Inventing our future Collective action for a sustainable economy

Where do we want to be?
Headline regional ambitions
40
Figure 9
Current Percentage skills of performance the population relative aged to 19–state RES targets pension (% age of adults) by highest level
of qualification compared to RES targets
100
90
80
70
60
50
40
30
20
10
0
Target
Level 2 and above Level 3 and above Level 4 and above
East of England England
Source: Annual Population Survey (2006)
Target
Target
Achieving these targets will help us to achieve improved productivity
through investing in intermediate and higher-level skills and reduced
inequality and poverty by improving the skills and employment prospects
of the least skilled.
Inequality
By more effectively harnessing the talents of all, raising lower-quartile
gross earnings to 60 per cent of the regional average, would reverse the
rise in wage inequality seen in recent years and promote economic
inclusion.
While prosperity has increased in the East of England over the past five
years, the outcomes for those at different earnings levels has varied
greatly. The increase in average real wages has been driven largely by
those at the top end of the wage distribution. In contrast, the gross
earnings of those in the lowest quartile have barely kept up with
inflation. xiii Gross earnings as share of regional average (%)
100
Average
90
80
70
60
50 A large number of factors have influenced wage differentials,
40 including educational attainment, off-shoring of both manufacturing and
30 services, technological change, the skills premium, international price
xiv xv
movements, immigration and sectoral change.
20
10
81.5
58.4
80.6
57.6
80.7
57.2
Research puts skills attainment at the heart of these phenomena: as the
balance of jobs shifts away from lower to higher-level skills requirements,
the premium on higher-level skills is increasing. Recent studies also find
that differences in the type and quantity of workplace training
undertaken by employees have contributed to growing wage inequality:
highly skilled workers typically undergo more training than lower skilled
employees, and the financial return is greater too. xvi
0
2002 2003 2004 2005 2006 2007
Median Lower quartile
Growing inequality can exacerbate social exclusion and will need to be
addressed if the East of England is to harness and develop the talents and
creativity of all. The RES therefore sets the ambition of raising
xiii. Annual Survey of Hours and Earnings, Resident Analysis (2008).
xiv. Ability, Sorting and Wage Inequality, Carneiro and Lee (2005).
xv. Off-shoring and Wage Inequality in the UK, 1992–2004, Employment Relations Research
Series No. 91, Claudia Canals (December 2007).
xvi. Employee Training, Wage Dispersion and Equality in Britain, Almeida-Santos and Mumford
(2006).
79.9
56.0
78.8
55.3
79.4
55.3