Employment in the creative industries. Ian Brinkley and Charlotte Holloway October 2010

Transcription

1 Ian Brinkley and Charlotte Holloway October 2010

2 Contents 1. Introduction 3 2. Creative industries in the knowledge economy 4 3. International comparisons 5 4. Long run growth trends 5 5. Creative industries in recessions 6 6. Creative industries in recoveries 8 7. A tale of two economies? 9 8. Future scenarios the US projections Conclusions Contact details 12

3 Section 1 Introduction Across the OECD many of the new jobs have come from the knowledge intensive service sectors. The cultural and creative sector s role was however for many years largely unrecognised and under-recorded, in part because the existing official statistics did not easily lend themselves to analysing the sector. This paper sets out: How many people work in the different industries that make up the creative sector in 2010 in the UK; How quickly has the sector grown in the past, including past economic recoveries; How do we compare against other major OECD economies in 2010 and are we falling behind or staying ahead; What are the prospects for the future? Throughout this note we are grappling with an information trade-off: The DCMS13 definition of the creative and cultural industries is one of the best in the OECD (see below for more details). But it is not directly comparable with other sectors or (as yet) with other economies, has proved hard to keep up to date 1, and covers just the last (exceptional) decade. The new Standard Industrial Classification (SIC) introduced six months ago offers more timely figures, allows international and cross-sectoral comparisons, and we can see change over much longer time-periods. However, it is never going to be as representative as the DCMS estimates. In this initial note we have gone with the second as offering more timely and comparable information, while recognising that it can only be an imperfect proxy of the full extent of the creative and cultural sectors. For our purposes we focus on two super-sectors information and communication services which includes publishing and electronic media and computer services and telecommunications (SIC J) and arts, entertainment, and recreation services (SIC R) which includes performing arts, museums and libraries, sports and other amusement and recreational activity. Both super-sectors are a mix of industries inside and outside the DCMS definition of creative industries and where possible we have dived below the super-sector level to look just at the most relevant industries. There is a further group of specialised creative industry services that fall within a third super-sector of professional, technical and scientific services (SIC M) and includes architecture, specialised design, and advertising and related services. There are two other caveats to keep in mind: Our analysis is based on employment because it is the most readily and widely available indicator. However, we also need to look at other indicators such as output (measured as gross value added) or exports the latter will be more important in the future as market and technological changes increase global reach but reduce domestic employment intensity in some creative industries; 1 Latest data are for Summer DCMS is currently working to adapt the new SIC codes to the previous definition of the cultural and creative sector. 3

4 We are only measuring direct employment in the creative industries, not the total of creative related employment across the economy as a whole: the DCMS estimates offer both, but only the former allows a direct comparison with other sectors such as financial services. Creative industries in the knowledge economy Our work on the knowledge economy shows that over the past forty years net employment growth has been driven by the expansion of knowledge based services as defined by the OECD/Eurostat across the OECD 2. By most indicators the UK is a fairly advanced knowledge based economy. Latest UK statistics suggest that in mid 2010 about 15 million people worked in knowledge intensive services, or about 48 per cent of all employment in service industries. At the time of writing, we have employment estimates for some creative based industries that broadly correspond with the DCMS definitions. These include most of the information and communications sector (publishing, movies, TV and radio, computer programming and consultancy, information services), advertising and related services, and creative arts and entertainment activities 3. Employment in these creative industries in March 2010 was just under 1.2 million or just over 4 per cent of all jobs, almost the same as the financial services sector. The biggest single sector is computer services at 40 per cent. We have included it in this initial definition, but while we know some of this employment will fall within the creative industries we do not know as yet how much. The break-down across the creative industries is shown in the chart below. Employment in some creative industries March 2010 Creative, arts, entertainment 16% Advertising 12% Computer related 42% Information 4% Movies, TV, radio 13% 2 Information and communication services, professional, technical and scientific services, admin and support services, financial and real estate services, and arts, entertainment and recreation services. 3 We have excluded design, architecture, fashion, antiques, and crafts either because the statistics have not yet been released at the level of detail required or because there are simply not picked up by the standard industrial classifications. 4

