Leaders: Jobless figures shroud a darker picture

Published on 21/06/2012 00:00

News that unemployment Scotland has fallen for the third consecutive month deserves to be widely welcomed, all the more so given the evident slowdown in the economy in the opening months of the year and concerns that Scotland, too, may have entered a “double dip” recession.

But relief needs to be tempered with an appreciation that, far from the economy experiencing a “normal” cyclical recovery, there is a growing concern among economists that we have entered a new and altogether more problematic era, with a real risk that economies in the West may now be close to, if not already experiencing, a Japan-style lost decade of growth. The latest Fraser of Allander Quarterly Bulletin well sets out the employment challenge longer term. Even though it makes grim reading, a broader grasp of the state we’re in is long overdue. It is against this background that the First Minister Alex Salmond’s latest trade mission to the United States should be seen. Mr Salmond is to be commended for the efforts he is making and to stimulate further inward investment to Scotland. The announcement of further investment by Lifescan in Inverness is a concrete example to be welcomed. The recent successes are encouraging but it would be wrong to assume that future successes are guaranteed without continuous effort in marketing and promotion. The eurozone crisis and recent evidence that the world economy may be entering a slowdown are major obstacles to the return of business and household confidence. Research undertaken by the Centre for Public Policy in the Regions carried in the latest Fraser of Allander Quarterly Bulletin sets out the scale of the problem faced in seeking to promote a robust and sustainable recovery across the Western world. The current “Great Recession” saw an overall fall in Scottish GDP of around 4.5 per cent, much more than in any of the previous recessionary periods. In addition, the length of the downturn in Scotland is only comparable with that seen in the 80s, though again, the position now, four years after peak output, is much worse than at the same point in the 80s. In fact, the time it is taking for the economy to recover already exceeds that during the 1930s Great Depression when it took 17 quarters before output recovered to its previous peak. In this downturn it is likely to take 27 quarters before the economy returns to the level of output recorded in 2007. Moreover, while the UK government is assuming a return in the medium to long term for UK productivity growth of 2 per cent a year, such a growth rate would be almost twice that seen in the 2000-2010 decade and in defiance of the trend in economic growth in advanced industrial economies which has slowed over the last four decades. If this continues, the outlook would suggest a most daunting challenge ahead for Scotland and the UK overall.

The gravy tram rolls on

IT WILL be two years yet before trams are running in Edinburgh, but already many will feel they have been taken for a ride. Figures out yesterday show that the directors of the stricken trams company Tie received bonuses and thousands of pounds in severance payments when it was closed down. Aggregate pay-out for compensation (in addition to salaries) totalled £406,635.

Few would dispute such an ambitious and complex transport project should command expertise, skills and commitment of the highest order. Salaries need to be commensurate with the project and the very special demands it has made. But bonuses are additional amounts paid for extraordinary service or when a project has been delivered on time and within budget. That cannot be said to be the case here.

Judgment on where the ultimate responsibility lies for this debacle needs to be suspended until a final enquiry is completed. Whether severance pay was appropriate is a matter determined by employment contract, but such contracts do not hold in all cases. And there is a powerful argument for the view that it would not be appropriate here, given the extent to which Tie was a victim of its own failings.

Relative to the cost of the project as a whole, such sums may seem small. But there is a principle here that compensation for loss of office should not be blind to the issue of culpability. Here is another unsettling feature of a project that has turned out to be a nightmare for Scotland’s capital city, its residents and the many businesses whose trade has been blighted. The patience of the city have been stretched to breaking point. The citizens of Scotland and Edinburgh seem to be the only ones losing out.