Analysis
By Gavin Mochan
The Scottish labour market continued to recover from the worst of the pandemic during the three months to the end of January, but this is not translating into real wage increases.
According to the latest figures from the Office for National Statistics (ONS), unemployment in Scotland fell to 3.8 per cent, down 0.3 percentage points compared to three months earlier. Employment also edged 0.1 points lower to 74.5%, but remains 0.6% higher than a year before.
Hiring demand remains largely positive with more than 52,000 jobs advertised across the country during February, 50% more than in the previous year but 9% down on January.
This month-on-month decline is not necessarily a sign that the market is cooling. Last year was seasonally atypical: we were in lockdown, and January’s growth may well have been inflated by pent-up demand from employers.
One thing is certain though – inflation is wiping out any real wage growth.
During the three months to January, average total pay (which includes bonuses) across the UK increased by 4.8%, and pay excluding bonuses grew by 3.8%. But after adjusting for inflation, total pay increased by just 0.1% and regular pay fell by 0.1%.
This of course is not uniform across all industries. While average total pay in the financial sector increased by 8.6%, reflecting the impact of hefty bonuses, the public sector and the construction industry lagged much further behind at 2.7% and 3.6% respectively.
When it comes to median monthly pay, Scotland is failing to keep pace with the UK. The latest early estimates for February indicate that the median salary for payrolled employees in this country increased to £2,064, a rise of 4% compared to a year earlier. However, the growth in UK median monthly pay was 5.1% higher over the same period.
Workers forced to take up self-employment opportunities to see them through the pandemic have started moving back onto corporate payrolls. Many have been encouraged by the large volume of jobs on offer and employers’ desperation to recruit staff, but with the cost of fuel, food and many other essentials set to keep rising, a tight labour market will not be enough to alleviate the squeeze on household incomes.
At the same time, nearly two-thirds of businesses have asked staff to work increased hours to avert the alternative of failing to meet customer demand. The question is whether this is sustainable in the long-term as employees have put increasing value on work-life balance through the course of the pandemic.
The jobs economy has shown resilience in recent months, but severe inflationary headwinds remain which will only be made worse by Russia’s invasion of Ukraine.
All eyes will now be on next week’s spring statement, when the Chancellor is expected to focus on measures to alleviate the inflation crisis facing households and businesses alike.
Gavin Mochan is managing director of s1jobs.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here