Average Scottish wage now £28,300 after five-year boom

Published on Thursday 27 November 2008 20:31

SCOTTISH workers earn on average £5,000 more than five years ago, a report published today reveals.

The typical annual full-time salary in Scotland rose by 23 per cent, from 23,080 in April 2003 to 28,296 in April this year, according to Bank of Scotland. Only London experienced higher average earnings growth over the period.

Crucially, inflation (as measured by the Retail Prices Index) has risen by 18 per cent over the past five years, meaning Scottish average earnings have increased by 5 per cent in real terms since 2003.

But the figures are inflated by salaries in Aberdeen and Edinburgh which are significantly higher than elsewhere in Scotland.

Aberdeen city workers have enjoyed a 41 per cent rise in average earnings since 2003. Their average salary of 35,959 is the highest in Scotland and 14 per cent more than the UK average salary of 31,500.

This is partly due to high demand for skilled workers in sectors such as oil and gas, said Kate Yuill, policy and communications manager at Aberdeen and Grampian Chamber of Commerce.

"While we are in the enviable position of having an unemployment rate which is below national average, it does mean we have a shortage of skilled staff. Businesses therefore offer excellent wage packages to attract the staff they need and this clearly has an impact on the average wage scale."

Edinburgh workers are the second-highest earners. The typical full-time worker in the capital earns 33,004, almost a third more than five years ago.

In all, only workers in London, and the east and the south-east of England enjoy average earnings above those in Scotland, the report found.

"The employment and labour market in Scotland has been healthy in the past five years and this reflects that," said Bank of Scotland economist Nitesh Patel.

But that has begun to change and, with the economy heading for recession, salaries are unlikely to rise significantly in the near future, said Gordon Barraclough, founding partner of Glasgow-based business sustainability firm Taradin.

"If you were able to take the same snapshot of salaries today, it would be dramatically different. People are not spending and companies do not know when we will get to the end of the downturn so they are keeping as much cash as they can and reducing overheads."

The situation is made worse by inflation forecasts for the coming months, according to Andrew Addie, tax director at Grant Thornton Scotland. He pointed out that employers who set inflation-busting pay in recent months were worried that inflation could now fall to zero or worse.

"It is the end of the good times and workers face a period of very low earnings growth," said Mr Addie.