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Better news on jobs but not out of the woods yet

While the engineering firm Doosan Babcock was announcing good news on Scottish employment yesterday, the American oil company Chevron was announcing bad.

Doosan Babcock said 266 new jobs are to be created at its new process engineering centre in Renfrewshire, but the gloomy news at Chevron was that 225 jobs are to be lost from its Aberdeen operation.

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At first sight, the news from Chevron appears confusing. The oil and gas sector, centred on Aberdeen, has been buoyant all the way through the recession, so much so that the city has appeared at times to be in its own economic bubble. The picture on employment in oil and gas should also remain strong in years to come, partly due to firms taking on more skilled engineering staff to help them reach the reserves of oil and gas in the North Sea that are increasingly hard to tap.

So why is Chevron laying off staff? Partly, it could be the sector becoming a victim of its success and having to make cutbacks because of its relatively high staff costs but, regardless of the explanation, it should be seen in the context of the overall success of oil and gas in Scotland. Indeed, Chevron itself is planning a £6 billion expansion west of Shetland and says it hopes it can reduce the number of redundancies in Scotland by redeploying some staff overseas.

Over at Doosan Babcock, the news appears to be good from every angle. Not only is the firm offering new jobs, but the creation of its new centre, which will work on the design and building of production facilities for companies working in oil and gas and other industries, is an encouraging sign in a sector that needs to grow further. The jobs at Doosan Babcock are the kind Scotland needs if its manufacturing sector is to thrive.

As far as the bigger picture on employment is concerned, however, there are still two persistent problems that the news from Doosan Babcock will do little to solve.

The first is underemployment, which existed before the recession but has accelerated in the past few years, leaving hundreds of thousands of Scots wanting to work more but unable to do so. This is not good socially, because part-time work is much more prevalent in insecure, low-paid sectors, but it is also not good economically because, for the economy to be truly productive, it needs to use up its spare capacity. New jobs such as those at Doosan Babcock are welcome, but more still needs to be done on childcare for instance, to allow those who want to work more to do so.

The second issue is youth unemployment, as Angela Constance, Minister for Youth Empoloyment, acknowledged yesterday. Ms Constance suggested the links between schools and employers should be more aligned to business needs, but it is more likely that, as confidence continues to return among small and medium-sized businesses, they will begin to take on more young people.

Doosan Babcock has done its bit by announcing 266 new jobs yesterday; the challenge for the Scottish Government is to ensure that schools, colleges and universities produce young people with the qualifications needed to take them.

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