MORAY, BADENOCH & STRATHSPEY ECONOMIC UPDATE OCTOBER 2003

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1 NETWORK ECONOMIC INFORMATION MORAY, BADENOCH & STRATHSPEY ECONOMIC UPDATE OCTOBER 2003 HIGHLIGHTS The population of Moray, Badenoch & Strathspey in 2001 was 98,703, an increase of 4.3% from 1991 which is more than the growth of 0.8% in the area. The population of Moray, Badenoch & Strathspey is younger than the area in general, with a mean age of 39.4 years. There is an overall trend towards an ageing population. The unemployment rate for Moray, Badenoch & Strathspey is lower than that for the area and is slightly less seasonal. In August 2003 the unemployment rate was 2%. Male unemployment has decreased at a greater rate than female unemployment over the period 2001 to Figures for August 2003 show unemployment at 2.6% for males and 1.3% for females. The average gross weekly earnings were 32 per week in These are the lowest earnings in the area, significantly lower than the average earnings in Scotland and GB. The Public Administration, Education & Health sector accounts for the largest percentage of employees with 30.6% of those economically active, followed by the Wholesale, Hotels & Restaurants sector. Females largely dominate these sectors. A large percentage of employees (30.1%) work in companies with more than 100 employees. However, a larger percentage (9.%) work in firms with 49 or less employees, highlighting the dominance of small firms in the area. Moray, Badenoch & Strathspey had an average business start-up rate of 3.1 per 1,000 population in 2002, less than the average for the area and Scotland. 1

2 INTRODUCTION This document provides information and analysis on the socio-economic profile of the Moray, Badenoch & Strathspey Enterprise area (MBSE). The data is mainly derived from the 2001 Census undertaken by the General Register s Office for Scotland (GROS) and from other national surveys undertaken by the Office for National Statistics (ONS). Where possible the most recent and accurate available data has been used. POPULATION Table 1 shows the population change in the MBSE area compared to the area and Scotland from 1991 to The population of the MBSE area was 98,703 in 2001 accounting for 22.8% of the total area population. Table 1: Resident Population, * 2001 Change % Change (1991 base) MBSE 94,624 98,703 4, , ,74 3, Scotland,083,330,062,011-21, Source: GROS 2001 Census *Based on non-revised 1991 Census population for LEC &, but revised 1991 Census population for Scotland. In MBSE there has been population growth of 4.3% since 1991, higher than the growth experienced by the area of 0.8%. Growth is concentrated around the population centres of Forres & Elgin, with population decline in some rural areas. This general growth experienced around the Inner Moray Firth area is influenced by the increased popularity of the area as a place to live and from which to commute to Inverness for work. The location of the RAF squadrons within the area also influences population change. Not only have new RAF squadrons at Lossiemouth contributed to the population growth, but the 2002 Moray Economic Survey estimated that an average of 92 individuals leave service from the two bases each year and settle in the local area, contributing to the growth. Age Structure Table 2 shows the changing age structure of the MBSE area as a percentage of the total population, compared to the area and Scotland from 1991 to Table 2: Distribution of Population by Age, (% of total population) Age Group MBSE 1991 * MBSE Scotland Source: GROS 2001 Census *Based on non-revised 1991 Census population figures. 2

