« Previous | Contents | Next »
Listen
Chapter Four: Labour Market
Population
The General Register Office for Scotland ( GROS) is responsible for the publication of population estimates for Scotland. Scotland's population in mid-2005 was estimated at 5,094,800. The population has been falling slowly since the mid-1970s (peak of 5.24 million in 1974), having exceeded 5 million for the first time in 1939. Looking forward, the population is projected to rise to 5.13 million in 2019 before changing direction and falling below 5 million in 2036.
The mean age of the population has increased over recent years and this is predicted to continue in future years. These projected demographic changes will have implications for the labour market in Scotland. Charts 4.1a and 4.1b illustrate these changes.
There is also currently variation in geographic distribution of population across Scotland. For example in Dumfries and Galloway 24.0 per cent of the population are greater than working age whereas in West Lothian only 15.1 per cent of the population are greater than working age.
Chart 4.1a: Number of females, by age, 1995, 2005 & 2015 | Chart 4.1b: Number of males, by age, 1995, 2005 & 2015 |
 |
Source: GROS 1995, 2005 mid-year population estimates
Government Actuaries Department, 2015 projection (2004-based)
Employment
The official source for estimating the number of people in employment is the Labour Force Survey ( LFS). In Spring 2006 there were 2.4 million people aged 16 and above in employment. This is an increase of 6.5 per cent since 1997.
The proportion of working age people in employment varies geographically across Scotland. This is illustrated in Map 4.1 using the Annual Population Survey ( APS) (see box 4.1).
Box 4.1: The Labour Force Survey |
|---|
The Labour Force Survey ( LFS) is a survey of households living at private addresses in the UK. Its purpose is to provide information on the UK Labour Market which can be used to develop, manage, evaluate and report on labour market policies. The survey is carried out by the Office for National Statistics ( ONS). Information is available for Spring 1992 onwards for the UK and Scotland and for Spring 1998 onwards for local authority areas in Scotland. The survey covers 60,000 households in the UK every quarter. Topics which are covered in the survey include: employment, full-time, part-time, industry of employment, hours worked, occupation of employment, earnings and qualifications. Due to the fact the Labour Force Survey is based on a sample, the information is subject to some sampling error. Quarterly estimates of less than 10,000 are not published as they are likely to be unreliable. Calendar Quarters The Review of the Framework for Labour Market Statistics recommended that the LFS moves from seasonal quarters to calendar quarters in line with Eurostat regulations. ONS will be making annual changes to the LFS questionnaire each January from 2007. This time the annual changes were made in December 2005 to avoid having mid-quarter changes, and to allow for both a December-February quarter and a January-March quarter to be constructed on a consistent basis. The first calendar quarter microdata was published in May 2006, together with selected previous quarters, but a complete back series of microdata products will take longer to produce. Local Area Estimates - LFS Boost and Annual Population Survey The quarterly data provide good estimates of the labour market in Scotland as a whole, but for small areas or small population groups it does not provide a large enough sample to give reliable results. In order to provide more reliable information, for local areas, the annual local area database ( LADB) was developed, based on 96,000 households in the UK (approx. 9,000 in Scotland). The LADB combined data from four quarters of the quarterly LFS, such that one response only, from every respondent from the four quarters, was included in the annual database. The LADB covered the annual period March to February. Since 2000/01 the LADB has been augmented by sample boosts, which are not included in the quarterly LFS. The boost in Scotland was introduced in 2003; it increased the annual sample from 8,800 households to 20,000 households. The boosted survey was called the Annual Local Area Labour Force Survey ( ALALFS) for the UK and the Annual Scottish Labour Force Survey ( ASLFS) in Scotland. In 2004, a further improvement, the Annual Population Survey ( APS), was introduced. The APS included all the data of the ALALFS, but also included a further sample boost aimed at achieving a minimum number of economically active respondents, in the sample, in each Local Authority District in England. The first APS covered the calendar year 2004, rather than the ALALFS period of March to February. Also, the ALALFS data were published only once a year, but the APS data are published quarterly on a rolling annual basis covering the time periods January to December, April to March, July to June and October to September. From January 2006 onwards, the APS data will not include the extra boost in England due to funding constraints. |
Map 4.1: Employment Rates by Scottish Local Authority area, 2005
Gender and Age
Chart 4.2 shows that the employment rate for both males and females has increased. Since 1997 there has been a greater increase in the proportion of females in employment compared with males. The number of females in employment has increased by 9.4 per cent, whereas the number of males in employment has only increased by 3.9 per cent. Chart 4.3 shows that the proportion of people in employment has increased across most age bands. The greatest increase can be seen in the 50 years plus age group.
