Jobs, skills and unemployment in Scotland Centre for Economic & Social Inclusion September 2012

1. Jobs, skills and unemployment in ScotlandCentre for Economic & Social Inclusion September 2012 Sponsored by:

2. Contact Acknowledgements Thanks to Wise Group and Glasgow City Council for sponsoring this work. Thanks for comments and advice from: David Coyne, Glasgow City Council; Laurie Russell, Wise Group; Jim Rafferty, Capital City Partnership; Paul de Pellette, Ingeus; Nick Young, Working Links; Matthew Crighton, Inclusion Associate. Thanks to Ingeus for research and charts in ‘Institutional and funding map’ section • Any questions on this research, contact: Paul Bivand, Associate Director of Statistics & Analysis, Inclusion • Paul.bivand@cesi.org.uk • 020 7582 7221

3. Introduction This report gives a snapshot of Scotland’s labour market for mid-2012. Its intention is to give the facts and figures that are needed for an informed debate about: • the challenges for Scotland’s labour market • what more the Scottish and UK Government’s could do to tackle worklessness • welfare benefits and employment budgets in the independence debate. A separate short Overview report summarises the main findings and concludes with questions for the future.

4. Sources of data • The data used in this report is sourced from the Office for National Statistics, Department for Work and Pensions, Scottish Government and other official sources. Some of the data and charts is based on Inclusion analysis of the Labour Force Survey and further analysis of published claimant count and Jobcentre vacancies data. • The data used is prior to the September release of labour market figures • Most charts show change from Jan-Mar 2008 (pre-recession) for both UK and Scotland

5. September’s labour market figures: what changed? • Employment rate up 0.1 points to 71.4% - UK up 0.5 points to 71.2% • Workforce jobs up 26,000 - a rise of 1.0% compared to a 0.3% rise for the UK • Unemployment up 0.1 points to 8.2% - UK down 0.1 points to 8.1% • Inactivity down 0.2 points to 22.1% - UK down 0.5 points to 22.4% • Claimant count down 600 on July – a fall of 0.4% compared to the UK fall of 0.9% • Claimant inflows down 700 or 2.6%, compared to a 1.8% fall for the UK • Claimant outflows down 100 or 0.4%, compared to a rise of 2.1% for the UK • Youth claimant count static at 43,700 – long term continuing to rise

6. Weathering the recession The Scottish labour market in context

7. Weathering the recession: better or worse than the UK?

8. Weathering the recession: better or worse than the UK? • Scotland’s recession started three months later than the UK • Nearly as deep as UK • 5.7% fall in Scottish output • compared with 6.1% in UK • Since Autumn 2009 output broadly parallel with UK • In Q1 2012 Scotland and UK output 3.9% below pre-recession levels • .... and showing few signs of recovery • Recent forecasts are for further revisions downwards, both for UK and Scotland

9. The recession and jobs: better or worse than UK?

10. The recession and jobs: better or worse than UK? • Employment in Scotland fell further in the recession than in the UK • UK employment numbers fell 2.3%, in Scotland employment fell by 4.3%. • UK employment has recovered to 0.1% below pre-recession levels, but Scotland’s employment remains 1.8% below • The fall in Scottish employment is much more in line with the fall in GDP than is the case at UK level • There are currently 45,000 less jobs in Scotland than before the recession

11. Employment

12. Employment • Scotland’s employment rate was up to 1.6 percentage points higher than the UK average as the recession started • Scotland’s employment rate fell further, dipping below the UK line in the first half of 2010, since then Scotland has returned to a lead over the UK – but a lead only half as large • If the employment changes are presented as percentage changes from the first quarter of 2008, the changes are clearer • Employment in Scotland and the UK fell at the same rate until Q4 2009 – and then Scotland worsened while the UK stabilised • Scotland then reduced the gap with the UK, almost returning to the Q1 2008 relationship briefly in Q2 2011, before a further gap opening up through the following period

13. Male and female employment rates

14. Male and female employment • Before the recession, the main reason why the Scottish employment rate was significantly higher was a female employment rate up to 2.8 percentage points higher than the UK average • Scotland’s female employment rate is still higher than the UK, but the gap has dropped to 1.6 points in the latest figures, and some months have been lower still • The steep fall in female employment in 2011 coincided with reductions in public sector jobs • The male employment rate for Scotland was, at the start of the recession, up to 0.8 percentage points above the UK level. The latest figure is negative at 0.4 points below.