3 The percentage of the population aged 44 years or less has decreased in the MBSE area from 62.% in 1991 to 8.% in This is still higher than that for area as a whole (6% in 2001) showing that there is a larger proportion of young people in the MBSE population. The percentage of the population aged 6 years or older in MBSE has increased from 1.4% in 1991 to 16.6% in This is lower than the area (17.2% in 2001). As a result, the MBSE area is shown to have a younger population profile than the area, but with a trend towards an ageing population. UNEMPLOYMENT Figure 1 shows the unemployment rate for MBSE compared to the area from January 2001 to August Figure 1: Unemployment Rates, MBSE Source: NOMIS (ONS) Note: LEC rates estimated using GROS Census 2001 population. Since 2001, the unemployment rate for MBSE has been up to 1% lower than that for the area. The MBSE unemployment rate is seasonal by nature, with unemployment rising during winter months and falling during the summer. This indicates a reliance on seasonal employment, in particular within tourism and the primary sector. In MBSE, the highest rates of unemployment were seen in January This was influenced by redundancies made by Barmac from the Ardersier oil fabrication yard the previous year. Overall, the unemployment rate has decreased from 3.2% in January 2001 to 2.% (1,492 claimants) in January Unemployment by TTWA Unemployment rates based on the claimant count are provided by NOMIS for Travel to Work Areas (TTWA s). There are four TTWA s within the MBSE area; Badenoch, Dufftown, Keith & Buckie and Elgin & Forres, all with different unemployment characteristics. Figure 2a highlights the unemployment rates for the Badenoch and Dufftown TTWA s, while Figure 2b highlights the unemployment rates for the Keith & Buckie and Elgin & Forres TTWA s from January 2001 to August

4 Figure 2a: Unemployment Rates by TTWA, Badenoch 4 Dufftown Source: NOMIS (ONS) Note: Figures based on latest estimates, and pending revision. Figure 2a illustrates that the unemployment rate in the Badenoch and Dufftown TTWA s have been lower than that for the area from 2001 until August In the Badenoch TTWA there is high seasonality in unemployment. This is influenced the outdoor activities sector, which is seasonal by nature. However, the unemployment rate has fallen over time, partly driven by the creation of new jobs through a new call centre opening in Aviemore, employing over 100 people. The Dufftown TTWA also displays a high level of seasonality, showing its reliance on employment in tourism (for example, the Whisky Trail) and the primary sector. While unemployment in the Dufftown TTWA was affected by redundancies made by Barmac in July 2000, the overall rate of unemployment has decreased from 3.8% in January 2001 to 2.3% in January Figure 2b: Unemployment Rates by TTWA, Elgin and Forres K eith and B uckie Source: NOMIS (ONS) Note: Figures based on latest estimates, and pending revision. 4

5 The Elgin & Forres TTWA also has an element of seasonality to its unemployment rate, showing it also relies on tourism and primary sector activities. The Elgin & Forres TTWA unemployment rate is the least seasonal of all those in the MBSE area. The unemployment rate has decreased from 2.9% in January 2001 to 2.4% in January The opening of a Cap Gemini call centre in Forres during this time, creating several hundred jobs, has influenced this. The Keith & Buckie TTWA has a more seasonal unemployment rate than the Elgin & Forres TTWA, indicating a stronger reliance on tourism and the primary sector for providing employment. The unemployment rate in the Keith & Buckie TTWA has shown a decreasing trend, falling from 3.% in January 2001 to 2.6% in January Unemployment by Gender Figure 3 shows the male and female unemployment trends for the MBSE area from January 2001 to August Figure 3: Male and Female Unemployment Rates, Male Female All Source: NOMIS (ONS) Note: Rates estimated using GROS Census 2001 population. Typifying most unemployment trends, the male unemployment rate is higher than the female unemployment rate. The male unemployment rate for MBSE is also more volatile, including a stronger seasonal trend. Male unemployment has shown a decreasing trend, falling from 4.3% in January 2001 to 3.2% in January The female unemployment rate has also decreased, but to a lesser extent, falling from 1.9% to 1.6% over the same time period. INCOME Table 3 shows the average gross weekly earnings for MBSE in 2001.

