SURF Conference : The Future for SURF Conference : The Future for CommunitiesCommunities

What could be the economic factors we What could be the economic factors we

need to be aware of ?need to be aware of ?

Ewan Mearns

Scottish Enterprise

The story so far ...

What kind of economy has been sustaining Scotland’s communities in the recent past ?

Changing Economic Structure

1950’s25 Shipyards

113 Coal mines

6 Steel works

0% world’s oil

Employment:

35% manufacturing

45% services

6% business services

2000’s 4 Shipyards

0 Coal mines

0 Steel works

3% of world’s oil

40% of EU’s PCs

Employment

15% manufacturing

75% services

21% business services

0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

1,750,000

2,000,00019

82

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

Manufacturing and Service Sector Employment

Services

Manufacturing

Where do we work? % breakdown of jobs

0 5 10 15 20 25 30

Agriculture

Electronics

Financial Services

Transport/Comms

Other Services

Construction

Hotel & Catering

Manufact. (ex. Elect)

Business Services

Retail & Wholesale

Public Services

%

90

100

110

120130

140

150

160

1701

97

5

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

SCOTLAND UK

Growth in GDP (1975=100)

20%

Productivity in 2000 (UK=100)

0 50 100 150

Japan

Scotland

UK

Germany

France

G7

USA

ILO Unemployment Rates Scotland and Great Britain

3

4

5

6

7

8

9

May

-92

May

-93

May

-94

May

-95

May

-96

May

-97

May

-98

May

-99

May

-00

May

-01

%

Great Britain Scotland

A changing (but under-performing) economy ...

Relative transition from a traditional manufacturing to a service and knowledge-based economy

importance of foreign investors to manufacturing employment and productivity

Scottish GDP growth and productivity lagging behind UK (and competitors) … and gap widening

declining unemployment during 1990s

… but with encouraging signs of future growth

the emergence of new sectors of economic activity strong growth in service-sector jobs commercialisation of academic knowledge more young people entering FE/HE more recently, a stable macro-economic environment

New jobs and activities

Financial services Scotland 6th largest equity centre in Europe

Biotechnology home to 20% of UK biotech companies, employing 24,000

Optoelectronics employs 5,000 people, 60% output exported

Creative industries digital media, games, Edinburgh Festival injects £120m annually

0 1 2 3 4

Manu (ex. Elect)

Public Services

GDP

Electronics

Retail/Wholesale

Chemicals

Hotel/Catering

Construction

Other Services

Business Services

Financial Services

Growth in Scotland by Sector 2002-2006 (GDP %)

More people entering FE/HE

0100,000200,000300,000400,000500,000600,000700,000

1981/82 1985/86 1989/90 1993/94 1997/98

Total

HE

FE

Some drivers of future economic change

The changing nature of ‘value’ in the economy

Increasing importance of ‘intangibles’ in creating value: software, services (with products), speed, ideas/creativity,

brands/trust, experience etc.

New ways of doing business mass customisation eg Dell, Dulux knowledge management eg Skandia innovative business models eg Egg, e-Bay, Dyson brands and values eg Intel, Nike experience eg Disney

A more global, networked economy

differential cost of labour the end of the ‘assembly plant’ era in Scotland

much closer ties between national economies vulnerability to economic shocks

a smaller, ‘connected’ world agglomeration effects

More demanding and prosperous consumers

Household income and expenditure

05

101520253035

1968 1978 1988 1998

%

0

20

40

60

80

100

120

Food & Fuel Leisure Real income (right axis)

Source: ONS

From mass production to mass customisation

People, skills and talent

Importance of ‘know how’ vs ‘know what’ in the knowledge-based economy

Future skills trends core skills : basic skills; communication skills; problem-solving,

planning and teamwork; IT skills occupations : managers; public sector professionals; elementary

caring and service occupations

Talent as key; diversity as driver

It’s not the strongest of the species that survive, nor the most intelligent but the ones most responsive to change

Charles Darwin

The rise of the creative class

Richard Florida says: innovation flourishes in places that attract creative people, places with the following attributes :

critical mass of cultural and natural assets open attitude to new and unconventional ideas and people cultural eco-system - many forms of creativity take root and flourish attract new and different kinds of people make rapid transmission of knowledge & ideas easy have low barriers to entry – economic, social, civic

creativity drives innovation

innovation is the key to sustained economic growth

'Prime' Working Age Population (20-34 years), 2000 to 2010

900

920

940

960

980

1,000

1,020

1,040

1,060

1,080

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

Year

Thousands

Scotland's Puture Population of Pensionable Age (% of total population)

16

17

18

19

20

21

22

2000 2001 2006 2011 2016 2021 2025

How can Scotland’s communities become more successful in the future economy ?

Foster a supportive environment for enterprise

more new and growing small businesses host to new/emerging activities eg social enterprise, digital

media more diversified local economies exploiting academic knowledge no low-tech industries, only low-tech companies new sources of value … not just high-tech importance of global connectivity

Be home to diverse and adaptable people

openness, willingness to change attracting, retaining - and losing - a diverse range of people new ideas and influences making the most of our human capital enthusiasm for learning - across all ages