The impact of large scale redundancies in the East of Scotland ESEP Seminar Callendar House, Falkirk 26 November 2003
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The impact of large scale redundancies in the East of
ScotlandESEP Seminar
Callendar House, Falkirk26 November 2003
Objectives
• to examine the impact of 2 large scale redundancies on the local labour market– Motorola and NEC
• to present cameo studies of other major redundancies
• to review the implications for policy makers, and identify possible interventions
Today’s programme
• 10.30 Welcome: Gordon McLaren• 10.40 Presentation: John Lord• 11.10 Commentary: Alan McGregor• 11.30 Break• 11.45 Focus groups• 12.30 Feedback and discussion: Alan
McGregor• 13.15 Closing remarks: Gordon McLaren• 13.30 Lunch
ESEP labour market service
• launched January 2002 • labour market information service for ESEP
and its partners• principal output - major annual report:
www.esep.co.uk
• ad hoc reports and services: ERDF/ESF-funded community development
projects strategic sector profiles
• autumn seminars
East of Scotland Programme Area
Presentation
• policy context: the PACE framework• incidence of large scale
redundancies• case studies: Motorola and NEC
– scale and phasing– labour market context– impact on the claimant count– redeployment outcomes
• cameo studies from the ESEP area
The PACE framework• a national framework for local
agencies to create effective and flexible mechanisms to identify and respond to redundancy situations
• precautionary planning and redundancy response
• local response teams
Incidence of redundancy
• about 8 employees in a 1,000 (<1%) were made redundant in 2000-01– but twice that in manufacturing
• about 13% of employees changed employer in the year to 2001– mobility greatest among the young, single,
people with level 2 qualifications, workers in the private sector (especially small firms)
– median job tenure in the UK 4 years
Redundancies per 1000 employees, UK (1992-2000)
• Redundancy rates are increasing in the manufacturing sector in the UK (1.6%) and falling in the service sector (0.5%)
0
5
10
15
20
25
30
1992 1993 1994 1995 1996 1997 1998 1999 2000
Source: Office of National Statistics
Services Manufacturing Other
Losses and gains reported in the press since Jan 2001
LEC area Jobs lost Jobs gained
Edinburgh & Lothian
10452 2672
Fife 3775 3091
Forth Valley 2482 1682
Grampian 2141 1634
Tayside 2750 1510
Total ESEP 21600 10589
Motorola and NEC: large site closures
• Motorola, Bathgate– 3100 redundancies– April – December 2001(9 months)
• NEC, Livingston– 1500 redundancies– August 2001 – December 2002 (16 months)
• total– 4600 redundancies– April 2001 – December 2002 (20 months)– most in the year to April 2002
Impact on the West Lothian economy
• in 2001, there were 69,000 employees in employment– of which 17,000 were in manufacturing
• the Motorola and NEC closures resulted in 4,600 job losses, equivalent to:– 7% of all employment– 27% of manufacturing employment
Workforce characteristics: Motorola
– 2/3 male– 2/3 aged 25-44– 2/3 semi-skilled/process workers– 90% employed for 3 years +– 21% qualified to L4 or over, 25% L3– …43% no post-school qualifications– motivated and able workforce– high productivity/quality environment– culture of training and development
Workforce characteristics: NEC
– 2/3 male– 78% aged 25-44– 36% operatives, 21% technicians, 17%
engineers– 75% employed for 3 years +– 21% qualified to L4 or over, 21% L3– …46% no post-school qualifications– motivated and able workforce– high productivity/quality environment– culture of training and development
Where employees came from
Lothian1650 (36%)
Other1190 (26%)
Lanarkshire 1750 (38%)
N Lanarkshire 1220 (27%)
W Lothian 1420 (31%)
of which
local people 2640 (58%)
Residents working in manufacturing as % of all
employees
0
5
10
15
20
25
Feb 0
0
May 0
0
Aug 0
0
Nov 0
0
Feb 0
1
May 0
1
Aug 0
1
Nov 0
1
Feb 0
2
May 0
2
Aug 0
2
Nov 0
2
Feb 0
3
May 0
3
Aug 0
3
Source: Labour Force Survey
Scotland North Lanarkshire West Lothian
Redundancy phasing period
Impact on West Lothian residents
• 1,420 West Lothian residents were made redundant
• in 2001, there were 82,000 West Lothian residents in employment– of whom 16,000 were in manufacturing
• the scale of redundancies was equivalent to:– 1.7% of all West Lothian residents in
employment– 8.9% of those employed in manufacturing
Impact on North Lanarkshire residents
• 1,220 North Lanarkshire residents were made redundant
• in 2001, there were 144,000 North Lanarkshire residents in employment– of whom 22,000 were in manufacturing
• the scale of redundancies was equivalent to:– 0.8% of all North Lan residents in employment– 5.5% of those employed in manufacturing
Redundancies relative to claimant count stocks
• between April 2001and Dec 2002, the average number of claimants in each area was:– West Lothian: 3000
1420 redundancies = 47% of claimants– North Lanarkshire: 7750
1220 redundancies = 16% of claimants
Redundancy phasing
0
200
400
600
800
1000
1200
Apr-
01
May-0
1
Jun-0
1
Jul-
01
Aug-0
1
Sep-0
1
Oct
-01
Nov-0
1
Dec-
01
Jan-0
2
Feb-0
2
Mar-
02
Apr-
02
May-0
2
Jun-0
2
Jul-
02
Aug-0
2
Sep-0
2
Oct
-02
Nov-0
2
Dec-
02
No.
