Recession forecast to cost 100,000 Scots their jobs

Published on Saturday 4 July 2009 19:54

SCOTLAND will shed more than 100,000 jobs over the course of the recession, equivalent to one in every 25 of the workforce, according to a report to be published this week.

The research, commissioned by Scottish Enterprise, the country's main economic development agency, concludes that 106,000 jobs will be lost by the end of the worst economic downturn for a generation.

The report, compiled before more than 1,000 job cuts were announced last week at Lloyds and Diageo, further warns that it will take nine years before employment in Scotland returns to its 2008 high of 2.7 million jobs.

In an interview with Scotland on Sunday today, Scottish Enterprise's new chairman Campbell Gillies warns there is "no silver bullet" to help turn the country around. But he says the government now needs to throw its weight behind home-grown success stories to help them become global players.

Yesterday, in a further sign of how the recession is affecting Britain's biggest firms, BT announced it was offering staff long-term holidays in return for pay cuts.

In Scotland, jobs agencies say many manufacturing firms are moving to a four-day week.

The report, by independent consultancy Oxford Economics, says that while Scotland's slump will not be as severe as that experienced throughout the UK this year and next, its recovery will be far slower.

The worst sector will be the country's manufacturing base. Oxford Economics believe that some 56,000 jobs will go in the sector alone in the next decade.

It says: "The (Scottish] economy is heading into perhaps its sharpest setback period since the war ... a return to jobs growth is expected from 2012 onwards, but employment levels are not expected to return to their 2008 peak until at least 2017."

It concludes: "There are forecast to be 106,000 fewer jobs in Scotland in 2011 than in 2008 as a direct result of the recession."

The biggest sector hit will be financial and business services which will lose 36,600 jobs. Retail and catering (28,500 jobs) and manufacturing (20,600 jobs) are other big casualties.

And the authors say that Scotland will fail to match UK growth over the coming decade, meaning the recovery of the jobs market will be slower. It declares: "As the economy gathers pace we expect economic growth in Scotland to fall once again behind the UK."

The findings suggest the Scottish Government will miss its central target of raising the country's growth rate to the UK level by 2011.

The publication of the report comes as the main political parties step up their campaign this week to reverse the 700 job cuts announced at Diageo's Kilmarnock factory.

Diageo has promised to consult before moving ahead with job cuts, but is also warning that the cutbacks are necessary to ensure it remains on a stable, long-term footing. It also points out that it is creating 400 new jobs in Fife, which will mitigate the 900 losses in Kilmarnock.

However, opposition parties last night called on ministers to hold an emergency summit on manufacturing, warning that the sector risked disappearing from Scotland. Labour's enterprise spokesman John Park said: "We are getting close to the critical mass in manufacturing in Scotland. We need to see an intervention from the Scottish Government."

A Scottish Enterprise spokeswoman said: "Scottish Enterprise commissioned this review to ascertain how the economic environment is impacting on Scotland's economy. The findings will play an important role in helping to inform our priorities for future investment and allow us to achieve the greatest value and economic impact. We are sharing the information with our partners across Scotland to help them understand and respond to the current economic conditions."

Experts in the agency say that there continue to be hopeful signs in the economy, including in the financial sector, which has seen groups including Virgin and Tesco Finance recently unveil new jobs in Scotland.

A spokesman for the Scottish Government said that the latest figures show Scotland is maintaining a higher employment rate, a lower unemployment rate and higher economic activity levels than the UK average.

He added: "However, no-one can doubt the seriousness of rising unemployment, the challenge it presents to our economy or the effect it has on individuals and their families."

A spokesman for the UK government said: "Since October we've put 500m into welfare to work in Scotland and 100m into the Future Jobs Fund which will deliver 15,000 jobs to ensure a generation of young people are not abandoned to unemployment as they were in the 1980s."