Transcript Document

STEM agenda: An economist’s
perspective
Graeme Harrison
Head All-Island Consultancy, Oxford Economics
Engineering Careers Event
23rd June 2009
Outline
 Economic backdrop
 NI future skill needs research
 Other research
 InvestNI Manufacturing statistical overview
 DEL ICT high-level future skill needs




STEM demand
STEM supply
Returns to STEM
Summary
Note STEM Review likely to cover some of same areas
Economic backdrop
A global recession – first since the war…
World: GDP growth
% year
6
Forecast
5
4
3
2
1
0
-1
-2
-3
-4
1996
1998
2000
Source: Oxford Economics
2002
2004
2006
2008
2010
2012
End of an era of UK growth …
UK: GDP and employment
% q-q
q-q (000s)
1.5
200
Forecast
1.0
100
0.5
0
0.0
2000
-100
2002
2004
2006
2008
2010
2012
2014
-0.5
-200
-1.0
-300
-1.5
-400
-2.0
GDP (LHS axis)
-500
Employment (RHS axis)
-2.5
Source: ONS, Oxford Economics
-600
A wide sectoral reach …
UK: Sectoral employment forecast (2008-2010)
Business services
Manufacturing
Retail & distribution
Construction
Financial services
Hotels & restaurants
Transport & comms
Other personal services
Public administration & defence
Agriculture
Mining & quarrying
Education
Utilities
Heath & social work
-600
-500
-400
Source: Oxford Economics
-300
-200
000s
-100
0
100
End of NI golden era …
NI: Total employment
NI: Claimant unemployment
000s
000s
1,000
Forecast
Employment trajectory
if growth of the past
decade repeated
950
100
EDF Sept-08
80
OE June-09
60
Forecast
900
850
Growth of previous
decade unsustainable
OE June-09
800
40
750
EDF Sept-08
Short-term outlook
now much weaker
700
20
650
0
1996
1999
2002
2005
Source: DETI, LFS, Oxford Economics
2008
2011
2014
2017
2020
1996
1999
2002
2005
Source: NOMIS, Oxford Economics
2008
2011
2014
2017
2020
NI future skill needs
research
Scope of research
 Empirical assessment of future skill needs (by NQF and NVQ level)
and degree subject demand of NI economy, including for priority
sectors (ICT, life sciences, hi-tech manufacturing and financial
services)
 Baseline (EDF Sept 08) and aspirational scenario
 The research is currently being updated with latest outlooks (weaker in short-run)
 Demand focus but some supply-side elements
 Model developed provides a consistent methodology for evaluating the
quantum of future skill needs
 Can be easily revisited with a weakened economic outlook, in calmer times or with a
different aspirational scenario (e.g. emergence of ‘green jobs’, reshaping of financial
& business services etc)
 Compliments more qualitative, ‘sector by sector’ expertise in SSC Sector Skill
Agreements and can be applied on a bespoke sectoral basis (e.g. SSC footprints)
Evidence from consultations …
 STEM graduates are and will continue to be in high demand
 Though concern that the number and quality of graduates within
science and engineering has been dropping at an alarming rate
 The quality of degrees is becoming a weakness, with sectors such as
the manufacturing being less impressed with today’s graduates, many
of which it terms as ‘broad brush’ graduates
 Under-supply of graduates in some sectors exists due to the lack of
awareness of career opportunities
 “The quality of personnel over the last decade in NI has been reducing.
Lower entry requirements at universities is one of the major factors
contributing to this trend”
Narrow ‘unspecialised’ subject focus
NI % total degree
qualified
em ployed
persons (UK=100)
NI % total degree
qualified
em ployed
persons
NI subject degree
em ployed
persons per
10,000 w orking
age population
(UK=100)
STEM
Medicine and Dentistry
Subjects Allied to Medicine
Vetinary Science, Agriculture and Related Subjects
Technologies
Mathematical and Computer Sciences
Engineering
Physical Sciences
197
126
124
88
82
80
65
5%
14%
1%
1%
5%
5%
3%
171
109
107
77
71
69
56
Non-STEM
Business and Administration
Combined degree
Education
Social Studies
Architecture, Building and Planning
Law
Creative Arts and Design
138
111
107
98
92
69
66
15%
21%
7%
6%
2%
2%
3%
119
96
93
85
79
60
57
Source: LFS, Oxford Economics
Note: Cells shaded purple indicate NI's employed degree subject share is 10 per cent less than the UK average. Cells
STEM concentrations
UK regions: STEM degrees (broad definition) in employment
(2007)
% total degrees
in employment
(3-year ma)
50%
40%
30%
20%
10%
SC
EM
EN
SW WW
Source: LFS, Oxford Economics
SO
NE
YH
WM
NI
UK
NW
GL
STEM concentrations excl medical subjects
UK regions: STEM graduates (2007)
% grads in
employment (3year ma)
20%
18%
16%
14%
12%
10%
SO
EN
EM
WM
SW
Source: LFS, Oxford Economics
UK
SC
NW
WW
NE
YH
GL
NI
Where could NI be?
 If NI had same sectoral and occupation skill and subject structure …
 16,000 more NQF 4/5 employed persons in work
 48,000 more managers and professionals in work
 7,000 more creative / art degree holders and 4,000 more STEM degree
holders in work (8,000 less with Business and Administration in work)
 But not easy for NI to quickly attract or create jobs genuinely requiring
more graduates, managers, STEM degrees etc
 High share of these jobs locate in Greater South East
 It is a demand and supply issue!
4k more STEM graduates in workforce …
NI: Actual minus expected workforce degree subjects (2007)
Combined degree
Education
Actual > Expected
Creative Arts and Design
Arts *
Business and Administration
Actual < Expected
4,000 more STEM (narrow
definition) and 7,000 more
creative / arts graduates in
employment if NI had same
sectoral graduate subject
structure as UK
Law
Physical Sciences, Mathematical &
Computer Sciences, Engineering &
Medecine & Dentistry and Subjects Allied
to Medecine
STEM (broad definition)
-10
-5
0
5
10
NI actual minus expected workforce degree subjects (000s, 2007)
Source: LFS, Oxford Economics
* Linguistics, Languages, Literature, History & Philosophy
Recession impact – over-supply in short-run
Baseline
NI: Net requirement from education system and in-migration
2008-2010
annual
average
(000s)
Annual flow
40
36
Estimate
Forecast
30
Expansion demand
-4
25
26
23 22
Net replacement demand
Leavers (including out-migration)
Joiners
16
55
39
20
20
17
18
13
11
10
Net requirement from education and in-migration
12
0
Entrants from education to employment
In-migration
17-20
?
1997
2000
2003
-10
Source: Oxford Economics
Source: Oxford Economics
Short-term outlook much weaker now
2006
2009
2012
2015
2018
Recovery – still a significant demand for labour
Baseline
2010-2020
annual
average
(000s)
Expansion demand
6
Net replacement demand
Leavers (including out-migration)
Joiners
15
56
40
Net requirement from education and in-migration
21
Entrants from education to employment
In-migration
Source: Oxford Economics
17-20
1-4



