The role of CCUS in industry clusters in delivering value to the political economy : a new multiplier metric for the quality of employment

Turner, Karen and Alabi, Oluwafisayo and Race, Julia and Katris, Antonios (2019) The role of CCUS in industry clusters in delivering value to the political economy : a new multiplier metric for the quality of employment. [Report]

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    Abstract

    Previously we have looked at how many direct and indirect (supply chain) jobs are supported by Scottish and UK industries that may be targeted for CCUS and/or other industrial decarbonisation solutions. This has included both the industries that could be play a key role in delivering CO2 transport and storage services (the oil and gas industry and its supply chain), and capture industries. In UK regional context, potential capture industries located at key cluster locations are of particular interest under the BEIS CCUS Action Plan. In Scotland particular interest lies in the Scottish Chemicals industry, much of which is located at the Grangemouth cluster in Falkirk. Basic employment multiplier analyses (using input-output data published by the Scottish Government) tells us that, while relatively capital intensive (making direct industry jobs hard to create), industries in the Chemicals sector support supply chain jobs across multiple Scottish sectors. Overall, the Scottish Chemicals industry directly employs 5,691 full-time equivalent workers, with a further 9,231 employed in supply chains throughout Scotland. The question we address here is the extent to which this may be considered as high quality employment. We extend conventional input-output economic multiplier analysis to produce a new metric that reports the quality of employment in terms of the average wage supported across the wider economy by any given industry’s activity. We find that the Scottish Chemicals industries support average wages per full-time equivalent (FTE) worker in their upstream supply chains that range (in 2015 prices) between £36k and £38.2k. This is considerably greater than the average wage across all Scottish industries (£32.2k per FTE worker), and among the highest supported by any Scottish industry. If the direct own-sector wage is included in the calculation, the average supported wage rises considerably in each case, with the three Chemicals industries being second only to the Scottish Pharmaceuticals industry in the wage premium associated with total supported jobs. Our method allows us to consider the critical contributors to these high average supported wages. For example, in the case of the Scottish ‘Petroleum Refining and Petrochemicals’ industry we find that while supply chain employment is dominated in absolute terms by jobs in lower wage Distribution and Services sectors, the presence of higher wage energy/utilities and other manufacturing sectors pull up the average wage supported (E38.2k).