Tuesday, 14 May 2013

What's happening in Scotland's local labour markets?

Not usually one for bold predictions, I hereby declare a strong belief that political reaction to the new labour market statistics for Scotland (published by ONS at 9.30am tomorrow morning) will be shrill and unenlightening. Cherries  will be picked, scarcely deserved credit claimed and/or unwarranted blame apportioned. Such is life on the third Wednesday of the month. It’s all as inevitable as it is crushingly tedious.

The monthly bunfight is predicated on Labour Force Survey data for employment, unemployment and inactivity. The LFS sample size for Scotland is approximately 5,800 households a year. I’ve blogged recently about the Scottish Government’s use of experimental LFS data for which the sample size is considerably smaller.

Unfortunately it’s not widely known that the Scottish Government funds ONS to boost the sample size for Scotland each year to 20,000 households. These data are then combined with similar boosts to the English and Welsh LFS in the Annual Population Survey. The APS therefore provides a more accurate and detailed picture of the Scottish labour market albeit one that lags the latest (non-boosted) statistics that will be published tomorrow.

The Scottish Government draws on the APS to publish an excellent annual report ‘Local Area Labour Markets in Scotland’. This is something of a pioneering study which led the way in shedding light on rising underemployment some time before ONS caught up.  So it’s a crying shame that the latest edition published on 8 May (covering 2012 APS) was, as far as I can tell, completely ignored by the Scottish media for it provides a much fuller picture of the reality of the labour market as confronted by real people in real communities than the monthly ONS release.

What does the 2013 report tell us?

  • The 2008-2013 mini depression has exacerbated long-standing regional inequalities. The report bravely concedes that progress towards the Scottish Government’s cohesion target has reversed: between 2011 and 2012, the gap in employment rates between the three local authorities with the highest employment rates and the three local authorities with the lowest employment rates increased by 2.8 percentage points from 16.3 to 19.1 percentage points. The poor performance of Glasgow (see below) had a relatively severe impact on the overall rate of the 3 worst areas due to its size.

  • Some welcome progress on employment growth over the year was insufficient to compensate for the damage done over the past five years: just over half of local authority areas saw an increase in their employment rates over the year, while all but two local authorities (North and South Lanarkshire due to significant increases of 4.1% and 4.3% respectively in the saw female employment rate) reductions between 2008 and 2012.

  • Glasgow saw the largest decrease in employment rate…down 4.1% to 59.7%, while its employment level decreased by 15,500…over the year Glasgow has seen a large shift out of employment into inactivity (with the level of inactive students aged 16-24 up around 11,000 over this period).

  • Perhaps surprisingly, the male employment rate decreased from 75.1% to 74.6% while the female employment rate increased slightly from 66.5% to 66.8%.

  • The youth employment rate (16-24 year olds) in Scotland decreased by 1.4% over the year, from 54.6% in 2011 to 53.2% in 2012. A total of 16 local authorities (including Glasgow and Edinburgh) saw an decrease in their youth employment rate, whilst over the same period the remaining 16 saw increases. The youth unemployment rate (16-24) in Scotland was 20.7%, 0.2 percentage points lower than the rate in the UK. The rate in Scotland has increased by 7.1 percentage points since 2008, higher than the increase of 5.9 percentage points in the UK over the same period. There is nothing in this report to support the Scottish Government's proposition that youth unemployment has fallen by a third over the past year.

  • The number of people in full-time work continues to decline: in 2012 73.2% of people in employment were working full-time, compared to 73,6% in 2011 and 76.2% in 2008. Over the year the percentage of people in full time work has decreased in 17 local authorities and since 2008 has decreased in 28 local authorities.

  • The increase in underemployment slowed in 2012: there were 243,000 workers underemployed (ie willing to work more hours), an increase of 2,600 over the year and 68,900 since the start of the recession in 2008. The underemployment rate (those underemployed as a proportion of all aged 16+ in employment) in 2012 was 10.0%, up 0.1% over the year and 3.0% since 2008. Underemployment levels are highest amongst part-time female and full-time male workers.

  • At the start of the recession in 2008, 268,500 (10.6%) of the 16+ workforce were self employed. By 2012 the level of those self-employed had increased to 301,700 (12.2%), an increase of 33,200 with around 60% of the increase due to a rise in self-employed males. Those working part-time made up 85% of the total rise in self-employment in Scotland in 2012. The level of 16+ employees has decreased from 2,242,600 in 2008 to  2,145,700; a decrease of 96,900.

  • The report provides no comfort to those looking for signs of rebalancing: since 2008, there have been statistically significant changes in the proportions employed within ‘manufacturing’ (down 1.6%), ‘construction’ (down 2.3%), and ‘banking, finance and insurance’ (up 2.2%).

  • Private sector job growth between 2011-2012 (10,600) did not fully compensate for public sector job losses of 13,900 – the paper does not break these jobs down into FT/PT etc.

  • In 2012 33,000 (13.3%) of 16-19 year olds were not in education, employment or training. The level of NEET had increased by 1,000 (0.9 percentage point) since 2011.

  • Just under 48% (101,600) of all unemployed people in Scotland have been unemployed for less than 6 months, while just under 33% (70,100) have been unemployed for 12 months or more.

  • The unemployed rate for disabled people (for those aged 16-64) in Scotland rose by 1.2% over the year to 12.6% with the level increasing by 4,000 to 50,500.

  • In 2012, 25.4% of all people in Scotland aged 16-64 who were inactive wanted to work, compared to 24.6% in 2011.
What do we learn from the above? Things were grim in 2012 and unless the improvement reflected in the last couple of ONS monthly releases is maintained and built upon through the whole of this year, 2014's Local Area Labour Markets report is unlikely to be much of an improvement.



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