Scottish unemployment rises as jobless rate falls

The unemployment rate for Scotland during the quarter from March to May rose after falling for the past seven months, according to the Office for National Statistics (ONS).

However, the jobless rate north of the Border is still lower than that of the UK as a whole. Although UK-wide unemployment has fallen by 57,000 to stand at 2.51 million, the Scots rate of 7.5 per cent is below the UK’s 7.8 per cent.

Scottish Government enterprise minister Fergus Ewing said Scotland was “outperforming the UK” on employment figures.

But Scottish Secretary Michael Moore said the figures showed a “mixed picture”.

The figures came on the same day a separate study shows that Scotland’s economy grew during the first three months of 2013, with the gross domestic product (GDP) rising by 0.4 per cent. Growth has been a unbalanced, however. The figures from the Chief Statistician showed the service sector growing 0.8 per cent against a 2.5 per cent fall in the construction sector.

Unemployment figures from the ONS are released every month and cover three-month periods. The jobless total for March to May was released yesterday, while the April to June figure will come out in August .

The statistics show Scotland’s unemployment total – which includes those who are out of work and not eligible for benefits – is 10,000 lower than it was for the same period last year.

The number of people out of work and claiming jobseeker’s allowance fell by 1,600 from May to 133,400 in June – 9,600 fewer than 12 months ago.

There was also an increase in the number of Scots in work, with 2,511,000 people in employment over the period March to May – 20,000 more than the same time last year.

Mr Moore said : “After a period of improving labour market conditions, there is a mixed picture this month. The news that unemployment in Scotland has increased slightly over the last quarter is disappointing.

“It is better news that there is an increase in employment and a fall in the number of people claiming job seeker’s allowance.”

Unemployment in Scotland last increased in the quarter from June to August last year, when the jobless rate increased from 7,000 to 222,000, according to ONS figures.

Scottish enterprise minister Fergus Ewing highlighted Scotland’s lower unemployment rate and said the number of people on jobseeker’s allowance was now at its lowest level for almost four years.

Mr Ewing also pointed to a fall of three percentage points in Scotland’s youth unemployment rate to 17.8 per cent, compared with the UK’s figure of 19.7 per cent – down by one point over the past year.

He said: “It is gratifying to see that the policies we have been pursuing mean we are starting to see our performance exceed that of other parts of the UK.”

But opposition politicians attacked the SNP administration’s record on unemployment.

Labour’s deputy finance spokeswoman, Jenny Marra, said: “We need proper capital investment and instead we’ve seen projects stuck on the drawing board, cuts to capital budgets and other cuts being reversed by the SNP in a late acknowledgement that they got it wrong.”

Tory finance spokesman Gavin Brown said it was “particularly disappointing to see unemployment increase, especially at a time when it’s dropping elsewhere in the UK”.

The GDP figures also showed Scotland’s economy grew by 1.2 per cent in the last year, outstripping the UK’s 0.5 per cent.

Within the service industries, which account for more than 72 per cent of the Scottish economy, the strongest growth of

5 per cent during the first quarter of 2013 was in financial and insurance activities.

Distribution, hotels and catering as well as retail all saw negative growth of about 1 per cent.

The contraction in construction followed growth of 2 per cent in the final three months of 2012 and, on an annual basis, this sector expanded by 2.3 per cent.

Scottish Trades Union Congress general secretary Grahame Smith said: “While another significant fall in construction output is hardly surprising, it does not augur well for the sustainability of Scotland’s recovery”.

The Federation of Small Businesses in Scotland said the latest figures were another indication of a “tentative economic recovery” north of the Border.

John McLaren on the stats: The good, the bad and the downright confusing

The latest economic data for Scotland illustrates both the good and the bad of its recession-era performance.

On the good side, recent revisions have shown Scotland’s recession was notably shallower than the UK’s and, in the past year, the Scottish economy has grown at over twice the rate of the UK economy.

On the bad side, Scotland’s recovery is still slower than the UK’s – which is itself is relatively slow. Most of the G7 economies are now performing near (France, Japan) or above (Canada, United States, Germany) their pre-recession peaks, while the UK is still some 4 per cent short of that level.

If future growth is constrained to the recent average of about 0.25 per cent a quarter, it will be close to a decade before UK and Scottish GDPs regain their pre-recession peaks. The most hopeful sign from the past year for Scotland has been the surprisingly rapid growth in business services output, up almost 11 per cent in 2012 on 2011 (compared with UK growth of only 4 per cent).

The news is also mixed with regards to jobs. The official employment rate is up over the year, equivalent to 20,000 more jobs, but the workforce jobs statistics show a decline of 30,000 jobs. This brings us neatly to a problem with recent statistics: their lack of coherence. There inconsistent signals and it is difficult to explain quarterly ups-and-downs, as well as big revisions to past data.

The bigger picture, however, remains. It is one of slow growth but resilient employment, the latter largely as a result of declining wages allowing for more workers to be retained than in previous recessions.

It is difficult to discern just how bad a scenario this is; since the housing and financial services booms of the 2000s, it is difficult to know what “normal” growth looks like.

The Office for Budget Responsibility and others expected rising exports and investment would act as the biggest generators of post-recession growth, but these remain becalmed. In fact, it is private and government consumption that have driven UK growth in recent months. Neither source may be tenable for much longer with government tightening up on consumption spending and if disposable incomes continue to fall in real terms.

• John McLaren is an economist with the Centre for Public Policy for Regions.