Scotland's employment rate is marginally higher than the UK as a whole, new figures show, with just over three-quarters of people defined as being in work.

The Office for National Statistics has released its labour market report for June to August 2022, finding employment had dropped overall by 0.3 per cent to 75.5 per cent.

In Scotland though employment rose to 75.8 per cent, up by 0.4, with unemployment falling 0.3 per cent and inactivity by 0.2 per cent.

Inactivity is described as being "people not in the labour force (also known as economically inactive) are not in employment, but do not meet the internationally accepted definition of unemployment because they have not been seeking work within the last four weeks, or they are unable to start work in the next two weeks".

Growth in average total pay (including bonuses) was 6.0 per cent and growth in regular pay (excluding bonuses) was 5.4 per cent among employees in June to August 2022.

However, adjusted for inflation, total pay fell by 2.4 per cent and regular pay fell by 2.9 per cent.

Reacting to the figures Chancellor Kwasi Kwarteng said: "Countries around the world are facing economic challenges, but today’s statistics remind us that the fundamentals of the UK economy remain resilient, with unemployment at its lowest point for almost 50 years.

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“Our ambitious Growth Plan will drive sustainable long term growth, meaning higher wages and better living standards for everyone, and we are cutting taxes so people can keep more of what they earn.”

The Scottish government hit out at Westminster for failing to adapt to shortages in the labour market.

It said: "The UK government’s Brexit policies are continuing to cause labour shortages, which continue to have a negative impact on a range of sectors across Scotland.

“The UK government holds key powers over migration, visas, VAT, National Insurance and key parts of employment law. I have been calling on the UK government to establish a joint taskforce with devolved nations to alleviate the pressures that current labour market shortages pose.

“Despite agreeing to engage with the devolved nations on these issues in June, we have received no further response to our request for a joint taskforce. The UK Government must engage with the Scottish government and use all available powers to address these matters.”

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The British Chambers of Commerce also sounded the alarm over labour shortages.

Reacting to the latest figures it said: "Once again, today’s data confirms that the UK is facing the tightest labour market in years.  Our own research shows that labour shortages are holding back the ability of many businesses to service existing customers and grow.  

“Despite a further decrease in the number of job vacancies to just under 1.25m, the overall level remains very high. Businesses are currently facing multiple external shocks, from global supply chain disruption, rampant inflation, and rising interest rates. Labour shortages are yet another issue weighing down on business confidence. 

“While the unemployment rate of 3.5% stands at the lowest level since 1974, the increasing economic inactivity rate, now standing at 21.7%, should be a cause for concern, with long-term sickness cited by the ONS as a key driver of this. Average weekly earnings also continue to be outstripped by inflation for workers overall.  

“If Government is serious about growth, it needs to get serious about jobs. There are key reforms it should adopt to help ease tightness in the labour market. These include supporting greater business investment in workforce training, adopting flexible working practices, expanding the use of apprenticeships, and a comprehensive reform of the Shortage Occupation List to allow sectors facing urgent demand for skills to get what they need.”

Overall real wages were down around £100 per month compared to the same time last year, with the Trades Union Congress urging the government to act.

TUC General Secretary Frances O’Grady said: “Every worker deserves a decent standard of living. But pay packets continue to be eaten up by inflation.

“Millions of families face a bleak winter unless we get wages rising across the economy.

“Instead of handing out bungs to bankers and big business, the government should be focussed on getting money into workers’ pockets.

“That means lifting the minimum wage to £15 an hour as soon as possible, funding decent pay rises for all public sector workers, and allowing unions to go into every workplace to negotiate proper pay rises for all working people. 

“That’s the best way to jumpstart our economy and to deliver sustainable growth.”