People: overview of key messages

1. People: overview of key messages May 2019

2. Labour market context

3. The current employment position is strong Figure: Trend in level of ILO unemployed and economically inactive who want a job, Leeds City Region • The level of employment in the region has increased by more than 110,000 or 9 per cent since its trough in the recession. • Employment is now 3 per cent higher than its pre-recession peak. • In spite of growth in the working age population (of around 100,000 or 5% since 2004) the employment rate has now surpassed the pre-recession position, at around 74% (national average:75%). • There are considerable disparities of employment rate at district level, ranging from 66% for Bradford to 83% for Harrogate. • . Source: Annual Population Survey.

4. There has been a strong decline in unemployed but smaller change in number of inactive people who want a job Figure: Trend in level of ILO unemployed and economically inactive who want a job, North and West Yorkshire • The region continues to face a challenge around getting people into sustained employment. • The latest position is that 58,000 people in the region are unemployed and seeking work, 3.9% of the working age population (national average: 4.2%). • However if economically inactive people who would like a job are factored in, the count increases to 130,000 or 9 per cent of the working age population. • Level of inactivity has been much stickier in face of strengthening labour market than official unemployment count – 32 per cent decline versus 54 per cent since 2012; decline in inactivity has only recently kicked in. • This confirms the continued importance of employment support and investment in skills development for the jobless. • . Source: Annual Population Survey.

5. The employment rate for disabled people in the area is 24 points lower than for non-disabled people Figure: Employment rate by disability status • 411,000 people in North and West Yorkshire are EA core or work-limiting disabled, 21% of all working age residents (national average: 20%). • Disabled people are considerably less likely to be in employment than the non-disabled. Just over half (55%) are in employment in North and West Yorkshire, 24 points lower than the employment rate for the non-disabled. • The picture locally is similar to the national average in this regard. • Disabled people face a range of gaps to employment but a lack of skills is a key one. Disabled people in Yorkshire and the Humber are three times as likely to have no formal qualifications and are much less likely to be qualified at level 3 or level 4 than the non-disabled (source: Labour Force Survey). Source: Annual Population Survey, January to December 2018.

6. The ethnic minority employment rate gap is 17 points locally, rising to 27 points for females • The ethnic minority population of North and West Yorkshire is 284,000, 15% of the total population of the area. • Three districts – Bradford, Leeds and Kirklees – account for 85 per cent of the total ethnic minority population. • The ethnic minority population is strongly represented in younger age bands: 21 per cent of 16-24 year olds are from an ethnic minority • At 59% the ethnic minority employment rate is 17 points lower than that of whites (76%) in North and West Yorkshire, rising to 27 points for ethnic minority females. • It is also notable that although local employment rates for whites are similar to the national average, both overall and for males and females, local employment rates for ethnic minorities are lower. Overall, there is a gap of 7 points but this is mainly due to a female ethnic minority employment rate that is 9 points lower locally than nationally Figure: Employment rate by disability status Source: Annual Population Survey, January to December 2018.

7. The region is among those areas with relatively low productivity and a low employment rate Figure: Employment rate and productivity performance of LEPs relative to the UK average • Local prosperity depends on two factors: the proportion of people in employment and the productivity of those people in their jobs i.e. the value of the output that they produce. • The region underperforms the national average on both of these indicators. • The region is in the bottom left quadrant, indicating that, compared with the national average, a lower proportion of people are in employment, while the amount they produce is also lower than average. • The chart also highlights the divergence in performance between southern England and the rest of the country, with LEPs from the south east dominating the top right quadrant. Cheshire and Warrington is the only northern LEP to feature in this quadrant Source: Annual Population Survey; ONS LEP level estimates of productivity

8. There is a strong correlation between skills and productivity performance at local level Figure: High level qualifications and productivity by LEP area • A simple illustration of the link between productivity performance and skills is this scatter chart which plots performance of LEP areas against the two variables – output per hour and % qualified at level 4 and above. • Shows strong relationship between the two, although there are a range of other factors aside from skills that determine local productivity. • North and West Yorkshire is towards the bottom left of chart – low productivity and low skills – London is top right – high productivity, high skills. • A strong supply of high level skills supports the effective use of technology within firms and an increased focus on innovation. Source: Annual Population Survey; ONS LEP level estimates of productivity

