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Introduction

The most detailed regular count of jobs in Lancashire is the Annual Business Inquiry (ABI), conducted since 1998 by the Office for National Statistics. This provides information on the number of employee jobs by place or work, classified by detailed industrial sectors. The ABI is intended mainly to provide an annual record of employee job numbers. It is not necessarily geared to accurately measuring real job trends over time. It measures net changes and for smaller geographical areas can sometimes give rise to considerable year-to-year volatility in job estimates. Prior to 1998 different means were used to collect employee jobs information (e.g. the Annual Employment Survey, the Census of Employment, etc.) and because of the changes in the methodologies and estimation procedures used in each, longer-term employment trends derived from these sources, as given below, should be regarded as being only indicative.

Background Trends

As illustrated in Figure 1, the longer term pattern of employee jobs in Lancashire over much of the post-war period was one of virtual stability and was in marked contrast to the buoyancy of new job creation nationally. However, the local position was far from static. Between 1950-1980 in excess of 3,000 jobs per annum were being shed from the old textile industry alone as well as from other sectors such as agriculture, coal mining and engineering. It was a time of major realignment of the local industrial and commercial base as Lancashire searched for a new economic identity to replace its rapidly eroding traditional industries. The fact that the sub-region was able to replace most of these lost jobs, even if not always directly, in other manufacturing industries but most especially in services, was a strong testimony to its resilience and job creation potential.

Figure 1 Employment in Lancashire, 1929-2006

Note Data 1929-1938 and 1939-1943 is interpolated.

Source Ministry of Labour/ONS - ERII Employment Records/ABI

The national recession of the early 1980s marked a major discontinuity in previous predictable trends. Lancashire suffered more severely than the nation at large. Over the short period 1979-84 more than 56,000 jobs disappeared in local manufacturing industry alone – a fall of more than a quarter – and much industrial capacity was scrapped. Large numbers of long-established companies and whole industrial sectors disappeared. Symbolically the textile industry lost its premier industrial position in the county. The period also saw the demise of the large and at one time technologically advanced textile machinery industry; the virtual disappearance of large plant man-made fibres production; the collapse of fishing and many port industries; and the total eclipse of the formerly large deep coal mining industry. These were all sectors that previously had employed many thousands of people.

These changes represented a radical and permanent alteration in the nature of the local economy. The extent of the decline in manufacturing employment particularly, and the structural and locational shifts that occurred went well beyond those that might have been explained by a temporary cyclical downturn in the economy. Overall, the loss of manufacturing jobs over this period was larger than over the whole of the previous twenty years and the rate of fall was greater than that experienced over the previous thirty years. Compared with a pre-recession figure of more than 40%, by 1984 less than a third of the county's employees were engaged in manufacturing.

Following a short recovery driven in large measure by services, manufacturing industry in Lancashire took a further major hit in the early 1990s. As one of the most defence industry dependent regions within Europe the local area suffered severely from the so-called "peace dividend" in the form of reduced government expenditure on defence equipment. The difficulties were exacerbated by global over-capacity and intense competition in the industry as well as by an unprecedented simultaneous downturn in the civil aircraft market. In fairly short order as many as 10,000 local defence and aerospace jobs were shed. The position was further compounded by the final financial collapse of Leyland Trucks & Bus, a company that 15 years earlier employed more than 12,000 people directly in its Lancashire plants alone.

Employment in Lancashire

In comparison to the above historical trends, employment patterns in Lancashire over more recent years have been remarkably benign. Since the early 1990s the region has enjoyed a period of fairly sustained new job creation that has raised total employee job numbers to an all-time high. Over the last eight-year period covered by the ABI, 1998-2006, employee job numbers in Lancashire rose by an estimated 43,000 to over 610,000 – an increase of about 7.6% (Table 1). This recorded increase was highly respectable by the sub-region's historical standards though as in the case of a number of other local economic indicators, slightly lagged that of both the UK (+8.1% increase) and the wider North West Region (+8.0%). (Details of employee change by Lancashire districts are contained in a complementary research monitor Employment Change by District.)

Employment Change by Sector

Within the context of the net 43,000 jobs created in Lancashire between 1998-2006 not all activity sectors fared equally (Table 2). Not unexpectedly, the primary sectors – agriculture, forestry and fishing and mining and quarrying/utilities – continued to shed jobs over the period as they have done for many years though the pace of loss has steadily moderated. Over the last four years agricultural jobs across the sub-region have shown virtual stability. In the case of the utilities too job reductions have levelled off sharply and it is probable that a large slice of the earlier "losses" were actually transferred or out-sourced to the supply chain – to the construction sector, for example.

There has been no let up in the downsizing of the manufacturing employee job base. A loss of more than 39,000 jobs in this sector between 1998-2006 was on a par with the reduction experienced both in the wider region and nationally. Again, it is likely that an unknown number of these jobs might have been out-sourced and are now classified elsewhere – for example, to business services such as labour recruitment agencies and to specialist business providers in fields such as contract cleaning, security, distribution and information technology. Whilst productivity of manufacturing continued to increase very strongly the period was generally a difficult one for the sector as it struggled against both the strength of Sterling and intense global competition across most of its sectors. There have been several notable closures of long-established manufacturing plants and instances of local production being transferred overseas to take advantage of lower costs.

