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The Economics Story: Is Dorset on a sticky wicket?

Fortnightly insight into the current state of the economy and how it relates to Dorset by Nigel F Jump, Chief Economist of Strategic Economics Ltd (a Dorset Company) and Visiting Professor in Economics at the Universities of Bath and Plymouth.

See: www.strategiceconomics.co.uk

After a stormy, rain-soaked period, we are now into a cold snap. It’s appropriate weather for a Dorset economy that has been buffeted by a series of economic storms interspersed with the cold reality of the downturn since 2008. There are a few signs that the economic weather may improve a little next year, but all the main forecasters still expect it to be a difficult spring.

As well as thinking about these cyclical questions, however, the end of the year always brings new data about the structure of the Dorset economy. For example, the latest annual survey of hours and earnings (ASHE) has been released by the ONS.  Showing data for the year to April 2012, it looks at median hours and earnings for all geographies (national to local).  It includes analysis by occupation, travel to work, residence and workplace.  The relative rankings tend not to change much year-by-year.  Nevertheless, the ASHE reveals interesting aspects of the local economy.

For all employee jobs, weekly pay by workplace and residence in SW England averaged £366.50 and £376.40 respectively in this period, suggesting incomes were boosted £10 a week by non-SW flows.  In Dorset, the equivalent figures were £347.70 and £383.30 for Bournemouth; £389.10 and £387.70 for Poole; and £342.30 and £357.50 for the rest of the county. As usual, Poole is above and Dorset county below the regional average on both measures whereas Bournemouth is below on workplace and above on residence.

As we see, workplaces in urban areas tend to have higher weekly pay than rural ones and residents in the east of the county tend to have higher pay than the rest. Within the county, for example, the workplace weekly pay range is from a high of £365.00 in East Dorset to a low of £298.70 in North Dorset. Although neighbours, East Dorset is part of, or adjacent to, the main conurbation and, therefore, its earnings benefit more than those in North Dorset from urban agglomeration. Similarly, by residence, the range is from £399.40 in mostly urban Christchurch to £335.90 in mostly rural Purbeck. Note that the range on workplace is lower than that on residence, suggesting incomes and transfers from outside Dorset are boosting local earnings.

It is also interesting to look at the gap between workplace and residence in each location.  For example, Christchurch has much higher weekly pay by residence (£399) than by workplace (£363).  This partly reflects a wealthy retired population with good pensions and savings incomes as well as outward commuting to Bournemouth-Poole and the M3/M27 corridors. A similar pattern of “residence pay being more than workplace” is evident in Weymouth and Portland, West Dorset, North Dorset and Bournemouth, also reflecting travel-to-work patterns. In contrast, East Dorset, Poole (areas that ‘receive’ workers each day) and (slightly) Purbeck have higher weekly pay by workplace than by residence.

Local divergences in the ASHE survey are affected by occupational and industrial structures. For example, as revealed above, the workplace measure for Poole is much higher than for Bournemouth.  This probably reflects a greater preponderance of relatively high-pay manufacturing in Poole and more relatively low-pay tourism and other services in Bournemouth.  Interestingly, by residence, the gap virtually disappears.

I have only skimmed the ASHE surface here.  (For example, I have not made any comparison between Dorset and other parts of the south.)  Soon, we shall get the latest gross value added data for Dorset.  We should then be able to judge the county and its parts against other areas in terms of output and output per head.  It will be interesting to compare the story for pay, as outlined here, with that for output and judge whether Dorset is paying its way in the world.  Generally, the gaps on income are not as wide as those on output.  In other words, the key economic differences within Dorset reflect relative productivity more than relative pay.

 

Professor Nigel Jump, 1st December 2012

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