5 Employment across these sectors is characterised by a high rate of self-employment - overall 24 per cent are self-employed, rising to between 40 and 50 per cent in movies, video, and TV, and radio services and in creative, arts and entertainment services. This compares with 13 per cent across the economy as a whole, and 18 per cent for market based knowledge intensive service industries. This makes it harder to keep track of what is happening as statistics for the selfemployed are typically less comprehensive and much less reliable than for employees. International comparisons We can make comparisons with other economies on a broad based definition using our two super sectors of information and communication services and arts, recreational, and entertainment services. The latest figures for the first quarter of 2010 show that by this proxy measure the UK is significantly ahead of other major OECD economies with just over 6 per cent of total employment in these two sectors compared with just under 4.5 per cent across the EU27 and just under 5 per cent in the US. When we split employment between the two sectors, the UK retains a lead in both compared with other major OECD economies, but most clearly in arts, entertainment, and recreational services. Employment in two creative based sectors compared in 2010 Note: share of total employment. Sources: Eurostat, Q1 2010; US Bureau of Labor Statistics, August 2010 Information and communication services Arts,entertainment and recreational services 4.5% 3.0% 4.0% 3.5% 3.0% 4.1% 4.0% 3.9% 3.6% 3.5% 3.2% 3.0% 2.7% 2.9% 2.5% 2.0% 2.6% 2.5% 2.4% 2.1% 2.0% 1.9% 1.7% 2.5% 2.0% 2.3% 2.3% 1.5% 1.5% 1.4% 1.3% 1.1% 1.5% 1.0% 1.0% 0.5% 0.5% 0.0% 0.0% Finland Sweden Ireland UK Netherlands Germany US Italy EU27 Ireland Finland Sweden Spain UK Spain France United States Netherlands Germany France EU27 Italy Long run growth trends Over the long run, the creative industries have shown significant job potential growth. However, the further back we go the less detail we have from the readily available statistics. We use the two super-sectors of information and communication services and arts, entertainment and recreational services as proxy measures of the creative industries. Over the past 30 years job growth has been dominated by knowledge intensive services. Between the first quarter of

6 and the first quarter of 2010 total employment 4 in market based knowledge intensive services grew by 93 per cent and employment in public based knowledge intensive services grew by 89 per cent. This compares with a net 13 per cent growth in total employment across all industries. Our proxy creative industries grew by 37 per cent, less than for market services as a whole but still nearly three times faster than across the economy as a whole. One comparator used in the first TWF report Staying Ahead was the financial service sector. Over the same period, employment in financial services grew significantly less strongly - at 29 per cent - than in the creative based industries. Moreover, the rise in financial services employment is confined to the 1980s when the sector was deregulated. Between 1989 and 2010 employment in financial services fell by 10 per cent while employment in our creative based service industries grew by 20 per cent. Employment growth in knowledge intensive sectors OECD/Euorstat defintion update to 2007 Standard industrial Classification 250% 200% 195% 150% 146% 134% 100% 103% 66% 64% 50% 29% 21% 13% 0% Education Arts, recreation Health Support Real estate Professional Information Financial All industries Creative industries in recessions In all recessions creative industries employment has been more sensitive to the economic cycle than employment in market based knowledge services more generally. Over the last three recessions the employment resilience of the sectors has been remarkably consistent. In each recessionary period employment in our proxy creative based industries fell by between 4 and 5 per cent. However, there have been marked differences between the arts, entertainment and recreational services group where employment falls in this recession have been greater than in previous downturns and information and communication services where the fall in employment has been much less. For the economy as a whole one of the marked differences in this recession compared with previous recessions is that employment fell by much less because of greater flexibility in hours and wages and a greater reluctance of employers to shed labour, especially more skilled labour. This is 4 Workforce in employment definition. Includes employees and self-employed and at the whole economy level HM Forces and people on special employment schemes. 6

