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Chapter three: Industry Sectors
Introduction
This chapter describes information on various industrial sectors of the economy - agriculture, fisheries, manufacturing, construction, services and tourism.
Scottish Annual Business Statistics
This chapter includes information on the sectors of the economy covered by the Office for National Statistics' Annual Business Inquiry ( ABI). The service sector is referred to for simplicity, but the figures quoted do not cover the financial sector and some of the public sector. For more detailed information, please visit the following web site: http://www.scotland.gov.uk/Topics/Statistics/16170/4363
The publication date for SES2007 has been brought forward and there has been no update to ABI data since the last publication. Consequently, most of the ABI based analysis in this Chapter remains unchanged from SES2006.
Trends and Comparisons
In 2004, turnover in the industries covered by the Annual Business Inquiry in Scotland amounted to £170 billion. Of this, £95 billion related to services, £34 billion to manufacturing, £21 billion to oil & gas and £12 billion to construction. The two industries making the largest contributions to these totals were both within services; retail at £19 billion and wholesale at £18 billion. (Tables 3.1 and 3.3)
Chart 3.1 looks at GVA per employee (a measure of productivity) and Labour Costs per employee by broad sector. In 2004, GVA per employee in manufacturing (£53,000) was around 80% higher than in services sector (£28,800). Whilst labour costs per employee in manufacturing (£26,200) were around 60% higher than in services (£16,300). The lower levels found in services partly reflects the higher level of part time working in this sector. (see also Table 3.3)
Chart 3.1: Gross Value Added and Labour Costs Per Employee by sector in 2004
Source: Office for National Statistics, Annual Business Inquiry
(Compiled by Scottish Executive)
Note: 1 Service Sector coverage excludes certain areas such as the financial sector and some of the public sector.
Gross value added ( GVA) is a measure of the income generated by businesses after the subtraction of input costs, but before costs such as wages and capital investment are paid prior to arriving at figure for profit. In 2004, GVA for ABI covered industries in Scotland amounted to £67 billion. Of this, £34 billion related to services, £13 billion to oil & gas, £12 billion to manufacturing and £5 billion to construction. ( Tables 3.1 and 3.3)
The industry with the largest GVA in manufacturing is in the food & drink industry (£2.7 billion). In services, 'other business activities' (which includes legal activities, accounting, architectural & engineering, labour recruitment etc.) has the largest GVA total at £6.9 billion. ( Table 3.1)
Charts 3.2 and 3.3 look at GVA and employee shares by broad sector split by ownership. In 2004, foreign-owned manufacturing companies accounted for 35 per cent of GVA but only 25 per cent of employees, whilst Scottish owned firms accounted for 42 per cent of GVA and 59 per cent of employees. This indicates that foreign manufacturing companies are more productive than Scottish-owned firms. In services, the productivity difference is less marked with foreign-owned companies accounting for 14 per cent of GVA but only 11 per cent of employees, compared with 59 per cent and 62 per cent respectively for Scottish-owned firms. (see also Table 3.7)
Chart 3.2: Shares of Gross Value Added by sector and ownership, 2004
Source: Office for National Statistics, Annual Business Inquiry (Compiled by Scottish Executive)
1 Service sector coverage excludes certain areas such as the financial sector and some of the public sector.
Chart 3.3: Employee shares by sector and ownership, 2004
Source: Office for National Statistics, Annual Business Inquiry (Compiled by Scottish Executive)
1. Service sector coverage excludes certain areas such as the financial sector and some of the public sector.
Renfrewshire, Glasgow City and Fife were the local authority areas with the highest gross value added in the manufacturing sector in 2004. In the services sector, the highest gross value added figures were found in Glasgow City, Edinburgh City and Aberdeen City. (see Tables 3.4 & 3.5)
Scottish manufacturing accounted for 7.3% of total UK turnover and 8.4% of total UKGVA in 2004. Whilst Scottish services sector accounted for 6% of total UK turnover and 7% of total UKGVA in the same year. (see Table 3.6).
