One of the most widely acknowledged challenges faced by the UK’s economy and labour market is regional inequality. There are huge differences in the opportunities available to people across our country depending on where they are.
In a previous blog, we looked at how productivity differs by area, with a focus on the gap between Greater Manchester and London and how this looks in terms of labour market demand by using our vacancy data.
In this blog, we take a step back, and look at how vacancy activity varies across the whole country. How do the opportunities being created today differ by area based on certain characteristics?
Read more: Closing the productivity gap between Greater Manchester and London
Advertised vacancy trends
We start by looking at our vacancy data using the intelligence portal, our proprietary dashboard that displays a wide range of aggregate statistics based on all the vacancy listings we hold on our site. We look at the data covering August 2022 to July 2023, roughly the last years’ worth of data.
We should note that before we dive into the data that more vacancies, i.e., more opportunities, is not necessarily a good thing – a high number of vacancies remaining unfilled indicates insufficient supply, in terms of both overall labour but also skills in the labour market in question. Demand outstripping effective supply means that employers are unable to find the talent they need to produce their goods or services, constraining output and economic growth.
A certain level of vacancies is a good thing – it is a symptom of a dynamic economy, with individuals moving between jobs and firms looking to expand, but only to the point where the supply is able to meet this demand.
Read more: Analysing the nation’s skills problem
Firstly, the map below, produced through the portal, shows how total vacancy demand varies by local authority across the UK. It clearly shows how labour demand is particularly strong in certain areas, including the Cambridge-Oxford-London triangle, the corridor north of the M3, and in West Yorkshire around Leeds.
In other parts of the country such as Wales, Northern Ireland and the East Midlands there are far less job opportunities being created. Note though that the figures underlying this are total demand – per capita labour demand is likely distributed slightly differently (as we shall look at later), but broadly speaking these are areas where the most opportunities are.
Advertised salary trends
The next map shows how the average (median) salary of these vacancies varies by area. While the quality of work is made up of a range of elements, salary is a fairly decent, readily available and easy to interpret proxy for this.
Here is where the economic dominance of London and the South East is best seen. Of the top 20 local authorities by average salary, 16 are in London or the South East. Other major cities (Birmingham, Manchester, Aberdeen, Leeds and Glasgow) also feature towards the top of the list.
So how do the quantity and quality of employment opportunities being created vary based on the characteristics of an area?
To best consider how the quantity of opportunities varies while accounting for differences in the size of labour supply by area, we construct ratios of the number of (1) unemployed (2) economically active individuals per vacancy. Largely speaking, a higher ratio of unemployed or economically active individuals per vacancy means that there are relatively fewer employment opportunities being created relative to the labour supply in an area.
To do this, we use data from the Annual Population Survey which uses data combined from two waves of the main Labour Force Survey along with data collected on a local sample boost, covering April 2022 to March 2023. And then, to consider the quality of opportunities available, we look at the same data points but only for vacancies that pay above the national median (£31,845), as well as the median salary by local authority. We run simple OLS regressions that allow us to examine the relationship between one variable and another.
In all the analysis to follow, we aren’t ascribing cause and effect to the relationship – this would be much more complicated given the complex relationships between each of the different characteristics we look at. Instead, we merely describe what the relationship looks like.
Deprivation and employment
We look at several different characteristic of each area. First, the English Indices of Multiple Deprivation 2019. This measures the relative deprivation of small areas, including local authorities, in England, by considering how the place fares across seven domains of deprivation: income; employment; education, skills and training; health deprivation and disability; crime; barriers to housing and services; and living environment.
We use the rank – the details of how this is constructed doesn’t matter too much (if you are interested, it is explained on the first tab of the workbook containing all the data at the link above), but basically each local authority in England is ranked based on how deprived it is. The lower the rank, the more deprived an area: Blackpool is ranked first as the most deprived local authority in England in 2019, while Hart in Hampshire is ranked last as the least deprived area.
There is quite a weak if any relationship between the level of deprivation by area and the different measures of employment opportunities we consider – see below for example the relationship between deprivation and the median vacancy salary.
This is likely because a lot of the more highly deprived areas are in large urban areas and cities, where the cost of living and therefore salaries tend to be higher. If we considered salary relative to living costs, a negative relationship might well appear between the level of deprivation and the quality of job opportunities available.