7 reflected in the experience of the information and communication industries, but not arts, entertainment and recreation. The main reason seems to have been a much greater vulnerability of self-employment to the downturn in arts, entertainment and recreation compared with other sectors. Between mid 2008 and mid 2010 self-employment across the economy went up by 4 per cent, but in arts, entertainment and recreation self-employment went down by 16 per cent. In contrast, employee employment in arts, entertainment and recreation was relatively stable, falling by just 0.8 per cent. In information and communication services both self-employment and employee employment fell, but the fall in employee employment was larger than for self-employment. This greater vulnerability of arts, entertainment and recreation in this recession could have several related underlying causes. One is that it has always been a feature of the sector and that the growing importance of self-employment has increased the shock absorber role of small one or two person businesses in the face of an external shock. Another is that the exceptional conditions of the pre-recession decade pushed and pulled more people into marginal businesses that could not survive the downturn while continued high levels of public support for arts and creative organisations helped stabilise employee employment. A third is that the rapid drying up of financial support for business during the crisis disproportionately affected a sector always regarded by financial institutions as exceptionally risky. Employment change in three recessions compared Note: all figures GB employees and self-employed. Creative based are information and communications and arts, entertainment and recreation (SICs J and R). Source: Office for National Statistics, TWF estimates. 4% 2% 2.7% Creative based sectors Arts, entertainment, recreation Information and communication 0% -2% -2.1% -2.7% -4% -3.5% -5.0% -4.5% -4.7% -6% -8% -7.7% -9.1% -10% We can look at employment change over the last recession in more detail, but at the time of writing just for employee employment. This is much more representative of the information and communication industries than arts, recreation and entertainment. We can also add a further creative industry, advertising and related services such as marketing. Over the recession, employee employment across information and communication services (excluding telecommunications) fell by 6 per cent, with exceptionally large falls in broadcasting and programming activities and other information services of 23 and 15 per cent respectively. There were also large falls in employment in advertising and related services of 15 per cent. In contrast, 7

8 creative, arts and entertainment service employee employment saw a rise. In comparison, employee employment in all private based service activity 5 fell by just over 5 per cent. Jobs in some creative industries and sectors over the recession 2008 Q2 to 2010 Q2 SIC* Industry June 2008 June 2010 Change Creative industries** 000s 000s percentage 60 Programming and broadcasting % 73 Advertising and marketing services % 63 Other information services % 58 Publishing activities % 62 Computer services, consultancy, related % 59 Movies, TV, radio, video services % 90 Creative, arts, and entertainment services % Total of all above % All private based services % Note: *SIC = 2007 Standard Industrial Classification. ** closest match to DCMS definition of the creative industries using the 2007 SIC codes. Creative industries excluded are specialised design and architectural services (data not yet available) and fashion, other design, antiques, and crafts (no industrial classification exists). Source: Office for National Statistics, TWF estimates. Creative industries in recoveries In the past employment bounced back strongly in recoveries. Between 1983 and 1990 employment grew by 20 per cent in our creative based sectors and by 17 per cent between 1993 and The next decade will share some characteristics with both these periods, in that both were periods of public spending austerity. If this past experience is a reliable guide to the future, the potential for significant employment growth clearly exists. The period after the 1990s recovery of 2000 to 2008 covers most of what the Governor of the Bank of England has called the NICE decade (Non-Inflationary Continuous Expansion). This was a period of rapid growth in consumer spending, an expansion of global markets for creative services and higher levels of public support for the arts. However, growth in employment across the two sectors slowed to around 13 per cent, primarily because of a sharp slowdown in employment generation in information and communication services, with employment levels flattening out form the mid 2000s onwards. This strongly suggests underlying structural change at work and makes it unlikely the information and communication industries will contribute strongly to net employment growth over the coming decade. Their contribution is much more likely to be in exports, growth, and driving innovation both within these industries and across the economy more broadly. 5 Total employee employment in all services less employee employment in education and healthcare services. 8