15. Employment rates in local authorities

16. Employment rates in local authorities • The lowest employment rates are in the West of Scotland, Dundee and Clackmannanshire • The highest employment rates are in Shetland, Orkney, the Highlands, Moray and Aberdeenshire • The gap between the highest at lowest employment rates is 20.4 percentage points • The table shows the employment rates of all the local authorities in Scotland

17. Scottish vacancies

18. Vacancies • These charts show full-time vacancies • ONS vacancy survey is not available for Scotland but Jobcentre vacancies are available • Inclusion’s seasonally adjusted analysis shows a slow improvement in JCP vacancies in Scotland • The fall in vacancies reached 44% in Scotland, compared with 37% in GB • The recent improvement is nowhere near as fast as for Great Britain • The Scottish improvement is more recent – GB started recovery immediately in Summer 2009 • While vacancies in Scotland remained very low for 2 ½ years, GB vacancies have now reached and passed the pre-recession level • Scottish vacancies have only climbed back slowly to 20% below the pre-recession level

19. Work that does not meet aspirations

20. Work that does not meet aspirations • Before the recession less than 10% of part-time workers had taken part-time work because they could not get a full-time job – in both Scotland and UK • In the UK, this has been rising steadily and has now reached 18% • For Scotland, the rise has been sharper, particularly since Spring 2010, and reached 19.8% in Summer 2011 • Before the recession around 25% of temporary workers had only taken these jobs because permanent jobs were not available – in both Scotland and the UK • In the UK, this has been rising steadily and has nearly reached 40% • In Scotland, the proportion passed 40% in late 2009 and reached 50% in Winter 2011

21. Unemployment

22. Unemployment • Scotland’s unemployment rate (on the international standard measure) is 7.9%, 0.1% below the UK • There are 214,000 unemployed people in Scotland • The fall in employment has translated into higher unemployment rather than higher inactivity – the inactivity rate is now back to where it was before the recession began • Pre-recession, Scotland had a lower unemployment rate than GB • So, the percentage rise to now is higher in Scotland than in GB • Scotland’s male unemployment rate is 8.7%, 0.2 % above the UK level • Scotland’s female unemployment rate is 7.0%, 0.4% below the UK level

23. Claimant (JSA) count

24. Claimant count • There are currently 144,000 JSA claimants in Scotland – this is double the pre-recession level • Scotland’s claimant count rose with the recession and stayed high • Scotland did not benefit from the improvement at the UK level in 2010, nor suffer so much from the later UK rise • Highest proportions in Glasgow and neighbouring local authorities • 34% of all the unemployed (ILO) claim JSA – this is below the UK rate of 38% • The likely reasons for this are the higher levels of women in the labour market and the (marginally) higher rate of young people in learning saying they are unemployed

25. JSA in local authorities

26. JSA in local authorities • The map shows how claimant count rates (as a proportion of the working age population) vary across Scotland • The highest rates are in the West of Scotland, Dundee and Clackmannanshire • The lowest rates are in Aberdeenshire, Orkney and Shetland

27. Vacancies and JSA claimants

28. Vacancies and JSA claimants • New vacancies per new JSA claimant dropped with the recession • At the low point, vacancies were less than 50% of new claimants each month • This has recovered to 80% in Scotland • Well below the 104% in GB – because vacancies in Scotland have been slower • JSA claimants per vacancy rose along with GB to 9 – but Scotland remained around this level until Autumn 2011 while GB improved • Since then, Scotland has improved to 6.8 claimants per vacancy, worse than the GB 5.3 level

29. How many on different benefits?

30. How many on different benefits? • In Scotland, 57% of out of work claimants are claiming ESA or legacy incapacity benefits – compared to 52% in GB • ESA/IB claimants are 8.1% of the working age population in Scotland – compared to 6.5% in GB • JSA claimants are 31% of claimants in Scotland, and 32% in GB • Lone parents on Income Support are 12% of claimants in Scotland and 10% in GB • Before the recession and benefit changes moving lone parents into JSA, about 12% of all claimants in Scotland were lone parents (15% in GB) • The proportion of all claimants on ESA/IB in Scotland has dropped by 3 percentage points since 2007

