Scottish Labour Market Trends [May 2018]

The Scottish labour market has been relatively robust in recent times with high employment and low unemployment. In the latest data, we are seeing these trends continuing with further increases in employment and decreases in unemployment. There are 10,000 more people in work than a year ago; 2,000 fewer people in unemployment than a year ago; and 19,000 fewer people economically inactive than a year ago. The quarterly unemployment rate dropped slightly to 4.3% over the period Jan-Mar, with the employment rate rising by 0.3% points over the same 3 months. Scotland now has an unemployment rate slightly above that of the UK, but with an employment rate which is nearly a whole percentage point lower. Tying these together is that Scotland has a higher rate of economic inactivity (21.9%) than the UK as a whole (21.0%). Although as we have discussed before, such small variations are not statistically significant. One of the most notable trends in the Scottish labour market over the past two years has been the substantial falls in youth (16-24 year old) unemployment. In the most recent data released today – covering 2017– youth unemployment is at a record low of 9.2%. This is less than half what it was five years ago. In the same period in 2012, youth unemployment was 20.5%. Encouragingly these declines have been seen in both the male and female statistics with male youth unemployment at a record low of 10.1%, down from 23.1% in 2012. As always, these headline numbers give us a snapshot of the health of the labour market, but growth remains weak in the Scottish economy. Furthermore, the latest productivity data show that – even with a bounce back in the final quarter of the year – labour productivity fell 1.9% in real terms in 2017. This does not bode particularly well for growth in take home pay. Official forecasts from the Scottish Fiscal Commission (SFC) are for this to continue for the foreseeable future. We remain slightly more optimistic than the SFC believing that activity will pick-up this year. But there remains significant uncertainty around the future outlook for the economy – so the next few months promise to be an interesting time for Scottish labour market data