APPENDIX 20
Memorandum from Professor Ivan Turok,
Department of Urban Studies, The University of Glasgow (JG 26)
SUMMARY
This Memorandum provides evidence of a significant
jobs gap in Britain's major cities. The worst affected groups
are men with manual skills. Much of the increase in joblessness
has taken the form of disguised or "hidden" unemployment.
The main cause of the urban jobs gap is a substantial decline
and decentralisation of employment, particularly in manufacturing.
Britain's 20 largest cities have lost 500,000 jobs since 1981,
while the rest of the country has gained 1.7 million.
The Memorandum suggests that this shortfall
in employment is a major source of hardship and social dislocation,
and an obstacle to effective management of the economy and welfare
reform. Current policies towards the labour market and cities
focus too narrowly on supply-side measures such as training and
job search. Insufficient consideration is being given to demand-side
policies to regenerate cities through attracting and retaining
employment opportunities. There are many examples of good practice
available, and the lessons need consolidation and to be given
wider application.
EMPLOYABILITY AND JOBS: IS THERE A JOBS GAP?
INTRODUCTION
1. This Memorandum provides evidence of a significant
jobs gap in parts of Britain. A "jobs gap" is defined
as an imbalance between labour supply and demand, in particular
a shortfall in the number of job opportunities available in relation
to an area's workforce. The size of the jobs gap has varied over
time and affected some groups more than others, depending on their
skills, gender and other personal characteristics.
WHAT HAS
HAPPENED TO
THE GEOGRAPHY
OF JOBS?
2. The best starting point to analyse the jobs
gap is to examine the geography of employment change in recent
years. Figure 1 shows trends in the total level of employment
using data from the Annual Employment Survey (previously called
the Census of Employment), indexed to help compare the different
types of area. The "conurbations" are the eight largest
cities, each with over three-quarters of a million population:
Greater London, West Midlands, Greater Manchester, West Yorkshire,
Clydeside, South Yorkshire, Merseyside, Tyneside. The 12 "free-standing
cities" have between a quarter and half a million population:
Bristol,Edinburgh, Stoke-on-Trent, Leicester, Wigan, Coventry,
Sunderland, Doncaster, Cardiff, Nottingham, Hull and Plymouth.
Together the conurbations and free-standing cities comprise two-fifths
of Britain's economy and population. All other parts of the country,
including smaller cities, all towns and rural areas are grouped
together in a broad category called "towns and rural areas".
3. Figure 1 shows a steady divergence between
the conurbations, free-standing cities and rest of Britain. Looking
through the peaks and troughs of the business cycle, employment
in the conurbations has continued to decline, while employment
in the rest of Britain has continued to expand. The long-term
trend for the freestanding cities seems to be little change, or
marginal contraction bearing in mind that sizeable losses occurred
in the 1979-81 recession. Over the period 1981-1996 the 20 cities
lost half a million jobs (5 per cent of their 1981 total) while
the rest of the country gained more than three times as many (almost
1.7 million, or 15 per cent of their 1981 total). So, Britain
as a whole has generated over a million extra jobs over this period,
but with a stark contrast between urban and 'rural' areas. The
widening disparity is significant for economic, social and environmental
reasons.
4. The period 1993-96 has prompted speculation
about a possible revival of cities because of their expansion
of employment. In fact, this is associated with the upswing of
the economic cycle and does not represent a reversal of previous
trends. The cities' share of national employment actually fell
during this period.
5. Sharpening the focus, there has been a continuing
divergence between the inner and outer areas of the conurbations
since 1981. Employment in the conurbation cores fell by 12 per
cent between 1981 and 1996, but by only one per cent in the outer
areas. Greater London has been different in this respect, with
the same rate of decline in employment affecting the inner and
outer boroughs. A striking feature is the great divergence between
Greater London and the rest of the South East (ROSE). Between
1981 and 1996 London lost 212,000 jobs (6 per cent), while the
ROSE gained 556,000 (15 per cent).
6. Merseyside has suffered the largest decline
in employment, losing 25 per cent of its jobs over this period.
Other conurbations and cities that have had large falls are South
Yorkshire (-15 per cent), Coventry (-10 per cent), Clydeside (-9
per cent), and Doncaster (-9 per cent).
7. The urban-rural disparity in employment
is apparent across all economic sectors, but manufacturing has
been responsible for the bulk of the job losses. Forty four per
cent of manufacturing jobs in the cities were lost between 1981
and 1996, amounting to 1.2 million jobs. Private services have
expanded more slowly in the cities than elsewhere. They increased
by nearly 20 per cent between 1981 and 1996, amounting to 0.8
million jobs. This compares with an increase of nearly 50 per
cent in the rest of the country.
