By Ian McConnell
A “CLEAR warning of what is to come” on the unemployment front in Scotland is writ large in the findings of a major survey of businesses.
The survey, published today by Scottish Chambers of Commerce and conducted in conjunction with the University of Strathclyde’s Fraser of Allander Institute, reveals record plunges in confidence among businesses north of the Border in various sectors amid the coronavirus crisis.
It shows the construction, retail and wholesale, and tourism sectors have been most affected by plummeting confidence. Around 95% of Scottish tourism businesses reported a decline in confidence in the latest quarter.
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The survey also flags intense cash-flow pressures in many sectors. And Scottish Chambers, highlighting widespread expectations of further falls in workforce numbers among businesses, flagged the “long-term challenge” for businesses “to retain employees and protect jobs”. The survey also shows sharp falls in sales revenues and investment across Scotland’s business base.
Professor Graeme Roy, director of Fraser of Allander, said: “This latest survey...presents a sombre picture of the scale of the challenge now facing the Scottish economy.”
He added: “There remains huge uncertainty…about the restart, not least because of the ongoing risks to public health, but also concerns around the timing of the removal of government support. Sadly, it will only be when government funding is fully rolled back that the full economic costs of the crisis will be realised. What is particularly worrying is the employment outlook. The survey shows a clear warning of what is to come, with a sharp rise in unemployment now inevitable as businesses adjust to a new normal.”
All sectors covered by the survey suffered plunges in sales revenues in the second quarter amid the lockdown aimed at slowing the spread of Covid-19.
And the survey signals expectations of sharp falls in employment in the coming quarter across the various sectors. The projected declines are most severe in the construction and tourism sectors. In each of these sectors, a net 40 per cent of businesses project a decline in employee numbers, subtracting the proportion forecasting a rise from that anticipating a drop. In the retail and wholesale category, and manufacturing, respective balances of 31% and 35% of businesses forecast a drop in employee numbers. In financial and business services, a net 12% of businesses project a fall in staffing.
All sectors reported significant declines in employment in the second quarter. The worst-affected was tourism, in which a net 70% of businesses reported a fall in employee numbers. The retail and wholesale category was next worst in terms of falling employment in the second quarter, with a net 56% of firms reporting employee numbers had declined.
A net 98% of tourism businesses reported a decline in sales revenue in the second quarter. Respective balances of 72% and 44% of businesses in the retail and wholesale category, and the manufacturing sector recorded a decline in sales revenues. In financial and business services, and construction, respective balances of 63% and 56% of firms reported declines.
Tim Allan, president of Scottish Chambers, said: “It is critical that governments in Holyrood and Westminster continue to provide business support for companies during and beyond the easing of lockdown restrictions. A sudden end to these vital financial support measures would not be welcome by anyone and a tsunami of jobs would disappear overnight.”
He added: “In many instances, these results are among the worst over the 30-year history of the survey.”
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