Even without a return to growth
of the past decade still a
significant demand for labour
On average 15,000 jobs
available pa without any net
increase in total jobs
Growth of 5,000-6,000 net new
jobs pa is more sustainable for
NI – consistent with education
outturn and moderate inmigration
Need for a balanced supply …
Net requirem ent from
education and m igrants
(annual average)
Historical
(2003-2007)
Baseline (20102020)
Postgraduate (NQF 7-8)
First degree and sub-degree (NQF 4-6)
Intermediate a (NQF 3)
Intermediate b (NQF 2)
Low (NQF 1 and below )
2.0
7.2
6.4
4.7
6.4
1.8
7.8
4.8
2.8
3.6
Total
26.6
20.8
Postgraduate (NQF 7-8)
First degree and sub-degree (NQF 4-6)
Intermediate a (NQF 3)
Intermediate b (NQF 2)
Low (NQF 1 and below )
7%
27%
24%
18%
24%
9%
38%
23%
13%
17%
Source: Oxford Economics

Just under half of net
requirement for NQF 4
and above

Still 1 in 6 available
positions will require NQF
1 and below
Other research
Manufacturing – a declining sector?
NI and UK: Manufacturing employment excl textiles
NI: Manufacturing employment
000s
200
1971=100
172,000 employee
jobs and 7,000 selfemployed in 1971
Self-employment
Employee jobs
100
90
160
NI
80
120
70
60
80
50
88,000 em ployee jobs and
5,000 self-em ployed in 2008
40
UK
40
0
1971
1975
1979
1983
1987
Source: DETI, LFS, Oxford Economics
1991
1995
1999
2003
2007
30
1971
1975
1979
1983
1987
Source: DETI, ONS, LFS, Oxford Economics
1991
1995
1999
2003
2007
Manufacturing – a declining sector?
Employment growth last decade
Food products, beverages & tobacco
Textiles & leather
Wood & w ood products
Pulp, paper & printing
Coke, oil refining & nuclear fuel
Chemicals & man-made fibres
Rubber & plastic products
Other non-metallic minerals
Metals
Machinery & equipment nec
Electrical & optical equipment
Transport equipment
Manufacturing nec
Total
NI
UK
Diff (pp)
-5%
-87%
43%
-13%
-40%
-11%
1%
34%
42%
8%
-15%
-21%
53%
-17%
-17%
-65%
-17%
-24%
-6%
-29%
-30%
-25%
-30%
-27%
-43%
-23%
-20%
-30%
11
-22
60
11
-33
18
31
60
72
36
28
2
73
-
Source: DETI, ONS, Census, Oxford Economics
Manufacturing – a declining sector?
NI: Sectoral productivity
NI and UK: Manufacturing GVA share of total excl
textiles
£000s (2003
prices)
70
% total GVA
(2003 prices)
30%
Manufacturing
Forecast
60
25%
50
20%
Professional
services
40
NI
Whole economy
30
15%
20
UK
Health & social
work
10%
10
5%
1971
1975
1979
1983
1987
1991
Source: Regional Accounts, Oxford Economics
1995
1999
2003
2007
0
1971
1976
1981
1986
1991
1996
2001
Source: Regional Accounts, DETI, LFS, Oxford Economics
2006
2011
2016
Towards export-led growth …
Manufacturing (including
services)
High export potential
service sectors and
m anufacturing &
construction services
Year
Exports (£bn)
Year
Exports (£bn)
2005/06
2006/07
4.59
5.03
2005
2006
0.31
0.36
Source: DETI Manufacturing Sales & Exports Survey; DETI
Exporting NI Services Study
Worrying supply-side trends - ICT
2003/04
2007/08
Change
GCSE enrolm ents
Information Technology
o/w Female
5,009
1,885
7,019
na
40%
-
A-level enrolm ents
Computer Studies
Information Technology
