Last labour market data for Scotland before the referendum

Today (Wednesday), the Office for National Statistics posted the final set of labour market data for Scotland that will be released before the referendum. So how is Scotland faring?

Scotland’s unemployment rate for the period May-Jul 2014 was 6 per cent. This was a good performance in both an historical and a comparative sense. Figure 1 shows the unemployment rate for Scotland from 1992 to 2014. The unemployment rate peaked at 8.9 per cent in June 2010. Since then unemployment in Scotland has fallen by 33 per cent.

Over this period, which straddles the establishment of the Scottish Parliament, the main event impacting on unemployment was the financial crisis of 2008, which led to a rapid rise in unemployment.  Since then, as the economy has recovered from recession, the Scottish unemployment rate has dropped sharply.

Figure 1: Unemployment Rate in Scotland 1992-2014

Unemployment Rate

Source: Office for National Statistics

How does Scotland compare with other developed countries? Figure 2 compares the latest unemployment rate for Scotland with the July 2014 unemployment rates in many European countries and the United States.  It shows that relatively few countries had a lower unemployment rate than Scotland in mid 2014. The only major countries with lower unemployment rates were Gernmany and Austria, states that were much less affected by the financial crisis.

Figure 2: Unemployment Rates July 2014

European Unemployment Rates

Source: Eurostat

If unemployment in Scotland is relatively low, how has employment in Scotland been evolving? Figure 3 shows employment in Scotland over the period 1992 to 2014 in thousands. Again, this period includes the establishment of the Scottish Parliament in 1999, though there is no discernible change in the trend growth of employment around that time.

Figure 3: Employment in Scotland 1992 to 2014 (thousands)

Scottish Employment

Source: Office for National Statistics

In May-Jul 2014, employment in Scotland reached a record high of 2.6 million. This suggests a labour market that has made an effective recovery from the financial crisis. Employment levels fell after 2008, and have only substantially recovered in 2013 and 2014, coinciding with the recovery of both the UK and Scottish lkabour markets.

Of course, questions may be asked about the quality of the jobs that have recently become available. The number of hours offered may be substantially less than those that employees want to work, and wage levels have not recovered their pre-recession real value. Nevertheless, in respect of employment and unemployment, the Scottish labour market is performing well in terms both of  its history and its international comparators.


About David Bell

David Bell FRSE is Professor of Economics at the University of Stirling. He graduated in economics and statistics at the University of Aberdeen and in econometrics at the London School of Economics. He has worked at the Universities of St Andrews, Strathclyde, Warwick and Glasgow. His research is mainly in labour economics, fiscal decentralization and the economics of long-term care. He has been budget adviser to the Scottish Parliament Finance Committee. He is PI for the Healthy AGing In Scotland project (HAGIS).
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