The Scottish economy is witnessing a transformation in its employment landscape, reflecting a robust recovery from the challenges imposed by the pandemic.

In a striking development, the proportion of businesses grappling with recruitment difficulties has sharply declined from 41% in March 2022 to just 21% today. Conversely, those reporting no such challenges have surged from 34% to 56%, showcasing a remarkable easing of the labour market pressures that were intensified during and after lockdown.

This positive shift is particularly evident across sectors that were hardest hit by lockdown measures, including wholesale, retail, accommodation, and food services. These sectors have seen the most significant decrease in recruitment difficulties, signalling a notable adjustment to the post-pandemic economic landscape.

The Herald:

For instance, in the accommodation and food services sector, the rate of businesses facing recruitment challenges has halved, dropping from 49% at the start of 2022 to 24% in the latest survey. Similarly, the wholesale and retail sector has seen its difficulties decrease from 35% to 14%, while the arts, entertainment, and recreation sector has improved from 47% to 21%.

This trend of easing recruitment challenges is a testament to Scotland's economic resilience and adaptability, suggesting a rebalancing after the demand and supply shocks associated with the pandemic.

At the same time the drop in vacancies across the UK continues with 908,000 open vacancies seen during the December 2023 to February 2024 period, a decrease of 43,000 from the previous quarter. This marks a 20th consecutive period of falling vacancies, with declines seen in 14 of the 18 industry sectors monitored.

The Herald:

Nonetheless, we are still 100,000 vacancies higher than the immediate pre-Covid period. As vacancies fall the number of unemployed people per vacancy ticked up marginally to 1.5 from 1.4 in the previous quarter. The unemployment rate itself in Scotland is 4.1%, slightly above the UK rate of 3.9% but nonetheless down 0.3% over the quarter.

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Scotland's private sector output has concurrently experienced its strongest growth since mid-2023, driven by a resurgence in new business predominantly in the service sector.

The employment picture across Scotland has similarly brightened, with job creation marking its thirteenth consecutive month of growth in February. This uptick is underpinned by increased staffing levels in manufacturing and a notable rise in service provider positions.

The Herald:

Business sentiment for the Scottish private sector has also seen a significant improvement, reaching an 11-month high in February, buoyed by planned investments and optimistic economic forecasts.

However, it's important to temper optimism with realism. Despite these advances, Scotland's confidence level remains the second-lowest among the 12 monitored UK regions. This serves as a reminder that while progress is evident, the path to full recovery is a continuous journey, requiring sustained effort and strategic planning.

As Scotland's economy strides forward, transforming its employment landscape, the story that unfolds is one of resilience, adaptability, and cautious optimism.

John Walls is head of data analysis at s1jobs.