9. Around 310,000 jobs (25%) across the region pay below the LWF Living Wage Figure: Number and % of employee jobs paying below the living wage (as defined by the LWF), 2018 • Productivity is closely linked to pay and therefore living standards: more productive firms pay higher wages. • The local productivity deficit is reflected in the pay situation. • 25% of local jobs pay less than the Living Wage Foundation’s Living Wage rate, which is intended to reflect the level of pay people need to get by. In contrast for Oxfordshire LEP it’s 13%. • The majority of low-paid jobs in volume terms are in West Yorkshire but several North Yorkshire districts have a high proportion of workers paid below the Living Wage. 2018 LWF Living Wage rate: £8.75 Source: Annual Survey of Hours and Earnings 2018 Note: Workplace-based

10. The lowest paid districts in the region are in North Yorkshire Figure: Median gross hourly pay for full-time jobs, 2018 • All districts in the region have hourly rates of pay that are lower than the national average of £14.49 • The five lowest paid districts in the region are in North Yorkshire, reflecting the sectoral and occupational structure of jobs in those districts (e.g. preponderance of jobs in areas like hospitality). • Mean hourly pay for full-time job in the region, at £15.71, is only 89% of the England average of £17.73. Source: Annual Survey of Hours and Earnings 2018 Note: Workplace-based

11. Employment status has a major bearing on rates of pay – part-time workers are heavily disadvantaged Figure: Median gross hourly pay employment status / gender, 2018 • Part-time workers in the region receive hourly rates of pay that are around a third lower than for full-time workers • This primarily disadvantages female workers who make up the majority of the part-time workforce • However, the gap in pay is more pronounced for male part-time workers who receive rates of pay that are 39% lower than for full-time counterparts in West Yorkshire, for example. 2018 LWF Living Wage rate: £8.75 Source: Annual Survey of Hours and Earnings 2018 Note: Workplace-based

12. The local pay deficit with the national average is largely due to a disparity at the top end of the pay distribution • Although the region has a significant proportion of people paid below the Living Wage, the main source of the pay deficit with the national average is under-performance at the upper end of the pay distribution. • For example the pay level for jobs at the 10th percentile in North Yorkshire is 96% of the equivalent national figure; however, at the 90 percentile it is only 79% of the national figure. • This indicates that the highest paid jobs in the region are paid significantly less than the highest paid jobs nationally and this is main source of overall pay gap. • This reflects the under-representation of jobs in the highest skilled occupations in the region. Figure: Median gross hourly pay by percentile (£), 2018 Source: Annual Survey of Hours and Earnings 2018 Note: Workplace-based

13. The character of skills deprivation varies at district level Figure: Proportion of neighbourhoods in 10% most deprived nationally by education and skills sub-domain • The region has more than its fair share of skills-based deprivation: 17% of neighbourhoods in the region are among the 10% most deprived in relation to skills, with Bradford (33%), Wakefield (28%) and Leeds the worst-affected • Districts in West Yorkshire, with the exception of Leeds, are characterised by skills deprivation that is more acute among adults rather than young people • In North Yorkshire districts the reverse is true, with skills deprivation among young people more prominent • Improving the skills pipeline by improving the attainment of young people is a critical priority but in some parts of the region will not be sufficient in view of deficit of skills among adults Source: Indices of Multiple Deprivation, 2015 Children and Young People sub-domain includes: Key Stage 2 attainment; Key Stage 4 attainment; Secondary school absence; Staying on in education post 16; Entry to higher education Adult Skills sub-domain: Proportion of working age adults with no or low qualifications; English language proficiency

14. What skills are needed?

15. Largest segments of employment are professionals and care workers in public sector, followed by sales and customer service Figure: Heatmap of employment by occupation and industry group, North and West Yorkshire • Occupational / sectoral profile of employment provides an indication of local labour demand and skills needs • The largest single segment is professional level employment in the broad public sector (includes health, education and public admin) • Employment in care roles in the public sector is also substantial • Other key concentrations include sales and customer service in distribution (primarily retail), and elementary roles in distribution (primarily hospitality jobs) Source: Annual Population Survey, Oct 2017 to Sept 2018 Note: Workplace-based employment

