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Building a Smarter Economic Future The UK Economic Development Conference 2009 7-8 October 2009 Royal Bath Hotel, Bournemouth © The Work Foundation. Ian Brinkley Director Knowledge Economy Programme The Work Foundation © The Work Foundation. How bad is the recession and how fast might we recover? © The Work Foundation. How fast will the labour market recover? Employment recoveries from previous recessions pre-recesion peak of em ploym ent (1979Q4/1990Q2) = 100 Q1. Workforce jobs, UK, seasonally a djusted 1.0 1.0 index Q1=100 1.0 1.0 0.9 0.9 0.9 1980s 1990s © The Work Foundation. 37 Q 35 Q 33 Q 31 Q 29 Q 27 Q 25 Q 23 Q 21 Q 19 Q 17 Q 15 Q 13 Q 11 Q 9 Q 7 Q 5 Q 3 Q Q 1 0.9 A recession of the North, Midlands and Wales Highest increases in: • Blaenau Gwent, Wales • Swindon, South West • Cannock Chase, West Midlands • Corby, East Midlands • Kingston upon Hull, Yorkshire Also significant rises in the core cities outside London © The Work Foundation. Skills key determinant of recession impact Places with low skills being affected the most Places with high skills being affected the least Other characteristics affecting impact: •Employment in manufacturing •Financial services employment outside SE and Greater London © The Work Foundation. Impact of the recession (so far) on jobs Apr-June 2008 to Apr-June 2009 Recession speeds up structural change total em ploym ent change Apr-June 2008-2009 7% 9% 84% Manual, unskilled, admin © The Work Foundation. Care and sales Knowledge associated Labour market interventions – the evidence on what works and what does not (Brinkley, Clayton, Coats, Hutton, Overall (2008) Hard Labour TWF. • Job search and job ready programmes by labour market intermediaries work successfully; • Employment and training placements with employers can be successful provided they have “proper job” characteristics; • Public investment projects can create some jobs, especially targeted on labour intensive activities; • Working time compensation schemes can be successful if temporary; • Early retirement schemes are unsuccessful – but more young people in higher education can be successful in the longer run; • Public employment and training schemes are less successful; • Tax reliefs, corporate tax cuts and hiring subsidies are less successful. © The Work Foundation. Implications for the 2020 workforce Workforce in 2020 33% 52% 15% Knowledge associated jobs © The Work Foundation. Care and sales Manual, admin, unskilled Knowledge economy and 1990s recession and recovery total em ploym ent, EU KLEMs database 1990=100. KE m arket based is telecom s, high tech, business, financial, and cultural services; KE public based is education and healthcare. 1.25 KE market based 1.20 KE public based Manufacturing Other Services 1.15 index 1990=100 1.10 1.05 1.00 0.95 0.90 0.85 0.80 1990 © The Work Foundation. 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Drivers of the Knowledge Economy – Now and to 2020 Drivers Key factors Examples Possible changes to 2020 Demand Consumer demand Digital services, finance and insurance, cultural and recreational, private/co-financed education and health “high demand” society for education, heath, cultural and “green” services Organisational demand Business and financial services, high tech, communications services, design, brand equity, human and organisational capital High and growing demand for knowledge based intangibles Collective demand Public education and health related spending, cultural services, environmental services Public supply highly constrained Public sector efficiency drive Supply General purpose technologies Knowledge based intangibles Computers, internet, lean production, networks R&D, software, design, brand equity, human and organisational capital More intensive application of existing technologies Low carbon technologies and applications Globalisation High tech manufactures and knowledge intensive service exports High skilled labour Bigger and more diverse markets Global production chains Ideas, best practices and technologies Non-OECD “middle class” Migration to UK more constrained © The Work Foundation. Conclusions and objectives for 2020 • Consumer, corporate and overseas demand for knowledge based services and high tech goods will drive the recovery and should be encouraged where possible; • Knowledge based market services and non public funded education and health services will have to provide the vast majority of new jobs, so that by 2020 well over half of the working population will be in knowledge based service industries; • Jobs associated with the knowledge economy will be the major source of employment growth and by 2020 will be filled by over half the workforce; • A key objective should be to restore full employment by reducing unemployment and employment to pre-recession levels by 2020; • The gap in employment outcomes between the 50 per cent of the workforce in knowledge related jobs and less well educated groups should be narrower than it is today; • The UK in 2020 should continue to be an attractive place for high skilled migrants to help drive the growth of the knowledge based industries; • By 2020 the overall gap between the UK’s major cities in terms of shares of knowledge intensive employment should be reduced, implying faster growth in some towns and cities with low shares at present. © The Work Foundation. Building a Smarter Economic Future The UK Economic Development Conference 2009 7-8 October 2009 Royal Bath Hotel, Bournemouth © The Work Foundation.