9 Employment growth in two recoveries and the NICE decade compared Note: all figures GB employees and self-employed. Creative based are information and communications and arts, entertainment and recreation (SICs J and R). Source: Office for National Statistics, TWF estimates. 30% 25% 26.8% Creative based sectors Arts, entertainment, recreation Information and communication 20% 19.6% 15% 16.9% 15.0% 16.2% 16.1% 17.8% 12.7% 10% 7.5% 5% 0% A tale of two economies? A direct comparison with the United States can be instructive for two reasons. One is the opportunity to do a contrast and compare analysis. For example, the US shares some common characteristics in having relatively open markets and a shared language and industrial linkages in some areas are highly developed, while lacking some UK features such as a strong public sector broadcaster and public service obligations. The second is that we have some official projections for growth in some creative industries in the US over the next decade and trends in the US may indicate where the UK could follow. The remainder of our analysis is based just on employee employment (the only basis on which a comparable detailed analysis can be undertaken). The exclusion of self-employment is a significant omission for some of the creative industries in the UK, but less so in the US where selfemployment is less important than in the UK. For example, in arts, entertainment and recreational services in the US the incidence of self-employment is 13 per cent compared with 24 per cent in the UK. An employee only analysis therefore understates the importance of the UK creative sectors compared with the US in terms of employment. Moreover, a direct comparison between the US and the UK is always difficult at this level of detail because even though the industry codes broadly correspond, they are not identical. Although the industries we have selected in both economies have similar titles, we still may not in some cases be directly comparing like with like. What is immediately striking about the US analysis is how little the creative industries have contributed to the growth in US employee employment over much of the NICE decade. Between 2000 and 2008 US service industries employee employment went up by 8 per cent, but employment in some creative based industries went down by 2 per cent. Over the same period the same roughly comparable set of industries in the UK saw employment go up by 12 per cent. The weaker US performance was driven by much bigger falls in employment in publishing activities and 9

10 contrasting trends in employment in advertising and market research related activities and information services, where UK employment went up and US employment went down. One area where the US appears to have done better than the UK is arts and entertainment services where employee employment went down in the UK and up in the US. However, this may be partly because we are comparing apples and pears. For example, the US classification includes spectator sports, where employment has been growing, whereas in the UK these are more likely to be classified under sporting activities 6. Moreover, the very high rate of selfemployment in this industry in the UK further distorts the comparison. Other contrasts will also need to be explored in more detail. For example, although US employment in advertising and marketing services declined between 2000 and 2008, employment in US firms providing marketing consultancy exploded almost doubling in just 8 years from 80,000 to 150,000. These may be unconnected developments with very different services and expertise offered by US advertising and market research firms and US marketing consultancy firms, but we need to be clear about potential links and what factors might be driving down employment in one area and pushing it up in another. EMPLOYMENT CHANGE IN THE UK AND US CREATIVE INDUSTRIES UK creative based industries SIC US creative based industries 73 Advertising and marketing 21% 5418 Advertising and related -7% 62 Computer services 16% 5415 Computer services 14% 59/60 Movies, sound, broadcasting 16% 511/512 Movies, sound, broadcasting 1% 63 Information services 18% 518/519 Information services -17% 58 Publishing activities -7% 511 Publishing activities -17% 90 Creative, arts, entertainment -8% 711 Performing arts, spectator sports 2% NIC All above 12% All above -2% Note: all figures employees in employment, national industrial classifications. Creative industries based on DCMS definition, updated to UK 2007 Standard Industrial Classification. Source: Office for National Statistics; Bureau of Labor Statistics. Future scenarios the US projections Authoritative forecasts for the creative industries in the UK are few and far between, partly because until recently there was little correspondence between the creative industries and the standard industrial classifications. Most tend therefore to be broad based forward projections, extrapolations and assumptions based on what happened in the NICE decade drawing on the DCMS employment estimates. A more solid effort has been made by the US Bureau of Labor Statistics (BLS) which late last year published its regular update of industry and occupational projections over the next decade 7. The projections are not ideal, as their base year is 2008 and some have been overtaken by events and are clearly unrealistic about future levels of employment. Even so, they give some indication of what might be expected in a decade of economic recovery (the BLS assumes the US economy returns to full employment by 2020). 6 The US figures shows employment in performing arts companies going down, but employment among independent artists going up; also on the rise was employment in firms offering agency, management and promotion services including the management of celebrities. 7 BLS explicitly sees these projections as a public service offering advice to US employers, jobseekers, and those entering higher education as to what sort of occupations might be in most demand in the future US economy and what sort of wage they might pay. 10