Job losses were highest in the more labour intensive and lower added value sectors – most especially in the textiles, clothing and footwear industries. Between them these industries lost in excess of 12,000 jobs over the eight-year period – a drop of some 65%. Reductions were greatest in the "making-up" and more commodity-like products. The miscellaneous ""other textiles" encompassing much of the higher value specialised and technical textiles more-or-less held its own for much of the period but latterly these two have suffered substantial job losses. Once a very important local sector, particularly in the Rossendale area, footwear has now all but disappeared as a manufacturing activity in Lancashire: the few firms that have survived have done so through a much reduced head count and by outsourcing virtually all their manufacturing activity. Other broad manufacturing sectors that endured above-average employment falls over the period included Electrical and Optical Equipment (-3,600 jobs or -42%), Motor Vehicles (-2,500 or -36%) and Paper, Printing and Publishing (-5,100 or -35%). By far the best out-turn with the lowest reduction in jobs was enjoyed by Other Transport Equipment which is dominated by Lancashire's largest industrial sector – aerospace which in 2006 was still providing close to 17,000 jobs directly across the sub-region, just 3% fewer than in 1988. Other below average job reductions occurred in the Fabricated Metal Products industry which includes many activities (e.g. metal treatments, sub-contract engineering services) that are part of the aerospace supply chain; in Other Manufacturing (mainly furniture) and in the relatively small Wood and Wood Products industry.

In contrast to the other production sectors, the construction industry appears to have been remarkably buoyant across most parts of the sub-region for several years enjoying a rate of jobs growth many times greater than that of the North West or the nation at large. The industry has enjoyed what has probably been one of the largest and most sustained up-turns it has ever experienced in Lancashire. Growth in the industry has been across all its component sectors and has included both the residential and commercial property markets, utility and industrial projects, both new build and refurbishment and, more recently, increased numbers of private finance initiatives for public sector capital projects, particularly in health and education. Further momentum has derived from the designation of a big part of East Lancashire as a housing renewal area. However, construction is an activity in which many jobs are highly mobile and such growth can be quickly reversed if market conditions begin to turn as they appear to have done in Lancashire. The 2006 estimates suggest a drop of about 4,800 over the previous year.

Aside from construction, the great bulk of local new job creation derived from services. These recorded a net gain of over 77,000 or 19.5% between 1988 and 2006. This compared with a rate of increase nationally of 16.5% nationally and 17.2% in the North West Region. The ABI employee job estimates can show some variability year-to-year so too much emphasis should not be placed on these growth rates. Nonetheless, it is clear that Lancashire has performed well above its historical trend over the past decade.

A number of sectors have driven service industry employee jobs growth in Lancashire. Most especially has been Real Estate/Business Services where a net gain of nearly 30,000 jobs was twice the pace recorded nationally. Key drivers have included real estate activities, the renting and leasing of machinery and equipment, computer services and a wide range of business activities including legal and accountancy services, business and management consultancy, labour recruitment, etc agencies, industrial cleaning, call centres and other miscellaneous business activities. It is likely that a large slice of this growth reflected out-sourcing and effectively represented a transfer from other sectors rather than new job creation per se but it is also apparent that the process has also encouraged the creation of many new businesses. Other significant service sector growth areas not unexpectedly included education (+16,000 jobs) and health and social work (+15,000 jobs), both of which have been under-pinned by government public expenditure priorities. However, there are indications from the 2006 results that the sustained growth in both sectors has, for the time being, peaked. Elsewhere with services, significant employment contributions were also made in Other Services (notably in recreational, cultural and sporting services) and in Hotels and Restaurants (largely catering to tourism activities).

In only three broad service sectors did Lancashire fail to match or exceed national employee job growth rates, namely transport and communications, financial intermediation and retail distribution. Specific local factors explain a large part of this outturn. In the transport sector jobs reductions were associated largely with telecommunications and tour operators and were linked with company restructuring and relocations. A significant decline in financial services jobs reflected on-going restructuring in retail banking as well as amongst local insurance companies and in HM Treasury operations such as National Savings. Over a large part of the early to mid-1990s, retail distribution was a key source of new job creation in Lancashire but the sector has been less buoyant over recent years as the pace of new store construction has eased, but particularly important in Lancashire has been an apparent major contraction of the previously very large mail order operations.

Prime Movers in Lancashire Employment Changes

The broad sector view of employment changes given above disguises many contrary trends within as well as across industry groups that are only apparent at a more detailed industrial level. Table 3 highlights those sub-sectors of industry which were the prime movers influencing employment changes in Lancashire between 1998 and 2006. It should be noted, however, that a recorded net growth or decline of employee jobs in any particular sector does not necessarily mean the creation of or loss of jobs per se.

In some instances the employment change recorded against a particular sector in Table 3 above results from a re-classification of activities as individual companies or organisations have moved into new product or activity areas and new forms of organisation rather than the shedding or creation of "new" jobs per se. Thus, for example, increases in Labour Recruitment, etc. employee jobs was a reflection of labour market changes and the increased use of contract workers by industry, though this now appears to have levelled off. Part of the increase in retailing in non-specialised stores (e.g. supermarkets) has been at the expense of small and independent specialist retailers. The apparent increase of jobs in social work without accommodation may reflect the increased use being made of home care and other forms of non-hospital health care. Restructuring within some of the County's largest industries has also often resulted in previously integrated parts of a company being divested to trade under new ownership, thus being classified under the new activity rather than that of its previous parent. In yet other cases, job changes will have reflected the tendency of many manufacturing firms to hive off and to buy-in non-core services. The increased job opportunities under services in these industries will often represent a simple transfer from one classification to another rather than any genuine gain in economic activity. Thus, a large part of the jobs increase in such sectors as software consultancy and supply and other computer activities, management and engineering consultancy, catering and other business activities can be attributed in some measure to this out-sourcing process.

For further details, please contact:
Peter Kivell
Tel 01772 534157
Email Peter.Kivell@lancashire.gov.uk