16. Employment in high skilled occupations is under-represented in North and West Yorkshire Figure: Profile of employment by broad occupational category • Employment in higher skilled management, professional and associate professional / technical occupations accounts for a smaller proportion of the total locally compared with nationally • 43% of people working in the region are employed in higher skilled roles, versus a national average of 47% • Employment in professional roles is particularly low at 20% of the total compared with national average of 23% • Employment in middle-skilled, service-intensive and manual roles are all proportionately higher in the region than nationally Source: Annual Population Survey, Oct 2017 to Sept 2018 Note: workplace-based employment

17. Lower proportions of workers in high skilled occupations in important sectors helps to explain low levels of productivity in the area • This chart shows how the overall deficit of high level skills plays out within sectors. • Local sectors generally employ fewer high skilled people who are key to driving productivity. • This reinforces the picture of a productivity deficit that is largely due to underperformance within sectors rather than the result of a negative sectoral mix. • The issue is not simply one of availability of skills, it is also about lack of demand for skills in these sectors. • Differences with national picture reflect type of functions undertaken within a sector (e.g. front vs back-room functions, or global vs national focus) in the local area compared to high productivity locations. • This structural issue can be addressed by raising demand for skills by attracting new investment, assisting business to raise product market strategy etc Figure: Proportion of the sectoral workforce in higher skilled occupations Source: Annual Population Survey, Jan to Dec 2018 Note: workplace-based employment; higher skilled occupations are SOC major groups 1-3; managers, professionals and associates professional / technical. Local data not available for agricultural sector.

18. But high skilled occupations have been main source of employment growth in recent years with cumulative increase of 120,000 since 2004/05 Figure: Occupational contribution to cumulative employment growth, North and West Yorkshire • Recent employment growth has been driven by expansion of higher skilled occupations: the number of people employed in these roles has grown by 120,000 since before the recession • The other main source of growth was service-intensive jobs, primarily care and elementary services roles (e.g. hospitality, cleaning) (+32,000). • Employment in middle skilled roles was hard hit by the recession but is now close to pre-recession levels • Employment in manual roles (semi-skilled operatives, labourers) saw decline in recession but has also seen some recovery Source: Annual Population Survey

19. Largest areas of recent employment growth are professional and caring roles in public sector; largest segment of decline is operatives in manufacturing Figure: Heatmap of employment change (absolute numbers, 2005-2018) by occupation and industry group, North and West Yorkshire • The picture of employment change between pre-recession period (2005) and current position provides an insight into underlying trends in demand for labour • Employment in higher skilled roles was seen virtually across the board and was particularly pronounced for professionals in public sector (includes health, education, as well as public admin) • Employment in caring roles saw significant growth • Administrative employment declined in all sectors but skilled trades saw a mixed picture with decline in construction and manufacturing but growth elsewhere • Semi-skilled operative employment in manufacturing fell markedly Source: Annual Population Survey, 2005 to 2018 Note: Teal bubbles reflect level of growth and red bubbles reflect level of decline within an employment segment. Note: Relates to workplace-based employment

20. A diverse range of occupational areas are featured among those with greatest recruitment need Figure: Top occupations in greatest demand overall, North and West Yorkshire, January to December 2018 • Another way of understanding demand is by examining the types of job that are being advertised via online job postings-this provides an insight into current recruitment patterns. • A key caveat is that lower skilled jobs under-represented - less likely to be advertised online. Analysis focuses on jobs that fall within higher skilled occupational groups – managers, professionals and associate professionals. • There were 175,000 higher level job postings in the 12 months from January to December 2018. • Digital occupations are prominent, with 3 out of the top 10 occupations falling into this category. The occupation with by far the greatest number of postings was software developer / engineer but web developer and computer support specialist also feature. • The top 10 occupational ranking also highlights the demand for a variety of other skills in the current labour market, including project management and sales as well as accountancy and legal skills. In addition, two public sector jobs are included, in the form of registered nurse and primary school teacher. Source: Labour Insight Note: Analysis limited to management, professional and associate professional occupations

