The gap between the highest and lowest paid workers in Leeds is ever widening, with large chunks of the city’s total workforce stuck in a rut and unable to move up the career ladder.
A new council watchdog panel set up to investigate the city’s economic growth progress and potential has been told that Leeds is seeing an increase in high pay, high skilled jobs and “phenomenal” growth in its technological, digital, financial and legal sectors.
The rungs of the ladder are moving further apart - if not being taken away altogether
But low pay, low skill jobs are also on the rise - and years of stagnated wages are stopping thousands of people from progressing.
This is, in turn, holding the city’s economy back, according to a senior council economic expert.
A new analysis of the city’s workforce reveals that one in every FIVE employees across the private and public sectors earned less than the Living Wage of £8.25 an hour in 2016.
This was despite a six per cent increase in average full time pay for employees a year earlier.
The first session of the cross-party panel at Leeds Civic Hall was also told that while the city is making huge advances in many sectors, the manufacturing sector has slowed.
A third of all Leeds jobs now come from KIBS (Knowledge Intensive Business Services).
The city is also home to the UK’s fastest growing legal sector, which has increased four times faster than London.
Tom Bridges, the council’s chief officer for regeneration and the economy, said recent jobs growth had been strong in Leeds, despite the city being “hit quite hard by the recession” with the loss of 30,000 jobs .
He explained that Leeds has had the fastest rate of private sector jobs growth of any UK city recently.
Other positives in a long list of successes include the fact that amongst the UK’s nine core cities, the largest outside London, Leeds has the second highest rate of business startups, as well as “significantly improved” inward investment over recent years.
He said recent performance in terms of jobs was “very strong”.
“The real success stories in terms of numbers have been in what the economists call ‘Knowledge Intensive Business Services’ - financial services, professional, legal, accountancy,” he said.
“We have the fastest growing legal sector of any UK city currently, as well.
“And we have seen phenomenal success in the digital sector, where we have seen businesses like Sky - who about three years ago employed 60 people in Leeds, they now employ 600 in digital jobs at Leeds Dock.”
However he admitted that manufacturing “hasn’t grown in terms of job numbers”, even though Leeds still has around 29,000 manufacturing jobs, and “it remains an important part of our economy”.
“I think less positively, productivity and economic output of per hour worked per worker has grown only very slightly in recent years,” he said.
“That’s in line with national trends which have been for weak productivity growth.
“But if you look at why that is, there is an issue around wage levels and low pay .
“Just under 80,000 jobs that are not full time - and in fact many of them are insecure, zero hours type jobs - pay less than the Living Wage.
“I find that quite a sobering statistic.”
Mr Bridges added that Leeds is seeing an increase in both higher paid, high skilled jobs and low paid, low skill jobs - and both are forecast to rise further.
“But the intermediate level jobs are not forecast to increase, and in some cases, they are forecast to decrease,” he said.
“What we are seeing is a polarisation of the workforce profile.
“The rungs on the ladder of career progression for people are moving further apart, if not being taken way altogether. “I think that poses a real challenge for us in terms of the economy. People who are caught in that trap of low skilled, low paid jobs and that’s clearly an issue around tackling poverty, but I also think it’s an issue around economic performance and productivity. That issue is holding our economy back.”
Keith Wakefield, former leader of Leeds City Council, who sits on the new Inclusive Growth panel as well as on the West Yorkshire Combined Authority, noted that “the one thing that links all these issues about productivity and inequality is training and skills opportunity”.
He said: “Ideally we want to map where these jobs are in community terms, and which communities are affected, and therefore where do you target support, resources and skills and training opportunities”.
A full inquiry is now set to be launched into jobs growth in Leeds, with the potential impact of automation and the Brexit effect on the city’s workforce both expected to be investigated.
BUSINESS BOOSTER FUND HELPS 1,200 LEEDS START-UPS
More than 1,200 people in Leeds have opened a business with the support of the Government’s New Enterprise Allowance (NEA), a fund available to jobseekers with a business idea.
New figures from the Department for Work and Pensions reveal that Leeds has the second highest take-up rate for the scheme across Yorkshire and the Humber.
Successful applicants get a business mentor, financial support for up to six months and may be able to apply for a loan of up to £25,000 to help with start-up costs. The latest NEA figures show that Sheffield had the highest number of start-ups in Yorkshire (1,450), followed by Leeds (1,210) and Bradford (880). In Wakefield, 540 people were helped.
Minister for Employment Damian Hinds said: “Thousands of people across Yorkshire have great business ideas, and are taking the steps to turn them into a reality. The NEA provides the right mix of expert, tailored advice and support to people of all backgrounds which can be invaluable in the early days of starting a business.”
The figures showed that of those launching a business, more than two thirds were aged between 25 and 49; almost a quarter were over the age of 50 and seven per cent were aged between 18 and 24. Four in 10 were women, 22 per cent had a disability and 13 per cent were from a BME background.