The Welsh Labour Market Following the Great Recession
Stephen DrinkwaterWISERD, Swansea University
November 2012
Outline• Background to the Great Recession
• Recent Changes in the UK Economy
• Recent Changes in the Welsh Labour Market– GVA and Earnings– Employment– Unemployment
• Summary
Background to the Great Recession• Origins in the US banking sector due to over-lending to high risk individuals (sub-prime loans) – many of whom defaulted
Triggered a chain reaction in the financial sectors of many other countries in Autumn 2007 => many banks had bought the (toxic) debts
• In the UK, the loss of confidence within the financial sector was compounded by the house price bubble
Caused a big drop in UK inter-bank lending
• Expected that London would have borne the brunt of this– but not the case (Gordon et al., 2011)– also knock-on effects for other sectors such as manufacturing
Recent Changes in the UK Economy• Sharp fall in GDP from mid 2008 to early 2010 (6%)
− but relatively small decline in employment (2 pp)− may be because of pro-active initial government response but also
other factors (Gregg and Wadsworth, 2010)
• Only a very slow to recovery since then with further recent falls in growth => focus on deficit reduction− unemployment fairly stable at around 8% since 2009
• Nominal wages on upward trend but real wages have declined in past couple of years
• Figures also show other major EU economies => highlights employment situation in Spain
GDP in the UK and EU: 2000-11
Source: Eurostat Note: 2000=100
95
100
105
110
115
120
125
130
135
2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1
European Union (27 countries) Germany Spain France Italy United Kingdom
Employment Change (%) in the UK and EU: 2000-11
Source: Eurostat
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
EU27 Germany Spain France Italy United Kingdom
Unemployment Rates in UK and EU: 2000-11
Source: Eurostat
0.0
5.0
10.0
15.0
20.0
25.0
2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1
EU27 Germany Spain France Italy United Kingdom
Weekly Earnings in the UK: 2000-11
Source: ONS (ASHE)
300
350
400
450
500
550
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Nominal gross median earnings (£) Real gross median earnings (£)
Recent Changes in the Welsh Labour Market• GVA and earnings still relatively low– decline has stabilized in recent years
– relative earnings are lower for males – but high percentage of females employed in public sector
• Employment rate fell 2008-10 but has recovered since – similar to UK trend– have been further reductions in manufacturing
– especially at the start of the recession
• Increases in unemployment – again fairly stable since mid-2009
– but some variations by groups (gender, age, education and area)
Relative GVA in Wales, Scotland and Northern Ireland: 1997-2011
Source: ONSNote: UK=100
Relative Average Weekly Earnings of Males and Females in Wales: 1997-2011
Source: ONS (ASHE)Note: UK=100
Employment Rates in Wales and the UK: 1992-2012
Source: ONS
58
60
62
64
66
68
70
72
74
Mar 1992to May1992
Jan 1994to Mar1994
Nov 1995to Jan1996
Sep 1997to Nov1997
Jul 1999to Sep1999
May 2001to Jul2001
Mar 2003to May2003
Jan 2005to Mar2005
Nov 2006to Jan2007
Sep 2008to Nov2008
Jul 2010to Sep2010
May 2012to Jul2012
United Kingdom Wales
Employment in Selected Industrial Sectors
Source: ONS (APS)
0 10 20 30 40
UnitedKingdom
Wales
UnitedKingdom
Wales
UnitedKingdom
Wales
Man
ufac
turin
gPu
blic
Serv
ices
Bank
ing,
Fin
. &In
sura
nce
Jun-08 Jun-10 Jun-12
Unemployment Rates in Wales and the UK: 1992 - 2012
Source: ONS
0
2
4
6
8
10
12
Mar 1992to May1992
Jan 1994to Mar1994
Nov 1995to Jan1996
Sep 1997to Nov1997
Jul 1999 toSep 1999
May 2001to Jul 2001
Mar 2003to May2003
Jan 2005to Mar2005
Nov 2006to Jan2007
Sep 2008to Nov2008
Jul 2010 toSep 2010
May 2012to Jul 2012
United Kingdom Wales
Unemployment Rates by Gender: 2008-2012
Source: ONS
0 2 4 6 8 10 12
UnitedKingdom
Wales
UnitedKingdom
Wales
Mal
esFe
mal
esMay-08 Jul-10 Sep-12
Unemployment Rates by Age
Source: ONS (APS)
June 2008 June 2010 June 2012
Wales UK Wales UK Wales UKAged 16-19 20.2 20.1 28.7 26.8 29.4 30.3
Aged 20-24 11.0 10.4 18.1 15.9 20.9 17.2
Aged 25-34 6.0 4.7 7.4 7.6 8.5 8.2
Aged 35-49 3.4 3.4 5.1 5.4 4.7 5.2
Aged 50-64 2.6 3.0 4.8 4.6 5.0 4.9
Aged 16-24 14.5 13.8 21.7 19.5 23.6 21.3
Aged 25-49 4.3 3.9 5.9 6.2 6.1 6.4
Aged 16-64 5.6 5.2 8.3 7.9 8.5 8.2
Unemployment Rates by Highest Qualification
Source: ONS (LFS)
Apr-June 2008 Apr-June 2010 Apr-June 2012
Wales UK Wales UK Wales UK
Degree 2.5 2.3 2.4 3.7 2.8 3.9
Higher Education 2.3 2.8 3.8 4.5 2.8 4.7
A-level/equiv. 2.5 4.2 7.2 7.1 8.5 7.6
GCSE/equiv. 6.1 6.7 11.4 10.3 10.1 10.8
Other qualification 7.0 7.8 15.0 11.2 13.1 11.3No qualifications 12.6 10.8 21.8 15.2 20.7 16.7
Unemployment in Selected Unitary Authorities
Source: ONS (APS)Note: * indicates estimate based on low number of responses
June 2008 June 2010 June 2012Blaenau Gwent 4.1* 14.3 15.3Merthyr Tydfil 6.9* 13.7 13.9Torfaen 8.7 9.3 11.9Swansea 4.9 9.0 10.1Cardiff 6.4 8.9 9.8Newport 7.3 9.2 9.4Ceredigion 5.9 5.4 5.3*
Isle of Anglesey 6.7 5.3 5.2*
Flintshire 2.7* 7.1 4.4*
Summary• Welsh labour market seems to have been affected in a
similar way to other parts of UK− although London appears to have escaped fairly lightly− some areas (e.g. North East) have been harder hit
• Relative GDP and earnings have fallen in past couple of decades
• Future public sector cuts may lead to a continuation
• Concentrations of unemployment amongst some groups− young people, low qualifications and some Valley UAs