Regional skills disparities: focus on people, not just places
Growth is driven as much by the talents and hard work of the people who live there as the infrastructure and investment that underpins the businesses they work in. High skilled workers choose to cluster, living and working in places with a higher amenity and service offer, amplifying small initial differences in skill levels to large disparities in the skills of a workforce, shaping the ability of businesses to grow and attract high skilled workers, as outlined by the UK Industrial Strategy Council Evidence review.
How small initial differences become skills gaps which stop business from locating and growing evenly across the UK
We can see this in regional educational outcomes over time. Even performance at a regional level in primary school opens into a disparity in secondary driven. Schools can struggle to attract high quality leaders and teachers, often identified as two of the most important factors in student learning. Young people have previously received limited formal career information, advice and guidance, widening a disparity between those with access to career opportunities via their communities and those without. At tertiary level, a market of universities and higher level training providers widens skills gaps as universities in lower skilled areas with less opportunities for graduates struggle to attract students alongside lower levels of access for local students. This is aggravated by falling internal migration, resulting in 50% of people working in the area they are born, rising to 60% for low skilled workers.
High skilled workers dramatically widen these regional disparities in skills by sorting or choosing to live and work in clusters as identified by Overman and Gibbons. In part, this can be attributed to the thickness of labour markets or the number of related opportunities for high skilled workers to progress as careers get longer. Employers benefit from these clusters which enable innovation and the development of new ideas, products and services, through proximity of different high level skill sets, as well as providing in work training and development for high skilled workers. It can also be attributed to wider factors such as: the amenity offer or sense of place from local culture and heritage; the service offer for high skilled workers with increased disposable income, less community responsibility and less free time; and the social offer to being close to peers, friends and potential partners. These clusters generate lower skilled jobs that can be more productive than similar jobs in other areas as they benefit from a higher local skill level which enables innovation diffusion in SMEs (such as the adoption of web marketing and technology) and entrepreneurship from the opportunities of high disposable local income.
We need to proactively protect high skilled work in rural areas as the labour market changes
High skilled workers outside of these clusters are more vulnerable to changes in the labour market from automation and net zero. High skilled technical workers often lack formal accreditation and a mechanism to make lateral transfers to comparable roles — for example from a safety inspector at a steel works to a safety inspector in pharmaceuticals. The pressures of redundancy can lead high skilled workers without access to retraining, benefits and high quality careers advice to move into economic inactivity via early retirement or to move to low skilled work, thus reducing opportunities for low skilled workers. Rural communities are more dependent on a smaller number of sectors for employment and have greater barriers to moving between sectors due to longer journey times and more limited infrastructure for job search and retraining.
We have a moment to correct regional disparities in skills. Rural communities have been less scarred from school closures and disruption of training, with more proportional benefits of moving online. New rural clusters of high skilled workers are forming, attracted by the natural environment and a stronger sense of community. But rural areas are dependent on a smaller number of industries for employment, and often these industries form the life blood of a place — whether that is agriculture, forestry, mining, petro chemicals or heavy industry. These industries have been driven by the high skills and hard work of their local communities, which are often unacknowledged by our skills system. We need mechanisms in place to maintain high skilled work in rural communities, as well as their new ‘nomad’ arrivals, that enables the transformation of rural economies rather than state abandonment, and prevents a divisive gap between clusters and rural communities.