21. Communication is the most widespread “baseline” skill requirement Labour Insight also supports analysis of the types of skill that employers ask for in their job postings, enabling us to profile the skills in greatest demand. The fact that employers ask for skills suggests they are not available as matter of course – in some cases difficult to get. This analysis focuses on baseline skills – generic skills in widespread demand across jobs. The size of text in the word cloud reflects level of demand for different types of skill. Communication is in greatest demand followed by skills including planning, organisation, creativity, problem solving. Many of these skills are those that are resistant to automation. Figure: Top “baseline” skill types in greatest demand, North and West Yorkshire, January to December 2018 Source: Labour Insight Note: Analysis limited to management, professional and associate professional occupations

22. Among the specialist skills in greatest demand in the region are teaching, budgeting, teamwork / collaboration and project management As would be expected the specialised skills in greatest demand for higher skilled jobs in the region’s labour market are highly diverse in nature. Teaching skills are most commonly featured as a requirement in 10% of job postings, followed by budgeting, teamwork / collaboration and project management A number of digital skill sets are featured, including programming skills such as javascript, C#, SQL and general software development, Figure: Top specialised skill types in greatest demand, North and West Yorkshire, January to December 2018 Source: Labour Insight Note: Analysis limited to management, professional and associate professional occupations

23. Routine and lower-skilled occupations are at greatest risk of automation in the area A key future challenge is automation (in form of AI and robotics) and its potential impact on demand for jobs and skills. A leading study by Frey and Osborne (2013) and related analysis found that 35 per cent of existing jobs in the UK are at high risk of computerisation over the next 20 years. Applying Frey and Osborne’s analysis to the employment base of North and West Yorkshire suggests that overall, 34 per cent of jobs are projected to be at high risk of automation, similar to the national average. In line with recent trends, routine clerical roles are expected to continue to be the most susceptible to automation, together with sales roles (such as checkout operators). Higher skilled jobs are expected to be the most resistant to automation, along with caring occupations, reflecting the importance of skills such as creativity and social intelligence to these jobs, which are more difficult to computerise. Figure: % of employment at high risk of automation by occupational category, North and West Yorkshire Source: LEP estimates based on Frey and Osborne (2013) and EMSI

24. What skills are available and in the pipeline

25. 2018 saw a continued improvement in the proportion of local population qualified at a higher level (level 4+) Figure: Profile of highest qualification held by working age (16-64) population, North and West Yorkshire residents • One of the key challenges facing the region is a deficit in its skills base relative to other parts of the UK. • Following a period of five years without improvement, 2017 saw an increase in % of working age people in the area qualified at level 4 and above which has continued in 2018, with a further 1 point increase to 35%. The national average also saw an increase of 1 point in 2018. • Perhaps most notably, the proportion of the region’s population with no qualifications saw a 2 point fall to 8%. • The area’s deficit, relative to the national average, of people with level 4 qualifications is equivalent to 74,000 people Source: Annual Population Survey, January to December datasets

26. But the region still lags behind the national average in terms of its skills profile Figure: Profile of highest qualification held by working age (16-64) population in 2018 • In spite of recent improvements the area continues to lag the national average on level 4+ qualifications by 4 percentage points – equivalent to 74,000 fewer high qualified people in the region • North Yorkshire and York both perform better than West Yorks and are above the national average in respect of this indicator • With regard to people with no formal qualifications, recent improvements mean that the region is now close to the national average, although West Yorkshire is still one point higher. Source: Annual Population Survey, Jan to Dec 2018

27. There are marked differences in skills profile at district level • The profile of skills supply across the region is highly disparate – the region’s relatively weak overall skills profile is largely due to underperformance in particular districts. • For example, only 25 per cent of the population in Wakefield is qualified to level 4. In Bradford there are significantly more people qualified below level 2 than qualified at level 4 and above. • Meanwhile, York and North Yorkshire out-perform the national average by a considerable margin, although Scarborough is a notable pocket of under-performance in North Yorkshire. Source: Annual Population Survey, Jan to Dec 2018 Note: data not available for Craven, Hambleton, Richmondshire, Ryedale

