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Socio-Economic Analysis of Wales 2020 , File Type Framework for Regional Investment in Wales Annex B: Socio-Economic Analysis of Wales 2020 Welsh European Funding Office (WEFO) Table of Contents ANNEX B: SOCIO-ECONOMIC ANALYSIS OF WALES 2020 Introduction and Purpose 3 Geography and Demography 4 Introduction 4 Geography 4 Demography 5 Economic Context 9 Introduction 9 Output, Productivity, and Economic Welfare 9 Labour Market Overview 16 Industry/Business Structure 25 Priority Area: Productive and Competitive Businesses 28 Key Points 28 Why Focus on Productivity? 30 Key Productivity Factors 33 Other Productivity Factors 43 Summary 51 Priority Area: Reducing the Factors that Lead to Income Inequality 52 Key Points 52 Why Focus on Reducing Income Inequality? 53 Measuring Income Inequality 54 Income, Earnings, and Skills 60 Cost of Living 68 Summary 76 Priority Area: Supporting the Transition to a Zero Carbon Economy 77 Key Points 77 Why Focus on Transitioning to a Zero Carbon Economy 78 Emission Areas 81 Summary 95 Priority Area: Healthier, Fairer, and More Sustainable Communities 97 Key Points 97 Why Focus on Creating Healthier, Fairer and More Sustainable Communities? 98 Health Factors 99 Adult Social Care 104 Welsh Language 107 Development Activity Being Led by Communities 109 Access to services 110 Summary 113 Appendix 114 Annex B: Socio-Economic Analysis of Wales 2020 2 Introduction and Purpose 1.1 The purpose of this socio-economic analysis is to provide a high level overview of the economic landscape of Wales to help inform the evidence based policy-making for regional investment in Wales outside of the European Union. 1.2 Our goal is to inform interested parties who wish to build their understanding of the evidence base and logic for our proposals so that they can effectively engage with and contribute to the consultation process. 1.3 The Welsh Government has proposed four priority areas for regional investment outside of the EU. These priority areas are: Productive and Competitive Businesses; Reducing the Factors that Lead to Income Inequality; Supporting the Transition to a Zero Carbon Economy; and Healthier, Fairer, and More Sustainable Communities. 1.4 This socio-economic analysis is structured as follows: Geography and Demography – a high level description of the geography and demography of Wales over time. Economic Context – an overview of the figures and trends of relevant socio- economic indicators to the priority areas set in the consultation. Priority Area: Productive and Competitive Businesses – areas covered in this section of the socio-economic analysis include skills, business demography, agglomeration, trade, and research, development and innovation. Priority Area: Reducing the Factors that Lead to Income Inequality – areas covered in this section include measurements of income inequality, earnings, tax and benefits, low and high paid work, skills, and selected living costs. Priority Area: Supporting the Transition to a Zero Carbon Economy – areas covered in this section include emissions profiles of sectors such as industry, power, transport, agriculture, and buildings. Priority Area: Healthier, Fairer, and More Sustainable Communities – areas covered in this section include factors contributing to health, social care, the Welsh language, community-led development activity, and access to services. Annex B: Socio-Economic Analysis of Wales 2020 3 Geography and Demography Introduction 2.1 This section provides a brief overview of a selection of non-economic characteristics in Wales that the Welsh Government will need to consider when devising programmes for future regional investment after Brexit. Many of these characteristics have been referenced in later sections of the socio-economic analysis. Geography 2.2 The total land area of Wales covers 20,736 km2, with the country sharing only one land border, with England, which is 160 miles in length and with the coastline covering approximately 715 miles. At an administrative level the country is split into 22 local authorities, which can be grouped into three key regions: North Wales, Mid & South- West Wales, and South-East Wales (see Figure 2.1). Data for Mid & South-West Wales are sometimes available separately, which have been used when available. Figure 2.1 Map of the three proposed Welsh economic regions Source: Welsh Government Annex B: Socio-Economic Analysis of Wales 2020 4 Demography Population Size/Density 2.3 As of mid-2018, there were an estimated 3,138,631 people living in Wales, which represented a 3.7% increase since mid-2008 (see Table 2.1). This was a considerably smaller increase than was seen in the United Kingdom and England over the same period (7.5% and 8% respectively). Mid Wales was the only region of Wales believed to have actually seen its population decline (by 1.2% compared to 2008) – although this decline has taken place since 