8. Research suggests various reasons for
the decline in urban employment. The physical constraint on development
in cities is a recurring theme, including fragmented land ownership,
built up sites and a lack of investment in redeveloping derelict
land and replacing redundant buildings. This limits the space
available to accommodate business growth and attract inward investment.
Towns and rural areas have more land available for development,
especially greenfield sites with higher amenity, better motorway
access and no costs of recycling land. Cities such as Manchester,
Liverpool and Glasgow are also constrained by narrow administrative
boundaries restricting the development of sites on the edge of
the built up area with access to the strategic road network.
CHANGES IN
EMPLOYMENT STATUS
AND OCCUPATION
9. There have also been significant changes
in the composition of employment. The conurbations experienced
a major shock in losing nearly a quarter of their 1981 stock of
full-time male employment by 1996, equivalent to over half a million
jobs (figure 2). This was offset only slightly by some growth
in part-time employment. Meanwhile, there was considerable growth
in female employment and part-time male employment in the towns
and rural areas. Their rate of decline in full-time male employment
was only a quarter of that in the conurbations, thereby easing
the process of adjustment.
10. The changes in occupation have been
equally important (figure 3). The towns and rural areas gained
many more non-manual jobs than the cities and lost far fewer manual
jobs. The conurbations and cities lost between a fifth and a sixth
of their manual jobs between 1981 and 1991, far more than the
towns and rural areas. They gained some professional and managerial
jobs, but these are unlikely to have been much of a substitute
because upward mobility from the former to the latter is low.
Research has found that the decline of skilled manual jobs has
tended to result in downward movement for men into less-skilled,
low-paid jobs or unemployment and casual work.
11. Manual employment declined in the cities
mainly because of the contraction of manufacturing, which was
the main source of skilled and semi-skilled manual jobs. The
growth in the cities of financial and business services and public
services provided few accessible opportunities for manual workers.
THE CONSEQUENCES
FOR THE
POPULATION
12. How have people been affected by these
changes? According to some commentators, local employment disparities
should be eliminated by people commuting or migrating to jobs
elsewhere. The simplest way of assessing the extent to which this
has happened is by assembling "labour market accounts"
(LMAs) for each city. LMAs relate changes in employment to changes
in migration, commuting, economic participation rates and recorded
unemployment. This helps to show how well the job losses in a
city get dissipated through different "adjustment" mechanisms,
such as people moving out, travelling elsewhere to work or taking
early retirement.
13. Table 1 aggregates the results for Britain's
20 largest cities between 1981 and 1991. Looking first at the
pattern of change for men, some 755,000 jobs were lost during
this period. This was equivalent to one in eight or 12.2 per cent
of the 1981 male workforce in the cities. Despite these job losses,
the bottom row shows that the overall level of recorded male unemployment
actually fell by about 78,000. The other rows help to account
for how and why this happened.
Table 1
LABOUR MARKET ACCOUNTS FOR BRITAIN'S CITIES,
1981-91
| |
Male Number%1
| Female Number%1
|
| Loss of employment | 755,000
| 12.2 | -44,000
| -1.1 |
| PLUS natural increase in workforce | 134,000
| 2.2 | 59,000
| 1.4 |
| MINUS net out-migration | 459,000
| 7.4 | 164,000
| 3.9 |
| MINUS change in net out-commuting | 77,000
| 1.2 | -61,000
| -1.5 |
| MINUS decline in economic activity rate |
338,000 | 5.4
| -154,000 | -3.7
|
| MINUS number on government schemes | 93,000
| 1.5 | 59,000
| 1.4 |
| EQUALS change in unemployment | -78,000
| -1.2 | 7,000
| 0.2 |
Source: Census of Population, 1981 and 1991.
Note: 1 As a percentage of the economically active
men/women of working age in 1981.
14. The single largest response to the loss of jobs was net
out-migration. This reduced male labour supply in the cities by
up to 459,000, or 7.4 per cent of the 1981 economically active
male population. Although out-migration may have been beneficial
for the individuals concerned, its impact on the cities has not
been benign. It has imposed considerable environmental, economic
and social costs on the areas left behind, including surplus housing,
over-capacity in schools, under-used community infrastructure,
general neighbourhood decline and even abandonment in some cases.