28. 31% of children in the region do not reach a good level of development by the end of reception Figure: Proportion of children achieving a good level of development at foundation stage by district, 2017/18 • It is critical that all children start school ready to learn. A key indicator of school readiness is the proportion of children who have reached a good level of development by the end of their reception class. • More than 30% of children in the region fell short of this level in 2017/18. The region lags the national average by three percentage points in respect of this measure. • There is a 9 point gap between the best performing district of Harrogate and the worst performing, Leeds • All districts in West Yorkshire perform below the national average Source: Department for Education

29. Disadvantaged children are much less likely to achieve a good level of development Figure: Proportion of children achieving a good level of development at foundation stage by district – percentage point gap between FSM and non-FSM pupils, 2017/18 • Only three districts in the region have a gap that is lower than the national average. Bradford has a particularly small gap. • A number of the districts that perform best on an overall level against this indicator, such as Harrogate, Selby and York, have the biggest attainment gap between disadvantaged and non-disadvantaged children Source: Department for Education

30. Apprenticeship starts fell by 24% in 2017/18 Figure: Trend in apprenticeship starts, North and West Yorkshire • Apprenticeships are a key means for employers to grow their own skills and to address their specific needs, particularly in areas of skill shortage. • There were around 25,300 apprenticeship starts in Leeds City Region during the 2017/18 academic year, a fall of 7,900 or 24%, following a 5% decline in the previous year. This is similar to the national picture. • The decline was linked to the introduction of the apprenticeship reforms, including the levy during the latter part of the 2016/17 academic year. Source: Department for Education

31. All districts saw a decline in apprenticeship starts but to varying degrees Figure: Change in total apprenticeship starts by district, North and West Yorkshire, 2016/17 to 2017/18 • Based on location of learner residence, Leeds contributed the greatest number of apprenticeship starts during 2017/18 (22% of the City Region total) followed by Bradford (16%), Richmondshire*** (13%) and Kirklees (12%); Craven had the fewest starts at 1%. • All districts saw a decline in starts during the year but there was significant variation in the extent of the decline. • Scarborough (-34%), Harrogate (-32%) and Wakefield (-32%) saw the biggest proportionate falls, while Richmondshire (-9%), Ryedale (-13%), and Craven (-20%), experienced the smallest declines. Source: Department for Education ***Note: Relatively high level of apprenticeships in Richmondshire largely reflects presence of Catterick garrison in the district and large number of army apprentices based there.

32. Biggest falls in apprenticeship starts in Health / public services / care, Business admin / law and Retail / commercial enterprise Figure: Trend in apprenticeship starts, North and West Yorkshire • In terms of subject area the biggest declines were in Health, public services and care (-3,400), Business admin / law (-2,100) and Retail / commercial enterprise (-1,300) • Starts on construction apprenticeships grew by 18% (+250), reflecting the sector’s familiarity with levy arrangements. Information technology starts also grew (by 110 or 14%). • The biggest falls in proportionate terms were for Education and training (-61%) and Leisure, travel and tourism (-52%) Source: Department for Education

33. Disadvantaged pupils are less likely to participate in apprenticeships in some districts Figure: % of pupils entering a sustained apprenticeship following completion of key stage 4 by free school meal eligibility • The proportion of KS4 pupils going on to an apprenticeship varies at district level, from 8% in Craven to 4% in Bradford (the latter being similar to the national average) • In all West Yorkshire districts pupils eligible for free school meals are less likely to enter an apprenticeship and this is also the case for Scarborough • In York and Hambleton, however, disadvantaged pupils are more likely to take up an apprenticeship, reflecting the national picture Source: Department for Education. 2016/17destinations for the 2015/16 cohort (state-funded mainstream schools). FSM entry rates suppressed for Craven, Ryedale, Richmondshire, Harrogate and Selby due to small values. Sustained apprenticeship: Young people were counted as being on an apprenticeship if they participated in relevant learning for at least six consecutive months at any point in the destination year.

