THE fate of the ‘economically inactive’ is a real enigma, as is the nation’s perceived shortage of skilled staff, writes Bill Jamieson
Few mysteries have more intrigued historians than the legendary disappearance of Rome’s Ninth Legion. Some 5,000 soldiers are widely thought to have been lost in the swirling mists of Caledonia. Some claim they were wiped out in border skirmishes; others that they were last encamped near Killin in the northern Trossachs.
Whatever the story of the final days, the legion disappears from surviving Roman records after AD 120. The legion is said to have marched into Scotland, after which it was never heard of again.
Today we have a similar mystery – or two in fact. The first concerns the persistent disappearance from Scottish government statistics of hundreds of thousands of people from the labour market. The figure for the “economically inactive” – the official term for those not in work and, for one reason or another, not seeking work – stands at 765,000. While the figure is down slightly in the October-December quarter, the ranks of the economically inactive have risen by some 60,000 in a year.
To lose 60,000 may be considered unfortunate. To lose 765,000 is truly going some. Their “disappearance” has much exercised Scottish Labour’s formidable economy spokeswoman Jackie Baillie. “The increase in economic inactivity and the fall in the number of people in work is,” she declared last week, “a worrying sign of the underlying problems in Scotland’s economy.” She argues that the “real level” of unemployment in Scotland is almost double the rate cited by the SNP administration once you add up both the unemployment figures and the number of people who are out of work but trying to return to employment.
The mystery deepens when you consider that there were 767,000 job vacancies across the UK in the first quarter of the year – 14,000 more than for a year earlier and the highest since comparable records began in 2001
And there’s another large group that also looks to have succumbed to this mysterious phenomenon: the fate of young people who have been through any one of Scotland’s numerous vocational training courses or skills academies . By any reckoning there should be no shortage of skilled labour available. But barely a month goes past without business organisations bemoaning the lack of suitably trained recruits.
For now the main focus of concern is the persistent army of the “economically inactive”. What do we know about it?
A starting point would be a more detailed breakdown of what this gross number comprises. For example, there will be a significant percentage who, for reasons of health and/or disability, are unable to take up permanent employment. Then there are the sizeable number of those who are in full or part time education, or in training.
A third category would comprise those who are in transit between one full-time job and another. Then there are those who have to take a break from full-time employment to attend to family matters: personal or social care is far from being in our broad understanding of the term, “economically inactive”.
And even among those remaining, there will be a residue of those who may be working in the “gig” or “informal economy”, or who have private means or savings income from previous employment who do not need to work full-time: that they are not in formal employment does not mean that they are unable to work, or actively seeking to find a job.
Perhaps a useful starting point would be for Holyrood’s economy committee to undertake a closer scrutiny of the figures; to ascertain the component parts of “economic inactivity” and what proportion is actively seeking full-time work who could be considered as officially “unemployed”.
Even the term “economically inactive” may now need to be questioned as it can give a misleading impression of what is a very large aggregate of people who, for one reason or another, do not slot easily into traditional formal employment categories. This, after all, is a labour market that has been transformed over the past 20 years and is continuing on a path of profound change.
Similar research may usefully be undertaken on the final destinations of those who have been through one of our many skills development programmes for young people. What is the job finder success rate? What is the drop-out rate? How long do those who have undergone training remain in employment or later move upwards in the workplace?
This is a dynamic and ever changing labour market – and one that has absorbed many who have come overseas to find work. In 2015 there were around 181,000 non-UK EU nationals living in Scotland representing 3.4 per cent of the population (4.9 per cent for the UK overall). Of the 152,000 non-UK EU nationals aged 16 and over, 115,000 were in employment (76 per cent).
The main industries were “distribution, hotels and restaurants” employing 32,800 (28.6 per cent of all non-UK EU nationals in employment here) followed by “public administration, education and health” employing 19,600 (17 per cent). Tourism employed 20,000 EU nationals accounting for almost eleven per cent of all employed in that sector. And more than a third (35 per cent) of non-UK EU nationals aged 16-64 in Scotland have a degree-level qualification or higher.
Yet last week the British Chambers of Commerce (BCC) reported on a survey of some 7,300 businesses in the manufacturing and services sectors, and found the percentage seeking to hire had grown by up to nine per cent in the last quarter.
But most also experienced “high levels of recruitment difficulties” which the BCC said was a risk to growth. According to the trade group’s quarterly economic survey, both manufacturing and services firms reported “solid growth” in their businesses in the first three months of the year, with domestic and export sales up since the previous quarter.
It also found “confidence in turnover and profitability is improving”, and that some 86 per cent of manufacturing firms and 59 per cent of services companies wanted to find new recruits. But despite this, around 74 per cent of manufacturing firms and 58 per cent of services firms said they were struggling to find staff.
Plenty here, surely, for Holyrood to keep itself “economically active” in the search for our own “lost legions”.