Recent headline indicators of employment and unemployment
provide some apparent good news about the Scottish economy. Yet some of these
recent trends – including this week’s further fall in unemployment – are masking
a number of underlying challenges, according to a new report out today by the
Fraser of Allander Institute and the Scottish Centre for Employment Research at
the University of Strathclyde.
On the basis of headline indicators such as the unemployment
rate, Scotland’s labour market continues to perform relatively well in
what continues to be a challenging economic environment. However, some of
the recent positive statistics hide a number of underlying challenges in the
Scottish labour market. For instance, this report shows that over two thirds of
the growth in employment over the past decade has been in part-time employment.
In addition, the recent sharp fall in unemployment appears to stem, not from
people finding work, but from people exiting the labour force.
Looking forward, the most significant development over
the next 6 – 12 months will arguably be the impact of rising inflation on
earnings and household incomes. This will erode the value of existing pay
awards and with sluggish demand in the near term, this could translate into
weak real earnings for those already in work and fewer opportunities for those
seeking to gain work.
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