34. Disadvantaged pupils are less likely to enter a sustained education or employment destination following KS4 Figure: % of pupils entering any sustained education or employment destination following completion of key stage 4 by free school meal eligibility • The proportion of KS4 pupils going onto a sustained education or employment destination is similar across the North and West Yorkshire districts, ranging from 97% in Craven to 92% in Leeds. • West Yorkshire districts tend to perform less well against this measure, whilst all North Yorkshire districts exceed or match the national average, except Scarborough. • Disadvantaged pupils are less likely to enter a sustained destination than other pupils across all districts. • The gap differs markedly by district, however, from 4 points in York to 13 points in Ryedale, 14 points in Leeds and 16 points in Selby. Source: Department for Education. 2016/17destinations for the 2015/16 cohort (state-funded mainstream schools) Sustained education or employment destination: pupils who were recorded as being in continuous education or employment between October 2016 and March 2017 and pupils who spent at least six consecutive months in an apprenticeship at any point in the year.

35. HE retention rates vary by subject of study Retention of graduates in the area’s economy is key to maximising the economic benefits of higher education. In 2016/17, around 57 per cent of qualifiers from our institutions were in employment in Yorkshire and the Humber six months after graduation. This rate has remained fairly constant over recent years. Retention varies by subject. For Computer science the retention rate, at 65 per cent, is higher than average of 57 per cent. Others are relatively low, at 53 per cent for Architecture, building and planning and only 43 per cent for Engineering and technology. Figure: Proportion of qualifiers from North and West Yorkshire HEIs working in Yorkshire and the Humber six months after graduation, by subject, 2016/17 Source: Higher Education Statistics Agency Note: Analysis relates to UK-domiciled graduates with UK employment destination

36. And also by institution Retention rates also differ markedly by local institution. Institutions that take a large part of their intake from local residents, such as Leeds Trinity and York St John, also have high retention rates. Russell Group universities that have a much wider catchment of national and international students (University of Leeds, University of York) have much lower retention rates. The subject mix and specialisms of the different categories of institution also has a strong influence on the subject level retention rates Figure: Proportion of qualifiers from North and West Yorkshire HEIs working in Yorkshire and the Humber six months after graduation, by institution, 2016/17 Source: Higher Education Statistics Agency Note: Analysis relates to UK-domiciled graduates with UK employment destination

37. North and West Yorkshire lags behind some competitor LEPs in terms of HE retention rate The chart shows a comparison of retention rates for selected LEP areas. Although North and West Yorkshire is ahead of D2N2 and Northern Eastern LEP areas, it trails someway behind Greater Manchester and Liverpool City Region. These differences largely reflect the degree to which each LEP area’s HE sector is integrated within its local area in terms of recruitment (see above) Figure: Proportion of qualifiers from HEIs in selected LEP areas working in home region of LEP six months after graduation, 2016/17 Source: Higher Education Statistics Agency Note: Analysis relates to UK-domiciled graduates with UK employment destination

38. Graduates from the area’s HEIs who leave the region are most likely to move to the North West or London The analysis looks at the destinations of UK-domiciled HE leavers who studied at an HEI within North and West Yorkshire and who were in employment six months after graduation. The analysis is limited to leavers with a UK employment destination. It shows that the most popular initial destinations following graduation are the North West and London, with each of these regions accounting for around 10 per cent of graduates. Figure: Destinations of UK-domiciled leavers from North and West Yorkshire HEIs, 2016/17 Source: Higher Education Statistics Agency Note: Analysis relates to UK-domiciled graduates with UK employment destination

39. Graduates with a local domicile are more likely to take up employment in Yorkshire and the Humber than people studying in the area The analysis provides a profile of HE leavers whose original domicile is within North and West Yorkshire and who were in employment six months after graduation. This is irrespective of the institution where they studied. The analysis is limited to leavers with a UK employment destination. Around 70% of local graduates find employment in Yorkshire and Humber, somewhat higher than the retention rate for people who study in the area. Relatively small proportions move to London and the North West as their initial destination. Figure: Destinations of HE leavers with North and West Yorkshire domicile, 2016/17 Source: Higher Education Statistics Agency Note: Analysis relates to graduates with UK employment destination

