The skills of a city’s population are the strongest predictor of its economic performance: places with a more skilled workforce tend to have higher wages and be more productive. This is because high-knowledge businesses tend to invest and create jobs in places where they can recruit the workforce they need. As the UK economy continues to specialise in knowledge-intensive activities, the availability of high-skilled workers in a place will be crucial to its economic success. And in a period of stagnant wages and low productivity growth, improving the skills of the population is a priority.
This report, supported by ISG, looks at Birmingham’s skills profile and the implications for its economy.
It finds that skills represent a challenge for the local economy. Birmingham has the highest share of people with no qualifications of any UK city, and a lower share of people with high-level qualifications than the national average. And this seems to particularly be an issue for those in the 50-64 age group, who are less likely to hold a degree and more likely to have no qualifications than the rest of the working age population. This makes the city relatively less attractive to businesses, particularly knowledge-intensive ones. And as a result of these skills patterns, the city has a lower employment rate and a higher share of low-skilled jobs than the national average.
Addressing this skills challenge should be a priority and West Midlands Mayor Andy Street is right in putting this issue at the top of his agenda. This report explores different ways the skills picture can be improved.
Some of the key findings include:
- 49% of new graduates stayed in the city to work in 2014 and 2015. Birmingham is also the third best performing city in the UK in attracting graduates who have no prior links to the city.
- 16% of working age residents living in Birmingham have no formal qualifications – twice as high as the national average (8%)
- More than one in five Birmingham residents (22%) aged 50-64 have no formal qualifications – nearly twice as high as the national average (12%).
- In 2015-16, just over half of students in Birmingham (53%) undertaking GCSEs gained A*-C in five or more subjects including English and Maths, less than the average across England (58%).
The report offers three key recommendations for policymakers:
- Focus on improving literacy and numeracy among school pupils and improve early years support for young children in the city, particularly by encouraging greater uptake of the existing early education support for disadvantaged children.
- Give local leaders, in particular the West Midlands metro mayor, more powers and resources to support working age residents to access training and gain qualifications.
- Continue to support infrastructure investment and improvements to the city centre to improve the quality of office space for high-skilled firms. This will both attract new highly skilled residents and business, and link in existing residents to these jobs.
This report was kindly supported by ISG.