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The impact of large scale redundancies in the East of Scotland

The impact of large scale redundancies in the East of Scotland. ESEP Seminar Callendar House, Falkirk 26 November 2003. Objectives. to examine the impact of 2 large scale redundancies on the local labour market Motorola and NEC to present cameo studies of other major redundancies

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The impact of large scale redundancies in the East of Scotland

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  1. The impact of large scale redundancies in the East of Scotland ESEP Seminar Callendar House, Falkirk 26 November 2003

  2. Objectives • to examine the impact of 2 large scale redundancies on the local labour market • Motorola and NEC • to present cameo studies of other major redundancies • to review the implications for policy makers, and identify possible interventions

  3. Today’s programme • 10.30 Welcome: Gordon McLaren • 10.40 Presentation: John Lord • 11.10 Commentary: Alan McGregor • 11.30 Break • 11.45 Focus groups • 12.30 Feedback and discussion: Alan McGregor • 13.15 Closing remarks: Gordon McLaren • 13.30 Lunch

  4. ESEP labour market service • launched January 2002 • labour market information service for ESEP and its partners • principal output - major annual report: • www.esep.co.uk • ad hoc reports and services: • ERDF/ESF-funded community development projects • strategic sector profiles • autumn seminars

  5. East of Scotland Programme Area

  6. Presentation • policy context: the PACE framework • incidence of large scale redundancies • case studies: Motorola and NEC • scale and phasing • labour market context • impact on the claimant count • redeployment outcomes • cameo studies from the ESEP area

  7. The PACE framework • a national framework for local agencies to create effective and flexible mechanisms to identify and respond to redundancy situations • precautionary planning and redundancy response • local response teams

  8. Incidence of redundancy • about 8 employees in a 1,000 (<1%) were made redundant in 2000-01 • but twice that in manufacturing • about 13% of employees changed employer in the year to 2001 • mobility greatest among the young, single, people with level 2 qualifications, workers in the private sector (especially small firms) • median job tenure in the UK 4 years

  9. Redundancies per 1000 employees, UK (1992-2000) • Redundancy rates are increasing in the manufacturing sector in the UK (1.6%) and falling in the service sector (0.5%)

  10. Losses and gains reported in the press since Jan 2001

  11. Motorola and NEC: large site closures • Motorola, Bathgate • 3100 redundancies • April – December 2001(9 months) • NEC, Livingston • 1500 redundancies • August 2001 – December 2002 (16 months) • total • 4600 redundancies • April 2001 – December 2002 (20 months) • most in the year to April 2002

  12. Impact on the West Lothian economy • in 2001, there were 69,000 employees in employment • of which 17,000 were in manufacturing • the Motorola and NEC closures resulted in 4,600 job losses, equivalent to: • 7% of all employment • 27% of manufacturing employment

  13. Workforce characteristics: Motorola • 2/3 male • 2/3 aged 25-44 • 2/3 semi-skilled/process workers • 90% employed for 3 years + • 21% qualified to L4 or over, 25% L3 • …43% no post-school qualifications • motivated and able workforce • high productivity/quality environment • culture of training and development

  14. Workforce characteristics: NEC • 2/3 male • 78% aged 25-44 • 36% operatives, 21% technicians, 17% engineers • 75% employed for 3 years + • 21% qualified to L4 or over, 21% L3 • …46% no post-school qualifications • motivated and able workforce • high productivity/quality environment • culture of training and development

  15. Where employees came from Lothian 1650 (36%) Other 1190 (26%) Lanarkshire 1750 (38%) of which W Lothian 1420 (31%) N Lanarkshire 1220 (27%) local people 2640 (58%)

  16. Residents working in manufacturing as % of all employees

  17. Impact on West Lothian residents • 1,420 West Lothian residents were made redundant • in 2001, there were 82,000 West Lothian residents in employment • of whom 16,000 were in manufacturing • the scale of redundancies was equivalent to: • 1.7% of all West Lothian residents in employment • 8.9% of those employed in manufacturing

  18. Impact on North Lanarkshire residents • 1,220 North Lanarkshire residents were made redundant • in 2001, there were 144,000 North Lanarkshire residents in employment • of whom 22,000 were in manufacturing • the scale of redundancies was equivalent to: • 0.8% of all North Lan residents in employment • 5.5% of those employed in manufacturing

