Labour market issues need much closer attention

Picture: PA
Picture: PA
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It’s somewhat perplexing that the labour market has been conspicuous by its absence from the debate over Scotland’s constitutional future.

For the performance of its labour market will be a crucial determinant in the success of any economy. The structure of the labour market is also particularly relevant to issues at the forefront of the independence debate such as currency, tax and inequality.

So it was with some anticipation that the STUC opened the Department for Business, Innovation and Skills paper “Scotland analysis: Business and microeconomic framework”, which included an 18-page chapter on “labour markets and skills”. But does it actually move the debate on? Not much. As with papers published by the Scottish Government and the Treasury, this isn’t a dispassionate academic analysis – it’s a policy paper designed to support a position. It emphasises both the advantages supposedly accruing to Scotland from the UK’s integrated labour market and the potential problems arising from the creation of new “barriers” to labour mobility.

Coalition

From the STUC’s perspective two salient points emerge, neither of which we find surprising. The first is the coalition’s volte face on the state of the UK labour market. Seeking to justify further deregulation, the coalition has regularly compared the UK unfavourably with other “competitiveness enhancing nations”. The implication is clear: if the UK wants to win the “global race”, it must further undermine workers’ rights.

Now, when the purpose is to dazzle Scottish voters with the virtues of flexibility, the coalition presents the serious international comparative evidence which has always shown the UK to possess very lightly regulated labour and product markets. Secondly, flexibility’s downside is simply ignored: the second highest proportion of low wage jobs in the developed world, rising insecurity as shown by the spread of zero hours contracts and record underemployment.

At best this opening salvo on the future of the labour market under different constitutional scenarios is partial, incomplete and unconvincing. Having edged towards a position in its “Economic Case for Independence” paper, it is now over to the Scottish Government to respond. Can it do any better?

• Stephen Boyd is assistant secretary of the STUC

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