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The impact of large scale redundancies in the East of Scotland

The impact of large scale redundancies in the East of Scotland

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The impact of large scale redundancies in the East of Scotland

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  1. The impact of large scale redundancies in the East of Scotland ESEP Seminar Callendar House, Falkirk 26 November 2003

  2. Objectives • to examine the impact of 2 large scale redundancies on the local labour market • Motorola and NEC • to present cameo studies of other major redundancies • to review the implications for policy makers, and identify possible interventions

  3. Today’s programme • 10.30 Welcome: Gordon McLaren • 10.40 Presentation: John Lord • 11.10 Commentary: Alan McGregor • 11.30 Break • 11.45 Focus groups • 12.30 Feedback and discussion: Alan McGregor • 13.15 Closing remarks: Gordon McLaren • 13.30 Lunch

  4. ESEP labour market service • launched January 2002 • labour market information service for ESEP and its partners • principal output - major annual report: • www.esep.co.uk • ad hoc reports and services: • ERDF/ESF-funded community development projects • strategic sector profiles • autumn seminars

  5. East of Scotland Programme Area

  6. Presentation • policy context: the PACE framework • incidence of large scale redundancies • case studies: Motorola and NEC • scale and phasing • labour market context • impact on the claimant count • redeployment outcomes • cameo studies from the ESEP area

  7. The PACE framework • a national framework for local agencies to create effective and flexible mechanisms to identify and respond to redundancy situations • precautionary planning and redundancy response • local response teams

  8. Incidence of redundancy • about 8 employees in a 1,000 (<1%) were made redundant in 2000-01 • but twice that in manufacturing • about 13% of employees changed employer in the year to 2001 • mobility greatest among the young, single, people with level 2 qualifications, workers in the private sector (especially small firms) • median job tenure in the UK 4 years

  9. Redundancies per 1000 employees, UK (1992-2000) • Redundancy rates are increasing in the manufacturing sector in the UK (1.6%) and falling in the service sector (0.5%)

  10. Losses and gains reported in the press since Jan 2001

  11. Motorola and NEC: large site closures • Motorola, Bathgate • 3100 redundancies • April – December 2001(9 months) • NEC, Livingston • 1500 redundancies • August 2001 – December 2002 (16 months) • total • 4600 redundancies • April 2001 – December 2002 (20 months) • most in the year to April 2002

  12. Impact on the West Lothian economy • in 2001, there were 69,000 employees in employment • of which 17,000 were in manufacturing • the Motorola and NEC closures resulted in 4,600 job losses, equivalent to: • 7% of all employment • 27% of manufacturing employment

  13. Workforce characteristics: Motorola • 2/3 male • 2/3 aged 25-44 • 2/3 semi-skilled/process workers • 90% employed for 3 years + • 21% qualified to L4 or over, 25% L3 • …43% no post-school qualifications • motivated and able workforce • high productivity/quality environment • culture of training and development

  14. Workforce characteristics: NEC • 2/3 male • 78% aged 25-44 • 36% operatives, 21% technicians, 17% engineers • 75% employed for 3 years + • 21% qualified to L4 or over, 21% L3 • …46% no post-school qualifications • motivated and able workforce • high productivity/quality environment • culture of training and development

  15. Where employees came from Lothian 1650 (36%) Other 1190 (26%) Lanarkshire 1750 (38%) of which W Lothian 1420 (31%) N Lanarkshire 1220 (27%) local people 2640 (58%)

  16. Residents working in manufacturing as % of all employees

  17. Impact on West Lothian residents • 1,420 West Lothian residents were made redundant • in 2001, there were 82,000 West Lothian residents in employment • of whom 16,000 were in manufacturing • the scale of redundancies was equivalent to: • 1.7% of all West Lothian residents in employment • 8.9% of those employed in manufacturing

  18. Impact on North Lanarkshire residents • 1,220 North Lanarkshire residents were made redundant • in 2001, there were 144,000 North Lanarkshire residents in employment • of whom 22,000 were in manufacturing • the scale of redundancies was equivalent to: • 0.8% of all North Lan residents in employment • 5.5% of those employed in manufacturing

