We would like to use cookies to ensure we give you the best experience on our website. If you consent to us using cookies, please click accept.

LinkedIn Twitter +44(0)1925 730 484

This area of the site requries cookies to function. Please 'Accept Cookies' using the button below to continue.

Newsletter Sign Up

IED Website

Latest News

By analysing the effects on the labour market using short, medium and long-term data-driven approaches, LEPs and local authorities can be much better prepared for what may be around the corner

 

It’s highly unlikely that anyone reading this was wondering at the beginning of the year what would happen if all the restaurants, pubs, cafes, hotels, “non-essential” shops and a host of other businesses were to be shut down for weeks, perhaps months on end. Yet here we are, in the midst of what it is undoubtedly the most dramatic, widespread and lengthy grinding to a halt of advanced economies ever seen – and of course we still don’t know the answer to this question. Unprecedented is an overused word, but it most certainly applies here in spades.

In the past week or so, data has begun to emerge showing the severity of the problem. For example, claimant counts rose by 856,500 in April, a 69% increase – by far the biggest monthly increase since records began in 1971, taking the total to over two million. This is likely to rise further in May, and in subsequent months, particularly when employers will be expected to contribute to the furlough of workers and those who cannot afford to do so may end up having to cut staff. In the midst of such uncertain and unprecedented times, and with the Bank of England warning of the worst economic slump for over 300 years, how exactly can those overseeing economic policies in local economies prepare?

We cannot predict the future, and it would be foolish to attempt it. What we can do, however, is look at the question in three phases – short, medium and long-term – which we define as:

• Short-term: the period of the full lockdown, involving questions of triage, damage limitation, and understanding the evolving nature of the economic impact.
• Medium-term: the period of recovery, potentially amidst continued partial lockdown restrictions, and including questions of how to understand the ripple effects of industry decline in an area, opportunities to maximise business growth, and how to facilitate the matching of skills supply and demand amidst much enlarged unemployment.
• Long-term: the period of resetting local industrial strategy in a very different setting, with the crisis and response likely resulting in a sudden acceleration of underlying technological and social trends that will impact the labour market, such as the vastly increased adoption of online retail, the prevalence of remote working, and fragilities in global supply chains.

Here we look at how insights gleaned from data can help in respect of these three phases.

Assessing the short-term impact

One of the big challenges that economic developers have in the short-term is an absence of key economic data. The release of claimant count data over the coming months will go some way to help us understand what is happening, but it won’t be until September or October, with the scheduled release of Workforce Jobs and the Annual Population Survey (both covering Q2), that we will get hard data on regional industries and jobs.

In the meantime, the best barometer of how things are shaping up is Job Postings Analytics (JPA), which harvests employer hiring from across tens of thousands of job boards, and which are then deduplicated to identify unique postings and offer insights in terms of job titles, employers and locations. By using this we can get a good sense of employer demand, and therefore what is happening in a local economy, through:

• A comparison of employer demand with the same time last year and prior to the crisis
• A look at the fastest declining and fastest growing occupations
• A look at the fastest declining and fastest growing skills being requested

For instance, in our analysis of the potential effects of the closure of the restaurant, pub and café sectors – https://www.economicmodelling.co.uk/wp-content/uploads/2020/04/Restaurant-and-Pub-Report_vWEB.pdf – we looked at employer demand for the top job titles in these sectors to see how much hiring demand was declining over a 30-day period compared to the previous 30 days.

In addition to these sorts of insights, we will be able to look at the claimant count data over the coming months to assess which jobs are being lost in an area. Put together, we can get a sense of where job demand is both increasing and decreasing, and so begin to understand where damage limitation might be needed, and where opportunities might be arising.

Assessing the medium-term exposure

Critical to successfully tackling the medium-term challenge will be gaining a clear understanding of the areas of greatest exposure and their consequences for regional economic growth and recovery. Although full industry-level data will not be available for some time, what we can do is apply our Input-Output Economic Model to a local economy, in order to assess what the consequences might be for that economy as the economic shocks ripple out from an initial industry through the supply chain sectors.

For instance, again coming back to our analysis of the potential effects of the closure of the restaurant, pub and café sectors, after identifying Weymouth and Poole as the local authority with the biggest proportion of jobs in these industries we then went on to look at the loss of earnings in the area as a result of the shutdown.

Furthermore, we are able to estimate the total job losses in these sectors, and in other sectors as the effects ripple throughout the economy, using different scenarios. For example, we can see the effects of the shutdown of these sectors for the UK as a whole under 5%, 15% and 25% scenarios, but the same analysis can be done for any local authority in the country.

Another aspect of the mid to long-term view is that of how people who have been laid off can be upskilled and redeployed into other sectors in the local economy. Here it will be crucial for local economic developers to get a much better understanding of the skills that exist in the potential workforce, and map it to skills demand.

We can do this by using our range of skills data, including our Skills Library and the O*NET database of skills, to understand the potential for “adjacencies” between available pools of workers and rising labour market demands. The aim of this would be to identify a number of potential pathways for rapid redeployment of unemployed labour to meet the fastest growing demand for new workers within the region.

Assessing the long-term recovery

As we look to the longer term, the key questions will be around how the crisis is affecting industries in an area. One crucial thing to say is local economies do tend to have a high degree of “path dependency”, which basically means that even during and after downturns they don’t tend to radically change their industry make-up.

For instance, an area with a high specialism in vehicle and defence technology will not suddenly lose the infrastructure and workforce that has grown up to serve the industries within that cluster. It is likely, therefore, that when the economy returns to growth these industries will probably once again have a significant presence. That being said, it’s likely that the crisis will cause a large amount of disruptions, and local economic developers will need to find ways of understanding and responding to these.

To assist with this, we are currently developing an analysis of which industries will be most affected in an area, given their dependence on a range of factors, including:

• The physical nature of their work

• The public nature of their work

• Their dependence on affected supply chains

• Their dependence on affected market demand

• Their proximity to ‘key worker’ functions which may see enhanced demand and/or competition

What this will enable us to do is build out an “exposure model” to identify which industries within an area are facing the greatest risks to jobs and earnings, as well as a prioritisation analysis to inform local economic developers of the depth and range of different impacts on their area’s economy.

In summary – there is no doubt that we are in a very unique and very trying time, and that there are going to be challenges and problems along the way that we could not have anticipated. However, by analysing the effects on the labour market using the short, medium and long-term data-driven approaches we have set out above, Local Enterprise Partnerships (LEPs) and local authorities can be much better prepared for what may be around the corner, mitigating risks and taking opportunities as they arise.

Will Cookson is Director of Economic Development at Emsi UK, a member of the Institute of Economic Development

why join?
MEMBER
BENEFITS
read more
renew
RENEWal
Renew your membership
RENEW NOW