The impact of large scale redundancies in the

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

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

Today’s programme • • 10. 30 10. 40 11. 10 11. 30 11. 45 12. 30 13. 15 13. 30 Welcome: Gordon Mc. Laren Presentation: John Lord Commentary: Alan Mc. Gregor Break Focus groups Feedback and discussion: Alan Mc. Gregor Closing remarks: Gordon Mc. Laren Lunch

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

East of Scotland Programme Area

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

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

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

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%)

Losses and gains reported in the press since Jan 2001 LEC area Jobs lost Jobs gained Edinburgh & Lothian 10452 2672 Fife 3775 3091 Forth Valley 2482 1682 Grampian 2141 1634 Tayside 2750 1510 21600 10589 Total ESEP

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

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

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 L 4 or over, 25% L 3 … 43% no post-school qualifications motivated and able workforce high productivity/quality environment culture of training and development

Workforce characteristics: NEC – 2/3 male – 78% aged 25 -44 – 36% operatives, 21% technicians, 17% engineers – 75% employed for 3 years + – 21% qualified to L 4 or over, 21% L 3 – … 46% no post-school qualifications – motivated and able workforce – high productivity/quality environment – culture of training and development

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%)

Residents working in manufacturing as % of all employees

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

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

Redundancies relative to claimant count stocks • between April 2001 and 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

Redundancy phasing

Redundancies by local authority

Redundancies per month relative to claimant count stocks

Claimant count stock

Claimant count rate index scale Feb 2000=100

Claimant count on-flow

Claimant count off-flows

West Lothian redundant residents relative to on-flow

North Lanarkshire redundant residents relative to on-flow

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

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

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

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

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

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

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

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

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

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+

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

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

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

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

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

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

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

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

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

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