Chart 4.2: Employment, unemployment and economic inactivity rates by gender in Scotland, 1992-2006
Source: Labour Force Survey, Spring Quarter, Not Seasonally Adjusted
Employment Rate - Number of working age employed as a proportion of all working age
Economic Inactivity Rate - Number economically inactive of working age as a proportion of all working age
Unemployment - Number unemployed aged 16 and above as a proportion of all economically active aged 16 and above
Chart 4.3: Employment rate by age group, 1994 - 2006
Source: Labour Force Survey, Spring Quarter, Not Seasonally Adjusted
Work Pattern
Employment comprises of employees, self-employed, unpaid family workers and government supported trainees. Full-time employment has increased by a greater amount for females (9.3%) than for males (2.8%) since 1997. The number employed on a part-time basis has also increased since 1997, but fallen slightly in the last couple of years. This increase has been greater for men than for women. Number of males in part-time employment have increased by 16.0 per cent since 1997 whereas for women, the increase is 9.5 per cent. Overall in 2006 (and 2005), part-time workers accounted for 24.9 per cent of all people in employment.
Since 1997, self-employment has increased by 1.7 per cent. Female self-employment increased by 7.5 per cent but male self employment decreased by 0.6 per cent over the period. The majority (70.5%) of self employed workers are male. Numbers of unpaid family workers and those on government supported training programmes have decreased since 1997.
Qualifications and Job Training
The proportion of people who had received on the job training in the last 3 months has increased since 1997. Currently 28.1 per cent of people had received job related training in the last three months. This compares with 23.6 per cent in 1997. The proportion of people in the workforce who have a degree has also been increasing in Scotland. In 2006, 23.3 per cent of people in employment aged 25 to state pension age held a degree level qualification or above. This compares with 15.3 per cent in 1997.
Chart 4.4 shows that the proportion of working age people in employment who possess SVQ level 5&6 qualifications is increasing, whereas the proportion of people who do not have qualifications is decreasing. This indicates that Scotland has a more qualified workforce than in previous years.
Chart 4.4: Working age people in employment by level of qualification, 1997 - 2006
Source: Labour Force Survey, Spring Quarter, Not Seasonally Adjusted
Note: This information relates to 90 per cent of all people. Approximately 10 per cent of people responded 'don't know' or 'other' to questions regarding qualifications.
Jobs
Official sources of workforce jobs are the Annual Business Inquiry and the Quarterly Employee Jobs series. These are surveys of employers carried out by the Office for National Statistics ( ONS). These surveys measure number of jobs, whereas the Labour Force Survey primarily measures the number of people in employment.
Industry
Chart 4.5 shows number of employee jobs by broad industry sector in 2004 and 1998. In 2004 and 1998 the highest proportion of employee jobs in Scotland were in Public Administration, Education & Health. Since 1998 the proportion of employee jobs has increased most in Public Administration, Education & Health and Business Services & Finance. The proportion of employee jobs in manufacturing has decreased by the largest amount over the time period.
Chart 4.5: Distribution of employee jobs by industry, 1998 and 2004
Source: Annual Business Inquiry
Unemployment
There are two measures of unemployment used in the UK:
- Unemployment (previously known as ILO unemployment) - This International Labour Organisation ( ILO) definition of unemployment is derived from Labour Force Survey data. It covers people who are: out of work, want a job, have actively sought work in the previous four weeks and are available to start work within the next fortnight; or out of work and have accepted a job that they are waiting to start in the next fortnight.
- Claimant count counts the number of claimants of unemployment-related benefits on the Jobcentre Plus administrative system. These are currently the Jobseeker's Allowance ( JSA) and National Insurance credits, claimed at Jobcentre Plus local offices. People claiming JSA must declare that they are out of work, capable of, available for and actively seeking work during the week in which the claim is made. They enter into a Jobseeker's Agreement setting out the action they will take to find work and to improve their prospects of finding employment.
