November 2017

Labour Market Bulletin

Examining Warwickshire’s north and south labour market: A cohesive future

It is no secret that a “north-south divide” exists in Warwickshire with historical underpinnings having driven the vast specialisation of traditional production industries in the north and growth in knowledge-intensive service industries in the south of the county. But recent trends show that Warwickshire’s economy is becoming increasingly inter-dependent, which is contributing to a robust and healthy labour market.

Table 6 labour market indicators

Note: Northern Warwickshire includes North Warwickshire, Nuneaton & Bedworth and Rugby. South Warwickshire includes Stratford-on-Avon and Warwick.

Table 6 brings together a range of different labour market indicators to assess whether there are stark differences in Northern Warwickshire’s labour market compared to South Warwickshire’s. Northern Warwickshire currently has a higher working-age employment rate of 79.8% with faster quarterly and annual growth of up to 4%. This represents an area of the labour market where there are improvements in economic slack, having seen the strongest growth over the last year.

In comparison, the employment rate in South Warwickshire is slowing down; where there are now fewer residents of working age employed compared to the previous year (-1.55%). These trends have resulted in the north of the county having a slightly higher labour force participation rate of 82.2% relative to 80.7%. The job demand in high-wage sectors (financial and insurance, manufacturing and IT services) is also increasing at a faster rate compared to the south. Job vacancies advertised from these sectors grew positively over the last year (2%) whilst South Warwickshire bucked the trend entirely (-2%), suggesting that employer demand in high-wage sectors is shrinking in the south of the county. As job demand continues to increase from high-wage sectors and the labour force participation rate rises over time, the quality of jobs advertised is improving.

We have emphasised the labour market strengths in Northern Warwickshire but what is happening in the south of the county? Job vacancy demand has accelerated at a faster rate (23% over the last year) which is the main indicator of employer demand. There are currently 51 job vacancies advertised per 1,000 population, doubling the concentration in the north. This suggests that there is high job demand amongst South Warwickshire’s population and that there are many employment opportunities available locally. To some extent, a considerable proportion of job vacancies may also be filled by commuters from the north if the supply of labour available to work continues to expand.

Moreover, employer demand is shifting towards higher skilled occupations (level 3 and 4) with professionals and skilled trades over-represented in job vacancies. A focus on job vacancy share instead of growth rates shows that about two-thirds of jobs advertised are higher-skilled jobs (65%) compared to lower-skilled over the last quarter. This indicates a strong upskilling in the economy and reinforces the significance but also threat of digitalisation in South Warwickshire’s labour market. What is important for the future, is whether higher-skilled advertised job growth picks up relative to lower-skilled growth

Alongside labour market strengths, there are important weaknesses to highlight for both areas which are interlinked. Northern Warwickshire has a higher than average employment rate which seems to be fuelled by increases in part-time and self-employment over the last year (2.2 and 4.1% respectively). Despite the greater flexibility, this implies that there are fewer job opportunities available to work full-time hours which has implications on future wages and productivity.  South Warwickshire has seen high employer demand for higher skilled occupations, but also a simultaneous rise in temporary jobs where there are currently 31 temporary jobs advertised per 10,000 people, doubling the north’s average. In addition, over a quarter (28%) of jobs advertised in the south were associated with STEM skills from Q3. However a rise in JSA claimants in the short term may loosely suggest there is a general labour supply shortage to satisfy employer demand. This to some extent poses a threat to sustainable growth.

So, is Warwickshire’s labour market becoming more cohesive? Based on labour market evidence, there are current strengths and weaknesses in both markets because the north and the south are very interlinked in terms of economic activity and the mobility of businesses and people. Data suggests, however, that the gap is narrowing, which means we are on the path towards sustainable growth in the long term.

There are many upcoming economic opportunities to help further close this gap in the future and Warwickshire County Council will ensure that the economic growth agenda for both the north and south of the region continues to be at the forefront of priorities.

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