2013. Table 2.1 Population size/change in Wales thousands and percent POPULATION SIZE Population change Region / Area 2008 2013 2018 2008-2018 UNITED KINGDOM 61,824 64,106 66,436 7.5% ENGLAND 51,816 53,866 55,977 8.0% WALES 3,026 3,082 3,139 3.7% North Wales 683 691 698 2.3% Mid Wales 208 209 205 -1.2% South-West Wales 677 688 702 3.7% South-East Wales 1,458 1,495 1,533 5.1% Note: Figures have been rounded but population change has been calculated using figures that have not been rounded. Source: StatsWales 2.4 Table 2.2 breaks down the factors related to population density in each region. South- East Wales (which includes Cardiff, Newport, and the Welsh Valleys) is estimated to be home to 48.8% of the Welsh population but represents only 13.5% of the total land area of the country, making it by far the most densely populated region. Mid Wales on the other hand is the largest region within Wales, by land area, but is home to only 6.5% of the population making it significantly more sparsely populated than all other regions. Annex B: Socio-Economic Analysis of Wales 2020 5 Table 2.2 Population density (2018) Share of Welsh total population Welsh Population within Land area land Persons Region/Area (thousands) area (km2) area per km2 WALES 3,139 100.0% 20,736 100.0% 151.36 North Wales 698 22.3% 6,150 29.7% 113.55 Mid Wales 205 6.5% 6,966 33.6% 29.49 South-West Wales 702 22.4% 4,810 23.2% 145.95 South-East Wales 1,533 48.8% 2,810 13.5% 545.54 Source: StatsWales Gender Composition 2.5 In line with overall population growth, the number of both men and women has increased in Wales (Figure 2.2). The relative share of each group has remained roughly equal with women being a large group than men by 2 percentage points (51% to 49%). Figure 2.2 Mid-year population estimates for Wales, by gender (million) 1.55m Female 1.59m 1.48m Male 1.55m 2008 2018 Source: StatsWales Age Composition 2.6 In line with wider UK trends, as well as rising life expectancy Wales has witnessed a shift in the age composition of its population, with all four regions witnessing a fall in the size of the population under the age of 44, and an increase in the numbers of those aged 45 and over since 1998 (see Figure 2.3). This was most pronounced in Mid- Wales where the share of the population aged 45 and over increased by 9.8 percentage points.1 2.7 The shift observed has important implications for the future in Wales, as the increase in the old-age support ratio witnessed will increase pressure on the provision of public 1 Meaning there was an equivalent fall in the share of the population aged under 45 in this region. Annex B: Socio-Economic Analysis of Wales 2020 6 services, such as social care, all things remaining equal. 2 This will be explored in more detail in the priority area Healthier, Fairer, and More Sustainable Communities. Figure 2.3 Mid-year population estimates, by age (1998 & 2018) North Wales Mid Wales 300,000 80,000 60,000 200,000 40,000 100,000 20,000 - - 0-15 16-24 25-44 45-64 65+ 0-15 16-24 25-44 45-64 65+ South West Wales South East Wales 200,000 600,000 150,000 400,000 100,000 200,000 50,000 - - 0-15 16-24 25-44 45-64 65+ 0-15 16-24 25-44 45-64 65+ 1998 (Mid-Year) 2018 (Mid-Year) Note: Horizontal axis (age group), vertical axis (population, set at different levels per region); Source: StatsWales Ethnic Composition 2.8 As of the last census in 2011, Wales was the second most ethnically diverse nation in the United Kingdom with 4.5% of the population not describing their ethnicity as white. It was however much less ethnically diverse than England where the figure was 14.7% - the breakdown for all nations, by ethnic group, can be seen in Table 2.3. Of the 4.5% of the population in Wales that did not define themselves as white, 2.3% were Asian/Asian British, making it the largest non-white ethnic group in the country. 2 The old-age support ratio is the number of people of working age relative to those of retirement age. For more info see: OECD (2011). Pensions at a Glance 2011: Retirement-income Systems in OECD and G20 Countries. Organisation for Economic Co-operation and Development. Annex B: Socio-Economic Analysis of Wales 2020 7 Table 2.3 Ethnic diversity in the UK and constituent countries (2011 Census) Black / Gypsy / Mixed / African / Traveller / Multiple Asian / Caribbean Other Irish ethnic Asian / Black Ethnic Region / Area White Traveller group British British Group United Kingdom 87.1% 0.1% 2.0% 6.9% 3.0% 0.9% WALES 95.5% 0.1% 1.0% 2.3% 0.6% 0.5% England 85.3% 0.1% 2.3% 7.8% 3.5% 1.0% Scotland 95.9% 0.1% 0.4% 2.7% 0.7% 0.3% Northern Ireland 98.2% 0.1% 0.3% 1.1% 0.2% 0.1% Source: Nomis (ONS) Disability 2.9 As of 2016/17, Wales was one of three regions in the United Kingom with the highest proportion of disabled people as a percentage of the total population – along with the North East of England and the East Midlands – at 25%.
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