02The skills and unemployment challenges facing cities
Skills are vital to the success of a city. There is a strong correlation between skills level and unemployment, which in turn impacts on productivity and the strength of a local economy.5 As shown in Figure 1, cities with a higher proportion of working age residents with no formal qualifications have higher unemployment rates. At 16.5 per cent Birmingham has a high proportion of residents with no qualifications. The city also has one of the highest unemployment rates (of 12.8 per cent). In contrast Aldershot has far fewer residents with no qualifications (4.3 per cent) and unemployment is around half that seen in Birmingham (of 6.7 per cent).
Increasing residents’ skills levels has a significant impact on local unemployment rates. Just ensuring residents have basic level 1 qualifications (equivalent to a GCSE grade D-G) can be enough to drastically impact on their labour market outcomes. In Hull, for example, the unemployment rate of those with level 1 qualifications is less than half that for those with no qualifications (Box 2).
Box 2: Level 1 qualifications significantly reduce the likelihood of unemployment
Gaining level 1 qualifications has a large impact on the probability of being unemployed. Figure 2 looks at the relationships between skills and unemployment in the Key Cities with the highest unemployment rate (Hull) and the lowest unemployment rate (Bath and NE Somerset).
In Hull, those with no qualifications are more than twice as likely to be unemployed as those with level 1 qualifications. And in Bath and NE Somerset those with no qualifications are around 30 per cent more likely to be unemployed than those with level 1 qualifications.
This difference between cities is likely to be reflective of the larger number of residents in Hull with no qualifications – 13.7 per cent compared to just 5.3 per cent in Bath. With an oversupply of residents with no qualifications, Hull has more people chasing these low skilled jobs. Gaining level 1 qualifications has a large role to play in lowering unemployment, but plays an even larger role in a weaker economy.6