  19. Redundancies relative to claimant count stocks • between April 2001and Dec 2002, the average number of claimants in each area was: • West Lothian: 3000 1420 redundancies = 47% of claimants • North Lanarkshire: 7750 1220 redundancies = 16% of claimants

  20. Redundancy phasing

  21. Redundancies by local authority

  22. Redundancies per month relative to claimant count stocks

  23. Claimant countstock

  24. Claimant count rate index scale Feb 2000=100

  25. Claimant count on-flow

  26. Claimant count off-flows

  27. West Lothian redundant residents relative to on-flow

  28. North Lanarkshire redundant residents relative to on-flow

  29. Proportion claiming 6+ months leaving count for work (%)

  30. Proportion claiming 12+ months leaving count for work (%)

  31. Local impacts of the Motorola and NEC closures: summing up • 4,600 jobs lost in West Lothian • most in the year to April 2002 • 2,600 local people (WL/NL) lost jobs • some impact (?) on total claimant count relative to Scotland • but a quick recovery • no discernible shock in flows on and off • but proportion of LTU leaving count for work has fallen in West Lothian

  32. Redeployment outcomes: Motorola • after 6-9 months: • 63% employed/self-employed • 6% in FE/training • 7% not seeking work • 24% unemployed • after 12 months: • 83% employed • 5% unemployed

  33. Redeployment outcomes: NEC • after 6-12 months: • 80% employed/self-employed • 7% in FE/training • 5% not seeking work • 8% unemployed

  34. Employment outcomes analysed • older workers find it harder to get a new job • some transfer from full-time to part-time work • especially women • a clear majority are now earning less • 68% ex Motorola, 69% ex NEC • people have had to acquire new skills • and switch to different industries • time makes a difference • redeployment rates improve after 6 months

  35. Cameo studies • Longannet, Fife • BP, Grangemouth • Grampian Foods, Edinburgh • Levi Strauss, Dundee

  36. Longannet Colliery • 450 redundancies: Nov 2001 – March 2002 • some mining engineers, mostly semi-skilled manual • large majority male • wide labour market catchment, but focus on Fife/Forth Valley

  37. Longannet: the outcome • one year on: • 65% in work or training • 4% claiming JSA • 20% claiming other benefits • 15% retired, moved away • limited information on destinations: • supermarkets, bus drivers, manufacturing

  38. BP, Grangemouth • 1,000 redundancies in 2 phases, starting end November 2001 • 650 released to date • remainder to leave by end 2004 • process workers and skilled trades • most live locally • 30% aged 45+

  39. BP: progress to date • of the 650 released to date: • 17% redeployed by BP • 49% retired • 19% in employment • 4% started a business • 2% in FE

  40. Grampian Foods, Lothian • 550 redundancies • May 2002 – Feb 2003 • workforce deemed high risk • 51% aged 25-45 • 65% lived in Lothian

  41. Grampian Foods: the outcome • 61% response to tracking exercise • 84% employed • 10% inactive • 5% unemployed • 33% earning higher wages; 47% earning less

  42. Levi Strauss, Dundee • 460 employees • 41% response rate • very stable workforce: 93% employed for 5 years+, 20% for 20 years+ • 59% live in a SIP postcode

  43. Levi’s: one year on • 83% employed • most people in different occupations • a lot of churn over 12 months • more were in part-time occupations • average earnings sharply down • 3% unemployed

  44. The impact of large scale redundancies in the East of Scotland ESEP Seminar Callendar House, Falkirk 26 November 2003

  45. Local impacts of redundancies: the historical record • where the employment base is more specialised… • redundancy may affect a higher proportion of the employment base • resulting in sustained higher levels of unemployment • …and population loss, especially among the young and more skilled • causing difficulties in attracting new employers

  46. Redundancies in large integrated labour markets • effects dispersed across the labour market • localised impacts difficult to see a few years down the road

  47. Other factors affecting local impacts • state of the local labour market • characteristics of the employer • characteristics of the redundant workers

  48. The impact of large scale redundancies in the East of Scotland ESEP Seminar Callendar House, Falkirk 26 November 2003