Economy and Employment

Introduction

Employment prospects and the current/future economic outlook are two of the key wider socio-determinants of health. Unemployed people are significantly more likely than employed people to have poorer mental and physical health.

What are the big issues?

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The UK unemployment rate has decreased rapidly in recent years, with unemployment reported to be at a seven year low in the three months to September 2015. The unemployment rate in Warwickshire has also decreased significantly, with current rates at the lowest seen in 10 years. The Claimant Count can be used to indicate the level of unemployment in local areas. This figure counts the number of people on Jobseeker’s Allowance (JSA) and also those on the out-of-work element of Universal Credit. However, the Claimant Count does include some out of work claimants in receipt of Universal Credit who are not required to seek employment; for example, due to illness or disability.

Employment and Support Allowance (ESA) is a benefit for people who are unable to work due to illness or disability. There are two ESA categories: the support group, which is for those who are not expected to return work; and the work-related activity (WRA) group, which is for those with less severe conditions, who may be able to return to work. Within Warwickshire, 2,690 of the 14,500 claimants were in the WRA group. From April 2017, new group claimants will receive £30 less a week than the current rate. Whilst the Chancellor suggests this will provide an incentive for claimants to return to work quicker, the Disability Benefits Consortium (DBC) argue the cuts could potentially lead to hardship for those claimants, and may actually have a detrimental effect on claimants’ health, delaying their return to work.

The outlook for Warwickshire appears positive, with wages higher than the equivalent regional and national figures and unemployment low. However, some of the negative effects of the recession are still being felt. Many workers lost overtime payments, had to decrease their working hours and took pay cuts as a result of the recession. Only recently have we seen workers be able to gain back some of their earnings. In the near future the introduction of the ‘Living Wage’ should help keep families further away from the breadline, however this may also mean employers will employ less people and will keep their wages static for longer.

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Over the last ten years, Stratford-on-Avon District has seen the largest decrease in JSA claimants, with 70% fewer claimants in 2015 when compared to 2005. In contrast, Nuneaton & Bedworth Borough has seen the smallest reduction in JSA claimants during this period, reducing by 30%. Across all of the districts and boroughs, JSA figures peaked in 2009 as a result of the recession. Across the county, these figures reduced year on year and by 2013 had returned to the levels witnessed pre-recession.

Nuneaton & Bedworth Borough also has the highest ESA claimant rate (6.2%) in the county; whereas Stratford-on-Avon has the lowest rate (3.3%). Moreover, Nuneaton & Bedworth Borough has the largest proportion of LSOAs ranked within the top 30% most deprived nationally, for the ‘Employment Domain’ of the IMD 2015. This measures the proportion of the working-age population involuntarily excluded from the labour market, per LSOA. The IMD provide an employment domain numerator, based on the number of JSA , ESA and incapacity benefit claimants, and claimants of carer’s allowance. Nuneaton & Bedworth Borough has a significantly higher proportion of LSOAs containing employment deprived people (37.0%) compared to the other districts and boroughs.

Full time workers, who reside in Nuneaton & Bedworth Borough, also earned less than their counterparts elsewhere in Warwickshire. Comparing the above datasets there are large variations cross the county in terms of income and employment. Nuneaton & Bedworth Borough consistently performs poorly when compared to the other districts and boroughs in Warwickshire.

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The above data visualisation looks at the proportion of unemployed residents across the county, in addition to the West Midlands and England. Long-term unemployment looks at the proportion of residents claiming JSA for 12 months or more, whilst youth unemployment looks at the proportion of 16-24 years olds claiming JSA. The visualisation also ranks the areas relative to each other. Across all of the areas included, unemployment peaked in 2009 as a result of the recession, however long-term unemployment peaked in 2013, highlighting that the ramifications of the recession were still being felt in later years. When looking solely at JSA claimant rates, Nuneaton & Bedworth Borough consistently has the highest levels of unemployment in the county, and up until 2015 this rate was higher than the England average.

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Figures indicate the median earnings for a full time worker working in Warwickshire are £787 a year lower than the equivalent for England. However, compared to the West Midlands median annual income is £1,306 higher in Warwickshire.

A 6% fall in employment growth in Warwickshire during 2006-14 was driven by sharp employment falls in professional services and financial & insurance services. Generally, the trend is fairly consistent with regional and national averages. However the “lag effect” of employment means that since 2012, Warwickshire has experienced a faster rate of economic recovery, with an increase of approximately 4,000 employed during 2012-14 (+1.36%). Forecasts show that employment will increase by 6%, exceeding national projections, particularly due to expected growth in food & beverage & IT services.