These issues are becoming increasingly important and costly to
the public purse in many northern cities. In addition, research
has shown that out-migration is weakest among the people most
vulnerable to unemployment (ie manual workers) and those who are
unemployed or economically inactive. The loss of the most skilled,
professional and managerial workers to northern cities also has
damaging long-term consequences.
15. The second largest response by men to the loss of jobs
was a reduction in the economic activity rate. This fell by 338,000,
or 5.4 per cent of the 1981 workforce in the cities. These were
people who apparently withdrew from the labour market. Other research
has found that many of them were not really inactive and out of
the workforce. They are better described as "hidden unemployed",
many of whom are available for and seeking work, but who transferred
to the category of sickness (or incapacity benefits) because of
the difficulty in finding work and because the welfare payments
are slightly better for some of them since they are not means-tested
or subject to stringent availability-for-work tests.
16. The spatial incidence of hidden unemployment is crucial
for national employment policy, urban and regional policies, and
judgements about the state of the labour market for the purposes
of macro-economic management. The Government has shown signs of
recognising the growth of inactivity and hidden unemployment in
the context of welfare reform. However, it does not appear to
have recognised its uneven geographical distribution and coincidence
with the decline in employment. Independent research has confirmed
that it is highest in the cities and coalfields. Our own research
found that the rate of increase in inactivity was highest in cities
where job loss was greatest, such as Liverpool, Glasgow, Manchester,
Sunderland, Newcastle and Doncaster. A simple indication of this
can be obtained by examining the proportion of the male working-age
population in Britain's major cities who are on incapacity benefit
(Table 2). It is considerably higher than the national average
in most of them and alarmingly high in some of them. About one
in five men of working-age are on incapacity benefit in Glasgow,
Liverpool and Manchester. All the evidence suggests many of those
classed as economically inactive should properly be regarded as
unemployed.
Table 2
INCAPACITY BENEFIT RECIPIENTS FOR CITY DISTRICTS
| | Number of ICB recipients (1996) MaleFemale
| Male ICB recipients as a % of male working age population (1996)
|
| Glasgow | 44,897
| 29,812 | 21.4
|
| Liverpool | 27,839
| 17,787 | 19.4
|
| Manchester | 22,328
| 12,849 | 17.3
|
| Sunderland | 14,312
| 8,058 | 16.4
|
| Doncaster | 13,643
| 6,785 | 15.0
|
| Newcastle | 11,065
| 6,154 | 11.9
|
| Cardiff | 10,414
| 5,988 | 10.7
|
| Nottingham | 9,505
| 5,712 | 10.7
|
| Birmingham | 31,368
| 17,119 | 10.3
|
| Sheffield | 15,893
| 8,884 | 9.6
|
| Coventry | 9,422
| 6,415 | 9.5
|
| Bristol | 9,961
| 5,405 | 8.3
|
| Leeds | 17,951
| 9,853 | 7.6
|
| Edinburgh | 10,979
| 7,962 | 7.2
|
| Great Britain | 1,559,000
| 919,000 | 8.6
|
17. Table 1 also shows that few city residents were able
to respond to urban job losses by commuting elsewhere to work.
This was because of physical access difficulties or a simple shortage
of jobs within feasible commuting distance. Research has shown
that inner city residents rely heavily on local job opportunities
and "reverse commuting" to satellite employment centres
is low, especially for people who depend on public transport.
18. The situation for women was different because employment
expanded, although not by very much. In the cities where the demand
for labour rose quickest, such as Plymouth, Bristol, Leeds and
Cardiff, there was growth in female economic participation, reflecting
employers efforts to draw additional people into the workforce.
There was also an increase in net inward commuting to these cities.
Net out-migration was still significant for women, presumably
because they were influenced by the migration behaviour of their
partners and their residential preferences. The figures for specific
cities show that those with large job losses affecting women had
bigger increases in net out-migration (particularly Liverpool,
Glasgow and Manchester), whereas cities with job gains had little
change in net out-migration (including Plymouth, Cardiff, Bristol
and Edinburgh).
THE CONTRAST
WITH TOWNS
AND RURAL
AREAS
19. The pattern of employment change and its labour market
consequences were very different outside the major cities. Table
3 presents the LMAs for the towns and rural areas. Some of the
differences from table 1 are very striking and the contrast illustrates
the adverse situation in the cities. For instance, male employment
increased very slightly outside the major cities, but fell sharply
within them. Female employment increased very substantially outside
the major cities, but very little within them.
