Unlocking Urban Labour markets: resilience and recovery

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The Scottish Cities Knowledge Centre Ideas Forum (SCKCIF) event on ‘Unlocking Urban Labour markets: resilience and recovery’ took place in Edinburgh on 25 October 2013, and was chaired by Professor Charlie Woods (Director, Universities Insight Institute). The aim of the ‘ideas forum’ was to assess if and how city labour markets are resilient to economic crisis, and whether this might be influenced by city size and location, urban form, dynamism, governance and policy. A series of presentations helped stimulate wider discussion.

The introduction from Dr Donald Houston (Director SCKCIF, and University of St Andrews) noted that SCKCIF straddles policy and academic worlds, and is a joint initiative between Universities of St Andrews and Glasgow. An aim is to develop ideas for research on policy built on evidence, e.g.:

  • Cities are ‘engines of growth’ – but they are losing jobs and have low business start up
  • Cities are ‘sites of production’ – but people tend to leave; therefore, how can they be retained?

The first presentation on ‘UK Patterns of Resilience and Recovery in City Regions to 2012’ by Professor Alan Townsend (University of Durham) compared 2 recessionary periods: 89/93 and 07/10. Figures are vulnerable to part-time/FTE figures; there is greater part-time working now (e.g. restaurant/café work); 5 out of 6 jobs in Scotland/Glasgow are PT; city regions are more resilient than cities, with surrounding areas doing better than core cities; employment sectors are generally down (e.g. manufacturing, construction, transport & communications, finance) but ‘public admin, education and health’ is up due to public sector investments. Whilst London and South East recovery is strong, PT work is helping the recovery.

The second presentation on ‘Career Progression and Cities: Escalators, Elevators, Ambition, Agglomeration and Achievement’ by Professor Ian Gordon (London School of Economics) noted ‘ambitious people make it in big cities’ and there is a move from working to service class. There is an ‘elevator effect’ of relocation to favoured areas, and an ‘escalator function’ tied to primary or secondary order cities with context specific boosts to learning.

Some personal advances are based on motives (dynamic, ambitious, human capital), access to jobs with opportunities for adding human/social capital, and external contexts – sector and spatial – which reward learning. Regression can stem from depreciation of assets without re-investment, depreciation of those tied to declining activities, bumping down after involuntary job loss.

General conclusions are: city regions are not large enough to represent labour market areas; strong sectoral effects exist with a higher % of degree holders (knowledge intensity); ‘escalators’ are urban phenomenon; London stands out but all cities doing well; if you want to do well: invest in that place.

In the following presentation on ‘Entrepreneurship and Neighbourhoods: Promoting Resilience or Reproducing Inequality?’ Professor Stephen Syrett (London Middlesex University) spoke of a strong emphasis on entrepreneurship in order to achieve competitiveness and innovation, reduce a culture of dependency, and increase self-reliance.

He described that more deprived areas suffer greater disadvantage and reinforce inequalities. There has been a history of policy interventions, but each has had different objectives: economic growth, social inclusion, etc. He questioned whether there is sufficient clarity about what policy makers are trying to do: in changed economic conditions, what worked in the past might not work now.

His paper noted there are very few growth businesses – characteristics are linked to education, skills and previous managerial experience; these tend to niche focus, differentiated products, low rates of survival. Reality is ‘imitative’ rather than ‘innovative’, with low value added sectors (e.g. taxi drivers; hairdressers). There is a growth of self employment/home based business that outsources, networks, adds value; home as ‘incubator’.

It is important that the labour market is socially inclusive; to reach marginalised groups, and shift dependency culture. Community and social businesses meet local needs; with new forms of delivering local social services.

Dangers are: high failure rates; poor quality working conditions; marginalisation. Past policies have been good at encouraging start ups and innovative practice; but have had little impact on worklessness, and were not good value for money.

In conclusion: generating better quality businesses needs education skills; therefore, target younger people + support new forms of home based business – mainstream support doesn’t always support or target this. Best local initiatives: provide advice, offer bottom-up support, and have good relationships with agencies.

In his presentation on ‘Cities, Regions and the Geography of Training Provision’ Mike Danson (HWU) briefly summarised how ‘Scotland’s history’ had influenced urban form: e.g. heavy industry -> housing decongestion within urban areas -> new towns + peripheral estates. These trends had implications on labour markets: if you wanted to go to university then you needed to live in the city; + students take jobs in city labour market.

Those unable to leave to go to university emphasised the importance of tackling skills development / local learning. This has implications for which geography to use to define ‘local’; travel to work areas; City Region; Functional economies; Geography of everyday life? What is a functional economic area? There is no established way to identify this in practice: it is impossible to draw a line around complex and dynamic social processes. There are lots of different maps; but what should functional areas be to deliver policy? The Scottish Government is creating ‘college regions’ to deliver effective and efficient skills development/training: catchment areas that reconcile needs of institutions and funders based on an approximation.

The presentation on ‘Internet Enabled Employment: New Forms of Fragmented and Freelance Work’ by Professor Anne Green (University of Warwick) focussed on ‘crowdfunding’ and ‘crowdsourcing’.
The EC is keen on crowdfunding calls to wider public to fund specific projects. Crowdsourcing takes on functions once performed by employees in open call, on-line mediated exchange. It is an internet enabled exchange, that supports internet enabled freelancing that tends to base in cities as most big projects are in cities and there is a concentration of people. Different platforms or supporting tools (e.g. on-line booking and time management) exist where people bring existing skills, broaden skills or change career. Benefits are that it can enable global working, facilitate lots of local working and open up opportunities. However, drawbacks are that it can use cheaper labour elsewhere; reduce local employment opportunities (outsource on-line); reduce employer/employee responsibilities (e.g. training). Prerequisites are: literacy, IT skills, self starter, confident, manage time, and ‘know the market’.

