Analysis: Jobless figures hide real story of Scotland’s four tough years

It IS four years since the beginning of what is now called the “Great Recession”. This is a good time to take stock of where the Scottish labour market stands now compared with four years ago, writes David Bell

The number of unemployed Scots has increased by 100,000 since the beginning of 2008. The unemployment rate has risen by 3.7 per cent to 8.7 per cent. Nevertheless, unemployment in Scotland is below the average in the European Union. It is much less than in countries like Ireland (15.1 per cent), Spain (23 per cent) and Portugal (14.7 per cent). In contrast, Germany has an unemployment rate of 5.8 per cent. These differences dwarf the small margin of 0.3 per cent by which the Scottish unemployment rate exceeds that in the UK as a whole.

The number of jobs in the Scottish labour market has fallen by 3 per cent in four years. There has also been a shift from full-time to part-time work. The number of full-time jobs has fallen by 5.6 per cent, while the number of part-time workers is up by more than 7 per cent.

Jobs have disappeared less quickly from the UK economy as a whole. Employment has declined by only 1.1 per cent in the UK since the beginning of the recession and only 3.2 per cent of this decline has been in full-time jobs. So if employment has been falling faster, why is there only a small difference between Scottish and UK unemployment rates?

One possible explanation is that Scots may be dropping out of the labour market at a faster rate.

There are 1.6 million Scots aged 16 and above who are neither employed nor unemployed. Since 2008, inactivity has risen by 69,000. This 4.6 per cent rise is more than double the 2.2 per cent increase in the UK. Scottish unemployment would have been 36,000 higher if the increase in inactivity in Scotland had matched that in the UK.

Finally, there is the influence of population. The number of Scots aged 16 and above has been rising. There are now 2.2 per cent more Scots in this age group than at the beginning of 2008. But in the UK as a whole, there are now 50.4 million individuals aged 16 and over – up 3.1 per cent. The more rapidly the population expands, the more jobs are required to keep the unemployment rate on an even keel.

The overall lesson is that the unemployment rate only tells part of the story of the Scottish labour market since the beginning of the recession. The real story is that, while Scotland has performed better than many other countries, its performance relative to the UK as a whole has been weaker than a simple comparison of unemployment rates suggests.

• David Bell is professor of economics at Stirling University.