40. Skills mismatch

41. Skill shortages most acute in primary, construction and manufacturing • Skill shortages arise when employers find it difficult to fill their vacancies because of a lack of candidates with the necessary skills, qualifications and experience. • Skill shortages tend to be concentrated in particular industry sectors and occupations but where they do exist they can be acute and persistent. • Their prevalence is highest in three sectors: primary sector and utilities, construction, followed by manufacturing. Shortages are also relatively high in information and communication and health and social work. Figure: Density of skill shortage vacancies by industry sector, North and West Yorkshire Source: Employer Skills Survey 2017 Note: Density measure shows skill-shortage vacancies as a proportion of all vacancies

42. In terms of occupation, skill shortages most acute in higher skilled professional, assoc. professional roles plus skilled trades • The occupational pattern of shortages provides an insight into the particular types of jobs that are affected by a lack of candidates with the right skills. • This shows that there are problems in generating intermediate and high-level vocational / technical skills. • The prevalence of skill shortages is greatest in professional, associate professional / technical and skilled trades occupations. This local pattern of shortages broadly mirrors that seen at national level. • With regard to the skills that employers found difficult to obtain from applicants, specialists skills required to perform the role are are highlighted for the majority of shortage vacancies. A lack of complex analytical skills (such as solving complex problems) is also widespread, as is a deficit of digital skills. Figure: Density of skill shortage vacancies by occupation, North and West Yorkshire Source: Employer Skills Survey 2017 Note: Density measure shows skill-shortage vacancies as a proportion of all vacancies

43. Digital and engineering professionals face acute shortages • More detailed occupational data on shortages is available for Yorkshire and the Humber, providing a clearer insight into the nature of the challenge. • The occupations with the greatest overall number of shortages include nursing roles, caring roles (e.g. care workers), food preparation and hospitality trades (e.g. chefs) and engineering professionals . • However, the occupations with the greatest density of shortages, those in which shortages are most acute, are nurses, digital professionals, engineering professionals, metal machining, fitting and instrument making trades and construction and building trades. • These occupations have typically seen a relatively high prevalence of shortages since 2011, demonstrating their persistent nature. Figure: Occupational minor groups with highest density of skill shortage vacancies, Yorkshire and the Humber Source: Employer Skills Survey 2017 Note: Density measure shows skill-shortage vacancies as a proportion of all vacancies

44. Admin, sales / customer service and elementary occupations most prone to skills gaps – but managers also affected • Skills gaps are another form of mismatch and come about when existing employees are not fully proficient in their job. The pattern of gaps provides an indication of workforce development needs. • There were 55,000 skills gaps in 2017, equivalent to approximately 4% of total employment in the City Region; around 13% of employers are affected by gaps. • Employers are most likely to report skills gaps in respect of sales and customer service staff, administrative staff and lower skilled elementary staff. • A significant proportion of employers report gaps for managers – with implications for wider business performance. • Many skills gaps are short term and associated with high rates of staff turnover, but can be due to introduction of new working practices, new technology or management issues. Figure: Incidence of skills gaps by occupational major group Source: Employer Skills Survey 2017 Note: incidence measure shows the % of employers with skills gap(s) who report a gap in a given occupation.

45. Financial services, hospitality and wholesale / retail are sectors most prone to skills gaps • The extent to which industry sectors are affected by skills gaps reflects their occupational employment structure and the representation of occupations like sales / customer service, admin and elementary • The susceptibility of financial services to gaps reflects the sector’s reliance on admin and sales and customer service staff • In hotels and restaurants – gaps are driven primarily by skills deficits among elementary hospitality roles – serving staff etc • In retail – sales and customer service staff are the main source of gaps • In manufacturing – operatives • In Arts and other services – sales and customer service • In education – teachers / teaching assistants Figure: Density of skills gaps by industry sector Source: Employer Skills Survey 2017 Note: Density measure shows the % of employers with skills gap(s) who report a gap in a given occupation.

