Scottish Labour Market Trends: headline indicators mask weak earnings growth and productivity performance


Labour Market Trends Vol. 2 No. 1 from the Fraser of Allander Institute (FAI) and Scottish Centre for Employment Research (SCER)

The latest FAI/SCER Labour Market Trends report summarising recent developments in the Scottish labour market has just been released.

Overall, the Scottish labour market continues to hold up relatively well despite Scotland’s economy growing more slowly than the UK as a whole. And earnings growth – across the UK – is being outpaced by rising inflation.

In the report we summarise the key headline indicators and trends in the Scottish labour market. We also look in more detail at the links between the labour market, productivity and earnings.

While it is true that Scotland has caught up with UK levels of productivity, we show that this is driven, in part, by the number of job and hours worked in the UK increasing more rapidly than in Scotland – as oppose to a sustained improvement in underlying productive capacity.

The consequence of weak productivity growth – across the UK – is being felt by workers who are seeing earnings growth outpaced by inflation. All but the bottom 10% of the earnings distribution in Scotland have seen their average weekly earnings fall in real terms over the past year.

This edition also includes a featured article by John Sutherland looking in more detail at firm’s workplace adjustment strategies during the Great Recession with insights from the Workplace Employment Relations. How firms responded to the recession may help us understand the UK’s exceptionally weak productivity performance.

John is an Honorary Research Fellow at the Scottish Centre for Employment Research (SCER) in the Department of Human Resource Management at the University of Strathclyde.

Published: 21 November 2017

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