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The knowledge economy

Knowledge business within the county

People working within knowledge intensive (KI) industries

People working within knowledge intensive occupations

High-technology manufacturing

The knowledge economy may be described as the part of the economy where organisations generate wealth by utilising a knowledge specialism in their workforce. This may include the knowledge to use a certain technology.  "Economic success is increasingly based upon the effective utilisation of intangible assets such as knowledge, skills and innovative potential as the key resource for competitive advantage.  The term 'knowledge economy' is used to describe this emerging economic structure" (Economic and Social Research Council, 2005)

There is no single way of defining what the ‘knowledge economy’ is, rather a number of separate definitions i.e. particular types of businesses or occupations associated with higher knowledge requirements and levels of skills.

Unless otherwise stated we have used the Eurostat definition of knowledge intensive services based on Standard Industrial Classification (SIC) 2007 codes[1].

Please note that manufacturing is not included within this definition as there are a separate set of definitions for high-technology manufacturing (reported below). Defining knowledge intensive activities using standard industrial classification codes has its limitations. Primarily because a business and its employees are all classified by a single code according to the main activity at the site in question. This means a whole business is classified as knowledge intensive even if it only part of the business or a fraction of employees who are actually engaged in ‘knowledge intensive’ activity.

Knowledge business within the county

In Herefordshire in 2015, there were approximately 3,000 businesses that were classed as providing knowledge intensive services, about 26 per cent of all business units in Herefordshire. This is lower than for England (39%) but similar to the West Midlands region (34 per cent).
Source: Business Register and Employment Survey 2015, ONS Crown Copyright

People working within knowledge intensive (KI) industries

In 2015, there were 27,700 employee jobs in knowledge intensive industries in Herefordshire, approximately 37 per cent of all workplace employment in the county.  This proportion is lower than the West Midlands region (43 per cent), The Marches Local Enterprise Zone (41 per cent) and across England as a whole (49 per cent). Within the knowledge intensive services sector the ‘other’ category made up the vast majority within Herefordshire (28 per cent of total employment) followed by ‘market services’ (6 per cent), ‘hi-tech’ (2 per cent) and ‘financial’ (1 per cent). This is similar to the distribution elsewhere, although ‘market services’, financial’ and ‘hi-tech’ all accounted for more employment nationally than in Herefordshire (see chart below). Looking in more detail at the ‘other’ knowledge intensive services, the vast majority is made up of public service activities (public administration and defence; education; human health; residential care; and social work activities without accommodation). In fact 75 per cent of all employment in knowledge intensive employment was in these sectors (more than across England (58 per cent) or the West Midlands (64 per cent)).

Chart 1. Make up of the knowledge intensive services sector (proportions of total employment)
 Make Up Of The Knowledge Intensive Services Sector Proportions Of Total Employment
Source: Business Register and Employment Survey 2015 – ONS, Crown copyright

Table 1. Employment in knowledge intensive industries by location 2015 (proportions of total number of people employed in the knowledge intensive services sector)
Employment In Ki Services By Location
Source: Business Register and Employment Survey, 2015 – ONS, Crown copyright

Note: Figures are rounded to 100 but percentages are calculated on unrounded figures.

 *This includes the ‘Rotherwas’ industrial estate which is situated just outside of the city boundary in the north of Dinedor Hill ward

Hereford City (including the Rotherwas industrial estate) had the greatest number of people employed in the knowledge intensive service industry in 2015 (13,000) while the highest proportion was seen in Bromyard (46 per cent). 

Knowledge intensive occupations

Probably one of the ways of measuring how many people are employed in knowledge intensive jobs is to look at their standard occupational classification.  Occupational classification information is obtained through the annual population survey (APS)[2].

The three occupations which are classed as knowledge intensive are ‘managers and senior officials’, ‘professional’ and ‘associate professional and technical’. The underlying rational for this definition is that these occupational groups include the sorts of jobs we most readily associate with the knowledge intensive industries.  One drawback is that some categories include large numbers of people who would not typically be regarded as knowledge workers, for example, managers of small stores and corner shops. Further to this, those jobs may be classified as knowledge intensive but not be working in a business that is knowledge intensive, therefore possibly not of as much value to the economy in terms of GVA.

In 2015-16 these occupations made up 41 per cent of all those in employment in Herefordshire. There was not a statistically significant difference between the county and the West Midlands region, but both areas were significantly less than England as a whole.

Chart 2. Proportion of all those in employment in the knowledge intensive occupations
Proportion Of All Those In Employment In The Knowledge Intensive Occupations
Source: Annual Population Survey 2015, ONS, Crown copyright

Note: Error bars show 95% confidence intervals. Overlapping bars indicate that there is no significant difference between the values. For more information about confidence intervals, see the useful definitions page.

High-technology manufacturing

High and medium-high technology manufacturing jobs have been defined by Eurostat[3], which includes jobs such as manufacturing of pharmaceuticals, chemicals, technical machinery e.g. clocks, aircraft, agricultural and motor vehicles.  

Although Herefordshire overall has more employment in manufacturing than nationally most of the difference is accounted for by more low and medium-low technology manufacturing. The proportion employed in high and medium-high technology manufacturing (3 per cent) is the same as The Marches Local Enterprise Zone and as across England and in fact lower than the West Midlands region (5 per cent). 

Note: that figures quoted here are correct, but may differ from apparent figures in the chart below due to rounding error.

Low technology and medium-low technology manufacturing together accounted for 80 per cent of employment in manufacturing in the county compared to 59 per cent in the West Midlands 60 per cent across England and 69 per cent across The Marches. Note that low technology manufacturing includes manufacture of food and beverages, which historically have been strong sectors for the county.

Chart 3. Employment in high and medium-technology manufacturing jobs (as proportion of all employment)
Employment In High Tech To Low Tech Industry
Source: Business Register and Employment Survey 2015, ONS, crown copyright
Note: Figures in the chart may differ from those quoted in the text due to rounding error


[1]Hi-tech KI services: 59, 60, 61, 62, 63, 72    KI financial services: 64, 65, 66    KI market services: 50, 51, 69, 70, 71, 73, 74, 78, 80    Other KI services: 58, 75, 84, 85, 86, 87, 88, 90, 91, 92, 93

[2] The Annual Population Survey (APS) is a combined survey of households in Great Britain. Its purpose is to provide information on key social and socio-economic variables between the 10-yearly censuses, with particular emphasis on providing information relating to Local Authority areas. The APS comprises the annual Labour Force Survey (LFS) plus data from the Annual Local Area Labour Force Survey (ALALFS), and a further sample boost, the APS boost, achieving a minimum sample of 500 economically active adults in all local authority districts in England.   Data is available from 2004.

[3]High technology ,manufacturing: 211, 212, 261, 262, 263, 264, 265, 266, 267, 268, 303 Medium-high technology manufacturing: 201, 202, 203, 204, 205, 206, 254, 271, 272, 273, 274, 275, 279, 281, 282, 283, 284, 289, 291, 292, 293, 302, 304,      309, 325, 292, 293, 293, 294, 294, 294, 295, 295, 295, 295, 295, 295, 296, 297, 297, 311, 312, 313, 314, 315, 316, 316, 341, 342, 343, 352, 353, 354, 354, 354, 355.

Last updated: Wednesday, August 22, 2018