Table 3
LABOUR MARKET ACCOUNTS FOR BRITAIN'S TOWNS AND RURAL AREAS,
1981-91
| | Male
| Female |
| | Number
| %1 | Number
| %1 |
| Loss of employment | -13,000
| -0.1 | -959,000
| -16.8 |
| PLUS natural increase in workforce | 204,000
| 2.2 | 97,000
| 1.7 |
| MINUS net out-migration | -247,000
| -2.7 | -226,000
| -4.0 |
| MINUS change in net out-commuting | -16,000
| -0.2 | 150,000
| 2.6 |
| MINUS decline in economic activity rate |
374,000 | 4.0
| -865,000 | -15.1
|
| MINUS number on government schemes | 120,000
| 1.3 | 74,000
| 1.3 |
| EQUALS change in unemployment | -40,000
| -0.4 | 5,000
| 0.1 |
Source: Census of Population, 1981 and 1991.
Note: 1 As a percentage of the economically active
men/women of working age in 1981.
20. The responses to these shifts obviously differed as well.
The female economic activity rate increased substantially in the
towns and rural areas as more women were drawn into the workforce
by the rising demand for labour. There was also net in-migration
to the towns and rural areas from people moving out of the cities.
The substantial growth in female employment was not translated
into lower unemployment because of the sharp rise in economic
participation.
21. The static overall employment and unemployment levels
for men obscured an increase in net in-migration and a reduction
in the economic activity rate. This could be explained by professional
and managerial workers moving into the towns and rural areas and
benefiting from job growth in these occupations, while manual
workers already living there were becoming economically inactive
because of the decline in manual jobs. It should be borne in mind
that the category "towns and rural areas" is actually
very broad and encompasses places ranging from the coalfields
which have experienced substantial decline in manual jobs, to
prosperous fast-growing towns such as Milton Keynes, Bracknell,
Cambridge and Newbury which have increase employment across the
occupational spectrum.
THE IMPLICATIONS
FOR SUPPLY
SIDE POLICIES
22. This evidence clearly indicates that the principal cause
of registered and hidden unemployment in the cities is the decline
in demand for labour. There is a strong correspondence between
places with high levels of job loss and high rates of unemployment.
More specifically, there has been a decline in demand for manual
labour, and manual workers typically lack the advanced skills
and qualifications to compete for whatever professional, managerial
and technical jobs have been created. National economic growth
will not rectify the situation on its own, since growth is distributed
unevenly across the country. Northern cities have not gained their
share of jobs associated with the period of economic recovery
since 1993.
23. Programmes such as the New Deal do not recognise the
significance of spatial disparities in labour market conditions.
Although they incorporate positive features, such as the person-centred
approach to employment advice and job search support, they do
not address the essential reasons for unemployment in areas with
an excess supply of labour. They imply that unemployment is caused
by inadequate basic skills and poor motivation, rather than a
lack of jobs, although there is little substantial evidence for
the former. There are positive features of other supply-side measures
as well, such as child-care, training, work experience and improved
in-work benefits. However, they also do little to expand the demand
for labour. Consequently, they could cause difficulties in areas
such as the conurbations and coalfields when combined with stronger
sanctions and pressures, by pushing workless groups into labour
markets that are already experiencing an over-supply of labour.
24. They may well succeed in getting individuals into jobs,
but generally at the expense of others in similar positions and
without reducing the overall level of unemployment within the
locality. They may end up simply shuffling employment around and
recycling people through temporary periods of work experience,
training and short-lived jobs. This would have adverse effects
on the morale of participants and damage the programme's reputation.
The application of penalties and high drop-out rates would have
adverse consequences for cities and poor neighbourhoods through
individual hardship, growth of the underground economy and the
loss of income to communities through welfare benefits being pared
back. It is important that official monitoring efforts establish
whether the delivery, quality, range of options and outcomes of
the New Deal are inferior in areas of highest unemployment. Supply-side
programmes on their own may have a stronger rationale in tight
labour markets where there is a shortage of labour and a higher
proportion of the unemployed face barriers to recruitment that
can be addressed in this way.
LOCAL, REGIONAL,
NATIONAL AND
EUROPEAN-SPONSORED
DEVELOPMENT POLICIES
25. The New Deal patently does not exist in isolation. There
is a growing range of policies and programmes aimed promoting
urban regeneration, local economic development and regional growth.
Specific objectives include promoting the start-up and expansion
of local businesses, encouraging innovation and the adoption of
new technology in industry, attracting inward investment, improving
the quality of local labour supply, enhancing housing and environmental
conditions and alleviating social exclusion. Over time, reducing
unemployment has become less explicit as an objective than one
might have expected. The relative scale, level of resources, coherence
and significance of these measures has not been properly documented
and assessed, partly because of the diverse funding arrangements
and lack of any single organisation with sufficient responsibility
to form an overview.
