CFE - Local jobs for local people

These are just some of the headline quotes regarding the current recession and the rising levels of unemployment. There are record numbers of people unemployed and claiming unemployment benefits. The economy is also shrinking at the fastest rate for 30 years. Official figures show that gross domestic product (GDP) fell by 1.9% between January and March 2009 [1] - the sharpest quarterly decline since the third quarter of 1979, the year when Margaret Thatcher came to power.

With record numbers of individuals now unemployed and claiming Job Seekers Allowance (JSA) we have seen a number of policy declarations aimed at creating more employment opportunities and supporting individuals to return to employment. National, regional and local government face considerable challenges in achieving this.

But, what is the scale of the problem? How many vacancies are there in the economy? Exactly how competitive is the job market? In this article we aim to provide some answers to these questions and pose some further questions for policymakers to consider.

How many vacancies are there?

The JSA claimant data from the Department for Work and Pensions (DWP) provides information on the number of live job vacancies currently unfilled with Jobcentre Plus (JCP). The most recent data shows that in the UK there are currently 212,718 [2] live vacancies waiting to be filled (there are currently 1.5m people unemployed and claiming JSA). This alone shows the scale of the challenge facing JCP and regional and sub-regional partners.

If we contrast the vacancy figures with the numbers of people registered with JCP and seeking employment we can calculate a ratio for the number of JSA claimants per vacancy. This provides an indicator of the competitiveness of the labour market.

Figure one shows the ratio of claimants to registered vacancies with JCP, highlighting a number of key points:

In the UK there are on average seven claimants for every live unfilled vacancy registered with JCP
There are considerable differences in the regional figures;
Over 10 claimants for every live unfilled vacancy in London, the West Midlands and the North East
Within the East Midlands there are only three claimants for every live unfilled vacancy.

Figure one:
Ratios of JSA claimants per vacancy for UK regions

^{Source: NOMIS, Claimant Count April 2009 and Jobcentre Vacancies April 2009}

This is a fairly crude analysis and clearly not all vacancies in the labour market are registered through JCP but on the other hand not all those people out of work and seeking employment claim JSA. The International Labour Organisation (ILO) unemployment figures indicate that there are currently 2.1m people [3] out of work and seeking employment, 600,000 more than those claiming JSA.

This analysis does show the scale of the challenge for JCP in matching an over supply of individuals with a reduced number of vacancies. The reality is that in some areas of the country there is a much higher ratio of people out of work compared to the number of registered vacancies.

What also needs to be considered at a very local level is the match between those seeking employment and the type of opportunities available - in policy terms, the integration of employment and skills [4], something we will come onto.

Place matters

We have initially looked at national and regional figures but the functioning of the economy differs by locality. The demand and supply of labour is influenced considerably by the nature of a local area - in other words, place matters. If we take the analysis of claimant to vacancy ratios further and drill down to local areas we can see there are some staggering results.

Table one displays those areas facing significant problems with over 20 JSA claimants for every registered vacancy. The extreme being Blaenau Gwent where there are only 79 live unfilled vacancies and 44 claimants for every one of those vacancies.

This poses considerable challenges for JCP in getting people back into employment, which at the current time is limited. Some localities are in need of considerable investment to increase the number of available opportunities if we are to see any reductions in the level of unemployment.

Table one:
Ratios of JSA claimants per vacancy for UK unitary authorities

^{Source: NOMIS, Claimant Count April 2009 and Jobcentre Vacancies April 2009}

The areas listed in table one aren’t all the UKs highest areas of unemployment either. Of these areas only Blaenau Gwent and Kingston upon Hull feature in the top 10 areas of highest unemployment in the UK. Areas such as Birmingham, Wolverhampton, Liverpool, Sandwell, Middlesborough may have high unemployment but also have more employment opportunities and therefore a lower ratio of claimants to vacancies.

Economic theory would suggest that labour mobility should operate freely and those unemployed in one area would move to another area of the country where job vacancies exist. However, economic theory does not always reflect reality. There are many social and cultural reasons why this does not happen.

It is important for local areas to understand the context of their local area and the relationship between job opportunities and those seeking employment. The characteristics of a place matter.

Matching people and opportunities

Within the economy, locality is important, especially to those with low skills, who are prepared to travel the least distance in pursuit of employment opportunities. We have seen that local areas differ by the amount of available job opportunities but localities also differ by the type of vacancies available.

