Scotland’s unemployment rate increased significantly in the three months to July, with data from the Office for National Statistics Scotland showing a 43% rise in the number of people unemployed compared to the same period the year before - 37,000, to be exact.

Furthermore, it brings Scotland’s unemployment rate up to 4.3% and in line with the UK when it had previously been doing better.

On a more positive note the data also shows that annual growth in regular pay, which excludes bonuses, was up by 7.8% between May and July, the highest regular annual growth rate since comparable records began in 2001.

The Herald:

This coincides positively with slowing inflationary pressures for homeowners. The consumer prices index including housing costs (CPIH) rose by 6.4% in the two months to July, down from 7.3% in June. That means salary growth is outstripping inflation. 

More current data on hiring demand shows the labour market remains relatively healthy. Hiring demand across Scotland was up month-on-month in August by 12% but down 5% year-on-year. The first eight months of this year have seen a 13% decline in hiring activity compared to the same period in 2022,  but that is coming down from historically astronomical levels.

The Herald:

There's no doubt today's figures, which only cover up to July, are influenced by some significant layoffs earlier in the year. Across Scotland some hefty employers such as Scottish Power, RBS, SSE, Standard Life Aberdeen, and Glasgow Airport have all announced redundancies in the hundreds in recent months.

Layoffs in Scotland have been increasing over the last 24 months. In the 12 months to March there were 17,000 redundancies, up from 13,000 in the 12 months to March 2022.

The increase in redundancies is due to several factors, including the Covid pandemic, the war in Ukraine, and the rising cost of living.

The Herald:

The pandemic led to a decline in demand for goods and services which has forced businesses to cut costs. The war in Ukraine has also had a negative impact on the Scottish economy as it has led to higher energy prices and uncertainty about the future. The rising cost of living is  putting additional pressure on businesses as they are having to pay more for wages, materials, and energy.

The trend of increasing redundancies is expected to continue in the coming months as businesses struggle with the economic challenges. The Scottish Government has announced a few measures to help businesses such as the Scottish Jobs Pledge, which provides financial support to businesses that are creating new jobs. However, it is likely that the number of layoffs will continue to rise in the short-term.

The Herald:

Overall, the labour market in Scotland is in a strong position, with high employment and low unemployment. However, the number of job vacancies are lower than last year, and government should look to better stimulate employers to hire and better develop staff in face of a clear skills gap, the impact of Brexit and the rise of automation. 

Gavin Mochan is managing director of s1jobs.