433
755
119
1,001
-73%
33%
FE enrolm ents
ICT subjects
Level 1 and entry
Level 2
Level 3
HE
26,079
31%
41%
22%
6%
16,322
45%
24%
24%
7%
-37%
-
FE achievem ents
ICT subjects
10,203
7,250
-29%
HE enrolm ents
ICT subjects - total
ICT subjects - first year
4,600
1,565
2,995
1,010
-35%
-35%
HE qualifiers
ICT subjects - total
ICT subjects - undergrad
ICT subjects - postgrad
1,315
985
335
745
615
125
-43%
-38%
-63%
Source: DE, DEL, HESA
Note: Due to lecturer strikes DEL are unsure how reliable FE achievement data is for 2007/08
UCAS acceptances ICT – falling quality
Tariff bands
2002
2008
Change
G4 - Computer Science
1-179
180-299
300-419
420 plus
22%
51%
24%
3%
18%
56%
25%
1%
-4.6
4.8
1.5
-1.7
G6 - Softw are Engineering
1-179
180-299
300-419
420 plus
20%
60%
13%
7%
0%
82%
18%
0%
-20.0
21.8
4.8
-6.7
H6 - Electronic and Electrical Engineering
1-179
180-299
300-419
420 plus
20%
20%
38%
23%
14%
41%
27%
19%
-6.0
21.0
-10.9
-4.1
N3 - Finance
1-179
180-299
300-419
420 plus
6%
39%
44%
11%
2%
20%
48%
29%
-3.7
-18.9
4.5
18.1
Source: HESA
Note: NI universities only
Grade
Tariff points
A-Level
A*
A
B
C
D
E
140
120
100
80
60
40
AS-level
A
B
C
D
E
60
50
40
30
20
Source: UCAS
STEM demand
Still a +ve net requirement …
NI sectors: Net requirement from education and migration (20102020)
NI sectors: Expansion demand (2010-2020)
-12
Other personal services
Other personal services
Health & social w ork
Health & social w ork
Education
Education
Public administration & defence
Public administration & defence
Business services
Business services
Financial services
Financial services
Transport & communications
Transport & communications
Hotel & restaurants
Hotel & restaurants
Retail & distribution
Retail & distribution
Construction
Construction
Utilities
Utilities
Manufacturing
Manufacturing
Mining & quarrying
Mining & quarrying
Agriculture, forestry and fishing
Agriculture, forestry and fishing
-8
-4
0
4
8
Expansion demand (annual average flow 2010-2020)
Source: Oxford Economics
12
-12
-8
-4
0
4
8
Net requirement education and migration (annual average flow 2010-2020)
Source: Oxford Economics
Manufacturing a declining
sector but large positive net
requirement
12
STEM shortfalls could occur
2010-2020 annual average (000s)
Dem and
Baseline
Aspiration
Supply
Balance
HESA NI
dom iciled
graduates from
UK HEIs
entering
em ploym ent in
NI (2003-2007
annual average
grossed up)
Aspiration

STEM
Medicine & dentistry
Physical sciences
Mathematical sciences
Computer science
Engineering & technology
0.23
0.17
0.04
0.65
0.53
0.23
0.22
0.07
0.76
0.65
0.28
0.18
0.04
0.55
0.34
0.05
-0.04
-0.03
-0.21
-0.31
Non-STEM
Law
Business and Administration
Languages
Creative Arts and Design
Education
0.35
1.12
0.21
0.31
0.86
0.45
1.18
0.21
0.40
0.85
0.23
1.31
0.25
0.29
1.51
-0.22
0.13
0.03
-0.12
0.65
Source: Oxford Economics
Note: NQF 4-8 requirement from education and migration adjusted for LFS subject degree % NQF 4-8
* Social studies; mass communication and documentation; philosophical studies
Potential STEM
shortfall under
aspirational
scenario (pa):



