Employment Data

Recent data for Glasgow shows a weakening in the labour market position, according to details from the Office for National Statistics.  

Employment rate - aged 16-64	Jan 2011-Dec 2011	Apr 2011-Mar 2012	Jul 2011-Jun 2012	Oct 2011-Sep 2012	Jan 2012-Dec 2012
Glasgow City	63.8	63.7	63.2	62.4	59.7
Liverpool	59.7	59.6	60.2	59.5	60.1
Manchester	58.7	58.9	58.7	59.8	59.9
Birmingham	57.9	57.0	57.0	56.6	57.0
Leeds	67.9	67.6	66.8	67.5	68.8
Scotland	70.7	70.7	70.9	70.8	70.6
United Kingdom	70.0	70.1	70.2	70.4	70.6

This is based on a decline in the number of people in Glasgow in employment, falling from 262,300 in the year ending 2011 to 246,500 in the year ending 2012, a fall of 6.0%.  This fall is not seen in either the comparator cities or in the national totals.  Employment in the surrounding part of the conurbation increased over the same period, from 529,700 to 534,200, by an increase of 0.8%.

It is not simply that the employment rate in Glasgow has fallen under 60% for the first time since the current record series started in 2004.  As the table shows, other similar cities have for some time had rates under 60%.  It is that the fall has been isolated to Glasgow that raises concern.

The paradox is that while employment fell between year end 2011 and year end 2012, the number unemployed over the same period also fell, from 34,700 to 33,500.  The fall in employment was matched not by an increase in unemployment, but by an increase in inactivity.  The reduction in employment in Glasgow (-15,800) is not far short of the increase in inactivity over the same period (+18,900).  As there was no major change in those inactive looking for work (from 29,100 to 29,200), the rate fell from 25.6% to 21.9%.  Although this rate is higher than in Birmingham (16.7%), it is lower than in Liverpool (21.9%), Manchester (28.6%) and Leeds (29.6%); and lower than the national rates for Scotland (25.4%) and the UK (24.6%).

This suggests that the fall in employment has been associated with an increase in the number of people of working age effectively opting out of the labour market.  This is clearly of concern.  The situation will be monitored closely.

Labour Market Details

This is a summary of the most recent labour market details for Glasgow, as at January 2013.

Employment and Unemployment

These charts show trends in employment and unemployment in UK cities.

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Who gets what: GVA and GDHI

There's a connection between the value of what gets produced in an area, and the amount that is returned to an area in terms of local income and expenditure.  At its most crude, this is the difference between workplace-based production, as measured by Gross Value Added (GVA); and residence-based expenditure as shown by Gross Domestic Household Income (GDHI).  The data is only available at the level of large local authorities and above.

The most recently available comparative data for Glasgow is for 2009, and shows that

• GVA was £17,343 million, equal to 16.9% of the Scottish total;
• GDHI was £7,769 million, or 10.1% of the Scottish total.

On the face of it, this suggests quite an imbalance.  A large part of the explanation lies with commuting patterns, as GVA represents the output of people working in Glasgow regardless of where they live, combining residents working in Glasgow with the contribution of in-commuters.  GDHI, on the other hand, shows the amount of money available for residents to spend regardless of where they work, and groups together residents working in Glasgow with people that out-commute.  As on a daily basis around 191,000 in-commute, offset by around 40,000 out-commute, you can see why GVA is higher than GDHI.

But this only explains part of the story.  As shown above, Glasgow receives 10.1% of the Scottish total of available income.  But Glasgow makes up

• 11.4% of Scotland's population; 
• 12.4% of Scotland's working-age population.

Glasgow's GDHI is therefore 11.4% lower than its share of Scotland's population, and 18.5% lower than its share of Scotland's working age population.  Put another way, if Glasgow's GDHI was equal to its share of Scotland's overall population, it would be over £1bn higher each year; if equal to its share of Scotland's working age population, it would be £1.8bn higher.  So it still appears as though Glasgow gets less in terms of its income than its contribution to the Scottish economy would suggest.

It could be that the large number of people on benefits explains why aggregate income in Glasgow appears low.  GDHI is made up of two components: primary income which is received from employment net of taxation, pension contributions and housing costs; and secondary income that are received through redistribution via pensions and benefits.  So if we think that the large number of benefit claimants explains Glasgow's relatively low share of Scotland's GDHI, we would expect secondary income to be relatively high.  In fact the data shows the opposite

• Since 2000 the balance of secondary income in Glasgow has been negative ie in aggregate terms more is contributed in terms of taxation than is received by way of income;
• Even when Glasgow received a positive net secondary income, as in 1997,    the amount received was only 5.2% the total positive primary income level.

