In support of contributing to an evidence base to aid the Labour Government’s key mission to promote regional economic growth and the creation of good jobs, a research team from the University of the West of England has analysed data created as part of the Wage and Employment Dynamics (WED) project to explore the unique characteristics of the West of England’s local labour market.
Background
This work was completed in support of the launch of the Futures West Foundation, which aims to establish evidence-based research and insights to tackle the West of England’s long-term challenges to raise productivity, prosperity and innovation. The report begins by providing a national context before focussing on the regional labour market of the Western Gateway Area (WGA) – the WGA includes Bath and North East Somerset, Bristol, North Somerset, South Gloucestershire, Gloucestershire, Swindon, and Wiltshire.
By utilising microdata from theAnnual Population Survey (APS) and the enriched Annual Survey of Hours and Earnings (ASHE), researchers explored labour markets and wage trends by focussing on five key sectors: Advanced Manufacturing and Engineering, Finance and Insurance Services, Creative Industries, Digital Industries, and Environmental Goods and Services.
What we found – national perspective
The article reports the persistence of regional wage disparities with wages remaining highest in London and the South East, while the North East has the lowest average pay. Wage growth, however, was fairly consistent across all regions between the period of observation (2004-2022). The report also notes that during this time, the minimum wage has increased at a faster rate than the median wage, suggesting that lower-paid workers are gaining a larger share of overall earnings. This trend is helping to reduce wage inequality which is demonstrated by the fact that the percentage of workers earning below two-thirds of the national median wage dropping significantly since 2014.
What we found – regional perspective
The data revealed that workers in the WGA earned a wage which was approximately 4% higher than the national average (excluding Greater London), but this reduced to just over 2% after taking other characteristics into consideration. The report estimates that the priority sectors contributed around 7% of this pay premium.
The analysis revealed that this pay advantage is unevenly distributed across the region. The average wage in the West of England was about 11% higher than in Gloucestershire, while higher wages in West of England are primarily driven by jobs in the City of Bristol and South Gloucestershire. The analysis also revealed that employees in Wiltshire (excluding Swindon) earned less than the national comparator group.
At the sector level, the analysis showed that wages in each of the five identified priority sectors are significantly higher compared to other sectors – e.g. those working in the Advanced Manufacturing and Engineering and Digital industries sector earn approximately 6% and 12% more than the national average. This advantage is further heightened for those working in the Advanced Manufacturing and Engineering sector in the WGA, who earn around 1.6% more on average than their counterparts in the same sector across the country. Despite employees working in the Digital industries recording above average wages, this advantage is somewhat offset for those working in the WGA. The analysis revealed that Digital industries sector workers in the WGA earned around 3.1% less than the national average for the same sector. This discrepancy is likely to be due to the specific sub-sector composition in the region, but warrants further exploration.
This research highlights the value of using microdata, such as that provided by the WED project. Th use of microdata can enable researchers to provide deeper insights, allowing for effective and targeted policymaking. The findings of this report suggests that priority sectors identified by Futures West are important for boosting living standards and productivity across the WGA. This work therefore provides support for targeted sector approaches.
Link to paper – What can microdata tell us about labour market and wage dynamics in the Western Gateway Area?
Damian Whittard
Damian Whittard is an Associate Professor in Economics and Programme Manager of the Wage and Employment Dynamics Project, where he leads a research programme creating a comprehensive labour market data spine for the UK. As an Academic Assessor for the Government Economic Service and Research Fellow funded by ADR UK, he specializes in economic measurement, labour markets, and green jobs research. His work has been presented at prestigious institutions including the International Monetary Fund and the Bank of England, and his research has influenced policy through projects with organizations such as the Open Data Institute and the Low Pay Commission. Drawing from his previous experience at the Office for National Statistics and the South West Regional Development Agency, Damian brings extensive expertise in national accounts, regional economics, and evidence-based policy making to his academic role.