Our Economy

The Nottingham and Nottinghamshire economy has gradually been changing from a low value reliance on traditional industries to a more ‘knowledge intensive' economy, which is better able to compete in global economic markets. Part of this challenge is to develop Higher Skills for Nottinghamshire so that our knowledge based industries will bring wealth to the sub region. Our economy also has a strong service sector base capable of providing Employment for All.

After a decade of economic growth and growth in labour market demand, the UK has been part of a deep global recession. Unemployment has risen, particularly amongst young adults. Some parts of the county, particularly in the north have been hit harder than others and some sectors of the economy have experienced a more severe impact.

Businesses see improving the local skills base as a priority, both in the short and long term. At ‘Nottinghamshire Thinks', a business engagement event held in January 2009 and follow up workshops, the following themes emerged as priorities for attention:

• The value of partnerships between business and schools, and the importance of schools in raising aspirations and producing job-ready young adults. A previous business survey for the Nottinghamshire Learning & Skills Council (LSC) in 2006 identified difficulties in filling jobs due to the ‘attitude' of applicants and a lack of interest in the work on offer.

• In the short to medium term, retaining skills at risk of being lost in the recession, whilst also building skills for future industries and modernisation of existing industries.

• The complexity of defining and meeting demands because of the breadth and variety of requirements, from basic literacy to high end engineering. The January 2009 regional Federation of Small Businesses survey illustrates this - a third of skills shortages identified were ‘sector specific'.

• The need to grow or attract high skills/high pay jobs to attract and retain a highly qualified workforce and graduates. Analysis by emda to inform the Regional Economic Strategy concluded that a ‘low pay low skills' equilibrium persists in the East Midlands.

Subsequent work on the Joint Headline Economic Assessment by the City and County Councils points out:

• Past recessions indicate unemployment continues to rise even when economic recovery begins and may remain high for several years. This experience however, was in a different policy context and greater flexibility within the workforce with part time working and reduced hours may well have limited the impact on unemployment in the present recession.

• There are big challenges for the economy ahead. Whilst diverse, there are important sectors at risk and the growing science and leisure sectors are still relatively small.

• The public sector is highly significant across Nottinghamshire as a source of jobs, but will also face major challenges as finances are reduced.

• Skills is a critical challenge. A large proportion of working age residents have no qualifications and the unskilled make up a large and growing proportion of the unemployed.

• Raising demand for skills from existing businesses is essential, but this must be matched by developing a more extensive business base with higher quality jobs.

We commissioned Experian to provide the background context for our Working and Skilled Strategy.

They found that the Nottinghamshire economy performed in line with the East Midlands showing steady growth, and around 34,000 jobs were created in the County between 1998 and 2008. The recession has however impacted different businesses and individuals in different ways, and hence some areas have proved more resilient than others. This has meant over 12,000 jobs lost from Nottinghamshire's labour market, concentrated in distribution, hotels and catering; manufacturing; financial and business services and construction. Unemployment has risen to 29,000, equivalent to a rate of 4.3% which is higher than both the region (4.0%) and UK (4.1%) in December 2009. Nationally, we know young adults and those with low skills have been disproportionately affected and recent evidence supports this locally.

The chart above shows that the proportion of the total unemployed which is made up of young adults, and particularly those claiming for more than 6 months, has increased significantly over the last two years. Whilst it is encouraging that youth unemployment in Nottingham City has fallen twice, both in November and December, the number of longer term 18-24 year old claimants has continued to rise and, in Nottinghamshire, this has been quite sharply. This suggests that it is those hardest to reach young adults who continue to be without work.

At a national level recent research by the Institute for Public Policy Research (ippr), using the Labour Force Survey, has shown that young adults from ethnic minorities have been particularly affected, with 48% of black young adults now unemployed compared to 20% of white young adults (based on national rates). Mixed ethnic groups have seen the biggest rise in youth unemployment with a change from 21% in March 2008 to 25% in November 2009. The above evidence points to the importance of prioritising action on vulnerable groups in the later theme of Employment for All.

While the regional economy has been badly hit; Nottinghamshire has performed broadly in line with the UK, but the impact has been more localised. As the graph below indicates, Bassetlaw, Ashfield, and Nottingham have been worst affected. In Bassetlaw and Ashfield this is probably due to having a greater share of firms in traditional manufacturing industries and Nottingham by contrast, which has a more modern economy, but is more exposed to the global recession that has hit financial services hard. Rushcliffe and Newark & Sherwood appear to be more resilient although in Rushcliffe's case, from a much smaller base. Indeed in Greater Nottingham, the city and the city centre provide an important source of jobs for surrounding districts: 40% of all City based jobs are filled by residents from outside their boundary. Work commissioned from Experian by the Nottingham Resilience Forum indicates Nottingham also has a high concentration of high growth knowledge sectors compared to other core cities. These sectors are expected to prove particularly resilient to the economic downturn and thrive in the upturn. Only Bristol has a higher proportion of such sectors. All the above indicates the importance of developing policies that are sensitive to the needs of contrasting geographies and highlights that a one size fits all approach will not be successful.

Estimated GVA Change in Nottingham and Nottinghamshire Districts 2009

Looking ahead, there is now considerable interest in the way that the sectoral mix creates an adaptable economy and contributes to resilience and reducing vulnerability. This will be a key feature of our work in the months and years ahead. Nottinghamshire is expected to recover broadly in line with the UK, with the recovery likely to be gradual rather than rapid. Experian expects that the claimant count is likely to increase further to over 31,000 before falling back in 2011

There is a significant challenge to meet the needs of existing employers and connect up local people to the opportunities created. At the same time, there is a need to find ways to develop a more adaptable and resilient economy and plan for the skills that will be needed to drive this growth. Policies and action on Employment and Skills are central to meeting this challenge and will need to be closely integrated with other agencies developing physical provision and providing business support.