Scottish Labour Market Trends
Labour Market Trends is jointly produced by The Fraser of Allander Institute (FAI) and The Scottish Centre for Employment Research (SCER) and aims to shed light on key developments in Scotland’s labour market. Alongside a summary of recent trends and the future outlook, the report also highlights longer trend developments and areas for discussion.
Please note: The FAI's Scottish Labour Market Trends is moving from quarterly to semi-annual publication.
Latest Scottish Labour Market Trends report
On headline indicators like the unemployment and employment rates, things have barely been better in the Scottish and UK labour market.
Scotland’s unemployment rate is at 3.2%, a record low since the current series began in 1992. The UK saw its unemployment rate drop to 3.8%, its lowest since 1974.
Yet, there is barely anybody who believes that the labour market is really working well for everyone. Economic growth is weak, productivity growth is muted, and wage growth is struggling to outpace inflation. In this edition of labour market trends we will look in more detail at both the headline indicators, but also wider indicators of what is happening in the Scottish labour market.
We review the latest data on who is employed in the UK labour market, what sort of employment they are in, and what is happening to the hours being worked. We also review the latest data on earnings using data from both surveys and also data from the HMRC on income liable for pay-as-you-earn taxation.
We finish our review of the Scottish labour market with a look at the evolving picture of labour productivity, not just for Scotland as a whole, but also for industrial sectors in Scotland. Using the latest ONS data we also look at the pattern of productivity growth across Scotland.
Back issuesNovember 2018: Vol 2, No 4
Scotland’s labour market continues to experience a period of historically low unemployment and near historically high employment.
This is a pattern reflected across the UK.
These headline numbers give us a snapshot of the health of the labour market, however, as this report shows challenges remain.
Labour productivity growth remains weak. As a consequence earnings growth has remained weak too. Median real earnings (i.e. earnings after adjusting for inflation) growth has been – at best – barely positive over the last few years.
The weakness of earnings and overall growth in the economy are reflected in the consumer confidence index for Scotland where consumers appear to be pessimistic about the outlook, and indeed more pessimistic than consumers elsewhere in the UK.
The latest labour market data illustrate that the Scottish labour market continues to remain relatively robust with high employment and low 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.
In the latest data, we are seeing these trends continuing with further increases in employment and decreases in unemployment.
These headline numbers give us a snapshot of the health of the labour market, however, as this report shows challenges remain, particularly with respect to productivity growth and real earnings growth.
Over the past couple of years, Scotland’s labour market has performed much better than the data for economic growth might suggest.
Unemployment remains relatively low by historical standards and there are 10,000 fewer people unemployed in Scotland than this time last year.
Employment and unemployment rates in Scotland continue to look healthy. On the face of it, current levels of labour market activity should be consistent with an economy that is in rather good fettle..
Yet overall economic conditions are more fragile. Economic growth in Scotland over the year to June was just 0.5%. This is well below trend.
Scotland’s headline labour market indicators show high levels of employment and low unemployment. The employment rate in Scotland now stands at 75.2% up 1.1 percentage points on a year ago. Meanwhile the unemployment rate has fallen to 3.9% down 1.2 percentage points since last year.
In another welcome development, two recent concerns in the labour market data, youth unemployment and economic inactivity, appear to have receded somewhat.
The Fraser of Allander Institute and the Scottish Centre for Employment Research have today (June 13) published the third edition of Scottish Labour Market Trends. The report examines the performance of the Scottish labour market so far this year and assesses the outlook for employment, unemployment and earnings in advance of tomorrow's updated statistics.
The report concludes that despite apparently very little growth in the overall economy, Scotland's labour market continues to hold up remarkably well.
Over the three months, January to March 2017, unemployment in Scotland fell 48,000 whilst employment levels rose 41,000.
Since our last publication in November, we have continued to see a mixed bag of economic statistics for Scotland.
Over the final 3-months of 2016, employment rose by 8,000. However, there was also a rise in unemployment of 6,000. With a workforce of over 2.6 million, we would caution against reading too much into such small changes.
Greater insight can come from looking at trends over a longer time-period.
This new report – to be published on a quarterly basis – aims to provide an accessible summary of trends in the Scottish labour market and the implications for policy.
On key indicators, Scotland’s labour market continues to hold up well despite a challenging economic environment.
Employment for example, remains close to record highs. Since the mid-2000s, there has been a rise in the number of women in the labour force, reflecting, in part, progress in knocking down barriers to equality of economic opportunity.