemployment, Labour Insight

Figure 9 compares the ratio of unemployed residents per job vacancy in Warwickshire to England over time. While the national ratio has remained relatively stable (5.3 current vacancies per unemployed resident), there appears to have been a considerable increase in Warwickshire’s ratio (14.5 current vacancies per unemployed resident) over the last four years. This is reflective of the business cycle, where job demand increases during a boom in activity but decreases during a recession. The ratio has grown by over five times locally, compared to two times at national level. The evidence supports that there is greater ease in finding a job in Warwickshire compared to elsewhere as there is less competition between job seekers. However, falling unemployment could mean employers are increasingly looking to recruit workers living outside the county if demand continues to rise.


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