Part of this can be explained by the relatively low proportion of people in Glasgow that are of pensionable age, relative to the rest of Scotland and the UK.  Even so, the small size of the overall share of secondary income to total GDHI suggests this explanation of Glasgow's smaller than expected share of Scotland's GDHI does not hold.

Income levels are another plausible explanation: if residence-based income levels are lower than workplace-based income, this would help explain the discrepancy.  The latest data from the Annual Survey of Hours and Earnings (2011) shows that

• the median gross annual full-time income for residents was £24,465;
• for workplaces, the equivalent income was £25,428.

Resident-based income was therefore 3.8% lower than workplace-based income.  Workplace-based income in Glasgow was only slightly lower than the Scottish median of £25,538.  Median income levels only explain part of the shortfall between Glasgow's GDHI and the level to which it might be expected in terms of population levels.

If Glasgow is getting a lower than expected GDHI, which areas are getting higher than expected returns?  Existing redistribution via the Scottish Government's Grant Aided Expenditure procedures already favour rural areas.

• East & West Dunbartonshire, Helensburgh and Lomond has an overall GDHI of £3.4bn and a GVA of £2.8bn, and this higher than expected income can be attributed to commuting patterns and a relatively weak local economy;
• Caithness & Sutherland and Ross & Cromarty has a GDHI of £1.4bn and a GVA of £1.3bn;
• Lochaber, Skye & Lochalsh, Arran & Cumbrae and Argyll & Bute have a £120m net gain on the balance of secondary income which adds 9.4% to their local economy.

Latest demographics

Unlike England and Wales, Scotland will have to wait another couple of months until we get sight of even the most basic Census 2011 results.  Thanks Holyrood.  Until then, we will have to make do with the latest (2011) mid-year estimates from Scottish National Statistics.  But at least this gives us some details of age composition and without making any great splashes it confirms some trends we've already noticed

• Scotland's population is increasing in number, it increased by 3.8% between 2001 and 2011;
• however the number of people in Scotland aged between 25 and 44 decreased during this period, falling by 6.2%.

The 25-44 age group increased in only three of Scotland's 32 local authorities

• Edinburgh: up by 16.4%;
• Glasgow: increase of 8.0%;
• Aberdeen: up by 2.8%, but lower than the overall population increase of 4.0%.

Any guesses on what they have in common?  The age group declined noticeably in areas like Dumfries & Galloway (-21.2%), Argyll & Bute (-21.7%) and East Dunbartonshire (-23.1%).

Looking at Glasgow, by far the greatest proportionate increase was in Anderston/City, where the increase was by 71.2% 2001-11.  Then came

• Calton: +27.2%;
• Hillhead: +23.1%; 
• Southside Central: +18.6%.

On the other hand, the age group declined in number in

• North East: -11.7%;
• Shettleston: -12.6%;
• Baillieston: -15.8%.

The 25-44 age group is worth monitoring as it includes people likely to be in employment, and probably also contemplating settling down and starting a family.  So it gives a clue as to the likely characteristics of a place over the next 5/10/15 years.

What are the features and wider implications of this?  The most obvious is that it marks the end of the flight to suburbanisation and New Towns and wider deurbanisation that was a feature of much of the last 50-60 years.  Other points are

• in Glasgow at least, the increase has mainly been not so much in but on the fringe of the city centre, linking it with the West End and areas like Dennistoun to the east, and to a lesser extent south across the Clyde;
• the decline in Glasgow has been in other parts to the east of the city, in spite of high levels of public investment in these areas over the last 20-30 years;
• the areas where the increase is most apparent are also those with an ethnic diversity and a private rented sector.

These trends also raise more worrying questions.  In crude terms, the younger part of the working-age population is increasing in cities, while the elderly population is going to increase in suburban, semi-rural and rural areas.

• are the urban economies going to be asked to support precarious and fragile suburban and rural economies as well as areas of need within their own boundary? - after all, they weren't too concerned about contributing when the cities were in decline;
• rural areas are likely to be faced with two pressures: a declining local economy (because of fewer people in employment) as well as increasing health and social costs due to increasing life expectancy - can services cope, and how will it shape these areas?
• will cities be able to reach their full potential?  Aberdeen probably will, given its importance to the energy sector, provided that it decides to.  Edinburgh's inbuilt advantages as a political and financial centre will stand in its favour.  That leaves Glasgow - contributing more to the Scottish economy (in terms of GVA) than it gets back (in terms of GDHI). It would be ironic if, at the time when its demographics fall in its favour, Glasgow becomes additionally burdened to support areas outside its boundary.

Demographics visualisation

UK Economic Performance

Data out today shows that the UK economy shrank by -0.2% between the fourth quarter 2011 and the first quarter 2012.  Quarterly change since 2008 is here.  The ONS also revised their estimate of the change between Q3 2011 and Q4 2011, from -0.2% to -0.3%.  It is also worth noting that the UK economy is still smaller than at the start of the recession.