Digital economy growing
Work that didn’t exist 25 years ago now employs 6% of Scots
The new digital occupations include software engineers and database administrators, programmers and IT support workers.
PwC’s UK Economic Outlook says 5.8% of workers now hold down these roles, while in London it is close to 10%.
The research was prepared in association with Dr Carl Benedikt Frey of the Oxford Martin Programme at Oxford University and highlights a shift in the UK workforce towards highly skilled professional and technical roles linked to overall economic performance in major UK regions and cities.
What the research calls ‘skilled cities’ have tended to show stronger employment growth, a healthier trend in unemployment rates since 2005 and a higher rate of new business creation.
The best preforming regions can expect the overall workforce to grow, reflecting their ‘skilled cities’ status, with the forecast suggesting that the Scottish workforce should grow by 7.2% over the next decade.
This is above the UK average of 6% and the fifth largest growth outside of London. The forecast also reveals that the former Strathclyde region alone is expected to grow by 5.5%, a move that may reflect the regeneration in the area and the Glasgow City Deal status to boost economic growth.
The research reinforces a recent survey from the Scottish government on the growing importance of the digital economy.
It found that digital technologies, including the internet, social media and data analytics are driving innovation and sales in the Scottish economy. Three-quarters of firms said digital platforms of all types are “vital” to their operations and 92% now have access to broadband.
PwC’s latest UK economic forecast estimates GDP growth of 2.7% for 2014 and 2.3% for 2015 in Scotland, just marginally behind the UK average growth figure in 2015 of 2.5%. Other regional forecasts include: North East of England (1.9%), Northern Ireland (1.7%) and Wales (2.1%).
It also points to a cooling in the UK house market. While UK house prices ended 2014 around 10% higher than at the start of the year, the strongest annual average performance since 2007, there were clear signs that this pace of growth was starting to ease and would continue to do so during 2015
In Scotland, the average house price growth was 5.5% – below the 9.8% UK average but ahead of other regions such as Wales, North East and North West of England and Northern Ireland.
Paul Brewer, head of government and public sector, PwC in Scotland, said: “There is no doubt that lower oil prices and falling inflation have given a boost to household disposable incomes and with inflation at 0.3%, most workers have received what equates to a real-terms pay increase. The significant footprint of the oil & gas sector in Scotland will restrain the impact of this on Scotland’s overall growth.
“However, recovery is being driven by jobs rather than productivity and productivity growth will be critical in enabling wages to recover without driving up inflation in the medium-term.”
The PwC research into the rise of the digital job says that the new types of job are in categories linked to digital technologies such as computer software engineers (80% of employees now doing types of jobs that did not exist in 1990); database administrators (79%); information systems managers (77%); and computer programmers (71%).
However, there is concern over a ‘north-south digital divide’ with London continuing to be the driver of new job creation, where total employment across all sectors in Central London is projected to grow by 25% over the next decade, with 13% projected for Inner London –substantially above the average of 5.8% for the UK regions, excluding London and the South-East.
Mr Brewer said there is a role for government and other institutions to co-ordinate activity and support clusters of skilled occupations and industries outside London:
“Many Scottish Enterprise, local authority and City region investment programmes have sought to advance these objectives in recent years.
“Universities also have a vital role in establishing successful digital hubs. Edinburgh, for instance, is one of six UK universities to rank in the top 10 for computer science outside of London, with others including Southampton, Cambridge, and Manchester.
“Our research notes that Stanford alumni have created around 40,000 companies and over five million jobs in the US. What is to stop leading universities in Scotland and the UK securing similar success as dynamic catalysts for innovation and growth?”