mad
e r
ed
un
dan
t each
mon
th
NEC Motorola
Redundancies by local authority
0
50
100
150
200
250
300
350
Apr-
01
May-0
1
Jun-0
1
Jul-
01
Aug-0
1
Sep-0
1
Oct
-01
Nov-0
1
Dec-
01
Jan-0
2
Feb-0
2
Mar-
02
Apr-
02
May-0
2
Jun-0
2
Jul-
02
Aug-0
2
Sep-0
2
Oct
-02
Nov-0
2
Dec-
02
North Lanarkshire
West Lothian
Redundancies per month relative to claimant count
stocks
0%
2%
4%
6%
8%
10%
12%
Apr-
01
May-0
1
Jun-0
1
Jul-
01
Aug-0
1
Sep-0
1
Oct
-01
Nov-0
1
Dec-
01
Jan-0
2
Feb-0
2
Mar-
02
Apr-
02
May-0
2
Jun-0
2
Jul-
02
Aug-0
2
Sep-0
2
Oct
-02
Nov-0
2
Dec-
02
As % of claimant count stock in West Lothain As % of claimant count stock in North Lanarkshire
Claimant countstock
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Feb-0
0
Apr-
00
Jun-0
0
Aug-0
0
Oct
-00
Dec-
00
Feb-0
1
Apr-
01
Jun-0
1
Aug-0
1
Oct
-01
Dec-
01
Feb-0
2
Apr-
02
Jun-0
2
Aug-0
2
Oct
-02
Dec-
02
Feb-0
3
Apr-
03
Jun-0
3
Aug-0
3
West Lothian claimant count stock North Lanarkshire claimant count stock
Redundancy phasing period
Claimant count rate index scale Feb 2000=100
50%
60%
70%
80%
90%
100%
110%
Feb-0
0
Apr-
00
Jun-0
0
Aug-0
0
Oct
-00
Dec-
00
Feb-0
1
Apr-
01
Jun-0
1
Aug-0
1
Oct
-01
Dec-
01
Feb-0
2
Apr-
02
Jun-0
2
Aug-0
2
Oct
-02
Dec-
02
Feb-0
3
Apr-
03
Jun-0
3
Aug-0
3
Oct
-03
Scotland North Lanarkshire West Lothian
Redundancy phasing period
Claimant count on-flow
0
500
1000
1500
2000
2500
3000
3500
Feb-0
0
Apr-
00
Jun-0
0
Aug-0
0
Oct
-00
Dec-
00
Feb-0
1
Apr-
01
Jun-0
1
Aug-0
1
Oct
-01
Dec-
01
Feb-0
2
Apr-
02
Jun-0
2
Aug-0
2
Oct
-02
Dec-
02
Feb-0
3
Apr-
03
Jun-0
3
Aug-0
3
Oct
-03
North Lanarkshire West Lothian
Claimant count off-flows
0
500
1000
1500
2000
2500
3000
3500
Feb-0
0
Apr-
00
Jun-0
0
Aug-0
0
Oct
-00
Dec-
00
Feb-0
1
Apr-
01
Jun-0
1
Aug-0
1
Oct
-01
Dec-
01
Feb-0
2
Apr-
02
Jun-0
2
Aug-0
2
Oct
-02
Dec-
02
Feb-0
3
Apr-
03
Jun-0
3
Aug-0
3
Oct
-03
North Lanarkshire West Lothian
West Lothian redundant residents relative to on-
flow
0
200
400
600
800
1000
1200
1400
Apr-
01
May-0
1
Jun-0
1
Jul-
01
Aug-0
1
Sep-0
1
Oct
-01
Nov-0
1
Dec-
01
Jan-0
2
Feb-0
2
Mar-
02
Apr-
02
May-0
2
Jun-0
2
Jul-
02
Aug-0
2
Sep-0
2
Oct
-02
Nov-0
2
Dec-
02
West Lothian redundant residents West Lothian on-flow
North Lanarkshire redundant residents relative to on-flow
0
500
1000
1500
2000
2500
3000
Apr-
01
May-0
1
Jun-0
1
Jul-
01
Aug-0
1
Sep-0
1
Oct
-01
Nov-0
1
Dec-
01
Jan-0
2
Feb-0
2
Mar-
02
Apr-
02
May-0
2
Jun-0
2
Jul-
02
Aug-0
2
Sep-0
2
Oct
-02
Nov-0
2
Dec-
02
North Lanarkshire redundant residents North Lanarkshire on-flow
Proportion claiming 6+ months leaving count for work
(%)
0
10
20
30
40
50
60
70
80
Jan 0
0
Apr
00
Jul 00
Oct
00
Jan 0
1
Apr
01
Jul 01
Oct
01
Jan 0
2
Apr
02
Jul 02
Oct
02
Jan 0
3
Apr
03
Jul 03
Oct
03
North Lanarkshire West LothianLinear (West Lothian) Linear (North Lanarkshire)
Proportion claiming 12+ months leaving count for
work (%)
0
10
20
30
40
50
60
70
80
Jan 0
0
Apr
00
Jul 00
Oct
00
Jan 0
1
Apr
01
Jul 01
Oct
01
Jan 0
2
Apr
02
Jul 02
Oct
02
Jan 0
3
Apr
03
Jul 03
Oct
03
North Lanarkshire West LothianLinear (North Lanarkshire) Linear (West Lothian)
Local impacts of the Motorola and NEC closures: summing
up• 4,600 jobs lost in West Lothian
– most in the year to April 2002• 2,600 local people (WL/NL) lost jobs• some impact (?) on total claimant
