How does geography impact economic outcomes for low-skilled people?
Cities can offer low-skilled people good economic outcomes that support inclusive growth aims, but inclusive growth cannot come without economic growth.
Cities can offer low-skilled people good economic outcomes that support inclusive growth aims, but inclusive growth cannot come without economic growth.
In recent years, inclusive growth has risen up the agenda. People up and down the country are increasingly concerned not just about economic growth, but how everyone can benefit from it.
Cities, as places of opportunity, play a key role in this debate. We know they are home to some 55 per cent of people in Britain that have few or no qualifications, but how successful are they at providing job opportunities for their low-skilled workers?
Splitting cities according to the strength of their economies shows two broad patterns. On one hand, there are weaker city economies, where productivity is lower. In these cities – mostly located in the North of England and Midlands – both low-skilled jobs and low-skilled residents are more prevalent. People with few or no qualifications account for almost a third of the working age population, while as many as four every ten jobs are low-skilled.
Yet, this large number of low-skilled jobs does not translate into better economic opportunities for the low-skilled people living in those areas. When looking at the low-skilled people-to-job ratio of places like Southend and Barnsley, there is a clear mismatch, with over two people competing for one low-skilled job. As a result, unemployment rates for low-skilled people tend to be higher than elsewhere in the country.
In order to encourage inclusive growth, these cities need to get growth going. This will require both demand-side interventions aimed at creating more job opportunities and supply-side initiatives to improve skills.
On the other hand, the picture looks very different in some of our strongest city economies. In Oxford, Cambridge and Exeter – three cities not often associated with lower-skilled work – there are more low-skilled jobs than low-qualified workers, highlighting a skills shortage. This is clearly good news for the low-skilled workers living in these cities.
In addition to this, in strong city economies there is also another very clear mismatch: people with few or no qualifications are almost 50 per cent more likely to be in higher-skilled occupations in Aldershot and Brighton than they are in Wakefield and Doncaster.
The two things together suggest that strong city economies do not just provide jobs for higher-skilled workers, but for those that have few or no qualifications too. In these cities, challenges related to making sure low-skilled people benefit from economic growth have less to do with creating job opportunities, and more to do with making it cheaper to live in these places.
In line with broader economic trends, when it comes to inclusive growth, different places face different challenges. For some it is about growing the size of the overall pie, creating more growth that can then be shared. For others it is more about managing the costs of economic growth, such as high house prices, congestion and air pollution. Clearly, these cannot be addressed with a one-size-fits-all approach. Rather, we need our cities to be able to choose the economic interventions that suit them most – be it on attracting businesses, improving infrastructure or affordable homes.
This article originally appeared in The Edge Foundation’s ‘Skills Shortages in the UK Economy’ bulletin. You can read the full bulletin here.
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