Economic Activity In Luton: A Local Authority Profile

Overview of Luton’s Economic Situation compared to East of England

Economic development of a country shows the improvement in indicators which help the country to move towards path of development, these indicators may be literacy rate, life expectancy rate, mortality rate, morbidity rate, unemployment rate and employment rate (Leigh and Blakely 2016). This report on Luton’s economic development mainly aims at to provide current economic situation of the region with respect to labour market.

Luton’s economic development is shown by comparing it with East of England. Luton is situated within Bedfordshire which is part of East of England. For showing the overview of the economic development the situation of labour market is considered.

This report mainly explores the current employment and unemployment rate in Luton and this employment is segregated into employment by occupation. Report also gives overview of qualification level of Luton and situation of business start ups. All these indicators of Luton are compared with East of England for getting idea about level of economic development of this region.

For showing economic development of any country, human capital if considered then a robust result is obtained. Human capital increases economic value by driving the country towards path of development (Faria et al. 2016). Thus achieving desired level of development human capital such as labour plays an important role.

Luton is part of Bedfordshire which is again part of East of England. East of England in terms of economic development shows improved indicators and these indicators are the main reason behind achieving the targeted goal by the country. Over the years East of England have shown there has been progress in labour market which in turn has helped to increase the contribution towards GDP of the country. Luton being part of East of England has also shown development but the degree of development much lower than that of East of England. Currently Luton’s economy shows dominance of service sector, rise of banking, finance and insurance while decline of manufacturing sector (Anon, 2017). Most common feature of all these sectors are use of labour, thus situation of labour within Luton is important domain to look up.

Diagram 1: Luton’s place in East of England

Considering data from ONS 2016 it is observed that out of total population of 6,130,500 in East of England, Luton consists of 216,800. This shows that Luton is a small portion of East of England.

Employment and unemployment figures of any country show the economic activity level of that country. If a person is economically active then that person is called employed and by unemployment it is meant absence of economic activity. Now employment can be subdivided into working under any organization and working independently i.e., self employed.

Population wise place of Luton in East of England

	Luton	East of England
Employed %	68.3	77.2
Unemployed %	5.3	3.8

Table 1: Employment and unemployment (Apr 2016-Mar 2017)

(Source: Luton.gov.uk, 2017)

The above table shows the percentage of employed and unemployed. The data from 2016-2017 show that employment in Luton has increased over the years but when compared with East of England the number is less. This comparison between Luton and East of England with respect to unemployment gives an idea that unemployment rate is higher in Luton and this may be due to growth of economically inactive people. This result however may not be the sole truth about the situation of unemployment in Luton because there are cases of hidden unemployment which are not even reported (Beatty, Fothergill and Gore, 2012).

Graph 1: Employed & Unemployed

(Source: Luton.gov.uk, 2017)

Graphical representation of table 1 shows the level of employment and unemployment more accurately. Reason behind more unemployment in Luton maybe increased number of school students and people looking after family unable to join work (Hardgrove, Rootham and McDowell, 2015) (Lee, N., 2014).

Occupational level shows the sector development of any country. It mainly gives idea about skilled labour and non skilled labour. Intensity of development is best understood if employment by occupation is considered, and the absorption of labour is divided by skill level (Eeckhout & Jovanovic, 2012) (Estrin, Mickiewicz and Stephan, 2013).

	Luton	East of England
Managers, Directors and Senior Officials	38.1	46.1
Professional occupations	18.7	20.2
Associate professional & Technical	12.2	14.2
Administrative & Secretarial	11	10.9
Skilled trade occupations	10.2	10.6
Service occupations	11.3	9.3
Sales & customer service occupations	5.7	6.9
Process plant & machine operatives	8.9	6
Elementary occupation	14.7	10

Table 2: Employment by occupation (Apr 2016-Mar 2017)

Above table shows the employment by occupation in Luton and East of England. Numbers shown in the table indicates that employment of managers, directors and senior officials is high in East of England as compared to Luton. With respect service occupations employment is more in Luton compared to East of England and this due to the fact service sector in Luton is increasing. Lastly elementary occupation number also indicates employment high in Luton with respect to East of England.

Literacy rate being one of the indicator of economic development plays an important role in achieving desired goals (Hanushek  & Woessmann, 2012). It is the literacy rate which gives idea about the level of development of a country. Although, with globalization countries have given more importance on literacy rate but still some gaps exist in putting efforts by the countries. Different policies are adopted to increase literacy rate and without proper implementation it is impossible to achieve targeted results (Atkinson & Storey,2016)  . Hence a proper implementation is necessary and this is not only part of governments concern but also the individual concern. Considering the data of ONS annual survey qualification level of Luton and East of England can be understood.ONS policy for presenting qualifications data considers-

1. NVQ 1 Equivalent-fewer than 5 GCSEs at grades A-C, foundation GNVQ, NVQ 1, intermediate 1 national qualification (Scotland) or equivalent.
2. 2.NVQ 2 Equivalent-5 or more GCSEs at grades A-C, intermediate GNVQ, NVQ 2, intermediate 2 national qualification (Scotland) or equivalent.