6 Table 3: Average Gross Weekly Earnings, Earnings as a % of: Area 2001 ( ) Scotland GB MBSE Source: New Earnings Survey From the table it can be seen that the average gross weekly earnings in MBSE were 32 per week in This is lower than the average gross weekly earnings in the area in 2001, and significantly lower still than the average earnings in Scotland and GB. This is influenced by the prevalence of employment within tourism and food & drink manufacturing in MBSE, typified by low wages. Additionally, the small sample size within the MBSE area may not capture the relatively high wages earned by RAF personnel. GROSS VALUE ADDED Gross value added (GVA) is a measure of the income generated by businesses after the subtraction of input costs (excluding wage and capital investment costs). Table 4 shows the gross value added per full-time employee for the Highland Council area in 2000, which Badenoch and Strathspey are part of, compared to the Moray Council area and Scotland. This is a useful measure of productivity. Table 4: Gross Value Added per Full-Time Employee, 2000 Area GVA per Full-time Employee ( ) Manufacturing Services Highland 27,778 1,60 Moray 44,000 17,600 Scotland 36,799 18,781 Source: Scottish Executive, Scottish Production Database & Scottish Services Database The table highlights that the Highland Council area has a lower GVA per full-time employee than Scotland for both Manufacturing and Services. This suggests that productivity is slightly lower in the Highland area, and thus Badenoch & Strathspey, compared to Scotland. The difference is greatest within Manufacturing, where GVA per full time employee is 27,778 in the Highland area, compared to 36,799 in Scotland. This is influenced by the nature of the Manufacturing sector in the Highland area relative to Scotland. In the Highland area, the Manufacturing sector tends to be centred on activities with outputs of low monetary value. Additionally, the Manufacturing firms tend to be smaller in the Highland area and are less likely benefit from economies of scale. The Moray Council area has a higher GVA per full-time employee than the Highland Council area for both Manufacturing and Services. Indeed, the Moray area has a higher GVA per full-time employee for Manufacturing ( 44,000) than Scotland ( 36,799). This is influenced by the concentration of large food and drink manufacturers in the Moray area, such as Walkers Shortbread and W. A. Baxter & Son Ltd, along with whisky distilleries, which benefit from economies of scale and expanding global markets. 6

7 EMPLOYMENT Figure 4 illustrates the distribution of employment by sector in MBSE and the area for Figure 4: Sector of Employment, MBSE Source: GROS 2001 Census In MBSE the Public Administration, Education and Health sector accounts for 30.6% of the total workforce (3.1% higher than that for the area) and the second highest percentage employed in this sector of all the LEC areas. Factors such as the location of two RAF bases within the area (which have recently experienced considerable growth) and the location of relatively large public bodies, such as Moray Council and Moray College, account for these relatively high figures. The Wholesale, Hotels and Restaurants sector accounts for 20.7% of those economically active (1.4% lower than that for the area) which reflects the reliance on tourism activities in MBSE. The 2002 Highland Visitor Survey highlighted that the average tourist staying in the Moray, Badenoch & Strathspey area stayed for 3.3 days and spent an average of 123 per day. Family connections were often cited as reasons for visiting although specific interest in an attraction or event was also a key motivator behind trips made, as was the scenery. The 2002 Moray Economic Survey suggests that a number of the tourists visited at least one of the local aviation heritage sites and/or RAF bases as a pre-planned or ad-hoc visit. The percentage of employees in the Manufacturing sector (12.%) is higher than that for the area (9.7%) as a result of many food and drink manufacturing companies, along with whisky distilleries being located in the area. This is a sector that has experienced market growth in recent years as a result of expansions into global markets (particularly malt whisky). 7

8 In MBSE, self-employment accounts for 8.9% of those aged (10.6% in the area). Part-time employment accounts for 13.3% of those aged (13% in the area) and full-time employment accounts for 41.2% of those aged (38.% in the area). Table provides a more detailed account of employment by sector highlighting the employment division by gender. Table : Employment in Sectors by Gender, 2001 Sector Male Female Total Percentage Agriculture and Fishing 1, , Manufacturing 3,896 1,92, Energy & Water Construction 3, ,6 7.8 Wholesale, Hotels & Restaurants 4,091,70 9, Transport & Communications 1, ,362.1 Banking, Finance & Real Estate, etc. 2,12 2,130 4, Public Admin., Education & Health 6,341 7,93 14, Other Sectors 2,73 1,424 4, Total 26,376 20,308 46, Source: GROS 2001 Census Note: Numbers may not total due to errors in rounding percentages. In line with other areas the service sectors, particularly Wholesale, Hotels & Restaurants, and Public Administration, Education & Health, are dominated by females (there are 1.3 females for every male employed). Conversely, the Agriculture & Fishing, Manufacturing, Energy & Water, Construction and Transport & Communications sectors show 3.4 males for every female employed. Employment by Company Size Figure shows employment breakdown for businesses by sizeband in 2001, not including self-employed. Figure : Employment by Sizeband, MBSE to 4 to to 24 2 to 49 0 to plus Source: 2001 ABI (NOMIS) No. of Employees in Company 8

