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Diversity and the Economy

Tuesday, June 6, 2006

A new publication from the Smith Institute covered diversity in the workforce of the Yorkshire and Humber region, and Meg was asked to write the Foreword, which is below. The publication was supported by Yorkshire Forward, the regional development agency.

For further details visit:

http://www.smith-institute.org.uk/publications.htm and/or: http://www.yorkshire-forward.com/www/index.asp

 

 

In order to succeed in an ever more competitive and global economy we must use all the talents available - equality of opportunity and economic success really do go hand-in-hand. This important and timely report argues that future success for the Yorkshire and Humber region depends upon us using to the full the rich diversity of our local people.   

 

As a Member of Parliament for a Yorkshire constituency, and the Minister for Women and Equality, I am delighted that Yorkshire Forward is championing the inclusion of all our population as we continue to create a successful regional economy. The role that Yorkshire Forward plays is crucial to our economic well being - their goal is to transform our region through sustainable economic development.

 

Diversity in the workforce appears to be a recent phenomenon. In fact our workforce has always been diverse, it’s just now some of the differences are more apparent. The growing numbers of women in the workforce over the past few years is evident, and in parts of the region in particular, the growth of the ethnic minority working population is significant. What is less readily obvious to most of us are the increasing numbers of disabled people who want to work.

 

In addition to these changes, the age profile of the region’s workforce is beginning to shift substantially. One quote from the report highlights this:

 

“In two years time, the number of people over State Pension Age will overtake the number of children across the country.  In ten years, only one in three of the British workforce will be a White man under the age of 45.  In twenty years time, over 50% of the nations population will be aged over 50’’

 

These demographic changes will happen whether we like it or not. If we try and ignore them it only makes it certain that our international competitors will succeed and we will fail. Understanding the implications of these changes to the workforce in the region gives us a chance to plan just how we adapt, to ensure we continue to enjoy a good standard of living. Only by taking a positive approach and using the opportunities these changes provide can we look confidently to the future.

 

An increasingly important role for women

In the area of economic activity women have just as much to offer as men. Women are playing an increasingly important part in our economy - creating wealth and jobs. It’s estimated that by 2010 there will be 2 million more jobs in the national economy, 80 % of which will be filled by women. Ensuring that there is gender economic equality is not just about what is right for women, it’s in all our interests that we do so.

 

Today more young women than young men gain degrees. However, that level of success is not carried through into work. Instead, many women work in lower-skilled, lower-paid jobs. Recent research by the Equal Opportunities Commission and Sheffield Hallam University found that more than 50 % of women in part-time jobs are working below their skill level. Talent squandered which could be increasing productivity and wealth.

 

There is a clear association between sectors experiencing skills shortages and sectors in which women are under-represented. An example is information technology which currently accounts for almost 5 % of the UK economy and will continue to increase. In the next decade employment is set to grow at five to eight times the UK average. But the sector is at a disadvantage when only 20 % of its workforce are women, compared with just under half of the UK's national work force.

 

Around 70 % of women who have science, engineering and technology qualifications are not working in sectors that use these skills. This is a significant loss to the economy; the country paid for the training that is not being used, business lose out by not having qualified women working for them, and many of the women lose out by not having a well-paid, interesting career in the sector.

 

To remedy this situation the Government has launched the UK Resource Centre for Women in Science, Engineering and Technology (UKRC). Based in Bradford, the Centre works closely with business to help encourage the participation of more women in the science, engineering and technology sectors.

 

The report outlines some of the barriers that currently face women, and concludes that business needs both to attract women into these areas of work, and then retain them. The alarming statistics for these business sectors call for concerted effort to tackle the masculine culture that drives women away and wastes their talent. The success of efforts to change this situation comes only where commitment permeates from the very top of an organisation downwards.

 

Ethnic minorities

Figures from the Ethnic Minority Task Force show that while the overall employment rate is 74.5%, for ethnic minorities it is only 59%. Over the next ten years, ethnic minorities will account for more than half the growth in the working age population. It is vital that we ensure that the skills and talents of all those from an ethnic minority background in our region are used. The report highlights the fact that not to do so, particularly in an area like Bradford where over 20% of the population are from an ethnic minority, would be extremely foolish on our part.  

 

As on average people from ethnic minority groups have fewer skills and qualifications than the population as a whole, a concerted effort is needed to ensure that they can take a full part in future prosperity. More than 40 % of those of Asian or Asian British ethnicity hold only low-level qualifications or none at all, compared to around 30 % of the white population.