1. NVQ 3 Equivalent-2 or more A levels, advanced GNVQ, NVQ 3, 2 or more higher or advanced higher national qualifications (Scotland) or equivalent.
2. NVQ 4 Equivalent And Above- HND, Degree and Higher Degree level qualifications or equivalent.
3. No Qualifications-No formal qualifications attained.
4. Other Qualifications- foreign qualifications and professional qualifications.

	Luton	East of England
NVQ4 & Above	31.7	34.7
NVQ3 & Above	48.9	53.5
NVQ2 & Above	65	72.4
NVQ1 & Above	76.3	85.9
Other Qualification	9.4	6.5
No Qualification	14.2	7.6

Table 3: Qualification level

The above table constructed using data from ONS survey 2016. The table shows that level of no qualification level is double in Luton compared to East of England. This kind of result definitely impacts Luton’s development level as number of illiterates if high puts its effect on growth level which in turn put its effect on welfare. Social welfare always maximized if all the indicators are improved.

Number of business start ups gives a precise note on economic activity. Business start ups need investment and this investment involves investment on raw materials, land, human capital and resources. Government encourages business start ups mainly to unemployed ones in order to mitigate problem raised from unemployment level. There are few reasons which encourage individuals to start business, firstly if an individual unable to get job then that individual always have tendency to start business (Fingleton, Garretsen and Martin,2012).now if an individual have ancestors who run business then that individual have interest to start business and finally if proper investment level is secured then starting a business becomes easier (Williams & Martinez,2014) .Business start up may be divided into two categories one is enterprise and the other is local units. Now these two categories can have four separate categories which are micro, small, medium and large firms.

Graph 2: Enterprise and local units Business start ups

With respect to enterprise and local units business start up it is observed number of business start up of Luton is much lower than East of England. The main reason may problems related to investment. Government of Luton may have not encouraged in lending process. It is also quite observable that only micro and small businesses are encouraged not the large ones, this may be due to the fact large business requires more investment and at the same risks associated with it also high.

Conclusion

The study on Luton’s Economic development shows that economy of Luton over the years although have moved towards development but there exist issues which need to be addressed in order to sustain development. Comparison between Luton and East of England shows that, Luton requires attention from government since it has the capability to grow and make its own recognition. The labour market of Luton shows level of unemployment is high, now considering business start ups; it shows low level of investment results in small number of business start ups. Thus it is recommended that Luton government must adopt policies to address the issue that may result in sluggish growth of economic activity within the town.

References

Atkinson, J. and Storey, D.J. eds., 2016. Employment, the small firm and the labour market. Routledge.

Beatty, C., Fothergill, S. and Gore, T., 2012. The real level of unemployment 2012. Centre for Regional Economic and Social Research, Sheffield Hallam University.

Eeckhout, J. and Jovanovic, B., 2012. Occupational choice and development. Journal of Economic Theory, 147(2), pp.657-683.

Estrin, S., Mickiewicz, T. and Stephan, U., 2013. Entrepreneurship, social capital, and institutions: Social and commercial entrepreneurship across nations. Entrepreneurship theory and practice, 37(3), pp.479-504.

Fingleton, B., Garretsen, H. and Martin, R., 2012. Recessionary shocks and regional employment: evidence on the resilience of UK regions. Journal of Regional Science, 52(1), pp.109-133.

Faria, H.J., Montesinos-Yufa, H.M., Morales, D.R. and Navarro, C.E., 2016. Unbundling the roles of human capital and institutions in economic development. European Journal of Political Economy, 45, pp.108-128.

Hardgrove, A., Rootham, E. and McDowell, L., 2015. Possible selves in a precarious labour market: Youth, imagined futures, and transitions to work in the UK. Geoforum, 60, pp.163-171.

Hanushek, E.A. and Woessmann, L., 2012. Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation. Journal of economic growth, 17(4), pp.267-321.

 Luton.gov.uk(2017).[online]Availableat:https://://www.luton.gov.uk/Business/Lists/LutonDocuments/PDF/Regeneration/TBR%20Presentation%203_Final%20with%20qwizdom.pdf.

Leigh, N.G. and Blakely, E.J., 2016. Planning local economic development: Theory and practice. Sage Publications.

Lee, N., 2014. Grim down South? The determinants of unemployment increases in British cities in the 2008–2009 recession. Regional Studies, 48(11), pp.1761-1778.

Ons.gov.uk. (2017). Population estimates – Office for National Statistics. [online] Available at:https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates 

Williams, C.C. and Martinez, A., 2014. Do small business start-ups test-trade in the informal economy? Evidence from a UK survey. International Journal of Entrepreneurship and Small Business, 22(1), pp.1-16.