9 In 2001, 30.1% of employees worked in a company with more than 100 employees. This is largely a reflection of the extensive manufacturing base in the area, along with employment in the armed forces. However, 9.% of employees work in companies with 49 or less employees, illustrating the dominance of the SME sector. Business Starts Figure 6 shows the quarterly rate of new business start-ups per 1,000 population in MBSE and the area from 2001 to Figure 6: Rate of New Business Start by Area, MBSE Q1/2002 Q2/2002 Q3/2002 Q4/2002 Q1/2003 Source: Committee of Scottish Clearing Banks Table 6 shows the number of new business start-ups per 1,000 population in MBSE, and Scotland for Table 6: New Business Start-Ups by Area, 2002 Area Start-Ups Start-Ups per 1,000 Population * MBSE , Scotland 18, Source: Committee of Scottish Clearing Banks *Figures estimated using population from GROS Census 2001 In 2002, MBSE had a lower business start-up rate (3.1 per 1,000 population) than the area and Scotland. E-BUSINESS Table 7 provides information from the 2003 E-Business Survey. From the businesses surveyed, it looks at the percentage within MBSE and the area who have access to the Internet, have their own website, and use broadband. In addition it looks at the percentage of businesses which have facilities for making payments to suppliers online, and allowing customers to order or make payments on-line. 9

10 Table 7: E-Business, 2003 Area Access to Internet Website Adoption Broadband Make Payments to Suppliers On-Line Allow Customers to Order On-Line Allow Customers to Pay On-Line MBSE 74% 39% 3% 23% 11% 14% 72% 42% % 20% 1% 12% Source: Highlands and Islands Enterprise E-Business Survey In MBSE, 74% of businesses have access to the Internet, compared to 72% in the area. Website and broadband adoption are lower in MBSE than the area, although there is slightly more widespread adoption of making payments on-line. In MBSE 23% of businesses make payments to suppliers on-line and 14% allow customers to pay on-line, compared with 20% and 12% respectively for the area. This suggests that businesses in the MBSE area are making slightly more use of e- business for trading than their counterparts in the general area. This is largely driven by the high levels of e-business adoption within the service sectors in MBSE. SUMMARY The MBSE area has a younger population than the general area and is experiencing a growing population, however there is an overall trend towards ageing. The unemployment rates in MBSE are below than that for the general area and are highly seasonal, particularly in the Dufftown and Badenoch TTWA s. The reliance on tourism is reflected in the high percentage of employment within the Wholesale, Hotels and Restaurants sector. The Public Administration, Education and Health sector, however, is still the largest employer, due to the prevalence of armed forces and location of public bodies in the area. Manufacturing is also an important employer in MBSE, with large firms such as W. A. Baxter & Son Ltd., Highland Country Foods Ltd., and Walkers Shortbread. Job losses from Barmac around July 2000 raised unemployment rates in MBSE. New opportunities, however, have created a wider economic base cabable of absorbing unemployment, for example, through contact centres. Small firms dominate employment, in line with the area in general and the business start-up rate of 3.1 per 1,000 population is slightly lower than the average for the area. Lastly, more businesses in MBSE have access to the Internet and are trading on-line than in the area as a whole. CONTACT INFORMATION If Network staff have any queries about the information contained in this document, or any other economic issues, please contact s Strategic Planning and Research Team: Senior Economist Alastair Nicolson (01463) ai.nicolson@hient.co.uk Economist Claire McDonald (01463) claire.mcdonald@hient.co.uk Research Assistant Heather Taylor (01463) h.taylor@hient.co.uk 10