Public sector helps Scotland to stave off worst of the recession

Published on 18/03/2009 21:39

MAJOR shifts in the Scottish labour market have helped alleviate the worst effects of the recession, it emerged last night.

Official statistics showed the country's burgeoning public sector, combined with strong rural and energy industries, had cushioned the impact of big job losses in the business and finance sectors.

Experts claimed that, as a result, Scotland had managed to avoid the sort of spiralling unemployment seen in many parts of the UK – at least for the moment.

The UK unemployment figures, released yesterday, were the worst since Labour came to power in 1997. However, the Scottish statistics revealed a much more resilient labour market. North of the Border, unemployment rose by only 1,000 to 135,000 in the three months to January, giving Scotland an unemployment rate of 5.1 per cent – well below the UK average of 6.5 per cent.

In the year to December, a total of 24,000 jobs were lost in Scotland's business, finance and distribution industries – the worst of any sector – and a further 7,000 were lost in manufacturing.

The mining, energy and water supply sector did reasonably well, losing only 1,000 jobs over the year, but the real success stories came in construction, agriculture, forestry and fishing, and in the public sector.

A total of 8,000 jobs were created in rural industries, 1,000 in construction and 9,000 in education, health and other administrative industries – which includes the public sector.

According to the Scottish Government, the public sector now accounts for 22.9 per cent of Scottish jobs and, although this has helped offset the worst effects of the recession, business leaders questioned whether this was good for the long-term health of the Scottish economy.

A spokesman for CBI Scotland said: "From our perspective, the relative size of the public sector in Scotland is providing some sort of cushion against the icy blasts of the recession.

"Long term, the question remains whether having a very large public sector in Scotland is compatible with growing the economy."

Alex Salmond, the First Minister said some areas were holding up well, including primary industries – forestry, and oil and gas – where there had been a 29.5 per cent increase in employment in the quarter.

"This is a strong sector in the Scottish economy and goes some way to explain why we are doing better," he said.

Mr Salmond also pointed to a slight increase in the construction sector, despite gloomy predictions about this area. He said this was partly down to the number of "shovel-ready" projects that the Scottish Government was able to push forward, with the accelerated capital spending of 300 million.

"We have a lot of large projects going on at the moment, including the M74 and M8 extensions, which is one of the reasons we are seeing jobs holding up in this sector," he said.