The latest JCP vacancy data allows the number of vacancies by occupation to be analysed. Down to each local JCP district a detailed breakdown of the number of vacancies by occupation is available. Data is also available on the occupation that JSA claimants are seeking (sought occupation) when they register for benefits. A simple ratio of what vacancies exist compared to what types of occupations are being sought, provides an interesting insight into the functioning of the labour market.

Figure two displays the ratio of the numbers seeking a specific occupation to the vacancies in this occupation for the UK:

Nationally two occupations in particular stand out as being considerably ‘over-supplied’

Elementary trades, plant and storage related occupations - 70 claimants per vacancy
Skilled Construction and Building Trades - 51 claimants per vacancy

Figure two:
Ratios of JSA claimants sought occupation to available vacancies for the UK

Source: NOMIS, Claimant Count April 2009 and Jobcentre Vacancies April 2009

Figure two highlights the national picture and how there is a need to match the demand for certain occupations with the available opportunities. In this process the need for transferable skills and re-skilling becomes apparent.

In reality this process is undertaken at a very local level and understanding these statistics for the local area is vitally important. Certain sectors and occupations are more prominent in some localities than others. Being clear about what job opportunities are available is critically important in matching individuals to the right opportunities, re-skilling people and giving people the information they need to make career choices.

Policy action

Local authorities and sub-regional partnerships can play an important role in matching local people with local employment opportunities or the local integration of employment and skills. The Governments position is:

‘We will not give up on people and will do everything we can to make sure that if you become unemployed we can help you get back to work as quickly as possible.’
Tony McNulty, employment minister

The preceding analysis has highlighted the challenges that local areas face in returning people to employment. From CFE’s experience and knowledge of working within the employment and skills system we think a two-fold approach is most effective in addressing the current challenges around unemployment.

1. Targeted local economic development - Creating more job opportunities

The public sector and local authorities in particular can also do more to expand employment, work experience and training opportunities for the unemployed. The Budget 2009 outlined initiatives to support local authorities in this role.

Local authorities will be given funding to create 100,000 new opportunities. Additional funding will also be allocated for local authorities to provide a further 50,000 jobs in areas of high unemployment. These are positive announcements but evidence shows that further investment and support for business is required.

As well as the creation of more employment opportunities to support the work of JCP there needs to be further encouragement to register more vacancies with JCP. There should be a stronger relationship with recruitment consultants and increased use of Local Employment Partnership agreements.

Local authorities should be encouraged to sign up to Local Employment Partnerships to ensure all vacancies and those vacancies connected with their supply chain are registered through JCP. Similarly, JCP may have to ‘raise its game’ and engage with a wider range of local partnerships to better support a changing typology of job seeker.

2. Better integrating employment and skills at a local level to match people with employment opportunities

Regional and sub-regional partnerships can play an important role in bringing together public and private sector partners to support local people into local job opportunities. From our experience we would highlight three particular local initiatives that are positive examples of integrating employment and skills policy at a local level.

CFE has recently been working with Leicester City Council in developing a construction training and access centre. This involves training and supporting unemployed individuals to enter sustainable job outcomes within the public sector and private sector construction companies. A pool of sustainable employment opportunities and a tailored supply of individuals to fit these opportunities is one of the added value elements of this project.

CFE has also been supporting the Slough Economy and Enterprise Partnership Development Group (SEE PDG) in its delivery of actions in support of key Local Area Agreement priorities. The ultimate aim of the SEE PDG is to narrow the gap between employers’ needs, and the skills levels of Slough residents. Underpinning the work of this group is the recognition that both the best local intelligence and the direct input of public and private sector partners is essential in addressing a range of short and long-term local economic priorities.

Employment and Skills Boards (ESBs) are also an important tool in engaging local employers in helping people back into employment. CFE has an in-depth working knowledge of Employment and Skills Boards through a national mapping project and supporting the development of local ESBs.

Whilst we may not yet have experienced the worst it has to offer, what is clear is that the global recession has presented us with a range of significant challenges, and at the local level these are, and will continue to be, better met with truly local solutions.

^{1. ONS, April 2009}

^{2. NOMIS, Jobcentre Vacancies April 2009}

^{3. ONS, ILO Unemployment April 2009}

^{4. Integration of Employment and Skills: ‘bringing together those services which help people get a job, keep a job and progress in work’}

Ian Neale
Research Manager