11 The US projections show overall a stronger performance for the creative based industries than might have been expected from their pre-recession experience. The publishing industry is expected to show further overall job losses, but contribute a strong GVA performance. This comes entirely from accelerating growth in software publishing, with very rapid growth in GVA of over 10 per cent per annum as well as employment. These figures exclude internet publishing which seems to be included in the data and information services industry. This is showing much stronger growth than in the previous decade. The projections are summarised in the table below. US OFFICIAL PROJECTIONS OF EMPLOYMENT IN SOME CREATIVE INDUSTRIES Industry Annual growth in Employment Annual growth in GVA Publishing - 5% -0.5% 5.4% Printed media -19% -2.1% -0.6% Software 30% 2.7% 10.5% Movies, video, sound 12% 1.1% 2.9% Broadcasting 8% 0.7% 2.1% Data and information services 45% 3.8% 9.3% Specialised design 46% 3.8% 3.0% Computer system design 45% 3.8% 3.8% Advertising and related 8% 0.8% 4.3% Performing arts, spectator sports 15% 1.4% 1.3% Performing arts companies 8% 0.7% 1.2% Spectator sports 13% 1.3% 2.1% Promoters, agents, managers 20% 1.8% 0.0% Artists, writers, performers 30% 2.5% 1.6% Source: US Bureau of Labor Statistics Unfortunately, there is no UK equivalent of the above projection. The closest is the UKCES s Working Futures series of reports, but they lack detail of employment by industry. The US projection should not be accepted uncritically it may well be too optimistic in some areas. But if we take the analysis at face value in the absence of anything better, it is both an encouragement and a warning. We can start to construct a more optimistic and a more pessimistic scenario as follows: The UK creative sector also experiences a decade of recovery similar to that projected for the US and in some areas does better than in the past, given the UK has outperformed the US (on the employment measure) in the period 2000 to If that were to happen, the UK would likely retain its relative competitive advantage in this area; The UK would start to fall behind the US and quite possibly other major OECD economies as some unfavourable structural changes seen in the US have still to fully impact on the UK creative sector. Moreover, the scope for growth in some areas may not be not fully realised or may be constrained by for example domestic market size, the regulatory environment, and public spending cuts. 11

12 Conclusions The creative sector remains elusive in trying to pin down its full extent through the use of official statistics, as our use of proxy measures and references to some rather than all of the creative industries show. This initial cut of the data is just that more work will be needed to refine these measures and undertake more detailed and sophisticated analysis, moving beyond just employment measures to also look at GVA and exports. Above all, we need to dive down into sectors and industries to fully understand what is going on. Some early conclusions are: the UK has a relative comparative advantage measured in employment terms and as we have argued in previous knowledge economy statements the sector therefore merits special attention in terms of rebalancing the economy; the creative industries will generate significant numbers of jobs in their own right (if past experience of recoveries is any guide, perhaps of the order of 10 to 15 per cent growth): over the next decade overtake the financial services industry in levels of employment; the creative industries overall are however unlikely to be large scale generators of new jobs directly: although some industries will indeed see very rapid expansion, others are likely to see few new jobs and in some areas a decline in employment is likely. Developing policies that assist areas of potential job growth to expand even faster is an obvious priority. The creative industries role therefore needs to be seen as much about driving future exports, technology applications, and innovation both within the sector itself and across the rest of the economy as about job generation. Contact details Prepared by: Ian Brinkley and Charlotte Holloway The Work Foundation Registered office: 21 Palmer Street, London, SW1H 0AD Incorporated under Royal Charter, Registered Charity Number Tel: ibrinkley@theworkfoundation.com cholloway@theworkfoundation.com 12