31. Inactivity rates

32. Inactivity • Scotland’s inactivity was well below UK levels before the recession ... and is so now • Male inactivity rose well above UK levels 2009-2011, now back down to UK level • Female inactivity is well below UK levels, but recent trend is rising • 24.4 %of the inactive say they want to work

33. Inactivity across Scotland

34. Inactivity across Scotland • The proportion of people who are economically inactive varies across Scotland from 16.8% in Shetland to 28.1% in Glasgow and North Ayrshire • The Highlands and Islands (with the exception of Eilean Siar) has the lowest inactivity rates, followed by Midlothian • Economic inactivity includes students and family care as well as long-term illness or disability

35. Qualifications of Scotland’s labour force

36. Skills background

37. Working and workless by qualification

38. Working and workless by qualification • 43% of Scottish workers are qualified to the former SVQ Level 4 and over • This compares with 39% in the UK • 7% of Scottish workers have no qualifications, but 23% of the Scottish workless have no qualifications • This compares with 6% of UK workers, and 20% of the UK workless having no qualifications • Scotland therefore has more both employed and workless at both ends of the qualification distribution • The employment rate rises by qualification in both Scotland and the UK, with a 22-23 percentage point difference between no qualifications (42% Scotland, 40% UK) and those with a Level 1 qualification. • Level 2 adds a further 4 percentage points, and Level 3 a further 5 percentage points. Level 4 adds 10 percentage points to employment rates.

39. Skills background • The latest analysis is the 2010 Scottish Employer Skills Survey (2011 Survey is due for publication) • Findings from 2010 Survey were: • Skill shortages and skill gaps are uncommon when set in the context of a labour force of around 2.5 million people. Skill gaps are perceived to have a minor impact by employers and are often transitory • There are fewer hard-to-fill vacancies than in previous surveys: in 2010, 35 per cent of vacancies were hard-to-fill, in 2008 this proportion was 50 per cent. • Most employers who have recruited someone straight from school, college or university thought that the recruit was well-prepared for work.

40. Scottish employer views on skills • Almost half of employers said that they would have provided more training over the last 12 months if they had been able. Lack of funds was the most common reason • Very small firms have higher rates of vacancies, hard-to-fill vacancies and skill shortages than larger firms, and are less likely to provide staff training • People doing jobs that typically require lower levels of skills and qualifications are more likely to be deemed not fully proficient by their employer. They are also less likely to receive training from their employer. • Where proficiency is lacking, it is mainly because of weaknesses in soft skills such as planning and organising, customer handling, problem solving and team working

41. NEET young people – More Choices, More Chances

42. More Choices, More Chances • Despite Scotland having higher proportion with high qualifications • Scotland still has a higher proportion unqualified than GB • And Scotland has a higher proportions of its young people who are Not in Employment, Education or Training – NEET • Scotland has had a higher NEET rate than England for six out of the last eight years • This is the target group for More Choices, More Chances

43. Future of the Scottish labour market 2012 Working Futures Projections, UK Commission on Employment and Skills

44. Future of the Scottish Labour Market • The UK Commission on Employment and Skills has recently published projections for employment for Scotland to 2020 • This section presents their key findings and a small selection of charts from the report • As with all forecasts – there are risks around forecast estimates • The success or failure of policies and adjustments will result in the results being different from these projections

45. Working Futures 2012: Towards 2020 • Employment is projected to grow only half as fast up to 2020, more slowly than for the UK • The fastest rate of output growth to 2020 is projected for Business and other services, while the Primary sector andutilitieswill continue to contract • Employmentgrowth is projected to be fastest in Construction and privatesector services and employment is projected to continue to contract in Manufacturing • The Business and other services sector is projected to be the largest industry sector in Scotland in terms of employment in 2020 • The broad shift in the occupational profile of employment in Scotland awayfrom lower-skilled occupations towards higher-skilled occupations is projected to continue, with 50% of jobs to be held by people holding higher level qualifications by 2020 • Vacancies from ‘replacement demand’ (replacing people who retire) are projected to be greater than vacancies from net growth in employment.