Analysis: Private sector needs help to lead the way to a prosperous future

Published on Wednesday 17 August 2011 17:51

FOLLOWING the publication of the latest unemployment figures, the Scottish Government was keen to point out that "Scotland has a lower unemployment rate, a higher employment rate and a lower rate of inactivity than the UK as a whole".

This sounds like good news but the fact is that Scottish unemployment rose slightly in the three months to June and in the past three months we have seen persistent increases in the number of Scots claiming jobseeker's allowance.

There are so many conflicting signals about the Scottish labour market at the moment it is easy to get confused. Unemployment tells us more about where our economy has been than about where it is headed. Prior to this week's figures, we had seen eight consecutive months of falling unemployment at a time when the UK figures were, in the main, increasing.

The Scottish Government can legitimately claim that part of the reason for this better performance north of the Border has been due to its decision to accelerate and maximise capital spending, choosing to defer budget cuts into the current financial year.

This has boosted Scotland's performance against the rest of the UK, where the coalition government has been imposing strict spending cuts for over a year. However, Scotland cannot dodge the cuts forever and the UK government's spending squeeze is beginning to bite here as well.

In this respect the Scottish Government's "no compulsory redundancies" policy for our public sector is of limited effect. The real challenge for Scotland is to take this opportunity to rebalance our economy away from an unsustainably large public sector and towards a healthy, vibrant and growing private sector.

The facts are that there are 60,000 more people employed in Scotland today than there were a year ago, and this is at a time when public sector employment is falling. Business needs to be supported through the harsh economic climate if this level of job creation is to be maintained. This means measures that allow businesses to invest for the future, coupled with a national strategy to tackle the growing threat that youth unemployment having on our future prosperity.

We have a golden opportunity to ensure the Scottish recovery is business-led and government must focus on the ability of Scottish firms to grow and create the jobs Scotland needs now and in the future. Our economy has been through tough times and there are challenges ahead. It's time to equip our private sector to lead us on the path to higher growth and new jobs.

• Liz Cameron is chief executive of the Scottish Chambers of Commerce.