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Annex a – Analysis

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Annex a – Analysis ANNEX A - ANALYSIS ANNEX A – ANALYSIS FULL ANALYSIS OF WEST WALES AND THE VALLEYS AREA OVERVIEW 1.1 West Wales and the Valleys covers an area of 1.24 million hectares (around 12,400 km2) with approximately 1,150 km of coastline. Approximately 80% of the total area of West Wales and the Valleys is designated as Less Favourable Areas, which parallels closely the mountainous and upland areas. West Wales and the Valleys is a diverse area of Wales comprising a population of some 1.86 million (64% of the total population of Wales). The area includes the following local authorities: • Isle of Anglesey; • Gwynedd; • Conwy; • Denbighshire; • Ceredigion; • Pembrokeshire; • Carmarthenshire; • Swansea; • Neath Port Talbot; • Bridgend; • Rhondda, Cynon, Taff; • Merthyr Tydfil; • Caerphilly; • Blaenau Gwent; and • Torfaen. 1 ANNEX A - ANALYSIS Figure 1. Map of the West Wales and the Valleys Convergence Programmes area 2 ANNEX A - ANALYSIS 1.2 The following sections provide an overview of the socio, demographic, economic and environmental conditions across West Wales and the Valleys, and highlight areas where West Wales and the Valleys varies from Wales, the UK and the European Union as a whole using statistics from the Office for National Statistics, the Welsh Assembly Government and Eurostat (in particular the Regio database). 1.3 Table 1 below shows the population of West Wales and the Valleys by local authority according to the proportion of the total population living in the West Wales and the Valleys. As Table 1 shows, over 60% of the population of West Wales and the Valleys is concentrated in the South Wales Valleys. Table 1. Population concentrations, West Wales and the Valleys Mid-2004 population Percentage of total (000s) population of West Wales and the Valleys Rhondda Cynon Taff 232 12% Swansea 226 12% Carmarthenshire 178 10% Caerphilly 171 9% Neath Port Talbot 136 7% Bridgend 130 7% Gwynedd 118 6% Pembrokeshire 117 6% Conwy 112 6% Denbighshire 96 5% Torfaen 90 5% Ceredigion 78 4% Blaenau Gwent 69 4% Isle of Anglesey 69 4% Merthyr Tydfil 55 3% West Wales and the Valleys 1,864 100% Wales 2,953 - Source: Office for National Statistics (Totals may not add due to rounding) ECONOMIC OVERVIEW 1.4 The following analysis provides the evidence base for the development of the Structural Fund Programme for the Convergence area described above. The analysis does not cover all economic issues. It focuses on areas where market failures have inhibited the ability of West Wales and the Valleys to achieve acceptable levels of GDP per head and where improvements must be made if the sub region is to achieve the targets for economic growth and jobs as outlined in the Lisbon Agenda1. 1 European Commission, 2005, Common Actions for Growth and Employment: The Community Lisbon Programme, Communication from the Commission to the Council and the European Parliament. COM(2005) 330 final: http://europa.eu.int/growthandjobs/key/index_en.htm 3 ANNEX A - ANALYSIS 1.5 The themes of the Lisbon Strategy run through the analysis with attention given to inter alia, research and development, innovation and education and skills in strengthening EU competitiveness and sustainable growth while ensuring social and territorial cohesion. 1.6 The Programme has been developed drawing on the analysis in this chapter, the ex-ante evaluation, the Strategic Environmental Assessment and the lessons learnt from the previous Structural Fund Programmes. 1.7 Since the turn of the Millennium, the economy of West Wales and the Valleys has shown significant improvement in several respects. Approximately 40,000 more people are in employment since 2001 and the unemployment rate has fallen to levels similar to the UK average. 1.8 Table 2 summarises the latest (i.e, the latest year that data is available) labour market conditions, comparing West Wales and the Valleys to the average for Wales, the UK and the European Union (EU25)2. As Table 2 shows, West Wales and the Valleys and Wales as a whole perform well on the leading labour market indicators compared to the average for the EU25 and have shown significant improvement since 2001. Improvements in the labour market have been more marked than in Wales or the UK more generally, with these improvements coinciding with the period of the Objective 1 programme. 1.9 The lower unemployment rate across West Wales and the Valleys compared to the average for the EU25 is not matched by an equivalent difference in the employment rates. The explanation behind this lies in the relatively lower economic activity (or higher economic inactivity) across West Wales and the Valleys compared with the average for the EU25 is a key weakness of the economy, and one of the key drivers behind our programmes. It is explained further in the following sections. 