GVA (Gross Value Added) is total economic output produced in the economy. A decline in GVA is equivalent to negative economic growth; therefore the economy is under-performing compared to pre-recession levels. Industrial performance can influence business activity and employment; hence affecting total GVA. Forecasts suggest a 24% growth in GVA between 2015 and 2025, representing an injection of approximately +£2.8 billion into the local economy.

This is likely to be driven by growth in real estate and IT services. Productivity is expressed as output produced per worker (GVA/employment). In 2014 some £36,859 was produced per worker in Warwickshire compared to £39,678 nationally, equating to a £2,819 productivity gap against England. Forecasts show that this gap is projected to widen by 2025, with Warwickshire lagging further behind the UK. Low productivity can be attributed to many reasons, such as an increase in part-time and temporary employment after the recession, leading to stagnant wage growth and less hours worked. Some also suggest that low productivity is due to the general shift towards low-skilled jobs and lack of high-skilled job creation.

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There is clear disparity in median workplace based earning across the county, with median annual earnings in Rugby Borough £7,941 greater than in North Warwickshire Borough. Both North Warwickshire Borough and Nuneaton & Bedworth Borough have median workplace based earnings lower than the equivalent figures for both the West Midlands and England.

Despite poor earnings figures, North Warwickshire Borough is forecast to have the greatest levels of employment growth between 2015 and 2025. Moreover, North Warwickshire had the smallest reduction in employment growth between 2006/14. Conversely, Nuneaton & Bedworth Borough is forecast to have the smallest increase in employment growth in the county, and saw the largest reduction in employment growth between 2006/14.

Nuneaton & Bedworth Borough also had the lowest level of GVA growth and is forecast to continue to have the lowest level of growth in the county. In previous years, Warwick District experienced the most GVA growth, however forecasts suggest Stratford-on-Avon District and Rugby Borough will experience greatest levels of growth between 2015/25. Whilst previously Rugby Borough had the lowest levels of productivity growth, forecasts indicate Rugby Borough will have the highest levels of productivity growth in the county by 2025.

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The graphic shows the number of businesses within each district and borough in the county. Figures suggest Warwickshire is home to 52,140 businesses, with 14,944 of these businesses located in Warwick. North Warwickshire has 5,742 businesses, the smallest number in the county.

It also shows businesses by industry, identifying the top ten industries within each district and borough. At county level construction accounts for the largest proportion of businesses, this trend is also seen in North Warwickshire, Nuneaton & Bedworth and Stratford-on-Avon.

Transportation and Storage is the most popular business type in Rugby, and Professional, Scientific & Technical Services is the most popular business type in Warwick District. Warwickshire experienced a 9% growth in the number of businesses between 2006-14. When comparing business growth across the county, Rugby Borough experienced the largest increase in business growth (18%), whilst North Warwickshire experienced the least (3%).

Outlook

The Coventry and Warwickshire Local Enterprise Partnership (CWLEP) promotes the area as a good place to do business by creating the right conditions and infrastructure for investment. In September 2014, CWLEP signed a Growth Deal with Government potentially worth over £100m to the local economy. This will help improve public transport, provide office space for SMEs (Small and medium size enterprises) and launch start-up initiatives across the region, all of which should increase job opportunities and employment rates. This positive economic activity along with the trends highlighted, suggest that the outlook for Warwickshire’s workforce and economy is strong. However, this has to be set against the backdrop of the Government’s unprecedented welfare reform programme, uneven economic recovery and uncertain growth in Europe; the impacts of which are still to emerge fully.

What do we need to do?

-Helping local people to be productive either in paid or unpaid work to support their transfer towards future employment will have a beneficial effect on demand for health services in the future.
-Local partners operating through the Local Enterprise Partnership (LEP) will need to help create the conditions for economic growth and effectively address the weaknesses, risks and inequalities across Warwickshire and the sub-region.

Who needs to know?

-All stakeholders

Further information

Comprehensive data and analysis describing the county’s workforce and economic performance, including unemployment, worklessness, output and productivity is contained within the Observatory’s latest Quality of Life in Warwickshire 2014-15 Full Report (PDF, 13.25 MB).

The Coventry & Warwickshire Local Economic Assessment also contains a wealth of relevant economic analysis.