Digital evolution acts as catalyst for regional growth

Published at 00:01 AM on 11 March 2015

 

  • 6% of UK workers (10% in central London) are doing jobs that did not exist in 1990, mostly linked to new digital technologies.
  • London has been the strongest driver of this trend, but there has been gradual regional convergence over the past decade.
  • The proportion of workers in new types of jobs in 2004 was a good predictor of relative rates of regional jobs growth over the following ten years to 2014.
  • Central London employment is projected to rise by around 25% over the next decade, but only with sufficient investment in commuter transport links and affordable housing.
  • Greater Manchester, West Yorkshire, Merseyside and West Midlands projected to see stronger regional jobs growth over next decade than last decade, with digital as a catalyst.
  • But greater regional investment is required in transport infrastructure, digital skills development and leading regional universities.

 

Some 6% of workers in Britain have job titles that didn’t exist in 1990, the great majority of these created by the digital revolution, says PwC in new research prepared in association with Dr Carl Benedikt Frey of the Oxford Martin School at Oxford University, and published today in PwC’s latest UK Economic Outlook report. 

The research finds that new types of jobs* are most prevalent in broader UK occupational categories linked to digital technologies such as computer software engineers (80% doing types of jobs that did not exist in 1990); database administrators (79%); information systems managers (77%); and computer programmers (71%). 

The analysis highlights a broader shift in the UK workforce towards highly skilled professional and technical roles that the research shows is linked to overall economic performance in major UK regions and cities. What the research calls ‘skilled cities’ have tended to show stronger employment growth and a healthier trend in unemployment rates since 2005 and a higher rate of new business creation. 

John Hawksworth, chief economist at PwC and co-author of the research article, commented that: 

“Some leading digital companies may not employ that many people directly, but our analysis suggests that they can have an important catalytic effect on the overall economic performance of the cities and regions where they are located.

“We found that the relative proportion of workers in 2004 in jobs that did not exist in 1990 accounted for just over half of the variation across UK regions in total employment growth over the following ten years to 2014. That is a surprisingly strong predictive relationship, and one that we used to project forward total regional employment growth over the next ten years.

“Central London, where around 10% of workers are now in types of jobs that did not exist back in 1990, could see total jobs growth of around 25% over the next decade, although this would be down from 35% growth over the past decade.

“Employment is projected to grow more slowly than in London in other regions, but some show notable accelerations in projected growth over the next decade as compared to the past decade, including Greater Manchester, West Yorkshire, Merseyside and the West Midlands.”

Table 1 shows details of total regional employment growth projections over the next ten years to 2024 alongside the actual growth rates seen in 2004-14. These projections reflect the estimated proportion of workers in new types of jobs in 2014, as shown in the first column of the table. 

Table 1: Proportions of workers in new types of jobs in 2014 and projections of total regional employment growth in 2014-24 as compared to the previous decade. 

Regions

%   of workers in new types of jobs (2014)

Projected   total employment growth in 2014-24 (% cumulative change)

Actual   total employment growth in 2004-14 (% cumulative change)

Central London

9.8

24.6

35.0

Inner London (not   Central)

7.0

12.6

19.9

Rest of South East

6.5

10.2

5.0

Outer London

6.2

9.0

2.6

East Anglia

5.9

7.7

9.4

West Yorkshire

5.9

7.6

5.4

South West

5.9

7.5

7.3

Rest of Scotland

5.8

7.2

6.1

Greater Manchester

5.7

6.9

5.1

South Yorkshire

5.5

6.0

9.4

Rest of West   Midlands

5.5

5.8

2.7

Tyne & Wear

5.5

5.7

5.0

Rest of North West

5.4

5.6

-1.5

Strathclyde

5.4

5.5

2.4

East Midlands

5.3

4.9

6.0

Wales

5.3

4.9

4.7

West Midlands   Metropolitan

5.2

4.8

-2.5

Northern Ireland

5.2

4.7

13.6

Merseyside

5.2

4.6

-0.8

Rest of Northern   region

5.1

4.0

3.6

Rest of Yorkshire   & Humberside

4.6

2.0

5.9

UK total

6.0

7.2

6.6

Source: ONS Labour Force Survey for historical employment growth; other estimates and projections based on calculations by Carl Frey and PwC.

Dr Carl Frey, Oxford Martin Citi Fellow and Co-Director of the Oxford Martin Programme of Technology and Employment at the University of Oxford and co-author of this research, added that: 

“Central London has been and continues to be a key motor of new job creation, but we also find some evidence of regional convergence over the past decade as the digital revolution has spread across the country.

“Increased investment in transport infrastructure is needed to facilitate continued diffusion of new jobs across regions, while also making sure that the growth of London is not constrained by the supply of housing.” 

Stephanie Hyde, head of UK regions at PwC, said: 

“There is a role for government and other institutions to co-ordinate activity and support clusters of skilled occupations and industries outside London, as many Local Enterprise Partnerships and City region devolution programmes have sought to do in recent years.

“Universities also have a vital role in establishing successful digital hubs. Six of the 10 top ranked universities for computer science in the UK, for instance, are based outside of London**

“Our research article notes that Stanford alumni have created around 40,000 companies and over five million jobs in the US. Leading UK universities could be similarly dynamic catalysts for innovation and growth.”

Ends 

Notes to editors 

*Defined as job titles that did not exist in 1990 according to the US Census Bureau’s list of around 30,000 such job titles 

1. The research article titled ‘New job creation in the UK: which regions will benefit most from the digital revolution?’ by Dr Carl Benedikt Frey of the Oxford Martin School at Oxford University and John Hawksworth of PwC, will be published in the March 2015 edition of PwC’s UK Economic Outlook report. 

2. The study draws on earlier academic research by Dr Frey and others looking at the creation of new types of jobs in the US, but transposes these findings to the UK at national and regional level. The research focuses on the period from 2004 to 2014 for which sufficiently detailed occupational data are available for 21 UK regions from the ONS Labour Force Survey. 

3. UK regions vary in their occupational mix, which also changes over time. This leads to variation in the estimated proportions of workers in each region in 2004 and 2014 in new types of jobs that did not exist in 1990. The study also finds that these proportions for 2004 can explain, using regression analysis, 52% of the variation in total regional employment growth rates over the following ten years to 2014. This historical relationship, combined with the estimates for the proportion of workers in each region in new types of jobs in 2014, is then used to produce projections of total regional employment growth over the next ten years to 2024 (as shown in Table 1 above). 

** Southampton, Cambridge, Oxford, Birmingham, Manchester and Edinburgh. 

About PwC 

PwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at www.pwc.com 

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© 2015 PricewaterhouseCoopers. All rights reserved.

Andrew Smith

PwC | Communications
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About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © 2016 PwC. All rights reserved

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