This blog discusses the importance of skills development and local labour market improvements for regional growth, focusing on initiatives in the West Midlands through the WMREDI program. It highlights research and policy efforts to tackle employment barriers, and skills gaps, and enhance workforce capabilities in areas such as digital skills, R&D, and youth employment.
Building a skilled workforce and developing robust local labour markets are critical for the economic growth and social development of regions and nations alike. When skill levels improve and labour market conditions are enhanced, we see positive outcomes such as increased productivity, higher employment rates, and more equitable economic opportunities. These factors drive long-term prosperity, particularly when regions face challenges in adapting to ever-changing economic, demographic, and environmental circumstances.
Many regions in the UK, including the West Midlands, encounter significant hurdles in developing a workforce that is prepared for current and future industry demands. Addressing these challenges is particularly pressing as industries evolve and workers need to adapt through upskilling and reskilling. The “Skills and Local Labour Markets” theme under the West Midlands Regional Economic Development Initiative (WMREDI) programme tackles these pressing issues with a comprehensive approach that includes research, policy recommendations, and strategic interventions aimed at improving employment and skills development across the region.
Key Areas of Focus in the Skills and Local Labour Markets Theme
The “Skills and Local Labour Markets” theme of the WMREDI programme covers a broad spectrum of activities, ranging from addressing economic inactivity to supporting career progression and lifelong learning. Some of the key areas of focus include:
- Tackling economic inactivity
- Supporting individuals as they enter or re-enter the labour market
- Promoting career progression and lifelong learning
- Enhancing graduate retention and attraction
- Strengthening research and development (R&D) skills
- Addressing skills shortages through international migration
The research conducted under this theme demonstrates a shared understanding of the importance of local skills and labour markets in driving regional development. Tackling these challenges requires a multifaceted approach, as skills mismatches, youth unemployment, R&D talent gaps, and regional disparities all contribute to workforce issues. To address these, the programme used a variety of methods, including literature reviews, econometric analyses, interviews, focus groups, and data analysis.
Addressing Economic Inactivity and Supporting Labour Market Entry
One of the core challenges faced by the West Midlands has been high levels of economic inactivity, a problem that has persisted above the national average for the past two decades. Research under the WMREDI programme aimed to better understand how local policies and employment support services can assist individuals in moving from unemployment or economic inactivity into employment.
A notable project in this area was the evaluation of the Connecting Communities employment support pilot, a collaboration between the West Midlands Combined Authority (WMCA) and the Institute for Employment Studies (IES). The project identified key challenges, including the difficulty of progressing in work once employed, and the importance of ensuring a good “fit” between employees and their roles. These findings have contributed to the design of more effective employment support frameworks in the region, helping inform future policy decisions.
Further research examined the barriers faced by young people and older individuals in entering the labour market, which highlighted the need for improved career guidance, internships, and employment support tailored to their specific needs. Research funded by WMREDI also explored funding flows for youth employment and skills initiatives, identifying barriers such as short-term funding cycles and the gaps left by the end of UK eligibility for European Structural and Investment Funds.
Closing Skills Gaps and Adapting to Changing Industry Needs
The demand for skills in the workplace is rapidly evolving, with a particular emphasis on digital and technical skills needed for the future. The WMREDI programme identified several key areas of concern related to skills shortages, including the growing demand for digital expertise, particularly for entry-level roles in sectors like business services and innovation.
A significant part of the research explored the skills needed for the digital economy, such as basic and advanced digital skills. Analyses of job vacancies showed that basic digital skills are now a prerequisite for most roles, while more advanced digital skills are becoming critical as software and technologies continue to evolve. To address these challenges, local initiatives such as the No_Code pilot in the West Midlands have been introduced to help young people gain digital skills through accessible programming tools that do not require expert coding knowledge. This initiative aimed to prepare students for future job markets and support the local business community by providing them with essential digital skills.
Another notable project involved the development of a Digital Skills Innovation District in Birmingham. The proposal suggested that establishing a dedicated space for collaboration between businesses, universities, and local organizations would help tackle regional digital skills shortages and promote innovation. This idea has the potential to significantly improve how businesses in the region access and develop the digital skills they need to thrive in an increasingly technology-driven economy.
Attracting and Retaining Graduates to Combat Regional Disparities
Graduate retention and attraction are crucial for addressing regional disparities in skill distribution. The WMREDI programme conducted a project to explore how different UK regions attract and retain graduates. Using data from the Higher Education Statistics Agency (HESA), the research revealed that major urban centres, particularly London, benefit most from graduate migration, while rural and peripheral regions struggle to retain young talent.
Key findings from the research highlighted that there are substantial regional differences in graduate retention, with factors such as economic opportunities, social networks, and cultural values influencing migration patterns. For example, some ethnic minority groups were more likely to stay in their local areas due to cultural ties and familial obligations. These insights have informed targeted policy recommendations aimed at improving graduate retention in underrepresented regions, thereby reducing regional disparities and ensuring that skills are better distributed across the UK.
The Role of International Migration in Filling Skills Gaps
International migration has long been a key solution for addressing skills shortages, particularly in industries facing acute labour gaps. Research by WMREDI has focused on understanding how employers make decisions regarding migration and how this impacts labour supply. A review commissioned by the Migration Advisory Committee examined employer decision-making around skill shortages, employee shortages, and the role of migration in meeting these challenges.
As Brexit has altered the immigration landscape, the research showed that employers are increasingly reliant on international workers to fill roles that require specific skills. However, employers also face challenges in balancing the immediate need for skilled workers with longer-term workforce development. These findings have contributed to national debates around migration policy and labour supply, highlighting the need for policies that facilitate the migration of skilled workers while also supporting the development of local talent.
Building a Sustainable Skills Ecosystem for the Future
The research and projects under the Skills and Local Labour Markets theme of the WMREDI programme highlight the need for a comprehensive, collaborative approach to addressing the challenges of skill development and labour market participation. Whether through improving employment support, addressing digital and technical skills gaps, or creating targeted initiatives to retain talent, the West Midlands and other regions are taking important steps to build a more resilient and adaptable workforce.
Ultimately, strengthening local skills ecosystems—where universities, businesses, and government agencies work together—will be key to achieving long-term economic growth and social development. By aligning local and national policies, fostering partnerships, and addressing the unique challenges faced by different subgroups, the West Midlands is setting a model for how other regions can respond to the changing demands of the workforce and economy.
Find out more and download the WMREDI Story
Disclaimer:
The views expressed in this analysis post are those of the author and not necessarily those of City-REDI, WMREDI or the University of Birmingham.