Thomas Athey, Economic Analyst at the North East Local Enterprise Partnership (North East LEP), discusses the main findings from the new digital tech evidence base published on the North East Evidence Hub.
Over the last year at the North East LEP we have been developing a refreshed evidence base for the North East digital tech sector, using a variety of data sources to provide a rounded perspective on the sector. This has been developed as part of our commitment to maintaining robust evidence bases for all of our areas of strategic importance, as outlined in the Strategic Economic Plan.
It is clear from the evidence that digital tech is a high productivity, high wage and high growth sector in the North East, performing above the North East average on all these metrics. The GVA added per hour worked in the sector is £11 higher than in the North East economy overall, the median weekly salary for full time employees is the highest of the sectors with available data, and the sector has grown more quickly than the regional economy over the last decade.
The North East also has a specialisation in several key markets which are poised for future growth. Findings from the Data City platform suggests that the North East LEP area has an above average concentration of firms in cyber, fintech, immersive tech and software as a service. Looking at subsector specialisations, the North East has a particular focus within AI, fintech, med tech and software as a service. The region is well positioned to compete for market share.
Realising this potential will mean addressing the mismatch between skills demand and supply, as demand for digital tech jobs in the North East LEP is very high. Over the 12 months between July 2021 and June 2022 there were more job postings for IT jobs than any other occupation category according to the Adzuna jobs platform. Finding the workers to fill these roles can be challenging, especially as the increased use of remote working across digital tech means that local businesses are having to compete with firms across the UK.
Attracting funding and investment to the sector is also key. Venture capital investment growth has been strong in the North East and £726 million was invested in the North East digital sector between 2015 and 2020. The growth in investment in England excluding London over the same period, however, was stronger still, which may act as a constraint on future sector growth in the North East.
Progress will have benefits beyond the digital tech sector as the presence of a digital cluster in the North East can accelerate digital adoption in other areas. Many firms already operate across sectors, with over 10% of North East AI firms also operating in advanced manufacturing, internet of things, computer hardware, photonics and data landscape. The adoption of digital technologies can drive productivity improvements whilst providing a market opportunity for local tech firms.
Many of those working in digital occupations also work outside of the digital sector. Only 39% of those employed in digital occupations in the North East are employed in the digital sector itself, while regional digital occupation employment growth has been quicker than the employment growth in the digital sector. This is further evidence of digital adoption across the North East economy and highlights how the whole region can benefit from improvements in the digital skills supply.
Emma Ward, Research, Evidence and Analysis Programme Manager at the North East LEP, said: “We are committed to providing up-to-date and insightful evidence bases that support regional decision making, strategy development and programmes of delivery. Our team will continue to keep this evidence base up to date, bringing in new and innovative data sources to understand how the sector is developing and responding to market challenges. Looking ahead, we hope to publish further sector evidence bases, similar in content to this, on the Evidence Hub.”
Read more about the Digital Technology Evidence Base here.