Scotland is, according to the respected economic think-tank The Fraser of Allander Institute (FAI), teetering on the verge of recession. A recession is defined by economists as two consecutive quarters of falling output and there is a perception that Scotland may well experience this if adjustments to previous predictions of economic growth are taken into account.
There is no value in pointing the finger at politicians but nor should we allow them to blame to Brexit or referendum anxiety. The causes are complex, the recession in the North Sea, which has shown signs of bottoming out, has affected the rest of the economy. The stronger performance of our service industries around financial and professional services has kept the impact in check. Yet the retail sector is in recession. The offsetting impact of a weaker pound causing our streets to flood with tourists is keeping things going.
Yet you wouldn’t know this to look at the jobs data. Scotland’s latest labour market statistics make comforting reading in some respects. We have reached an unemployment level of 4.4 % (below the UK rate of 4.6%). There is also a curious (at first glance) discrepancy in employment rates between Scotland and the rest of the UK with Scotland having a lower rate of employment than the rest of the UK, and lower unemployment. This indicates an increase in inactivity, which is citizens who have for a variety of reasons given up looking for work.
http://www.gov.scot/Resource/0052/00521168.pdf
One reason is that the jobs being created (although welcome) are largely part time and low skilled with a high level of self- employment. The rise in part time employment is about 8% over the last decade. Within that number there is a 45% increase in the number who say they are working part time because they cannot find full time work. Secondly there is a big rise in self-employment. Indeed, almost all of the rise in Scottish employment was down to self-employment. Many will be retired professionals like many from our own profession or those taking advantage of a package to set off on a new career. However some will simply be delivering packages for a couriers firm and will be employed as a self-employed contractor, or they could be driving a taxi on a similar contract.
As a result of more people in a weakening economy producing less overall, the productivity rate has continued to decline. It’s now sitting at half the level it was before the global financial crisis. Output per head in Scotland according the FAI analysis was just 1.2% over the last ten years. That’s barely needle touching level BUT that is over a decade NOT a year.
In many ways this productivity headache is at the centre of our concerns. If we can’t raise productivity we can’t generate the economic growth we need. Much of the discussion is around how we create better quality and more productive jobs, especially as technology continues to impact. There is a crucial role for HR and L&D in making work both more human and more productive. It’s a debate which will increasingly feature and in a series of future Scotland the Blog pieces, I will be using comprehensive reviews of the research conducted for the CIPD by Warwick University. It gives us more depth of insight into what’s going on in our labour market and how that translates to the workplace.
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