High skill jobs
Second, and also from the Annual Population Survey, we look at proportion of individuals in employment in the highest skilled occupations (using the Standard Occupational Classification 2020 which classifies jobs based on the set of tasks or duties to be carried out by one person): managers, directors and senior officials; professional occupations; and associate professional occupations. A higher proportion of employees within these occupations would generally indicate a higher skilled, higher paid workforce.
We see that the proportion of employed individuals working in higher skill and higher paying jobs has a stronger (although still quite weak) relationship with the quantity of higher quality job opportunities being created in an area.
A one percentage point increase in the proportion of those employed working in the highest skilled and paid professions is associated with a 5% increase in the unemployed to vacancies paying above national average salary ratio (the graph below displays this relationship), and a 4% increase in the economically inactive to vacancies paying above national average salary ratio.
The relationship with median salary is quite small – a one percentage point increase in the proportion of those employed working in the highest skilled and paid professions is associated with an increase in median salary of just £95 a year, or about 0.4%.
Rural area trends
Fourthly, we look at the proportion of the local authorities population that lives in rural areas, which we get from DEFRA’s 2011 Local Authority Rural-Urban Classification.
Although the relationships are quite weak, interestingly, the higher the proportion of the population that is rural the higher the relative quantity of jobs being created but the lower the quality. This likely reflects the smaller population of rural areas leading to relatively larger falls in labour supply compared to demand plus the lower cost of living in rural areas.
Classifying by supergroups
Lastly, we consider the 2011 area classifications which categorises each local authority by 8 supergroups: Affluent England; Business, Education and Heritage Centres; Countryside Living; Ethnically Diverse Metropolitan Living; London Cosmopolitan; Services and Industrial Legacy; Town and Country Living; and Urban Settlements.
The table below shows the mean of the measures of the quantity and quality of employment opportunities being created for each of the local authorities within different area type classifications, relative to the average for Affluent England, which based on the data has the greatest relative amount of employment opportunities and high quality employment opportunities of the different area types.
Areas classified as Town and Country Living also have a relatively large amount of employment opportunities, although the average salaries on offer there are about 10% lower than on offer in Affluent England. Urban Settlements typically have the lowest relative levels of labour demand, likely due to their relatively high populations. Average salaries are highest in London Cosmopolitan areas, although the quantity of higher quality opportunities is relatively low compared to other area types.
Table 1: Employment trends by area classification
| Area classification | Unemployed per vacancy | Unemployed per above average salary vacancy | Economically active per vacancy | Economically active per above average vacancy | Median vacancy salary |
|---|---|---|---|---|---|
| Affluent England | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
| Bus., Edu. & Heritage Centres | 2.26 | 2.56 | 2.75 | 2.93 | 1.00 |
| Countryside Living | 1.68 | 2.46 | 1.38 | 1.95 | 0.90 |
| Ethnically Diverse Metropolitan Living | 4.48 | 4.14 | 3.32 | 3.03 | 1.08 |
| London Cosmopolitan | 2.62 | 1.84 | 2.56 | 1.80 | 1.18 |
| Services and Industrial Legacy | 1.73 | 2.10 | 1.95 | 2.48 | 0.94 |
| Town and Country Living | 1.47 | 1.88 | 1.73 | 2.28 | 0.91 |
| Urban Settlements | 5.77 | 11.78 | 3.52 | 5.31 | 0.96 |
Key takeaways
There is so much to look at in Adzuna’s vacancy data and in other sources of labour market information. What we have done here barely scratches the surface of what is possible. A wide range of organisations are performing detailed, high-quality research on the labour market with significant implications for policy makers. What we have done here is very simplistic, and is just the start what can be done by combining different datasets.
If there is one takeaway, it is that if more and better quality employment opportunities tend to be created in areas which are already better off or have healthier labour markets, this is only going to reinforce the inequalities that we face. Multipliers, positive and negative spirals are somewhat an inevitability in local labour markets, and certain types of opportunities will always tend to concentrate in certain areas (and for good reasons). But policy makers need to make sure that certain areas don’t get left behind, and that there are quality employment opportunities for all.
For more information on this, take a look at the research and evidence funded by organisations like the Social Mobility Commission, such as this report looking at how labour market opportunities vary by area.
Read more: Using our ‘Time to fill’ data to track supply and demand for jobs