The unemployment rate obtained from the Labour Force Survey is the preferred measure of unemployment. The unemployment rate is less reliable for small areas and therefore the claimant count unemployment rate is also a key indicator of unemployment. However, in July 2006, ONS published, for the first time, modelled unemployment rates. These provide unemployment rates under the preferred ILO definition for local authority areas (see box 4.2).
Box 4.2: Model-Based Estimates of Unemployment |
|---|
For small areas, for example local authorities, even the annual LFS or APS have small samples. This means that estimates from the LFS/ APS for these areas are likely to be less reliable than those for larger areas since the sampling variability is high. In particular, this will affect estimates of events which are not common. An example of this is unemployment (formerly International Labour Organisation ( ILO) unemployment). A statistical model has been developed to provide reliable unemployment estimates for all local authorities. The model is a multilevel model that uses annual LFS/ APS data, by age and sex, but also uses claimant count to calculate the estimates. The claimant count is an administrative measure, and so is known accurately for all areas. Also it is highly correlated with unemployment. The model is said, therefore, to borrow strength from the claimant count. The model also includes a socio-economic area indicator and a 'random' area effect. The relationship between claimant count and the number of unemployed may be different in two areas in spite of them sharing the same factors in the model. The random area effect is included in order to model these random local differences. The inclusion of the random effect gives the model-based estimates the property that, under sufficiently large sample conditions, they will coincide with the direct survey estimates. APS data are published quarterly (but with each publication covering a year's data). The model-based estimates, using APS data and claimant count data referring to the same period, are similarly produced quarterly. Further information, and detailed user guidance on the model-based estimates, are given at http://www.statistics.gov.uk/statbase/Product.asp?vlnk=14160 |
Chart 4.6 shows that the unemployment rate obtained from the LFS is higher than the claimant count rate for Scotland and the UK. The unemployment rate in Scotland and the UK has decreased since 1992. After 1996 the gap in unemployment between Scotland and the UK widened. This gap has narrowed again in recent years.
Chart 4.6: Claimant Count and Unemployment Rates in Scotland and UK, 1993 - 2006
Source: Unemployment, Labour Force Survey, Spring Quarter, Seasonally Adjusted
Claimant Count Rate, Office for National Statistics, May each year, Seasonally Adjusted
Economic Activity & Inactivity
The labour market can be divided into two groups, the economically active and inactive. The economically active population are people who are either in employment (employee, self-employed, unpaid family worker or on a government supported training programme) or unemployed and actively seeking work. The economically inactive are people who are not in work, but who do not satisfy all the criteria for unemployment, such as those not actively seeking work or those not available for work. Reasons for economic inactivity include looking after the family/home, being a student, being sick/disabled, retirement etc.
Chart 4.2 shows that there has been little change in economic inactivity for males in the past few years, whereas there has been a decrease in economic inactivity for females.
Benefits
The claimant count is the number of people in receipt of JSA. Analyses of the number of claimants of Incapacity Benefit and those claiming Income Support can identify those who would be classified as inactive. JSA is mutually exclusive from Incapacity Benefit and Income Support. Using all these benefits figures captures people who are not working and includes people who are looking for work and those not looking for work. Benefit figures are sourced from the Work and Pensions Longitudinal Study, which is maintained by the Department for Work and Pensions (see box 4.3). Map 4.2 shows the distribution of number of claimants of workless benefits ( JSA, Incapacity Benefit and Income Support) throughout Scotland. Using benefits information in addition to LFS information gives a more detailed picture of the labour market in Scotland.
