More jobs, less pay for Scots workforce

MORE people in Scotland are finding work as the economy struggles to recover from recession - but their wage packets are continuing to fall behind the cost of living, new statistics have revealed.

In a mixed picture on the economy, figures showed that an extra 20,000 people in Scotland entered the job market in the spring, while at the same time dole queues shortened by 11,000 people, prompting guarded optimism from the UK and Scottish governments.

But analysts said the reality within the figures was less promising, amid signs of a new surge in "underemployment" - where more people are taking on part-time or temporary labour to avoid going on the dole.

The figures also showed that, including bonuses, annual rates of pay were rising by 2.3 per cent, below the rate of inflation, and therefore a real-terms cut.

The increases were driven mainly by rises in the private sector, the survey noted, with thousands of public-sector employees now having to accept a pay freeze.

Lucy McTernan, chief executive of Citizens Advice Scotland, said: "What these figures don't show is the large numbers of people who are stuck in low-paid or part-time jobs that don't meet their economic needs."

She added: "The human truth behind the monthly statistics is that the cost of living is going up all the time, and many people are simply unable to cope with that financially."

The new figures, which were for the March to May period, show that Scotland's unemployment rate is now running below the UK as a whole, at 7.6 per cent to 7.7 per cent.

There are now 2.5 million people in employment in Scotland, amounting to 71 per cent of the working-age population.

Compared with a year ago, that figure is up by 55,000.

However, even though unemployment fell in the same period, separately calculated figures also published yesterday on the jobseeker's allowance showed a rise of 1,500, up to 141,300.

The rise follows a recent warning from the respected Fraser of Allander Institute that unemployment could increase over the coming months, amid signs of a sluggish economy recovery.

Across the UK, economists said this was a more accurate indicator of the current labour market."While (the unemployment survey] data suggest some tentative improvement … more up-to-date information suggests that weakness lies ahead," said Chris Williamson, economist at research firm Markit.

Statisticians said this rise in unemployment could be the first sign of thousands of Incapacity Benefit claimants being moved on to jobseekers allowance, as reforms to the welfare state are introduced, and their claims reassessed.

That interpretation was supported yesterday by First Minister Alex Salmond, who said there could be no cause for complacency in the headline numbers.

He said: "One of the aspects that has certainly taken place in Scotland in claimant count is the move from invalidity to jobseekers allowance. I suspect some of what we are seeing in the claimant count increase is actually a movement in social security policy, as opposed to labour market policy."

A further trend buried in the figures is the growth of part-time work, with statistics showing that the number of hours worked across the country continues to fall. Labour's shadow Scottish secretary, Anne McKechin said: "Many of new jobs being created are part-time or temporary, as Scots choose to take what work they can rather than face the dole."

Meanwhile, union leaders warned of the massive rise in the ratio of unemployed people to job vacancies.

Brendan Barber, TUC general secretary, said: "There are parts of London and Scotland where about 30 dole claimants are chasing every vacancy."

With public sector austerity measures now rolling out, business leaders said last night that keeping employment rising in Scotland would be up to the private sector, and continuing investment in infrastructure.

Colin Borland, from the Federation of Small Businesses, added: "What cannot be doubted is that in the months ahead, Scotland will need new private sector jobs. We need to ensure that busy and successful Scottish businesses are given the right support."

Liz Cameron, chief executive of Scottish Chambers of Commerce, said: "It is clear that the private sector continues to create more jobs than are being lost in the public sector.

"This will be an increasing challenge for business as public spending cuts begin to bite."