Transcript The Plan`s Employment Growth Assumptions and their

Employment in London Forecasts
Bridget Rosewell
Background
•Provide a medium term outlook over 15
years
•Take into account structural shifts
•Avoid need to forecast uncertain drivers
Method
•Identify and analyse appropriate historical
trends for London and component sectors
•Identify breaks in trend over past period
•Consider likelihood of future trends
differing from the past
•Construct trend figures
•Adjust where trends considered likely to
change
Employment Output
Relationship
-2.7
-2.8
-2.9
-3.0
-3.1
-3.2
Log of total employment divided by real London GVA £mn
Total employment (log) as a proportion of total London GVA
1971 - 2000
1970
1975
1980
1985
tim
1990
1995
2000
Implications
•If the economy grows on average at 2.5%
–And job creation over 30 year average rate,
only 70,000 new jobs by 2016
–With job creation at 90s rates, 1 million new
jobs by 2016
•Because the move to services is more
labour intensive and the decline in
manufacturing largely complete
The SDS Forecast
•Takes the underlying growth of 2.5%
•Moderates the short term trend over the
next decade back towards the longer term
one
•Takes a trend based view of all individual
sectors, except two
•Business services constrained so that
share does not increase over 40%
•Health and education adjusted upward
on policy grounds (50,000 jobs)
The Growth Question
•Growth has averaged 2.7% since 1982
•Treasury assumption is 2.75% - recently
revised up from 2.5% when the SDS was
prepared
•London can at least be expected to match
the UK
Ouput Growth In London and the UK
8
6
4
2
0
1971
1976
1981
1986
1991
-2
-4
London
UK
1996
Difference Between London and UK Growth
3
2
1
0
1971
-1
-2
-3
-4
1976
1981
1986
1991
1996
Growth: London and the
UK
•London grew less fast than the UK in the
1970s
•In the 1980s at around the same rate
•And possibly faster in the most recent
years
19
71
19
74
19
77
19
80
19
83
19
86
19
89
19
92
19
95
19
98
20
01
20
04
20
07
20
10
20
13
20
16
London GDP at 2.5% and 2.75% growth
1971=100
280
230
180
130
80
Job Creation
•How many jobs does growth create?
•Over the 1981-2000 period, on average
the economy had to grow 2.4%pa to stop
employment falling
•But over the 1990s, this rate was only
1.2%
London GDP & Employment
GDP, 1971=100 & Employment 000s
280
5500
230
5000
4500
180
4000
3500
80
3000
19
71
19
74
19
77
19
80
19
83
19
86
19
89
19
92
19
95
19
98
20
01
20
04
20
07
20
10
20
13
20
16
130
GDP
Employment
Numerical Change in Employee Jobs
(between 1973 & 2000, 1973 & 1989, and 1989 & 2000)
Manufacturing
1,000,000
Numerical change in employee jobs
Public Admin.& Defence
Transport and
Communications
Construction
500,000
Wholesaling
Health and Education
0
1973 to 2000
1989 to 2000
1973 to 1989
1989 to 2000
Agriculture, Forestry &
Fishing
Retailing
-500,000
Hotels & Catering
-1,000,000
1973 to 1989
1973 to 2000
-1,500,000
Other social and personal
services
Other Financial &
Business Services
Business Services
Banking & Insurance
History
•Employment fell in the 1970s and 80s
•But has made up these falls in the 90s
•Much of the fall is the decline in
manufacturing in the capital
•Services has grown throughout, especially
business services
Business Services Trends
-4.60
-4.65
2000
-4.70
1996
1991
-4.80
-4.75
1985
-4.85
1971
1980
-4.90
Log of business services employment divided by real London GVA £mn
Business services employment (log) as a proportion of total
London GVA 1971 - 2000
1976
1970
1975
1980
1985
1990
1995
2000
Employment in 2000
Primary and utilities
Manufacturing
Construction
Wholesale
Retail
Hotels & restaurants
Transport & comms
Financial services
Business services
Public administration
Health & Education
Other services
Employment in 2016
Primary and utilities
Manufacturing
Construction
Wholesale
Retail
Hotels & restaurants
Transport & comms
Financial services
Business services
Public administration
Health & Education
Other services
SDS Employment
Forecast
P rim a r y a n d u tilitie s
M a n u f a c t u rin g
C o n s tr u c t io n
W h o le s a le
R e ta il
H o t e ls & re s t a u ra n t s
T ran s port & co m m s
F in a n c ia l s e r v ic e s
B u s in e s s s e r v ic e s
P u b lic a d m in is tr a t io n
H e a lt h & E d u c a t io n
O th e r s e r v ic e s
2000
20
328
215
275
404
294
361
248
1123
227
610
339
2 0 1 6 D if fe r e n c e
15
-5
240
-8 8
160
-5 5
290
15
415
11
445
151
325
-3 6
275
27
1590
467
175
-5 2
660
51
530
191
T o ta l
4453
5120
667
Other Views
•The SDS view not
isolated
•Other modellers
provide similar figures
•All based on strong
growth FBS and
stabilisation elsewhere
Average
growth
SDS
0.89
CEBR
23)
OEF
0.88
0.78
Long Term Forecasts
7000
6000
Volterra
5000
Total employment ('000)
OEF
4000
3000
2000
1000
0
1982
1987
1992
1997
2002
2007
Year
2012
2017
2022
2027
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
Total jobs ('000)
Long term forecasts
2500
2000
OEF Business Services forecast
1500
Volterra Business Services forecast
1000
500
OEF Financial Services forecast
Volterra Financial Services forecast
0
Year