Box 4.3: Work and Pensions Longitudinal Study |
|---|
The Work and Pensions Longitudinal Study ( WPLS) links benefit and programme information held by Department for Work and Pensions ( DWP) with employment records from Her Majesty's Revenue & Customs ( HMRC). The WPLS data are based on 100 per cent of claimants and cover information such as age and gender of claimant, duration of their spell on benefit and geographical locations of claimants. From 27 October 2005, the DWP has produced headline benefit statistics derived from the WPLS rather than from the 5 per cent samples. Statistics from the 100 per cent data are available from the DWP's tabulation tool ( www.dwp.gov.uk/iad/statistics.asp ). The best benefit statistics to use are sourced from the WPLS. However, the WPLS cannot yet be used for very specific breakdowns (for example age by duration by local authority area) so for this the 5 per cent sample data is relied upon. Information on how to use the 5 per cent sample data in combination with the WPLS 100 per cent data is available from the DWP website at www.dwp.gov.uk/asd . The WPLS has improved the availability of benefits data for small areas. As a result of this, the workless client group data (those claiming out of work benefits (Jobseeker's Allowance, Incapacity Benefit or Income Support)) are now available at detailed geographies such as datazones. These data are available at www.sns.gov.uk . |
Earnings
The Annual Survey of Hours and Earnings ( ASHE), which replaces the New Earnings Survey ( NES), is now the official source of earnings information. Median gross weekly earnings in Scotland, in April 2005, for full time employees were £409.60. Scotland was ranked 4th out of the twelve government office regions in the United Kingdom. In Scotland, in April 2005, median gross weekly earnings for full time employees were 95.0 per cent of earnings for the United Kingdom. Since April 2004 median gross weekly earnings for full time employees working in Scotland have increased by 4.8 per cent, compared to a 2.8 per cent increase for the UK.
In April 2005, median earnings in Scotland were highest for those living in East Dunbartonshire (£491.90) and lowest for those living in Moray (£362.40).
Gender Pay Gap
In April 2005, median full time hourly earnings (excluding overtime) for women at £9.58 were lower than that for men at £10.54. That is female earnings were 90.9 per cent of male earnings giving a gender pay gap of 9.1 per cent. Chart 4.7 shows that the gender pay gap in Scotland has been decreasing since 2000 and that the gender pay gap in Scotland has been narrower than that for the UK since 2003.
Map 4.2: Claimants of workless benefits (Jobseeker's Allowance, Incapacity Benefit and Income Support) by Local Authority, August 2005
Chart 4.7: Gender pay gap, Scotland & UK, 1997-2005
Source: Annual Survey of Hours and Earnings
Box 4.4 Graduates in the Labour Market |
|---|
In 2006 Futureskills Scotland published a report looking at labour market for graduates and how this has changed between 1993/95 and 2001/03. The purpose of the report was to establish what effect the large increase in the supply of graduates in recent years has had on the labour market experience and performance of graduates in Scotland. The full report can be found at: www.futureskillsscotland.org.uk/web/site/home/Reports/NationalReports/ Report_The_Labour_Market_for_Graduates_in_Scotland.asp The main findings of the report are: - The graduate population in Scotland has risen significantly over the past decade ...
Between 1993/95 and 2001/03, the number of graduates in Scotland grew by 43 per cent, from 340,000 to 485,000. Growth was proportionally greater among those who are postgraduate qualified and among women. - ... but the employment rate remains higher for graduates than non-graduates
Employment rates are higher for graduates in Scotland than non-graduates, although the gap has narrowed in recent years. Employment rates vary considerably with age. Younger graduates in Scotland have lower employment rates than people without degrees (as they are just entering the labour market), while graduates over the age of 50 have considerably higher employment rates than non-graduates (as they tend to retire later). - Most graduates still enter graduate jobs
Younger graduates are more likely than older ones to work in non-graduate jobs, but much of this is a transitory effect experienced in the early years after graduation, and was the same in the early 1990s as in 2001/03. The vast majority of older graduates (aged over 25) work in graduate jobs. - Sectors in which graduates work vary with age
Graduates in Scotland are more likely to work in the public sector than those in the rest of the UK, although there are clear differences depending on age. Younger graduates in Scotland are more likely to be employed in the distribution and hospitality sectors, while older graduates are disproportionately represented in the education and health sectors.
- Little evidence of under-employment
There is little evidence that graduates in Scotland are under-employed in terms of doing part-time work involuntarily. Graduates in Scotland were, however, more likely to be in working on a temporary basis, and to report doing so involuntarily, than their non-graduate counterparts, and graduates in the rest of the UK. - It still pays to get a degree
Graduates still earn a wage premium compared with people who had the entry qualifications necessary to do a degree course but chose not to. In 2001/03, average annual graduate earnings were around £28,000 (in 2003 prices). This was around 50 per cent more than the earnings of people with sub-degree Level 4 or Level 3 qualifications. The wage premium in 2001/03 was similar to 1993/95.
|
« Previous | Contents | Next »