A practitioner perspective was offered by James Arnott (Glasgow City Council) who spoke about ‘Current Economic and Labour Market Trends’ in relation to Glasgow. Between 08/13 Glasgow lost 10% jobs, and the economy has shrunk, with fewer people in employment. Critically there is a big increase in inactive not wanting work i.e. people opting out of labour market, with serious implications for the city. The % of HHD’s in employment has not changed; but % of 2 adult HHD’s in employment has dropped. The total number on income related benefits has dropped. A large number of high-value well paid jobs have gone, with a 25% drop in professional, technical and managerial sector.

The city has attempted to attract inward investment e.g. through hosting conferences; bid for external sources of investment; but has had less success at generating indigenous sources of investment or supporting large numbers of small businesses. There has been a poor business failure rate: perhaps Glasgow is a difficult place to get established?

Large infrastructure investment and re-generation programmes have been about physical infrastructure; e.g. M74, Hydro, Commonwealth Games. These have tended to see economic development as physical investment, and have overshadowed human capital.

City population is increasing – the number of 25/44 year olds is up from 25% to 34% – this age group spends money and is looking for jobs. The huge increase across 10 years is located on the fringe of the city centre (ethnically diverse, large private rented sector) in places where, 25 years ago, you wouldn’t have wanted to be. Developing the ‘hidden lanes’ and places where people meet i.e. cafes: much didn’t happen as result of ‘planning’!

The £24m Future Cities Project will also aim to support small businesses (e.g. ½ don’t have website).
Economic development has tended to focus on large building, physical infrastructure; there is a need for policy to change: to look at micro basis. Future educated workforce needs high skills, e.g. know about Java, html, python, etc.

A presentation on ‘Long Term Scarring of Young People and the Great Recession’ by Professor David Bell (University of Stirling) described that the 18/24 year age group concentrates in cities; high youth unemployment leads to a wealth of negative effects: migration, poverty, social disturbance…

There are 6m 16/25 unemployed in Europe; 23% youth unemployed in Eu (Q4, ’12); by age 24 only 60% in employment; more concentration of better qualifications in cities (70% urban pop; 55% in rural pop). Youth unemployment numbers increase with settlement size. Note: youth rates have always been 2.5 x ratio due to structural issues.

Youth have higher rates of UNDERemployment (i.e. want to work longer hours) than unemployment. Employers use lots of young people on short hours; whereas the older want to work less – an advantageous swap! Youth wages have dropped 10/15% to just above minimum wage. Trends have polarised the labour market: technical innovation + globalisation have eliminated skilled manual worker. Recruitment process is by word of mouth / who you know, and not necessarily based on qualification or experience. There is a failure to understand barriers to getting work, e.g. transport.

Evidence shows that bad labour experiences lead to scarring: study of mapped lives of people from 1980s – now have 10% lower wage relative to peers + higher problems + poorer health. They have higher unemployment; reduced wellbeing; negative health outcomes; negative behaviours. The cost of lost output = £10.7bn!

In Nordic countries / Germany adult youth unemployment is negligible; it is seen as responsibility to ensure transition to work on the part of every company, school, mayor, non-gov organisation; it is a cultural norm.

The final presentation ‘From Resilience to Recovery: Re-employing High Skilled People in Edinburgh’ was from Jim Galloway (City of Edinburgh Council) who took up his post as Head of Enterprise and Innovation at the end of the ‘NICE’ decade (1997/2007 – ‘non-inflationary continuous expansion’).

The CEC Economic Resilience Action Plan 2008 focussed on reducing energy consumption; stimulating new inward investment; slowing the economic slowdown; working in partnership with others. It was united in a common cause to build stronger community, enter into green biz partnerships, and reduce energy costs through making funds and advice available, and reducing debt/credit control.

During Edinburgh’s recession (finance) people became disillusioned and had a chance to look at what want to do with life: considering lifestyle, opportunities, life offer. Instead of ‘going for growth’ people content with modest; people with redundancy cheques were looking at options.

CEC worked with Edinburgh Chamber of Commerce to set up executive skills monitoring programme to help small business start up; matching people with money to invest and appropriate skills to young start up business. Typically consultants did 6 to 8 weeks for no fee: 400 people registered; 205 found work; 46 invested in company; many became directors. Edinburgh is benefitting from e.g. green investment bank, Tesco bank, foreign direct investment; and is ranked 1,2,3 in indices of resilience.

Q’s / Discussion
Links between policy and practice (successful?); but, a mismatch between academic and policy?

Unwillingness to address poverty. Little positive planning to replace lost jobs for over a decade, then attracted low cost call centres with bulk transactions but no value added. Infrastructure investment was hopeful: ‘build it and they will come’.

Economic development has tended to focus on infrastructure/physical; but not on building human capital. There is a need for investment in the ‘softer side’ – behavioural impact – importance of networks in resilience: facilitating networks development / business mentoring role.

Need to address demand/supply – one of the highest rates of graduates in the world.

Comparison with Germany: cultural/communal sense of responsibility; unlock the labour market. German manufacturing offers apprenticeships; polarisation of labour market misses mid paid jobs.

Considering macro economics; but no clear view about what economic strategy to do! There have been programmes and regeneration (e.g. URC’s/ Inverclyde). Need political capacity to take coherent decisions: invest in growth in some places and renewal in others.

The URGENT overwhelms the IMPORTANT. Timescale: longer term issues are less tangible.

What lies behind successful urban growth – Infrastructure, skills, investment in business? Scottish Cities Alliance to think about infrastructure: not either/or = human/infrastructure; attract, support and develop small indigenous business.

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