26. In the absence of this, one can do little more than flag
up several apparent concerns. First, it is clear that there has
been increasing activity at the regional scale. It is early days
in the life of the Regional Development Agencies, although is
already apparent that their region-wide remit and strong growth
orientation mean a focus on areas where market pressures and private
sector investment interest is greatest, rather than the cores
of urban areas and other localities where unemployment is highest
and the physical and financial obstacles to development loom larger.
There is a danger, therefore, that the RDAs could reinforce the
urban-rural shift in economic activity and do little to improve
economic conditions in the high unemployment areas.
27. Second, government support for the RDAs comes after a
long period of weakening of traditional regional policy. This
sought to reduce the North-South divide and related problems by
encouraging industrial relocation from regions experiencing congestion,
overheating and labour shortages, and promoting inward investment
in the depressed regions. It is ironic that the re-emergence of
strong growth pressures in the South East and increasing migration
from the northern regions are coinciding with a situation where
every region has its own RDA and there is no institutional framework
to formulate and implement a strategic national perspective on
the distribution of employment. Restricting housing development
in the South East through the planning system will do little to
support the economic revival of cities in the Midlands and North.
28. Third, urban policy has a vital role to play in promoting
economic development in the places that need jobs most. One of
the priorities ought to be investment in land reclamation and
improvement, the development of strategic sites, provision of
modern premises and suitable infrastructure to accommodate business
expansion and attract inward investment. This would help to tackle
the underlying causes of social exclusion, it would have environmental
benefits in recycling land and reducing energy consumption from
travel, and have spin-offs for macro-economic management in a
more balanced distribution of labour demand and supply. It needs
to be undertaken on a city-wide basis to provide the strategic
perspective and co-ordination for key investments.
29. In practice, urban policy and related government
initiatives on social exclusion have become focused on residential
neighbourhoods. Their efforts to empower communities, upgrade
housing conditions, improve the safety of the environment and
enhance people's access to employment advice and training cannot
but be supported. However, the targeting of small and specific
residential areas, and the modest resources that tend to be available
mean that economic development, infrastructure investment and
employment creation do not feature prominently. This may be a
fundamental obstacle to the regeneration of these areas on a sustainable
basis. There is already a history of failed regeneration schemes
that did not tackle the root causes of poverty and deprivation.
The problem seems to arise partly because the rationale for urban
regeneration is perceived by the Treasury to be social rather
than economic, and from the dominant supply-side perspective on
unemployment.
30. Similar kinds of difficulties may arise with the
new round of European-sponsored regional programmes as a result
of the new ward-based method of designating Assisted Areas for
regional assistance and Objective 2 areas for the European Structural
Funds. The highly fragmented and localised map of priority areas
that results from this approach makes coherent planning of economic
development for sensible labour market areas difficult. It is
not easy to see how major physical projects can be effectively
integrated with supply-side programmes when they require a larger-scale
perspective.
31. There are of course many examples of good practice
available. For instance, cities such as Leeds and Sunderland,
appear to have been more active than the rest in improving their
physical fabric and infrastructure, making serviced land and premises
available for economic development, protecting land from retail
pressures, and replacing or modernising older buildings. They
also have wide administrative boundaries that permit them to promote
large sites on the edge of the built up area with good access
to the strategic road network. At a smaller spatial scale, Glasgow
has established a unique network of "local development companies"
in areas of highest unemployment. They are able to co-ordinate
and integrate demand-and supply-side labour market measures, so
that, for example, training courses are linked into projects that
increase particular kinds of employment opportunities to ensure
client progression. They raise resources from a wide range of
city-wide, national and European sources and co-operate closely
with other local interests and organisations.
CONCLUSION
32. There is clear evidence of a jobs gap in many of
Britain's cities. Insufficient emphasis in policy is currently
being given to expanding labour demand in these places, for institutional,
financial and philosophical reasons. The resulting uneven spatial
pattern of employment and population growth has damaging economic,
social and environmental consequences and deserves to be taken
more seriously. It threatens the efficient functioning of the
national labour market and is bound to constrain the thrust of
government policy to get people off welfare and into work. The
positive examples of good practice that are available need to
be consolidated and given wider application.
Professor Ivan Turok
Department of Urban Studies
The University of Glasgow
October 1999
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