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The economy and the North-South divide

United Kingdom mapDifferences between the North and South have always been a topic of debate. This 2012 article from the Economist cites lower employment rates and average incomes. Some have even gone so far as to say that the North and the South are two different countries in everything but name.

The contrast

Economically speaking, how stark is the contrast? The geographical location of the North-South divide is itself contested. We chose to use this study from the University of Sheffield, which shows that the line runs diagonally across the Midlands, stretching from the Severn to the Humber.

In the South of England, the economy is composed of 14.3 million jobs, while the North houses 12.8 million jobs. The South grew 2.2% in the years spanning 2008-2013, while the North declined 1.2%.

For the most part, the North and South mirror each other in growth and decline. Before the recession hit, the South was growing at a slightly higher rate than the North, but both ended up in the economic doldrums in 2008. From the trends, it looks like the North has had a difficult time recovering from the slump.

In terms of actual job numbers, the South has gained more than 700,000 jobs since 2009, while the workforce in the North has increased by only 232,734 jobs.

Industry levels

Wholesale and retail trade continues to be an economic driver for all regions of Great Britain. It is the leading industry for both the North and the South, accounting for more than two million jobs in each region. Many of the same industries are large in both the North and the South, with the South leading in many. The regions in the North, however, lead the South in human health and social work activities, manufacturing, public administration and defence and construction. This graph represents ten of the largest high-level industries in the North and the South.

In terms of high-level industry, the South is represented by wholesale and retail trade and human health and social work and activities. Unfortunately, high-level industries don’t give a very good picture of what is driving the economy since the North is characterised by the exact same industries. It’s interesting to see how the two regions compare at the high industry level, but to get a better idea of what makes the two regions distinct, it is helpful to dig into the data and look at detailed industries.

In the South, the highest-employing detailed industry is public administration and defence; compulsory social security (595,655 jobs), but it has declined by 11 per cent in the last five years. Hospital activities are next with 583,795 jobs (and 4 per cent growth), then primary education with 527,590 jobs and 1 per cent growth.

In the North, hospital activities is the highest-employing industry with 736,661 jobs, followed by public administration with 724,014. As in the South, public administration is shrinking (here by 6 per cent). The third largest industry is retail sale in non-specialised stores with 482,928 jobs and 2 per cent decline since 2008.

Occupation

Now we’ll take a look at the state of the economy from the perspective of occupations.*Sales assistants and care assistants will always be found near the top twenty occupations in the South, but more interesting are the occupations that are in decline. Sales and retail assistants, general office assistants, accounts and wages clerks and personal assistants all show loss of total jobs between 2008 and 2013. This seems to be part of a trend that we’ve been seeing in the data for some time: as managers are forced to make budget cuts, and as more and more processes become automated, the need for assistants grows smaller and smaller.

On the other hand, care assistant and home carers have seen quite a large increase in jobs (37,709). Information and communication technology managerssecondary education teachers and waiters/waitresses have all seen respectable growth as well.

In the North, we see many of the same occupations that we saw in the South, but here those occupations are definitely more susceptible to decline. Out of the top twenty occupations in the North, half are shrinking, many by 3 per cent or more. Bar staff are getting the worst of it, at a loss of 8 per cent of the jobs in the occupation. But care assistants and home carers have grown a great deal (46,217 jobs added), just like in the South. Nurses are also doing quite well at 4 per cent growth.

Projected job change

What can we expect from the economy in the future? How can we expect these regions to grow or decline in the next five years? If present trends continue, the economy will grow, but the South will continue to outstrip the North in terms of economic development.


 

*Source: EMSI Covered Employment – 2013.1

Data for this post comes from Analyst, the web-based labour market data tool from EMSI. For more information about EMSI data, please contact Andy Durman (andyd@economicmodelling.co.uk). 

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