count relative to Scotland– but a quick recovery
• no discernible shock in flows on and off– but proportion of LTU leaving count for
work has fallen in West Lothian
Redeployment outcomes: Motorola
• after 6-9 months:– 63% employed/self-employed– 6% in FE/training– 7% not seeking work– 24% unemployed
• after 12 months:– 83% employed– 5% unemployed
Redeployment outcomes: NEC
• after 6-12 months:– 80% employed/self-employed– 7% in FE/training– 5% not seeking work– 8% unemployed
Employment outcomes analysed
• older workers find it harder to get a new job
• some transfer from full-time to part-time work– especially women
• a clear majority are now earning less– 68% ex Motorola, 69% ex NEC
• people have had to acquire new skills– and switch to different industries
• time makes a difference– redeployment rates improve after 6 months
Cameo studies
• Longannet, Fife• BP, Grangemouth• Grampian Foods, Edinburgh• Levi Strauss, Dundee
Longannet Colliery• 450 redundancies: Nov 2001 –
March 2002• some mining engineers, mostly
semi-skilled manual• large majority male• wide labour market catchment, but
focus on Fife/Forth Valley
Longannet: the outcome
• one year on:– 65% in work or training– 4% claiming JSA– 20% claiming other benefits– 15% retired, moved away
• limited information on destinations:– supermarkets, bus drivers,
manufacturing
BP, Grangemouth
• 1,000 redundancies in 2 phases, starting end November 2001
• 650 released to date• remainder to leave by end 2004• process workers and skilled trades• most live locally• 30% aged 45+
BP: progress to date
• of the 650 released to date:– 17% redeployed by BP– 49% retired– 19% in employment– 4% started a business– 2% in FE
Grampian Foods, Lothian
• 550 redundancies• May 2002 – Feb 2003• workforce deemed high risk• 51% aged 25-45• 65% lived in Lothian
Grampian Foods: the outcome
• 61% response to tracking exercise– 84% employed– 10% inactive– 5% unemployed– 33% earning higher wages; 47% earning
less
Levi Strauss, Dundee
• 460 employees– 41% response rate
• very stable workforce: 93% employed for 5 years+, 20% for 20 years+
• 59% live in a SIP postcode
Levi’s: one year on
• 83% employed– most people in different occupations– a lot of churn over 12 months– more were in part-time occupations– average earnings sharply down
• 3% unemployed
The impact of large scale redundancies in the East of
ScotlandESEP Seminar
Callendar House, Falkirk26 November 2003
Local impacts of redundancies: the historical
record• where the employment base is
more specialised…– redundancy may affect a higher
proportion of the employment base– resulting in sustained higher levels of
unemployment– …and population loss, especially
among the young and more skilled– causing difficulties in attracting new
employers
Redundancies in large integrated labour markets
• effects dispersed across the labour market
• localised impacts difficult to see a few years down the road
Other factors affecting local impacts
• state of the local labour market• characteristics of the employer• characteristics of the redundant
workers
The impact of large scale redundancies in the East of
ScotlandESEP Seminar
Callendar House, Falkirk26 November 2003
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