Revving up the Midlands engine

Published on Incomes and Inequality

The Midlands Engine could use some oil. That’s the conclusion drawn from this morning’s statistics on regional growth. While 2015 did bring respectable growth to the West Midlands city region with Birmingham and in particular Solihull – the fastest growing local authority in the country – performing well, it also makes the scale of the challenge clear: the city region’s economy per head is still smaller than it was in 2002.

But there are signs that the West Midlands is finally getting the attention it needs in order to remedy this. Over the next few months, the run-up to the election of a Metro Mayor in the West Midlands Combined Authority should mean even more thought is given to what’s needed to help it thrive. And while the health of its overall economy is crucial, top of that list of priorities should be ensuring the city region’s recovery helps to turn around the region’s dismal employment performance.

The West Midlands’ rusty jobs machine isn’t a new problem, as a new report published by the Resolution Foundation highlights. In the years leading up to the financial crisis, the employment rate remained stubbornly low compared to other city regions. And while the recovery has seen the proportion of people in work nationally rising to record levels, the West Midlands still hasn’t got back to where it was, with an employment rate of just 64.5 per cent compared to 71.6 per cent across city regions.

The West Midlands Combined Authority (WMCA) is made up of Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton – diverse areas with different histories and populations. But bar Solihull, each of those local authorities has an employment rate below the average across the UK’s other city regions. A cross-city plan is needed.

The big challenge for the new mayor along with other local leaders and central government is helping people from groups that have traditionally been disadvantaged in the labour market to find work. That doesn’t mean that we expect, say, people with disabilities to have identical employment rates to the rest of the country. But the gap between the kinds of workers who tend to be in employment whatever the economic weather – in their thirties or forties, highly-educated – and these disadvantaged groups is significantly larger in the WMCA than in other city regions. Targeted support designed to help some of those groups that fare worst in the WMCA – younger workers, those with low qualifications and people from BAME backgrounds – could make a meaningful contribution.

Of course, it’s not enough to just think about potential employees. The kinds of jobs and sectors setting up in the city region are crucial too. The WMCA can be rightly proud of its industrial heritage, still evident today with companies like Jaguar Land Rover. And while a higher share of the WMCA’s workforce are employed in manufacturing, it’s still only 13 per cent. The city region should also look to expand into more ‘jobs-rich’ areas such as the high value services sector. When it comes to industrial strategy, it should be proud of but not constrained by its past.

And hand in hand with attracting those sorts of jobs is having workers with the right skills. Qualification levels in the WMCA are below average. Despite having one of the highest proportions of students among city regions, it has trouble retaining them once they graduate with fewer staying on than in Bristol or Manchester. More high-skilled jobs would help but it’s worth thinking too about what those other ‘stickier’ cities offer and how the WMCA can mark itself out and tap into the asset of its large student population.

While the mayor will have powers that can make a real difference, a shared focus with central government and other leaders in the West Midlands will be needed to boost employment. But with a targeted, ambitious plan that puts jobs growth at its heart, there’s every reason to hope that the West Midlands will be talked about for all the right reasons for years to come.

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An earlier version of this blog appeared on City Metric