Executive Summary

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 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.  There are a number of different ways to improve the skills picture. The first is improving the skills profile of Birmingham’s existing population. Schools play a crucial role in this, particularly when it comes to improving the skills level of young people. Currently when comparing the performance of schools in Birmingham with those in the rest of the country, the city is not doing so well: pupil achievement at GCSE is lower than in the rest of England. And while the share of pupils obtaining 5+A*-C GCSEs including English and Maths has increased over the last ten years, the gap with the rest of England has remained almost unchanged.

Another way to improve the skills picture is to make the most of the movements of people into and out of the city.  Birmingham’s migration patterns are not improving the skills profile of the city — it attracts university students from the Greater South East but it loses degree holders to the same region, with the largest share moving to the capital for work.

A third approach is new graduate retention. Birmingham is doing well on this front, retaining almost half of new graduates. The city seems to be an especially attractive place for those graduates who are originally from Birmingham: more than three quarters of those who lived in the city prior to university decided to stay to work. And half of the graduates who left Birmingham decided to return to the city after university.

Over time these graduate gains have helped increase the share of people with a university degree in Birmingham. But these improvements have not been enough to close the gap between the city and the national average, suggesting that retention on its own will not be enough to bridge this gap.

In order to improve the skills of its residents, Birmingham should focus on three areas:

Improving the life chances of young people by focusing on early years education uptake and literacy and numeracy across all age groups.

Setting up the West Midlands Skills Fund to provide more tailored and targeted employment and training programmes, and providing better career guidance to young people.

Making the city more attractive to high-knowledge businesses to increase job opportunities for graduates from Birmingham but also from the rest of the country. This should be done by focusing on improving the city centre and the transport system.