Bill Jamieson: Froth of peak cappuccino can’t lift us off low growth treadmill

Employment in food and beverage service activities has shown the greatest decline.
Employment in food and beverage service activities has shown the greatest decline.
Share this article
0
Have your say

Is Scotland’s economy vanishing? It can hardly be said to be shrinking if recent data on employment is any guide. We have 2.6 million people employed in Scotland – up 6 per cent since 2010 and the highest employment count on recent record. And with unemployment numbers continuing to fall, it’s surely the most marked improvement in our economic fortunes for a generation.

But look around and the physical evidence points to shrinkage and closure. Bank branches are a prime example. Permanent physical offices seem to be in retreat. Outside the main city centres, high street outlets are continuing to decline.

The latest evidence of this trend is the news that VisitScotland is closing nearly two-thirds of its tourist information centres – 39 out of 65 over the next two years. Centres earmarked for closure include those at Edinburgh and Glasgow Airports and Tyndrum. Staff affected by the centre closures are to be offered redundancy packages or the chance of redeployment.

We seem to be turning into a spectral economy – plenty of growth in the “invisible” world of digital services, online retailing and web-delivered activity – but a “real world” shrinkage in many areas. As a result, employment growth has hardly been linear or evenly spread across all economic sectors.

Alison O’Connor of the Scottish Parliament Information Centre has put together a commendable blockbuster tome of facts and figures on “Scotland’s Employment by Industry and Geography” just released at the weekend.

The big picture is indeed of overall job growth – but the most striking features of her research are the areas where employment has been shrinking.

It’s not that part-time employment has soared while full-time jobs have marked time. On the contrary – the figures show that in the seven-year period to 2016, part-time employment as a proportion of all employment has only changed marginally, from 31 per cent to 32 per cent over this period. The majority – 64 per cent – are full-time employees.

Sectors where numbers employed have shrunk in the 2009-2016 period include agriculture, forestry and fishing (down 6 per cent), manufacturing (down 6 per cent), financial and insurance (down 9 per cent) and education (down 4 per cent).

It often looks as if the big growth area for jobs in Scotland is the multiple coffee bars that have mushroomed in recent years. Surely every third person in Edinburgh or Glasgow is a barista – those frenetic youngsters with six arms jostling behind the counter at Starbucks or Costa Coffee with fiendishly noisy coffee machines spouting steam from every orifice.

But we are not, it seems, the double espresso or “flat white” economy of contemporary comment. Indeed, we may have reached “peak cappuccino” for this niche sector. The Accommodation and Food Services sector may be showing a 4 per cent gain in numbers employed since 2009. But over the past year employment in food and beverage service activities has shown the greatest decline in employment – down by 18,000 or 10 per cent over 2015-16.

Biggest job gainers are unsurprisingly, “information and communication”, now employing 74,000 with jobs growth of 12 per cent since 2009 – this in the face of a sharp decline in physical print media; and “arts, entertainment, recreation and other services” now employing 136,000 – up a whopping 27 per cent in the 2009-2016 period.

Visible this sector may be, and providing compelling evidence that arts and entertainment make a significant contribution to our economy. But it is a world away from those metal-bashing, heavy engineering activities that we still associate with the “real economy”.

These figures suggest otherwise –that for all our doubts and scepticism about the economic contribution of “soft” activities, our economy is changing markedly and that sectors many still regard as peripheral are gaining while we bemoan the decline of the heartland economy of yesteryear.

Sports activities and amusement and recreation activities created an additional 10,000 jobs over the year to 2016. Human health activities employed an additional 8,000, while other sectors reporting high volumes of employment growth were legal and accounting activities and, unsurprisingly, general public administration.

It often seems as if the public sector, already a formidable employer in Scotland – one in four people in Scotland worked in the public sector last year – just keeps growing. But this total has declined by 10 per cent or 70,000 since 2009. Over the same period private sector employment has grown by 7 per cent or 134,500 and has risen over time from 72 per cent of total employment in Scotland in 2009 to 75 per cent.

Against this, much has been made of the effect of austerity cuts in local authority employment. But between 2015 and 2016, most local authority areas saw an increase or no change in employment. The seven-year growth rate for local authority employment was positive or showed no change in all but nine local authorities. In absolute terms, local authorities with significant employment increases since 2009 were City of Edinburgh (additional employment of 18,850), Aberdeenshire (12,750), Highland (10,000), and Falkirk (9,300).

Overall, we are seeing a profound change in the nature of work and, as a result, in the composition of employment and the economy overall. This makes it all the more difficult to make firm forecasts of how our economy will grow in the years ahead and indeed whether such growth can be comparable with previous data.

It also has implications for the way in which we measure productivity, where there has recently been much anguish over figures showing a deterioration. These have been affected by the continuing growth in numbers in work – a product both of older workers staying in the workforce after the formal retirement age, and job growth in less skilled – and lower paid – activities.

Here we seem to be on a treadmill – the longer pay growth remains low or static, the more that consumers will constrict their spending on big ticket items, with spending growth concentrated on lower cost goods and services, most notably in the services sector.

To this extent there is indeed a trend towards a shrinking economy as measured by previous activities and behaviours. The new “invisible” digital world is expanding. At the same time we are experiencing a trompe l’oeil and the gradual disappearance of the economy we once knew – or thought we did. It all bodes well for at least one category of employment – the statisticians.