  19. Redundancies relative to claimant count stocks • between April 2001and Dec 2002, the average number of claimants in each area was: • West Lothian: 3000 1420 redundancies = 47% of claimants • North Lanarkshire: 7750 1220 redundancies = 16% of claimants

  20. Redundancy phasing

  21. Redundancies by local authority

  22. Redundancies per month relative to claimant count stocks

  23. Claimant countstock

  24. Claimant count rate index scale Feb 2000=100

  25. Claimant count on-flow

  26. Claimant count off-flows

  27. West Lothian redundant residents relative to on-flow

  28. North Lanarkshire redundant residents relative to on-flow

  29. Proportion claiming 6+ months leaving count for work (%)

  30. Proportion claiming 12+ months leaving count for work (%)

  31. Local impacts of the Motorola and NEC closures: summing up • 4,600 jobs lost in West Lothian • most in the year to April 2002 • 2,600 local people (WL/NL) lost jobs • some impact (?) on total claimant count relative to Scotland • but a quick recovery • no discernible shock in flows on and off • but proportion of LTU leaving count for work has fallen in West Lothian

  32. Redeployment outcomes: Motorola • after 6-9 months: • 63% employed/self-employed • 6% in FE/training • 7% not seeking work • 24% unemployed • after 12 months: • 83% employed • 5% unemployed

  33. Redeployment outcomes: NEC • after 6-12 months: • 80% employed/self-employed • 7% in FE/training • 5% not seeking work • 8% unemployed

  34. Employment outcomes analysed • older workers find it harder to get a new job • some transfer from full-time to part-time work • especially women • a clear majority are now earning less • 68% ex Motorola, 69% ex NEC • people have had to acquire new skills • and switch to different industries • time makes a difference • redeployment rates improve after 6 months

  35. Cameo studies • Longannet, Fife • BP, Grangemouth • Grampian Foods, Edinburgh • Levi Strauss, Dundee

  36. Longannet Colliery • 450 redundancies: Nov 2001 – March 2002 • some mining engineers, mostly semi-skilled manual • large majority male • wide labour market catchment, but focus on Fife/Forth Valley

  37. Longannet: the outcome • one year on: • 65% in work or training • 4% claiming JSA • 20% claiming other benefits • 15% retired, moved away • limited information on destinations: • supermarkets, bus drivers, manufacturing

  38. BP, Grangemouth • 1,000 redundancies in 2 phases, starting end November 2001 • 650 released to date • remainder to leave by end 2004 • process workers and skilled trades • most live locally • 30% aged 45+

  39. BP: progress to date • of the 650 released to date: • 17% redeployed by BP • 49% retired • 19% in employment • 4% started a business • 2% in FE

  40. Grampian Foods, Lothian • 550 redundancies • May 2002 – Feb 2003 • workforce deemed high risk • 51% aged 25-45 • 65% lived in Lothian

  41. Grampian Foods: the outcome • 61% response to tracking exercise • 84% employed • 10% inactive • 5% unemployed • 33% earning higher wages; 47% earning less

  42. Levi Strauss, Dundee • 460 employees • 41% response rate • very stable workforce: 93% employed for 5 years+, 20% for 20 years+ • 59% live in a SIP postcode

  43. Levi’s: one year on • 83% employed • most people in different occupations • a lot of churn over 12 months • more were in part-time occupations • average earnings sharply down • 3% unemployed

  44. The impact of large scale redundancies in the East of Scotland ESEP Seminar Callendar House, Falkirk 26 November 2003

  45. Local impacts of redundancies: the historical record • where the employment base is more specialised… • redundancy may affect a higher proportion of the employment base • resulting in sustained higher levels of unemployment • …and population loss, especially among the young and more skilled • causing difficulties in attracting new employers

  46. Redundancies in large integrated labour markets • effects dispersed across the labour market • localised impacts difficult to see a few years down the road

  47. Other factors affecting local impacts • state of the local labour market • characteristics of the employer • characteristics of the redundant workers

  48. The impact of large scale redundancies in the East of Scotland ESEP Seminar Callendar House, Falkirk 26 November 2003

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