Last week’s Birmingham Post carried a piece on the local LEP stating that it was aiming to create 100,000 jobs and lever in more than £8 billion in private sector money. I wish it well in these ambitious objectives.
One way of saving – let alone creating – several thousand jobs is for the LEP, and in particular Birmingham City Council, to recognise that the Birmingham Wholesale Markets is a commercially viable economic institution that brings considerable benefits to the city and wider region. Put simply, the markets are worth investing in.
They are one of the largest integrated markets in Europe, and the largest in England. Its operational model, in particular its close links with many small firms in the city and the outdoor retail markets, is seen as something of a benchmark internationally.
The markets comprise 73 traders with an aggregate turnover of £275 million annually, employing 1,100 directly on-site and many more externally. Quite how many jobs are supported externally has been the subject of some debate. In earlier Post pieces I’d put the total markets-related jobs figure at around 4,000, but an interesting piece of work has just been undertaken by Forrest Research which puts the total number of dependent jobs as high as 15,000. That gives the markets a pretty big local and regional economic footprint.
The markets service not only the West Midlands region – with a population of 5.5 million – but also the middle third of Wales and the northern parts of the South West.
In arriving at this 15,000 jobs estimate, the following assumptions were used:
* The markets support close to 200 retail markets, encompassing roughly 2,000 retail traders. Assuming 2.5 dependent full-time equivalent jobs (FTEs) at these traders, some 5,000 FTE jobs are at risk if the markets were to close. As well as direct employment at the retail markets, the mix of related and support activities can be estimated at a further 0.25 FTE jobs per retail trader, ensuring a further potential 500 FTEs in the catchment area at risk.
* In addition to the employment supported in the retail markets, the city council itself calculates that close to 5,000 independent local retail and catering businesses rely on the markets. Assuming a FTE job dependency of 1.5 (which seems reasonable), this multiplier gives an employment effect of 7,500.
* There are more than 2,400 deliveries each trading week around the markets. Assuming a multiplier of 0.5 FTE in the logistics sector, there are a further 1,200 FTE job dependents here as well. Last but not least, given the number of companies operating on the site, then another 20-30 dependent ancillary FTE jobs could be assumed.
Add that all together, and the total number of direct and indirect jobs supported by the markets could be as high as 15,000. The assumptions underpinning this estimate are reasonable.
This new jobs estimate adds weight to the earlier claim by Shabana Mahmood MP that the loss of the markets could have a jobs impact on the regional economy as big as the closure of MG Rover. The latter ultimately led to loss of some 10,000 jobs at the firm and in the supply chain. Some may have scoffed at the MP’s claims at the time, but actually she is in the right ball park.
And the broader strategic importance of the markets for the wider ecosystem of small firms also needs to be recognised. What’s important here is the price differential between wholesale- and retail-sourced inputs for such firms.
Low wholesale prices at the markets mean that the small independent sector – corner shops, restaurants, take-aways all run by an ethnically diverse mix of owners – can keep costs down. Such firms are vulnerable to what would amount to a pretty hefty price shock, of the magnitude of 30-40 per cent, if access to the wholesale markets became constrained.
