The findings show how driving up employment, creating better jobs and improving skills must be the priority to make the economy work for everyone living in the region when the mayor is elected in May.
Today marks the 100-day countdown until voters elect new mayors in several city regions. In its briefing for the candidates, JRF says the new post gives the West Midlands a chance to deliver inclusive growth – growth that benefits everyone living in the city region.
The West Midlands faces significant challenges to creating an inclusive economy: just under 600,000 people are income deprived and three in ten children are growing up in poverty. The employment rate (65%) is well below the English average (74%), and masks major inequalities between ethnic groups. The briefing found:
- There is a need to focus on the employment rate of people from black and minority ethnic (BAME) backgrounds. Across England the BAME employment rate is below average (64% compared to 74%), but the picture is particularly stark in the West Midlands mayoral area, where the ethnic minority employment rate is just 54% - 20 percentage points below the national employment rate.
- People from Pakistani, Bangladeshi, Black African and Black Caribbean backgrounds have particularly high unemployment rates, although rates vary between different parts of the city region:
Unemployment rate by ethnic group in West Midlands Mayoral area local authorities
The proportion of working age adults who are economically inactive (not looking for work because they are studying, looking after family, disabled or sick – 30%) is 8 percentage points higher than the national average, and higher than other areas electing mayors.
The challenge is not simply to get more people into work. Connecting people in poverty to opportunities are at the heart of an inclusive growth agenda:
One in five households in the city region also rely on in-work tax credits to top up their low pay, substantially higher than the one in seven average for England.
A significant minority of businesses report vacancies they cannot fill due to skills shortages – ranging from 18% in the Greater Birmingham and Solihull Local Enterprise Partnership area to 28% in the Black Country (across England it is 22%). In the workforce, 63% have qualifications at NVQ level 2 or above, 10 percentage points behind the national average, and notably worse than other areas electing mayors
The Mayor will have a number of tools at their disposal. The creation of a £36.5million per year city regional Investment Fund will provide freedom to direct spending according to locally determined success measures; these should be set to drive inclusive growth. To deliver inclusive growth, JRF recommends the mayor:
- Raise productivity in low-paid sectors such as retail and hospitality by working with businesses and industry bodies. Increasing productivity provides a path to higher wages. The Mayor should also support the West Midlands’ growth sectors by helping businesses address issues such as skills shortages and high turnover, and connect people in poverty to job opportunities.
- Use procurement powers to support job creation. Where local economic development activity leads to new jobs (both when new developments are being built, and the jobs that then follow), or local anchor institutions (the biggest local spenders and employers such as local authorities, universities, NHS) are recruiting staff, they should make sure local people with barriers to the labour market benefit. The Mayor can support this to happen by using planning obligations to broker training and employment support packages to connect people to opportunities.
- Use employment support programmes to tackle unemployment among ethnic minority groups. The Mayor should work with Job Centres locally to make sure they use their discretionary finding to build on the success of schemes such as the Ethnic Minority Outreach Scheme and Ethnic Minority Flexible Fund. The Work and Health Programme should offer intensive and tailored support to help long term unemployed and disabled people.
- Use powers over training and skills to reduce poverty. The overarching goal of the training and skills system should be to reduce poverty through higher employment, higher earnings and progression to further learning. Some funding to providers should be contingent on the outcomes they achieve, to incentivise a stronger connection to the needs of businesses and individuals.
Use their influence by making inclusive growth an explicit aim of their time in office. In the Mayor’s first 100 days, their first actions should be to:
- Create a cabinet position with responsibility for Inclusive Growth, integrating social and economic policy.
- Set ambitious targets to focus action on the employment rate, and boosting educational attainment from the early years to adult skills.
- Convene stakeholders across business, economic development, employment and skills providers, education and early years providers, other public service providers and civil society to develop a city-region wider strategy for inclusive growth and solving poverty.
Katie Schmuecker, head of policy at JRF, said:
“The Midlands Engine is a growing economy and home to the country’s second city. But it could be doing better. The incoming Mayor has a golden opportunity to deliver a prosperous and poverty-free West Midlands. Attracting, retaining and generating investment to grow the economy is vital for a more prosperous city region. But while growth is necessary, it is not sufficient on its own to develop an economy that works for everyone and where poverty is lower. Driving up the region’s employment rate, particularly for BME communities which are far behind the rest of the country, and creating the conditions for a strong economy that delivers better jobs that offer a route out of poverty must be the number one priority when the mayor takes office.”