Page 48 - Regional Employment & Skills Plan

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Sectors within the foundational economy are required to support the overall function of the economy and will utilise predominantly local expenditure, sectors include retail, social care and the public sector. The foundational economy has typically lower skills levels, occupational groupings and wages, the sector also has a higher number of part-time employees.
The foundational economy can be considered as a new economic entity and has been described as;
‘Large, mostly unglamorous, rather heterogeneous, and is distributed across the country. It is an economy that meets everyday needs by providing taken-for-granted services and goods such as care, telecommunications or food.’94
The nature of the foundational economy means that a number of occupational groups can fall under the category which have been identified as having skills gaps.
‘By occupation, there had been a particularly marked increase in the density of skill shortage vacancies amongst machine operatives since 2013 (from 25 per cent of all vacancies to 33 per cent). Skilled trades continued to be the occupation with the highest density of skill-shortage vacancies (43 per cent).’95
As a result of the low wage nature of much of the foundational economy there are significant challenges faced by employers through the introduction of the national living wage for those aged over 25, however, it also provides a significant opportunity for those who may have become entrenched in low paying jobs. Due to the recent implementation of the living wage the full impacts of the policy onto the foundational economy have not been fully evaluated.
4.1 Relationship with the aspirational economy
A number of sector areas can be defined as both aspirational and foundational, for example where a ‘day to day’ service is provided and an additional level is provided to support economic growth and inward invest. An example would be the financial services sector where everyday financial transactions form part of the foundational economy while more advanced financial transactions can form part of the aspirational economy.
Sectors that can be considered as operating across both the aspirational and foundational economy include:
• Financial and professional services • Construction
94 http://www.cresc.ac.uk/medialibrary/workingpapers/wp131.pdf 95 Employer Skills Survey 2015:UK Results – UKCES 2016
Regional Employment & Skills Plan South West & Mid Wales Foundational Economy