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Birmingham Economic Review 2018: Expert comment - Professor Anne Green

University of Birmingham

This blog post has been produced for the Greater Birmingham Chambers of Commerce to provide insight on the findings of the Birmingham Economic Review. The Birmingham Economic Review 2018 is produced by the University of Birmingham’s City-REDI and the Greater Birmingham Chambers of Commerce, with contributions from the West Midlands Growth Company. It is an in-depth exploration of the economy of England’s second city and is a high quality resource for organisations seeking to understand Birmingham to inform research, policy or investment decisions. This post is featured in the full report and report summary here.

A central challenge facing the Birmingham labour market is how to contribute to inclusive growth by providing access to ‘good jobs’ and addressing low-value low-wage low-skill work. This highlights a need for progression pathways in the labour market – from pre-employment interventions for those individuals who need them, through employment entry and sustaining employment to in-work progression. In turn, this requires knowledge about routes into and through the labour market and resilience in coping with transitions into the labour market and between jobs.

Skills are one key factor in in-work progression. The skills profile of the city’s residents has been an ongoing cause for concern, with Birmingham residents less likely to have high-level qualifications and more likely to have low or no qualifications than residents of other major cities and nationally. Only around two in three of Birmingham’s residents have qualifications at Level 2 and above, compared with three in four of residents nationally. This suggests that one in three of Birmingham residents are in so-called ‘skills poverty’. One in eight of the city’s residents have no formal qualifications, compared with one in twelve nationally. These skills deficiencies are a contributing factor in a Birmingham’s lower than average employment rate (64% in Birmingham, 75% for Great Britain.) Yet the fact that resident earnings in the city (gross weekly pay for full-time workers is £523) are lower than workplace earnings (at £550) indicates that in-commuters are taking a disproportionate share of the better-paid jobs available in the city.

Key challenges for policy are to address first, the ‘more jobs gap’ (comprising individuals who cannot get any work/ the amount of work they want) and secondly, the ‘better jobs gap’ (made up of people in insecure and/or low-paid jobs). Those individuals with no/ low skills are most vulnerable to falling into these ‘gaps’. An increase in labour demand can help such individuals, especially through increasing the availability of permanent job opportunities and also by increasing wages.

International evidence on inclusive growth suggests a role for policies that identify and target sectors that are growing, are of strategic importance and have the potential to create middle- and high-income jobs. Inward investment and cluster policies have a role to play here. The insertion of clauses regarding skills development and job quality in procurement can help embed the importance of employment quality in city and business development policies and raise wage floors. But to reap the rewards of such demand-side policies it is necessary to prioritise co-ordination with supply-side policies to better connect and match supply with demand. Sector-focused policies have an important role to play here, as do employability policies that look beyond employment entry to sustaining employment and in-work progression.

Looking forward, Birmingham is set to gain from the Skills Deal agreed with the West Midlands Combined Authority to boost digital and technical skills, support more young people into work and upskill and retrain people of all ages. An agile and responsive skills system is needed to provide individuals with the skills that are needed currently, and then to equip them with further new skills once technological changes means some current technical skills are no longer required.

Professor Anne Green
City-REDI, University of Birmingham