Raising skills and productivity in Greater Manchester - new CEP report

A new report from the Centre for Economic Performance shows that closing Greater Manchester’s productivity gap with London will require action that goes beyond skills policy alone.

The report was launched at a National Productivity Week event at Alliance Manchester Business School.

Hive of talent: what would it take to raise skills and productivity in Greater Manchester? examines how skilled workers are attracted to, trained in and retained by the city – and what could help or hinder progress.

Productivity in Greater Manchester before the pandemic was 35% below London’s. Closing this gap to levels comparable to that between Paris and Lyon, France’s two biggest cities (a 20% gap), would require a significant expansion of workers with degree and sub-degree qualifications – equivalent to around 180,000 people.

The report recommends making the city a more attractive place to live and work – thereby helping to retain and recruit higher numbers of UK-born graduates – and promoting development of better sub-degree skills among local people who don’t go to university.

Findings include:

• Between 2011 and 2019, Manchester added around 11,620 graduates and 2,380 sub-degree qualified workers each year. Three pathways underpinned those increases: local education (those who grow up in the city), the higher education system (those who move to the city to study and stay), and migration (those who move to the city for work or other reasons).
• Local graduates who grew up in Manchester make a meaningful contribution to increases over time. By the end of the 2020s this pathway will add roughly 9,700 graduates per year. But even were attainment and retention rates raised to match London, the locally born cohort is simply too small relative to the size of the workforce to generate the scale of change required.
• Attracting graduates through the higher education sector makes the largest contribution, with the number of retained graduates (around 11,500 per year by the early 2020s) exceeding gains from local education by over 1,500. But this pathway is partly dependent on international students: proposed changes to immigration policy could significantly reduce the number of retained international graduates.
• Improving Manchester’s overall graduate retention rate (67%) to match London’s (79%) would more than offset this loss, underscoring retention as the most important lever the city can act on directly.
• Manchester’s gains from migration for reasons other than education are almost entirely dependent on international flows, with internal migration currently running in the wrong direction (to the rest of the UK). The city’s growing profile as a destination for high-value employers provides grounds for cautious optimism.

Professor Henry Overman, Department of Geography and Environment and Research Director of the Centre for Economic Performance commented: “Nowhere understands better than Manchester – one of the cradles of the industrial revolution and a world-leader in science research – that a city depends on the skills, talent and work of its people. Skills policy is key to improving living standards not only for those workers, but for the city – and country – as a whole. But attracting and retaining the skilled workers GM needs depends on improvements to jobs, housing, and transport that go beyond skills policy alone.”

Co-author Aadya Bahl, policy officer at the Centre for Economic Performance, added: “Greater Manchester does not need to replicate London, nor should that be the objective. The goal is to create a more dynamic and resilient economy that offers opportunities for residents, attracts skilled individuals from elsewhere and supports the growth of high-productivity sectors.”

Read the report Hive of talent: what would it take to raise skills and productivity in Greater Manchester?