Scottish Labour Market Trends [June 2017]

Despite apparently very little growth in the overall economy, Scotland’s labour market continues to hold up remarkably well. Over the year to the 3-months January to March 2017, unemployment in Scotland fell 48,000 whilst employment levels rose 41,000. The current rates of employment and unemployment are close to the best on record. Indeed, since 1992 – when the labour force survey was first published – only in the early summer of 2008 has Scotland’s unemployment rate been lower than the current rate of 4.4% Levels of underemployment – that is people in work but who would prefer to work longer hours – have also fallen back towards pre-recession levels. Scotland’s youth unemployment rate continues to outperform all other parts of the UK and compares favourably internationally. However, as we highlighted in our last report, the headline figures do hide some challenges. Firstly, the type of employment being created appears to be less secure in many instances. For example, since the financial crisis there has been a rise in part-time employment (up around 9% since 2007). Within the part-time figures, there has been a 60% increase in the number of people who say the reason they are working part-time is that they cannot find a full-time job. Self-employment has also risen – up around 25% since 2007. Indeed, nearly ¾ of the growth in Scottish employment over the last year was in the form of self-employment. Secondly, there has been a further rise in economic inactivity – that is people not actively seeking work – of 15,000 over the last year. Thirdly, the general news on the Scottish economy remains disappointing. With little or no growth in output, but rising levels of employment, productivity takes the hit. In 2016, productivity as measured by output per hour worked in Scotland fell 1.5%. Weak productivity levels will make it difficult for businesses to find new resources to support sustained wage increases. With inflation now at 2.6% and forecast to go higher over the next few months, the prospects for household incomes continues to look weak. This issue includes an analysis of trade union membership in Scotland and the UK in 2016, by Patricia Findlay and Stuart McIntyre