SCOTLAND’S employment rate has suffered a record fall amid warnings of “increasing economic headwinds”.

The Office for National Statistics reported the employment rate fell by 1.8 percentage points between February and April in Scotland to 74.6%.

This compared to 0.2 point improvement across the UK to 76% in the same quarter. 

The economic inactivity rate in Scotland, which includes students and the long-term sick not seeking work, also increased by a record amount, up 1.9 points to 22.9%.

This compared to a 0.4% fall in economic activity across the UK as a whole, to 21%.

Both the fall in employment and the rise in economic activity were the largest quarterly changes seen in Scotland since comparable records began in 1992.

They were also the worst quarterly changes of any UK region from February to March.

However there was better news on the unemployment rate, which was unchanged in the quarter in Scotland at just 3.1%, while across the UK it rose 0.1 points to 3.8%.

ONS figures showed that 85,000 people aged 16 and over in Scotland were unemployed between February and April.

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Professor Stuart McIntyre, of the Fraser of Allander Institute and Associate Dean at the Strathclyde Business School, said: "The significant decline in the employment rate and the associated increase in economic inactivity in the latest data for Scotland suggest that the labour market is weakening in the face of a set of pressing economic challenges.

“It’s too soon to tell where this will go next, and we’ll have to await further data to understand how these wider economic pressures will play out in the labour market, but the outlook remains concerning.

“The latest UK-wide data show that a big driver of economic inactivity continues to be sickness preventing people from participating in the labour market – and the data we have for Scotland paint a similar picture.

“This underlines the importance of considering wider societal challenges alongside economic conditions, and in particular the importance of improving population health in supporting economic progress and wellbeing.”

STUC General Secretary Roz Foyer added: “It’s troubling that, in Scotland, we find a record quarterly dip in employment, down 1.8% and now lagging behind the UK average. 

“To add insult to injury, sickness levels have increased, pay is down and average hours worked have risen. Workers are working longer hours, for less money and gradually falling sicker.

“We need an economic model that delivers for workers. That means increased investment in our public services, boosting employment and delivering higher wages for the workforce.”

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SNP Wellbeing Economy Secretary Neil Gray welcomed the near-record unemployment rate, but admitted the economic outlook remains “challenging”.

He said: “The Scottish Government is committed to supporting more people into work – including parents, disabled people and those with health and caring responsibilities – through employability and skills support, high-quality early learning and school age childcare provision, as well as improving access to flexible working.

“We are quickly taking forward the commitments made in the National Strategy for Economic Transformation, including developing a lifetime skills offer for adults, which will ensure future support is targeted at those who need it most. 

“These commitments also include the implementation of the action plans to ensure workers are equipped with the skills that employers will need in a green economy. Additionally, our strong apprenticeship programme is allowing employers to invest in their workforce.

“However, with certain industries still facing recruitment challenges, an urgent rethink of UK Government immigration policy is needed to enable increased access to the international labour and skills that Scotland needs for our economy and communities to flourish.

“With full powers over migration, Scotland could boost its workforce and tackle the recruitment challenges, many of which have been caused by the end of free movement and the hard Brexit imposed on Scotland by the UK Government.”

The UK Government said the inactivity numbers reflected “increasing economic headwinds”.

Scottish Secretary  Alister Jack said: “It’s encouraging to see that the unemployment rate in Scotland remains near record lows and there’s resilience in the labour market. Global issues are still causing significant economic challenges, however.

"The UK Government is investing £3.5billion to remove barriers to work and remains committed to halving inflation, reducing debt and growing the economy, not least through investing more than £2.2bn in Scotland through our ambitious levelling up agenda and City and Growth Deals.”