Employment growth remains strong in Greater Cambridge region’s knowledge-intensive businesses but falls elsewhere
Overall employment rates in Greater Cambridge have continued to grow during the pandemic thanks to knowledge intensive (KI) sectors.
A different picture emerges in businesses outside these fields, however, with employee numbers falling or remaining unchanged in seven out of nine non-KI sectors, a new report shows.
The findings come from the University of Cambridge’s Centre for Business Research report funded by the Greater Cambridge Partnership and Cambridge Ahead and cover the period between October 2020 and April 2021.
Studying a sample of companies that cover 68 per cent of corporate employment in Greater Cambridge, the report shows the impact of lockdowns on the economy compared to a time before the pandemic.
The report finds: “Corporate employment growth in the Greater Cambridge area has slowed down from 4.8 per cent in 2019-20 to 3.7 per cent in 2020-21 – the latter is still a significant rate of growth considering the unprecedented challenges brought about by Covid. However, there is variation in these growth rates across both industry sectors and firm sizes.
“The slowdown in employment growth over the last two years is due to a weaker performance of non-KI sectors, suggesting that they have been hit the hardest by Covid-related restrictions.”
KI sectors have shown great resilience, with employment growth maintained at the previous year’s level of eight per cent.
The region’s life science and healthcare sector recorded, unsurprisingly during the pandemic, the strongest growth of 11.9 per cent, with information technology and telecoms second, recording strong growth of 11.2 per cent.
Outside of KI industries, only manufacturing and the education, arts, charities and social care sector recorded employment growth in the 2020-21 period compared to 2019-20.
Overall, non-KI sectors recorded a 0.8 per cent drop in employment, compared to 1.6 rise in 2019-20.
The report notes: “The Covid pandemic has had a varied impact across sectors. Sectors like life sciences are involved in supporting the fight against the virus and future outbreaks.
“Information technology and telecoms have benefited as a consequence of the increase in remote communications, gaming and internet security, which have more than offset the reduction of demand in other areas.
“Hospitality, travel and tourism and some business services companies have been severely affected by lockdowns and other restrictions.”
The ‘other services’ sector - which covers hotels, pubs and restaurants - showed the biggest decline in employment, dropping 3.6%.
Transport and travel along with property and finance were the next biggest fallers, while high-tech manufacturing was also hit, dropping 0.3 per cent compared to growth of 0.7 per cent in 2019-20.
The number of one-person businesses, meanwhile, has risen by 4.3 per cent - or by 113 people in real terms - perhaps as individuals set up their own companies in response to the pandemic’s impact.
KI sectors helped small businesses with one to nine employees grow by 1.9 per cent, compared to 0.5 per cent the year before.
But falls for companies in non-KI sectors means employee growth at companies with 10 or more employees has slowed from 5.7 per cent to 4.1 per cent.
CBR’s report says: “The group of 10-plus employee businesses tends to dominate employment changes given its large aggregate size. These businesses are significant contributors to the decline in employment observed in sectors such as ‘High-tech manufacturing’ (eg world-leading manufacturer of industrial inkjet printheads Xaar) and ‘Other business services’ (eg contract cleaning services company Nightingale Cleaning).”
Overall, KI sectors employed 3,029 more people in this period than the previous year, while non-KI sectors dropped by 302 employees.
CBR also examined turnover data for a sample of 185 corporate companies, which found a year-on-year decline in turnover numbers from 9.3 per cent to 1.5 per cent. Employment at these companies also dropped from 7.7 per cent to 5.5 per cent.
“The finding that turnover fared worse than employment partly reflects the role of the government’s furlough scheme in holding up employment in sectors with declining sales. Therefore, our results suggest that the end of this unprecedented support package could have implications for employment changes,” the report notes.
“However, the overall picture might be less positive than the modest decline in turnover that we have found for the corporate sector, since this decline is likely to be felt more by a number of in-person service businesses (eg consultants, hairdressers, gyms, pubs and restaurants) many of which are not incorporated.”
The report said: “Overall, the results highlight the continued strong performance of the Greater Cambridge corporate economy despite the unfolding of the Covid-19 pandemic.
“The impact of the first and second lockdowns in England on Greater Cambridge-based businesses was mitigated by the resilience of KI sectors, particularly the life science and ICT clusters. In turn, non-KI sectors have been hit the hardest by Covid-related restrictions and would have suffered larger falls in employment without the support of the furlough scheme.”
A small sample of companies with interim results for the six-month periods ending between May 2021 and June 2021 was also studied to provide a more recent snapshot of the region’s economic wellbeing.
“Total turnover for this group of companies (all knowledge intensive) rose by 14 per cent in their latest six months compared with a decline of eight per cent in the first half of 2020 (when the pandemic first hit). Therefore, we find evidence of a strong recovery and an upturn in business confidence,” the report concluded.
Matthew Bullock, chair of the regional economic planning group at the business and academic member organisation Cambridge Ahead, said: “Corporate employment growth in knowledge intensive sectors has continued at a significant rate and turnover data in these sectors also suggests a strong bounce back performance in the second half of 2020.
“To continue to support these companies to grow and for the non-KI sectors to recover quickly, we must ensure we are planning ahead and putting in the infrastructure before and alongside development, not after. This will help to promote high quality of life across our city region.”
County councillor Elisa Meshini (Lab, King’s Hedges), chair of the Greater Cambridge Partnership executive board, added: “This data is vital to understanding how our economy has stood up to Covid-19 and it demonstrates just how vital our knowledge-intensive sectors have been, and will continue to be to our economy in the future as we move forward from the pandemic.
“It is therefore vital that the GCP continues to deliver our major infrastructure schemes – with the opening of the Histon Road project this year and Chisholm Trail phase one nearing completion – and our successful skills contract helping to support our businesses, workforce and residents.”