 

Some 50% of women from an ethnic minority are in employment compared to 71% of white women. But these rates can disguise larger differences for individual ethnic minority groups, less than 20% of Bangladeshi women are in employment compared with around 60% of Indian women. Of Black African women, 47% are in employment compared with 64% of women of Black Caribbean descent.

 

Overcoming barriers to employment is highlighted in the report, which suggests measures such as providing particular training for women from ethnic minority backgrounds. Around 40% of Pakistani and Bangladeshi women of working age have no qualification at all, compared with 17% of white women. 75% of Bangladeshi women aged over 25 do not speak fluent English - a huge barrier to their participation in both education and work.

 

People with disabilities

Increasing the numbers of disabled people in employment is important, not just to the individuals who are out of work and want to work, but to our economic future. In Britain out of the total number of people of working age out of work, 40 % are disabled. Only 51 % of disabled people are in work, falling to 21 % of people with a mental health condition and 17 % of people with a learning disability.

 

For disabled people with a higher education qualification, the ‘lacking but wanting work’ rate of 14 % is actually higher than the "lacking but wanting work" rate of non-disabled people with no qualifications at all. Almost a third of working-age disabled adults live in income poverty. This is higher than a decade ago, double the rate for working age non-disabled adults and higher than the rates for either pensioners or children.

 

For most people, including people with disabilities, employment continues to provide the best escape route from poverty and exclusion. It provides not only greater financial security, but also independence, status and social interaction.

 

Managers and directors

Diversity at higher management and board level has got better over recent years, but not by much. Getting more women and people from ethnic minorities onto boards of directors isn’t just about furthering their careers, though there’s nothing wrong with that! A strong relationship is evident between companies having a diverse membership of directors and market capitalisation - 18 of the top 20 companies by market capitalisation have women directors, but only 8 of the bottom 20 firms do so. 

 

A look at the female FTSE 100 shows this on a national level. In 2004 17 % of new FTSE 100 board appointments were women, up from 13 % in 2003 and 10.5 % in 2002. But in the UK, only 9.7 % of the top UK companies’ board members are women, and only 4.1 % of those are in executive roles. Only one woman made it to Chief Executive Officer (CEO), and only one woman chairs a FTSE 100 board. 

 

Figures from Cranfield School of Management show that, while ethnic minorities make up 8% of the population, they provide only 2.5% of the total membership of boards of FTSE 100 companies.

 

More diversity would mean that companies better represent the society in which they operate, which should lead to improved competitiveness and productivity. Diversity ensures better sharing of a broader and different range of experiences and opinions.

 

Older people have much to offer

Age is also a significant issue - older people find it harder to gain employment. As stated in the quote at the beginning of this contribution, by the late 2020s around half of the adult population in the UK will be over 50.

 

Age discrimination carries a heavy price tag. The annual cost to the economy is calculated at around £36 billion - £31 billion in lost production, and £5 billion to Government through the cost of paying benefits to those who might be working plus the loss in tax revenue from those who would be working but for age barriers. 

 

Assumptions are made about older people, such as the time someone will work before they retire. In fact, newly recruited older workers may well stay considerably longer than a younger worker looking to move jobs in developing a career. They often have a range of skills and experiences that can be used if only companies and services identify them. B&Q have started specifically to recruit older staff members, recognising that they often have hands-on knowledge about the products that customers want to buy.

 

Pushing the agenda

Should we be pushing this agenda further? Yes we should, and yes we will. It really doesn’t matter in the short term whether businesses adopt positive policies through belief, or because skills and/or labour shortages force them to investigate areas they would not have before. What matters is that they do. What matters is that by so doing they move towards a more diverse workforce.

 

Public perception plays an ever increasing role in the success of an organisation. Positive press coverage, being listed in the Times 100 Best Companies - something that Yorkshire Forward has achieved - or winning an award helps the image of a company. Having a diverse workforce means that companies are more likely to provide the products and services wanted by an equally diverse customer base.

 

Research suggests that organisations that actively promote gender equality benefit from a more motivated and productive workforce. This in turn leads to a better customer service and happier customers; happier customers are more likely to be return customers.

 

This report makes a strong case for the public and private sector to work together to ensure that everyone in the region has the opportunity to obtain the skills needed to be productive at work. In this region we are known for our pride in where we live. The challenge for the future is to ensure that Yorkshire and the Humber includes all of our diverse population in taking on the skilled jobs of the future - thus ensuring we all benefit from the vibrant and prosperous economy we can build.  


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