OVER recent years, one of the big debates regarding the status of the economy in Wales has been about the employment profile of the workforce and how it needs to change from depending on the public sector to one where there are private sector jobs in industries such as financial services.
That is why it is fascinating to read the latest research on the workforce of Wales, released earlier this week by the Office for National Statistics.
The data shows that between 2001 and 2005, the largest increase in the number of jobs was in health, education and public administration, equal to 53% of all the new jobs created in Wales during this period.
This is not surprising, given that the devolution dividend has resulted in billions of additional funds being spent within Wales, predominantly in the areas of health and education.
However, the business and financial services sector also saw a 19% increase in new jobs, driven by the success of companies such as Admiral Insurance and the Principality Building Society but also by the attraction of new call-centre jobs to the region.
In contrast, manufacturing employment fell by 14% in Wales over the period, although this was unexpectedly less than the 19% decrease across the UK as a whole.
In terms of the private sector, Wales is truly a nation of shopkeepers, with the wholesale, retail and distribution sector remaining the largest in terms of workplace employment, accounting for 303,000 jobs (or 30% of Welsh jobs).
This is different to the UK position, where the business and finance sector was the largest, accounting for 21% of the total workforce.
If we contrast Wales with the UK as a whole, the fact that only 13% of total number of jobs in the Welsh economy is within a high value added sector such as business and finance goes a long way in explaining the gap in prosperity with the rest of the UK.
The fact that 30% of all Welsh jobs are in public administration, health and education as compared to 25% for the UK as a whole may help to explain why, as discussed last month, Wales remains at the bottom of the productivity league table.
However, as we all know, two-thirds of Wales is classed among the poorest regions in Europe and it is worth examining whether there are differences in the job profile of the richer and less prosperous part of our nation.
For example, West Wales and the Valleys – which has received £1.3bn of Objective One funding – still has 68% of all Welsh jobs in the agriculture sector but only 50% of jobs in finance and business activities.
It is also worth noting that despite the millions spent on capital projects through European structural funding, the vast majority of the increase in construction employment was in East Wales.
Indeed, there was a 29% increase in building jobs in East Wales as compared to 1% for West Wales and the Valleys.
Therefore, if we compare the two parts of Wales, 68% of the net number of new jobs within the poorest parts of Wales has been as a result of increases in public administration, health and education.
In contrast, the vast bulk of the new jobs created in the richer parts of Wales have been in construction, business and finance.
This seems to suggest that despite £2.5bn of European and government funding being spent to develop a more productive economy within West Wales and the Valleys, there is still an overwhelming dependency on public sector jobs to provide the new employment within these poorer areas.
This presents an enormous challenge to the third Assembly Government, which will shortly begin spending the second round of funding provided by the European Commission to the poorest parts of Wales.
It suggests that there remains the need for a clear focus in developing the private sector in Wales, either through the creation of new businesses or the expansion of existing firms.
Certainly, if there is a slow-down in the funding from the Treasury for expansion of public services within Wales, as many expect during the next few years, it will be private businesses that will need to pick up the slack created by the slowdown in the number of new public sector jobs in the region.
If not enough emphasis is placed on the wealth creating potential of our entrepreneurs, then it is highly unlikely that we will see any further growth in the job market in Wales.
That is why it is fascinating to read the latest research on the workforce of Wales, released earlier this week by the Office for National Statistics.
The data shows that between 2001 and 2005, the largest increase in the number of jobs was in health, education and public administration, equal to 53% of all the new jobs created in Wales during this period.
This is not surprising, given that the devolution dividend has resulted in billions of additional funds being spent within Wales, predominantly in the areas of health and education.
However, the business and financial services sector also saw a 19% increase in new jobs, driven by the success of companies such as Admiral Insurance and the Principality Building Society but also by the attraction of new call-centre jobs to the region.
In contrast, manufacturing employment fell by 14% in Wales over the period, although this was unexpectedly less than the 19% decrease across the UK as a whole.
In terms of the private sector, Wales is truly a nation of shopkeepers, with the wholesale, retail and distribution sector remaining the largest in terms of workplace employment, accounting for 303,000 jobs (or 30% of Welsh jobs).
This is different to the UK position, where the business and finance sector was the largest, accounting for 21% of the total workforce.
If we contrast Wales with the UK as a whole, the fact that only 13% of total number of jobs in the Welsh economy is within a high value added sector such as business and finance goes a long way in explaining the gap in prosperity with the rest of the UK.
The fact that 30% of all Welsh jobs are in public administration, health and education as compared to 25% for the UK as a whole may help to explain why, as discussed last month, Wales remains at the bottom of the productivity league table.
However, as we all know, two-thirds of Wales is classed among the poorest regions in Europe and it is worth examining whether there are differences in the job profile of the richer and less prosperous part of our nation.
For example, West Wales and the Valleys – which has received £1.3bn of Objective One funding – still has 68% of all Welsh jobs in the agriculture sector but only 50% of jobs in finance and business activities.
It is also worth noting that despite the millions spent on capital projects through European structural funding, the vast majority of the increase in construction employment was in East Wales.
Indeed, there was a 29% increase in building jobs in East Wales as compared to 1% for West Wales and the Valleys.
Therefore, if we compare the two parts of Wales, 68% of the net number of new jobs within the poorest parts of Wales has been as a result of increases in public administration, health and education.
In contrast, the vast bulk of the new jobs created in the richer parts of Wales have been in construction, business and finance.
This seems to suggest that despite £2.5bn of European and government funding being spent to develop a more productive economy within West Wales and the Valleys, there is still an overwhelming dependency on public sector jobs to provide the new employment within these poorer areas.
This presents an enormous challenge to the third Assembly Government, which will shortly begin spending the second round of funding provided by the European Commission to the poorest parts of Wales.
It suggests that there remains the need for a clear focus in developing the private sector in Wales, either through the creation of new businesses or the expansion of existing firms.
Certainly, if there is a slow-down in the funding from the Treasury for expansion of public services within Wales, as many expect during the next few years, it will be private businesses that will need to pick up the slack created by the slowdown in the number of new public sector jobs in the region.
If not enough emphasis is placed on the wealth creating potential of our entrepreneurs, then it is highly unlikely that we will see any further growth in the job market in Wales.
Comments
However, it doesn't involve the civil servant centred approach to economic policy that, despite failing to do anything about the decline of the Welsh economy, continues at a pace.
For some reason known only to themselves, the Assembly is content to continue to ignore the experience and expertise of entrepreneurs and private sector firms in Wales as it has done so for the last eight years.
Get them more involved in putting together a whole new approach to areas such as the new convergence funds and how to spend it to its maximum potential and then you will see a wholesale change in how the Welsh economy operates.
However, whether that will happen is a completely different matter.