Physical
sciences: 40
Mathematics: 30
Computer
Science: 200
Engineering &
Technology: 300
Before even
considering
downward STEM
enrolment trend
STEM supply
STEM degree workforce pool
2007 (3-yr
average)
STEM
Subjects Allied to Medicine
Engineering
Medicine & Dentistry
Mathematical & Computer Sciences
Biological Sciences
Physical Sciences
Architecture, Building & Planning
Vetinary Science, Agriculture & Related Subjects
Technologies
66,100
24,300
8,200
7,800
7,600
6,200
5,200
3,600
2,300
900
Non-STEM
Combined Degree
Business & Administration
Education
Social Studies
Creative Arts & Design
History & Philosophical Studies
Law
Other
102,400
35,400
25,900
12,400
10,900
5,600
4,500
4,000
3,700
Source: LFS, Oxford Economics
Note: Rounded to nearest hundred
STEM UCAS acceptances (NI HEIs)
H1 - General Engineering
D4 - Agriculture
B4 - Nutrition
A1 - Pre-clinical Medicine
B7 - Nursing
J9 - Others in Technology
G1 - Mathematics
A2 - Pre-clinical Dentistry
H3 - Mechanical Engineering
F1 - Chemistry
H2 - Civil Engineering
C1 - Biology
G6 - Softw are Engineering
F3 - Physics
H4 - Aerospace Engineering
H6 - Electronic and Electrical Engineering
G4 - Computer Science
H7 - Production and Manufacturing Engineering
C4 - Genetics
Source: UCAS
Change 2002-2008
(%)
Change 2002-2008
(absolute)
277%
83%
55%
40%
33%
31%
30%
29%
28%
27%
27%
1%
-5%
-25%
-26%
-30%
-30%
-51%
-56%
36
49
31
75
94
13
21
12
25
11
38
1
-1
-14
-12
-29
-207
-33
-10
Returns to STEM
First occupation returns
STEM
Non-STEM
% total first destination
Managers &
professionals
Sales, custom er
service, process
and elem entary
(H2) Civil engineering
(H3) Mechanical
engineering
82%
5%
66%
(G6) Softw are engineering
(H4) Aerospace
engineering
(F1) Chemistry
(G3) Statistics
(H6) Electronic & electrical
engineering
(F3) Physics
(G1) Mathematics
(G4) Computer science
Source: HESA
% total first destination
Managers &
professionals
Sales, custom er
service, process
and elem entary
(N1) Business studies
30%
16%
13%
(R1) French studies
30%
13%
61%
12%
(L2) Politics
29%
16%
60%
13%
(L4) Social policy
28%
16%
53%
51%
12%
10%
(C8) Psychology
(V5) Philosophy
28%
25%
16%
22%
51%
16%
(C6) Sports science
24%
18%
50%
47%
46%
14%
12%
16%
(N5) Marketing
(W4) Drama
(P5) Journalism
22%
17%
11%
17%
25%
13%
Source: HESA
Wage returns
UK: Weekly earnings by degree subject (2008)
Arts
Education
Humanities
Librarianship & information
Linguistics
Social sciences
Other languages
European languages
Business & financial
Agricultural sciences
Medical related
STEM
Biological sciences
Technology
Physical / environmental
Medicine
Maths & computing
Architecture & related
Engineering
0
Source: LFS
5
10
15
20
% more than £1,000 per week
25
30
Summary
Facing a new world




The end of a debt era
Who can spend (not business, not consumer, not government?)
Not 100% true – there are opportunities to spend and some are doing
Tomorrow will have to be export-led not debt-led – manufacturing of
growing importance?
 Economies need to diversify
 UK over-dependent on financial services
 NI over-dependent on public sector / too small a private sector
 Could industrial production return to the UK as production and
transportation costs rise elsewhere?
 The environment will be ever more global - skills will therefore be even
more crucial
 Leading not following matters (e.g. MATRIX)
Economist’s questions
 Is the mix of skills appropriate – too general at top end?
 How to future skills match – STEM demand and supply?
 How to reverse STEM supply-side trends? What should the message
be? Is it a demand issue?
 Supplying niche skills in some STEM areas – good return but
expensive – does it fit funding model?
 Skills in energy sectors – how well do we know (green technology etc)?
Contact:
Graeme Harrison
Head All-Island Consultancy, Oxford Economics
Tel: 028 9266 0669
Email: [email protected]