3.6.1 The South West labour market continues to be characterised by high economic activity rates, relatively high levels of employment and low rates of unemployment compared to the national average. Wages in the region tend to be lower than the national average with employment more concentrated in lower value occupations and industries.
3.6.2 The recession led to rising unemployment, although the South West region has not been as adversely affected as some other regions to date. Although unemployment is a lagging indicator there are signs that the economy has started to recover, though the pace of that recovery is weak and unemployment may remain relatively high for some time to come. Young males were hit hardest by the increase in unemployment, contributing further to already high rates of unemployment, though rates for this group have now begun to fall.
3.6.3 Low labour productivity remains a key challenge for the region. The South West’s industrial and occupational structure means that there are comparatively large numbers of employees in low value sectors and occupations. In addition, high rates of part-time working, on the one hand suggest flexibility in employment opportunities, but on the other contribute to the region’s lagging productivity performance compared with more competitive regions.
3.6.4 The north east of the region benefits from a higher concentration of more productive industries, a highly skilled population and higher average earnings. Employment in this part of the region is more productive - a key engine for growth. Towards the south and the west of the region, however, there is less employment in high productivity industries, a lower level of ‘top end’ skills and low average earnings. Together these factors contribute to a ‘productivity’ gap within the region.
3.6.5 The region has an older than average population which is predicted to grow at a faster rate than the national average over the next twenty years. At present, participation rates in the labour market remain high, although further population ageing may have a negative impact. The ageing population presents a number of challenges for the region. Firstly, it raises the question of how to replace experienced workers as they reach retirement age. Secondly, there is a challenge to provide opportunities for those who want or need to work longer. Thirdly, South West England needs to respond to the high old age dependency ratio, the number of over 65s compared to the working age population. A healthy level of employment opportunities for younger workers in high value jobs will help ensure that the region can support a large retired population.
3.6.6 Youth unemployment is also a challenge. Unemployment amongst the 16-24 year old group has been higher than for over 24 year olds in the years leading up to the recession. The recession has disproportionately affected young males and they have seen the largest increase in claimant count rate of any group to date. The region must ensure that young graduates are utilised and those young people who are unemployed do not become discouraged from (re-)entering the labour market.
