Scotland's labour market is proving quite resistant to growing economic challenges, with the overall picture remaining that of strong demand from employers.
Latest figures from the Office for National Statistics pegged the unemployment rates at 3.3 percent during the three months to the end of October, down 0.5 percentage points on pre-pandemic levels. However, this was an increase of 0.2 points on the previous three months.
Importantly, that rise is down to a decrease in the number of people who are economically inactive – those who are not in employment, and not seeking a job. The reality is that more people are in work.
Earlier in the year employers seemed less clear on how to tackle staff shortages. Fighting against rising inflation they have been averse to and often unable to pull the usual levers – like higher salaries or the increasingly popular four-day working week – to secure the labour they need.
But under the strain of lost business, companies have in more recent months been increasing starting salaries. Early forecasts for November suggest that median monthly pay for employees in Scotland was £2,213 – an increase of 18.1% compared to the pre-pandemic period of February 2020, and the sharpest monthly increase since 2018.
Companies are also now more prepared to train their own workforce to combat skills shortages. This is a sound strategy when it comes to increasing talent pools and keeping costs under control.
A recent survey by Hays highlighted that 94% of employers in Scotland experienced skills shortages during the past 12 months, with nearly three-quarters saying they would hire people without the necessary skills. One-fifth have raised their training budgets to lessen the skills gap between under-qualified entrants and their existing workforce.
Businesses are under no illusions that these are necessary steps if they are to operate at full capacity. All too often, and particularly in smaller operations, employers have resorted to reducing opening hours or offerings to ease the strain of being under-staffed.
Bigger businesses have not avoided these conflicts either. The number of working days lost across the UK to strike action in October reached 417,000 – the highest since November 2011. Disruption was most acute across transport, storage, information and communications.
The paradox is that hiring demand is still high despite definite signs of employers slowing their recruitment intentions. In addition, recruitment activity seems to be thwarting the Christmas contraction.
Hiring volumes in November 2021 were down about 13% on the previous month, but this year there were 44,000 jobs advertised in Scotland in November, a monthly decline of just 6%. Employers still need to expand their workforces, and some perhaps hope to better stand out when fewer competitors are active during the winter months.
With a market full of contradictions, the outlook to 2023 is uncertain. The only definite is that businesses which are most nimble in attracting and retaining staff will fare the best.
Gavin Mochan is managing director of s1jobs.
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