46. There are mismatches in profile of HE and local market demand One way of assessing the relevance of HE provision to the needs of the local labour market is to compare the profile of provision to that of projected future job openings. Involves mapping subject categories to occupations. Caveat around the transferability of skills. Study in a particular vocational area proves to be of value across a range of occupational settings. HE institutions are serving the national labour market not just local needs. Areas where supply is low relative to estimated demand include: computer science and architecture, building and planning and business and administrative. Conversely, there are subject areas in which supply, reflected in the proportion of qualifiers relative to the proportion of openings, appears to be high. This is the case for Creative arts and design, Mass communications and documentation and Social studies. Figure: Comparison of profile of HE achievements versus projected job openings in related occupations, North and West Yorkshire Source: Labour Force Survey More surprisingly the proportion of people who qualify in Science, engineering and technology outweighs demand for directly related roles in the labour market. These skills are highly transferable and can be applied across a range of settings, with demand from employers extending well beyond the specific occupational field.

47. Many workers in medium / lower skilled roles are notionally over-qualified for their job Skills mismatches are not only due to skills deficits. Just over a third (34 per cent) of employers in the area say that they have workers whose skills / qualifications are in advance of those needed for the job (source: Employer Skills Survey 2017). Other measures suggest that underutilisation is more widespread and on a larger scale than either skill shortages or skills gaps. Data for the Yorkshire and the Humber region indicate that 230,000 people aged 25 and over working in non-graduate roles (as their main job) hold qualifications at level four and above. This is equivalent to 20% of all people working in non-graduate roles or 11% of all employment. Workers with under-utilised skills are most likely to be employed in administrative, customer service, secretarial and caring roles. This kind of mismatch represents a waste of human capital and a missed opportunity to maximise productivity. Figure: Medium and lower-skilled occupations with the greatest proportion of workers (aged 25+) qualified at level 4+; Yorkshire and the Humber Source: Labour Force Survey

48. Brexit poses potential labour supply challenges The presence of migrant workers can be seen as a mismatch between the skills / labour requirements of employers and the available supply of indigenous workers. Across Yorkshire and Humber there are around 150,000 EU migrant workers equivalent to 6% of total employment. The occupational groups with the highest level of employment among EU migrants are classified as lower-skilled elementary occupations and semi-skilled operative occupations.Only around a quarter of EU migrant workers in Yorkshire and the Humber are employed in higher skilled management, professional and associate professional occupations, much lower than the UK average of 35%. There could still be significant implications for skills. For example, some employers may decide to move to a more skills-intensive business model founded on capital investment in labour-saving equipment. Figure: Occupations with the highest level of EU migrant employment, Yorkshire and the Humber Source: Labour Force Survey

49. Overall, the area is in low skills equilibrium • How does the region stand overall in terms of mismatch? • The slide shows its performance relative to selected other LEPs using an analytical tool developed for OECD. • The analysis is broad-brush, using workplace productivity and occupational structure of workforce as indicators of demand and qualification profile of population as indicator of supply. • Alongside most core cities the region is in the low skills equilibrium quadrant. The labour market is in balance but businesses typically compete on basis of price with low skills and low wages and are less likely to be actively looking to upgrade the skills of their workers. • The aim should be to shift the region as a whole into top right quadrant – where businesses use high skills to deliver sophisticated products and services, competing on basis of quality rather than price. The end result is high productivity, high wages. Figure: Analysis of LEP skills performance using OECD diagnostic tool High skills equilibrium Skills gaps and shortages Low skills equilibrium Skills surplus Source: Adapted from Green, A. (2012), “Skills for Competitiveness: Country Report for United Kingdom”, OECD

50. People – key messages • The area faces a deficit of skills – particularly at a higher level, and this is closely associated with its performance on productivity and pay. This deficit is a function of low skills equilibrium – the deficit of skills supply is linked to a deficit of demand • Nonetheless, higher level occupations are the main source of job growth – raising aspiration and connecting local people to high skilled openings represents a major opportunity • The area has seen a strong recent improvement in its labour market performance but still has a significant number of people who are excluded from the labour market, with disadvantaged groups most at risk • Apprenticeships represent a key opportunity to address employers’ specific skills needs but recent reforms have disrupted the supply of opportunities. • The area has a large HE sector but the extent to which it addresses local skills needs is limited, with graduate retention rates low relative to some comparable areas • Employers continue to under-invest in workforce development and there is a need to improve skills utilisation. Many people are stuck in low-paid work and need support ot enable them to progress their career.