Labour Market Change

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Labour Market Change

Labour Market Change


London's economy continues to grow and is currently outperforming other regions in the UK. In March, the Purchasing Managers' Index (PMI) measures of seasonally adjusted new orders and the level of employment for London were above that of all other regions. Meanwhile, the seasonally adjusted business activity measure for London was the second highest among all the regions. (Wagner 2000:54)All three indices for London are well above 50, which is the level consistent with no change on the previous month. At 54.0 the seasonally adjusted level of employment index for London is at its highest level since March 2005. The rates of expansion for new orders and business activity remain sharp, though they did ease slightly in March.

The City of London is currently doing well due to the strong performance of financial markets. Over the long-term the improving status of the City is expected to continue as highlighted by a recent report from the IBM's Institute for Business Value and The Economist Intelligence Unit. The report predicts that the City of London will become an even stronger magnet for international employee talent as it cements its reputation as the cosmopolitan capital of commerce. (Villano 2004:20) More restrictive financial regulations in the US are expected to lead to more US companies and executives coming to London to do business.

London's economic recovery continues to strengthen with unemployment falling, industrial production rising and the Nikkei share index reaching levels last achieved in 2000. After years of deflation there are initial signs that low levels of positive inflation may be returning to the London economy leading to speculation that interest rates may rise later this year. Meanwhile the UK economy continues its blistering growth and driven by investment it actually picked up pace in Q1 2006. With a historically low unemployment rate the UK economy continues to perform well. (Howle 2004:12) However, growth may slow this year as consumption potentially moderates due to a cooling housing market and the lagged impact of previous monetary tightening. US interest rates at 4.75 per cent are now at their highest since April 2001.

Two potentially important spatial scales can be identified from previous research. At the urban level, the importance of geographical location is likely to be minimised by the opportunities opened up through commuting. However, at an interurban scale (between labour markets), the concentration of ethnic minorities in particular geo- graphical areas is likely to affect their employment opportunities, simply because some local labour markets are declining whilst others are growing. Within local labour markets the 'spatial mismatch' thesis suggests that lack of job opportunities in the inner cities may result from an outward shift of industry. This may be responsible for high unemployment rates for blacks living in inner areas. (Gallagher 2000:45)

London is a particularly difficult place to make the transition, because a higher proportion of jobs are high skilled and therefore less accessible to people coming ...
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