State of the Labour Market Strategic Labour Market Group March 2018 - PowerPoint PPT Presentation

State of the Labour Market Strategic Labour Market Group March 2018

Summary • Subdued growth: Output growth in the Scottish economy continued to grow into the third quarter of 2017 (+0.2%) but economic growth remains notably below its long run trend rate. • Resilient labour market: Scotland’s employment rate (74.3%) remains high by historical standards and unemployment (4.5%) remains close to record lows. However, Scotland’s employment rate is now lower and unemployment and inactivity rates higher, compared with the UK’s . • Employment Demographics: For women, the employment rate increased over the year (71.3%) and unemployment fell (3.6%). Both rates currently outperform the UK (70.8% & 4.4%). • Sector employment changes: Employment has declined most notably in distribution, hotels & restaurants and to a lesser extent in public admin., education & health. Other services, transport & communications and banking, finance & insurance have seen the largest employment increases. • Regional impacts: Sector changes are impacting different regions in different ways, with some, such as Aberdeen, impacted negatively due to sector-specific shocks (decline of oil & gas sector). • Longer term features of the Labour Market in Scotland include an ageing workforce, a reducing gap between male and female employment rates and an increasing proportion of employees working under zero hours contracts.

Recent performance – subdued growth GDP • Output growth in the Scottish economy picked up in the first half of 2017 and continued into Q3 (+0.2%) following relatively weak growth in 2016. However, economic growth remains below its long run average. • Output growth in Q3 and over the past year was driven by the services and Source: Scottish Government production sectors, offsetting contraction in the construction sector.

Recent performance – resilient labour market Employment 76 UK Scotland 74 72 Per cent 70 68 Oct-Dec Oct-Dec Oct-Dec Oct-Dec Oct-Dec Oct-Dec Oct-Dec Oct-Dec Oct-Dec Oct-Dec 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 • Since the recession the labour market has remained remarkably resilient. • Scotland’s employment rate (74.3%) has risen by 4.6 percentage points since 2010. • Employment levels in Scotland have risen to over 2.6 million, close to record highs, with 68,000 more people in employment than the pre-recession peak (2008).

Recent performance – resilient labour market Unemployment Inactivity 25 9 UK UK 8 Scotland 24 Scotland 7 23 6 Per cent Per cent 22 5 4 21 3 20 2 19 1 0 18 Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Oct- Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 • Scotland’s unemployment rate (4.5%) has mainly been higher than the UK’s (4.4%) – partly due to decline of oil & gas sector. Until Oct-Dec 2017, Scotland’s unemployment rate was lower than the UK’s for 11 consecutive monthly labour market releases. • Scotland’s inactivity rate rose last quarter to 22.1%, higher than the UK’s rate (21.3%).

Recent performance - earnings Annual Weekly Earnings Growth, Scotland, 2017 • Of all the regions in the UK, Scotland has the third highest average weekly full-time earnings at £547.30 and 2.4% growth over 2017. • However, new experimental HMRC PAYE data shows Scotland to have the lowest growth of average PAYE pay per individual of any UK region/country for 2015/16 & 2016/17. Source: Annual Survey of Hours of Earnings 2017, ONS

Employment Demographics Gender Self-employment 82 Employment Rate % (16-64 ) 80 78 76 74 72 70 68 66 64 62 60 0 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Scotland - Males UK - Males Scotland - Females UK - Females • The employment rate for women (71.3%) increased over the year to Oct-Dec 2017 and remains above the UK rate (70.8%). The employment rate for men has also increased (77.6%) but remains below the UK rate (79.7%). • The number of self-employed has increased by 18,000 over the year to Oct-Dec 2017 to 326,000. Source: Labour Force Survey ONS (Jun-Aug 2017)

Employment – annual sector changes 25,000 20,000 15,000 Annual Change in employment level 10,000 5,000 0 -5,000 -10,000 -15,000 -20,000 -25,000 R-U:other H,J:transport and K-N:banking, F:construction A:agriculture and B,D,E:energy and C:manufacturing O-Q:public G,I:distribution, services communications finance and fishing water admin. education hotels and insurance and health restaurants This chart shows employment growth in Scotland over 2015 and 2016. • Employment level has declined by the largest amount in distribution, hotels and restaurants. Public admin, education & health, manufacturing and energy & water have also been impacted negatively. Whereas construction, banking, finance & insurance, transport & communications and other services have seen employment increases. • Some of these negative changes reflect the impact of oil price declines on the oil and gas sector & supply chains. Others reflect declines in local government employment. Source: Business Register and Employment Survey 2015 and 2016

Employment – Annual regional changes % Midlothian Inverclyde Argyll and Bute Edinburgh, City of East Dunbartonshire Renfrewshire West Lothian East Lothian South Lanarkshire Fife East Ayrshire Stirling Glasgow City Highland Dundee City Clackmannanshire Angus North Lanarkshire Moray Orkney Islands Scottish Borders North Ayrshire Dumfries and Galloway Falkirk Eilean Siar East Renfrewshire Aberdeen City Aberdeenshire Perth and Kinross West Dunbartonshire South Ayrshire Shetland Islands -4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 percentage point change in employment rate • These changes to sector employment have had different impacts on regions. • Notable changes include in Aberdeen and Aberdeenshire, which along with the Shetland Islands have been negatively impacted by the oil-price shock. • The majority of other local authorities that have seen a fall in employment over the last year have been impacted by falls in manufacturing and public sector employment. Source: Annual Population Survey: July 2016-June 2017, ONS

Longer Term Labour Market Trends Occupation Skill Level Age Profile Taking a longer-term view of the Labour Market in Scotland: • The bulk of jobs created over the past decade have been in medium to high skilled jobs. • Employment amongst those aged over 65 has doubled over the last decade.