The West Midlands no longer has the least skilled workforce anywhere in England, according to official statistics.
Efforts to improve education and workforce training appear to be paying off, with the region shedding its 2004 label of the worst performer.
It is now third from bottom out of nine English regions, based on a skills performance index.
The improvement is disclosed in the annual report of the West Midlands Regional Observatory, which monitors economic and social trends.
But the remainder of the document makes gloomy reading.
Regional economic output is £10 billion a year below the national average, with the gap described as “growing year on year”.
A north-south divide in the West Midlands, with Solihull and south Warwickshire pulling ahead in wealth creation at the expense of Staffordshire and Stoke is a worrying development, according to the report.
Average output per employee is lower than in most other parts of the country, while businesses in the West Midlands are said to be particularly bad at making money from innovative ideas.
While manufacturing continues to decline, the region is struggling to attract the service sector occupations that “add the most value” to the economy.
Other findings include:
• The West Midlands has the highest proportion of people with no qualifications in the country.
• Skills levels, although improving, remain low in Birmingham, the Black Country and Stoke.
• Participation in cultural activities is lower than in most other regions.
• Participation in sport is also low and said to be a contributory factor to high levels of obesity.
The study uncovered a West Midlands “identity crisis”, with fewer than half of residents questioned saying they felt a strong affinity to the region.
The report warned: “Improving the image of the region is vital to its future economic prosperity, since it influences the decisions that people make about whether to locate here or not. However, this represents a challenge.
“A better understanding of how the region is perceived, both by its own residents and by those from outside, will help us address that challenge and encourage people and businesses to come here.”
Regional Observatory chief executive, Rosie Paskins, said she never failed to be surprised by how little the West Midlands did to promote itself.
She added: “People still think about metal bashing and dirty chimneys. We always seem to be putting ourselves down, and I don’t quite know why we do that.”
Newly-appointed West Midlands Minister Ian Austin, who gave a keynote speech at the launch of the Regional Observatory report, said he was determined to do everything possible to improve economic performance.
Mr Austin (Lab Dudley North) said the region’s standing had improved dramatically since 1997, with 100,000 more people in employment and 200,000 more people owning their own homes. But he said no one should underestimate the difficulty of achieving key targets in the Regional Economic Strategy.
In order for the West Midlands to become an “average” region, 44,000 more people would have to be helped into work, 110,000 more people found training and 75,000 more people helped to pass qualifications.
In addition, during the lifetime of the economic strategy, 1,900 new businesses would have to be created along with 70,000 jobs for graduates.
Mr Austin added: “The number one focus has to be what we can do to take this region through the economic down-turn and minimise the impact on families and businesses in the West Midlands.
“I would hope that in two years we are able to report that we have been able to safeguard the prosperity of families and the profitability and competitiveness of businesses in the region.”