Chance to keep moving through diversification

As we head towards another winter of at least partial pandemic lockdowns, the damage to the economy at every level – local, national and global – is increasingly apparent. We are facing a major challenge, and to overcome it will take a great deal of resilience and inventiveness.

Scotland’ s economy shrank by 19.4% in Q2 following a contraction of 2.5% in the first quarter of 2020.

Scottish Government scenarios which were prepared back in June suggested GDP could fall by 14% over 2020, though last month analysts found the decline in economic output had been smaller than expected, due to the robust performance of some sectors.

Still, the economic consequences of further anti- Covid restrictions over the winter will be problematic, but a crisis such as this – despite being a health and economic tragedy – can have some long-term beneficial effects.

It provides an added incentive for businesses and workforces to reinvent themselves through innovation, diversification and reskilling.

Here in the north-east, that means accelerating and intensifying a process on which the region has already been embarked for years, but the “double whammy” of the downturn in the oil and gas industry and the problems created by Covid present a serious challenge.

The Oxford Economics Vulnerability Index rates Aberdeenshire as the fourth most vulnerable local authority area in Britain, in terms of Covid-19 economic impacts, largely due to poor digital connectivity and low rates of working from home. On the other hand, it also scores Aberdeen City as the 12th most resilient local authority.

That’s what counts: our progress in re-energizing our economy and workforce. We can contribute to the national recovery by accelerated drug development and digital healthcare in life sciences, digital and advanced manufacturing in the food and drink industry and conversion of the oil and gas sector to energy transition activities.

The first priority is to reskill oil and gas industry workers. Many of them already possess construction and engineering skills suitable for transfer to the burgeoning green energy sector. Energy transition is a massive opportunity for the north- east, with offshore wind, hydrogen as a fuel and carbon capture and storage all developments we are well placed to exploit.

Since 2016, Skills Development Scotland has been helping oil workers retrain for other occupations. Following a survey by Scottish Renewables, the industry body, which found more than three-quarters of oil workers were willing to retrain for green energy jobs but were deterred by the expense, the industry called on the government to establish a national transition training fund.

Last month, in her Programme for Government, First Minister Nicola Sturgeon announced a £25 million National Training Transition Fund, to enable up to 10,000 people of all ages to retrain for new careers, and a £ 100m Green Jobs Fund to help workers find employment in environmentally-friendly occupations. That should give real impetus to oil workers seeking to transition to green energy jobs.

But it’s not just the energy workforce that needs to retrain. The pandemic is going to cause many job losses.

A decline in employment this year of 2.1% in Aberdeenshire is forecast, with a growth of 1.6% between 2020 and 2023. Oxford Economics estimates local jobs creation up to 2027 will be largest in professional services, construction, administrative and support services, and health and social work.

The Scottish CBI has called for greater collaboration to address the upskilling and retraining needs of workers as a new wave of automation and artificial intelligence will transform traditional sectors.

It sees apprenticeships as key to this development. Nine out of 10 workers will need some kind of reskilling by 2030 and one in six will undergo a radical change of job, requiring retraining.

In fact, 80% of the workforce of 2030 are already in work today. Business, government and the educational institutions must collaborate in delivering what Damien Yeates, chief executive of Skills Development Scotland, has called the “rapid, short, sharp upskilling and reskilling” demanded by industry.

Sir Ian Wood, chairman of Opportunity North East (One), has aptly summarized the situation: “The critical business growth themes across all the sectors are digital, automation, market de velopment and the skills development and reskilling of people required in this fastchanging business environment.”

BENEFITS: The crisis provides an added incentive for businesses and workforces to reinvent themselves.