2 Care should be taken when comparing labour market data from Eurostat and UK Labour Force Survey sources due to differences in methodology applied. An overview of the methodology for the European Labour Force Survey is available at: http://epp.eurostat.ec.europa.eu/portal/page?_pageid=0,1136184,0_45572601&_dad=portal&_schema=PORTAL &screen=ExpandTree&open=%2Fpopul%2Flabour&product=EU_population_social_conditions&nodeid=71140&v index=4&level=2&portletid=39994101_QUEENPORTLET_92281242&scrollto=0#LABOUR_MARKET An overview of the UK labour market data sources is available at: http://www.statistics.gov.uk/about/data/guides/LabourMarket/default.asp 4 ANNEX A - ANALYSIS Table 2. Labour market summary, EU25 comparison (percentage) 2001 2005 Change over 2001 Employment rate (a) West Wales and the Valleys 63.1 66.4 3.3 Wales 65.4 68.3 2.9 UK 71.4 71.7 0.3 EU (15) 63.9 65.1 1.2 EU(25) 62.7 63.7 1.0 Economic activity rate (b) West Wales and the Valleys 67.4 70.0 2.6 Wales 69.5 71.5 2.0 UK 75.2 75.3 0.1 EU(15) 69.1 71.0 1.9 EU(25) 68.7 70.1 1.4 Unemployment rate (c) West Wales and the Valleys 6.3 5.1 -1.2 Wales 5.8 4.5 -1.3 UK 5.0 4.7 -0.3 EU(15) 7.5 8.2 0.7 EU(25) 8.6 9.0 0.4 (a) Employed persons are all persons aged between 15 and 64 who during the reference week (week when the data was collected) worked at least one hour for pay or profit, or were temporarily absent from such work. Family workers are included. Rate for those aged between 15 and 64; (b) Economically active population comprises employed and unemployed persons. Rate for those aged between 15 and 64; (c) Unemployment rate represents unemployed persons as a percentage of the economically active population. Rate for those aged 15 and over. Source: Eurostat 1.10 Figure 2 shows the progress that West Wales and the Valleys has made toward the headline Lisbon employment targets. In 2005 the region fell short of the main employment target for 2005. The female employment rate across West Wales and the Valleys in 2005 was above the 2005 and 2010 target rate. The employment rate of older workers was just below the 2010 target. The data uses the European definitions for employment for age ranges 15-64. The key difference with this definition and the data presented in the rest of this analysis is the UK definition for employment is for males aged 16-64 and females 16-59. Care should be taken when comparing data from Eurostat and data from UK sources3. 3 An overview of the methodology for the European Labour Force Survey is available at: http://epp.eurostat.ec.europa.eu/portal/page?_pageid=0,1136184,0_45572601&_dad=portal&_schema=PORTAL &screen=ExpandTree&open=%2Fpopul%2Flabour&product=EU_population_social_conditions&nodeid=71140&v index=4&level=2&portletid=39994101_QUEENPORTLET_92281242&scrollto=0#LABOUR_MARKET An overview of the UK labour market data sources is available at: http://www.statistics.gov.uk/about/data/guides/LabourMarket/default.asp 5 ANNEX A - ANALYSIS Figure 2. Progress against Lisbon targets, 2005 and 2010 Source: Eurostat 1.11 Despite these improvements in the labour market, economic output (conventionally measured by Gross Domestic Product per head of population4) across West Wales and the Valleys remains below the average for Wales, the UK and the EU25 as a whole (see Figure 3). Overall, economic output in West Wales and the Valleys has also shown some improvement since 2000, and now stands at 77% of the average for the EU25. 4 I It is widely recognised that GDP per head may not fully reflect wider welfare or quality of life factors. However, it does provide a useful measure of economic performance within each time period. 6 ANNEX A - ANALYSIS Figure 3. GDP per head (Purchasing Power Parities (a)) EU25=100 (b) (a) Purchasing Power Parities (PPPs) are currency conversion rates that both convert to a common currency and equalise the purchasing power of different currencies. In other words, they eliminate the differences in price levels between countries in the process of conversion; (b) Figures are expressed as an Index. Index numbers compare individual observations against a benchmark, where the benchmark is given an index of 100. In this case the average GDP per head across the EU25 is the benchmark and is given an index of 100. Index values of less than 100 show where GDP per head is below the average for the EU25 and vice versa for index values above 100. Source: Eurostat 1.12 Analysis of the gap5 in GVA6 per head shows that the relative under- performance of Wales and West Wales and the Valleys and provides a focus for how policy initiatives can be targeted to improve economic growth and reduce growth inequalities within Wales.
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