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SURF Conference : The Future for Communities What could be the economic factors we need to be aware of ? Ewan Mearns Scottish Enterprise The story so far ... What kind of economy has been sustaining Scotland’s communities in the recent past ? Changing Economic Structure 1950’s 2000’s 25 Shipyards 4 Shipyards 113 Coal mines 0 Coal mines 6 Steel works 0 Steel works 0% world’s oil 3% of world’s oil Employment: 40% of EU’s PCs 35% manufacturing Employment 45% services 15% manufacturing 6% business services 75% services 21% business services Manufacturing and Service Sector Employment 2,000,000 1,750,000 1,500,000 1,250,000 Services 1,000,000 750,000 500,000 250,000 Manufacturing 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 0 Where do we work? % breakdown of jobs Public Services Retail & Wholesale Business Services Manufact. (ex. Elect) Hotel & Catering Construction Other Services Transport/Comms Financial Services Electronics % Agriculture 0 5 10 15 20 25 30 Growth in GDP (1975=100) 170 160 150 140 130 120 110 100 90 SCOTLAND UK 2001 1999 1997 1995 1993 1991 1989 1987 1985 1983 1981 1979 1977 1975 20% Productivity in 2000 (UK=100) USA G7 France Germany UK Scotland Japan 0 50 100 150 ILO Unemployment Rates Scotland and Great Britain % 9 8 7 6 5 4 Great Britain Scotland May-01 May-00 May-99 May-98 May-97 May-96 May-95 May-94 May-93 May-92 3 A changing (but under-performing) economy ... Relative transition from a traditional manufacturing to a service and knowledge-based economy importance of foreign investors to manufacturing employment and productivity Scottish GDP growth and productivity lagging behind UK (and competitors) … and gap widening declining unemployment during 1990s … but with encouraging signs of future growth the emergence of new sectors of economic activity strong growth in service-sector jobs commercialisation of academic knowledge more young people entering FE/HE more recently, a stable macro-economic environment New jobs and activities Financial services Scotland 6th largest equity centre in Europe Biotechnology home to 20% of UK biotech companies, employing 24,000 Optoelectronics employs 5,000 people, 60% output exported Creative industries digital media, games, Edinburgh Festival injects £120m annually Growth in Scotland by Sector 2002-2006 (GDP %) Financial Services Business Services Other Services Construction Hotel/Catering Chemicals Retail/Wholesale Electronics GDP Public Services Manu (ex. Elect) 0 1 2 3 4 More people entering FE/HE 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 1981/82 1985/86 1989/90 1993/94 1997/98 Total HE FE Some drivers of future economic change The changing nature of ‘value’ in the economy Increasing importance of ‘intangibles’ in creating value: software, services (with products), speed, ideas/creativity, brands/trust, experience etc. New ways of doing business mass customisation eg Dell, Dulux knowledge management eg Skandia innovative business models eg Egg, e-Bay, Dyson brands and values eg Intel, Nike experience eg Disney A more global, networked economy differential cost of labour the end of the ‘assembly plant’ era in Scotland much closer ties between national economies vulnerability to economic shocks a smaller, ‘connected’ world agglomeration effects More demanding and prosperous consumers % Household income and expenditure 35 30 25 20 15 10 5 0 120 100 80 60 40 20 0 1968 Food & Fuel 1978 Leisure 1988 1998 Real income (right axis) Source: ONS From mass production to mass customisation People, skills and talent Importance of ‘know how’ vs ‘know what’ in the knowledgebased economy Future skills trends core skills : basic skills; communication skills; problem-solving, planning and teamwork; IT skills occupations : managers; public sector professionals; elementary caring and service occupations Talent as key; diversity as driver It’s not the strongest of the species that survive, nor the most intelligent but the ones most responsive to change Charles Darwin The rise of the creative class Richard Florida says: innovation flourishes in places that attract creative people, places with the following attributes : critical mass of cultural and natural assets open attitude to new and unconventional ideas and people cultural eco-system - many forms of creativity take root and flourish attract new and different kinds of people make rapid transmission of knowledge & ideas easy have low barriers to entry – economic, social, civic creativity drives innovation innovation is the key to sustained economic growth 'Prime' Working Age Population (20-34 years), 2000 to 2010 Thousands 1,080 1,060 1,040 1,020 1,000 980 960 940 920 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Year 2000 900 Scotland's Puture Population of Pensionable Age (% of total population) 22 21 20 19 18 17 16 2000 2001 2006 2011 2016 2021 2025 How can Scotland’s communities become more successful in the future economy ? Foster a supportive environment for enterprise more new and growing small businesses host to new/emerging activities eg social enterprise, digital media more diversified local economies exploiting academic knowledge no low-tech industries, only low-tech companies new sources of value … not just high-tech importance of global connectivity Be home to diverse and adaptable people openness, willingness to change attracting, retaining - and losing - a diverse range of people new ideas and influences making the most of our human capital enthusiasm for learning - across all ages