3.4.1 Stable and positive socio-economic picture for most of the city
As outlined in the Part 1 economic overview, the overall socio-economic wellbeing of Derby is positive and increasingly stable. The City’s economy was particularly hard hit by the 2008-9 recession and the subsequent economic downturn and contraction in public spending. In that period, the proportion of people claiming Jobseekers Allowance in Derby reached 5.0% in early 2010 and again in summer 2011 – before peaking at 5.6% in March 2012, but with regional and national unemployment (JSA, 16-64) already down to 4.0%. The claimant count in Derby was consistently higher than regional and national averages from 2008 until the end of 2014.[i]
In the past two and a half years to mid-2017 however the claimant count has been in line with or below the national average. The proportion of young people between 18-24 claiming JSA in Derby is now also below the East Midlands and national averages[ii]. Average earnings of Derby residents are £28,650 a year, £400 higher than the national (UK) average and over £2,000 higher than the East Midlands average[iii].
3.4.2 Gap between value of Derby’s economy and economic benefits to residents
Despite the improving socio-economic wellbeing of the City, further progress could be made by continuing to close the gap between the value generated in Derby’s economy and the economic benefits to the whole city. The average (median) job in Derby pays £32,300 whilst the average resident earns £28,650 – a gap of £3,650 (11%)[iv]. This gap cannot be explained simply as a result of the comparatively high proportion of better paid jobs in the City taken by in-commuters, although this is a factor. At the lower end of the scale, economic benefit to residents is also not commensurate with the value of the city’s economy. Three quarters of the way down the scale – at the 25th percentile – the gap between resident and workplace earnings is still over £1,800 (8%).
As identified in the economic overview, the profile of employment in Derby is polarising towards the highest and lowest skilled occupations. This trend is reflected in the types of jobs the city’s residents do, but with a particular bias towards the lower end. A considerably greater share of Derby residents work in elementary, unskilled manual and customer service roles than the regional and national averages. Almost a quarter of working residents in Derby (23%) have jobs in the lowest tier of skills and value, compared to 17% across the UK. At the very highest end, the proportion of Derby residents in management and directorial roles is only around 70% of the regional and national averages[v].
The value gap is particularly acute for Derby’s economically deprived communities. Despite the relative good health of the city’s economy, Derby has a greater share of more deprived households than the national average – 45% of Derby’s local areas (LSOAs) are amongst the 30% most deprived in the country, with 19% in the 10% most deprived nationally. This is by no means unique for a large urban economy. However, Derby remains in the bottom fifth of local authorities in England’s Index of Multiple Deprivation – suggesting that economic opportunity is not universal in the city.[vi]
3.4.3 Skills and educational performance deficit
The overall skills profile of Derby residents lags behind wider trends. This an issue not only for the higher-level skills required to improve productivity and innovation (see section 3.1.4) – but also at the entry-level of the labour market. The deficit of work-readiness and training-readiness in Derby’s labour force are reported as particular issues by local employers – and are known national barriers to economic growth.
Improving skills and work readiness will be vital mechanisms for closing the value gap in Derby’s economy – enabling more local people to access employment, and then higher-value employment opportunities in the City.
Training opportunities do exist, but they are not necessarily be taken by local residents. 10% of all apprenticeships in the Midlands are offered in Derby, proportionately high. There are shining examples of good practice. 31% of Rolls-Royce apprenticeships are filled by people from Derby [vii] and both Toyota and Rolls-Royce do an enormous amount locally to encourage young people to choose the STEM subjects that will give them access to their apprenticeships.
The CBI’s 2017 research into the regional productivity gap identifies the combination of educational attainment at 16 and workforce skills as the most influential factor in the differences between the performances of place economies in the UK. The particular focus is on schools:
Ensuring strong school performance and children getting the best results at GCSE (or equivalent) is the single most important driver of productivity differences across the UK.
CBI (2017). Unlocking regional growth understanding the drivers of productivity across the UK’s regions and nations
Without improvement, the standard of educational performance in the city is likely to have a negative effect on whole-city economic opportunity and workforce productivity. In 2015 the proportion of students in Derby achieving 5 A*-C at GCSE (inc. Maths and English) was ten percentage points below the national average. Derby’s results were the fifth worst out of 60 cities in England and Wales – placing its performance below other more economically disadvantaged places such as Blackpool, Sunderland, Stoke and Doncaster.[ix]Derby’s performance in educational attainment and skills development is one of the key weaknesses of its economy. The city is in the bottom quintile for in work training and the bottom 2% for school outcomes[viii].
3.4.4 Whole-place economy indicators
Indicator |
Measuring | Derby | East Midlands | GB | ||
| EM | GB | |||||
| Primary indicator Job seekers’ allowance claimant rate (% population 16-64, July 2016-June 2017 average) | Cross-city economic wellbeing | 1.1% | 1.1% | 1.2% | ✔ | ✔ |
| Resident- workplace earnings gap | Retention of economic value | £3,650 | N/A | |||
| Proportion of students achieving 5 A*-C inc. Maths and English | Entry-level skills, educational attainment and aspiration | 47.6% | Not available | 57.7% (E&W) | ✘ | |
Footnotes
[i] GENECON analysis of ONS Claimant Count data 2011-2017.
[ii] ONS Claimant Count, July 2017
[iii] Median annual wage of residents (2016): Derby: £28,654; East Midlands: £26,593; UK: £28,213 (ONS Annual Survey of Household Earnings, 2016)
[iv] Median annual wage of residents (2016): Derby: £28,654; Median annual wage of workplace jobs £28,650 (ONS Annual Survey of Household Earnings, 2016)
[v] GENECON Analysis of ONS Annual Population Survey, Workplace and Resident Occupations, 2011 and 2016
[vi] GENECON analysis of DCLG 2015 Index of Multiple Deprivation, Local Authority analysis
[vii] Rolls-Royce (2017)
[viii] Derby City Council data from CBI (2016) Unlocking Regional Productivity, NUTS3 areas)
[ix] Department for Education (2015) data reported in Centre for Cities data tool.