Box 3.1: Focus On Motor Trades - SIC 50 |
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Motor Trades, which is represented by the Standard Industrial Classification ( SIC) code 50, contributed £1.4 billion Gross Value Added ( GVA) to the Scottish economy in 2004. The Scottish share of UK Motor Trades activity remained virtually unaltered in the five years to 2004: GVA was around 6% of total UK Motor Trades GVA, while Scottish employment in the sector was about 7% of the UK figure. The Motor Trades sector is part of the service sector. The largest sub-sector within Motor Trades is the sale of motor vehicles, which accounted for more than a third of the sector's GVA in 2004. Other sectors include the maintenance and repair of motor vehicles (28% of GVA) and the retail sale of automotive fuel (20% of GVA). The relative size of the Motor Trades sub-sectors are illustrated in Chart 3A. While employment in the Scottish economy as a whole expanded over 1999-2006, driven by public sector and business service growth, Motor Trade employment fluctuated around a relatively flat trend. The Motor Trades sector employed approximately 43,000 people in 2006, some 2% of the Scottish labour force. This was around 6.5% less than the employment level in the sector in 1999 and 2004, but above the 1999-2006 average. Further analysis of the labour market for the Motor Trades sector shows that the workforce is predominantly male, educated at SVQ level 3, and receives about 19% less than the earnings of the median Scottish worker. Chart 3A: Motor Trades - 2004 Shares of Gross Value Added 
Source: Office for National Statistics, Annual Business Inquiry (compiled by the Scottish Executive). |
Table 3A: Employment - selected years | Motor Trades | All Industries |
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1999 | 46,000 | 2,269,000 |
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2002 | 41,000 | 2,341,000 |
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2004 | 46,000 | 2,402,000 |
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2006 | 43,000 | 2,405,000 |
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Source: Labour Force Survey; Spring Quarters | Table 3B: Qualifications Split - year to June 2006 | Motor Trades | All Industries |
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SVQ 4 and above | 12.0% | 36.2% |
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SVQ 3 | 41.6% | 29.0% |
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SVQ 2 and below | 35.5% | 24.6% |
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No Qualifications | 10.9% | 10.2% |
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Source: Annual Population Survey July-June 2006 |
Table 3C: Gender Split - year to June 2006 | Motor Trades | All Industries |
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Males | 80.1% | 52.0% |
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Females | 19.9% | 48.0% |
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(Total) | (100.0%) | (100.0%) |
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Source: Annual Population Survey July-June 2006 | Table 3D: Median full-time annual earnings - 2006 | Motor Trades | All Industries |
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Males | £19,165 | £24,757 |
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Females | £15,005 | £19,660 |
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Total | £18,426 | £22,631 |
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Source: Annual Survey of Hours and Earnings (residence based) |
As was the case with employment, production performance in the Motor Trades sector has fluctuated over time, measured by the Quarterly GDP Index. However, the sector grew over the 1998 to 2006 period by an average annual rate of 1.4%. The annual growth rate in Motor Trades fell behind the growth rate in the service sector as a whole - which, driven mainly by financial and business services growth, stood at 2.9% - and was below the growth rate of the Scottish economy as a whole over the same period - which stood at 2%. Some 4,600 businesses, 3% of all registered Scottish businesses, operated in the Motor Trades sector in 2006, according to the Interdepartmental Business Register ( IDBR). The vast majority of these companies were small, with less than 50 employees, roughly in line with the distribution of companies by size in Scotland as a whole. Companies with more than 50 employees accounted for 2.9% of Motor Trades firms, compared to 3.9% of companies in Scotland as a whole. Registered Motor Trade businesses had a turnover of £11.3 billion in 2006, 6.4% of the turnover of all Scottish businesses (excluding Financial Intermediation). This represents a relatively high sectoral share of turnover in the economy when, for example, compared to the sector's share of employment. The high share of Scottish turnover for the sector is likely to reflect the pre-eminence of the sale of goods where a relatively low value added is gained per unit sold, such as motor vehicles. Chart 3B: GDP Index - Motor Trades, Services and Economy as a whole 1998-2006 
Source: Scottish Quarterly GDP Index; 2003 = 100. The impact of the Motor Trades sector in the wider economy can be understood by analysing the 2003 Scottish Input-Output ( IO) Tables. The Tables show that in addition to Motor Trades employment there were a further 4,300 full-time equivalent ( FTE) jobs in other industries related to purchases by the sector (see table below). Table 3E: Main industries with employment related to Motor Trades purchases in 2003 Input-output category | Employment
( FTE) | Output
(£m) | Gross Value
Added (£m) |
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Other Business Services | 677 | 23 | 14 |
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Other Land Transport | 545 | 39 | 22 |
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Transport Services | 300 | 44 | 13 |
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Banking | 271 | 34 | 15 |
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Computing Services | 249 | 23 | 15 |
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Architectural Activities and Tech' Consultancy | 221 | 20 | 10 |
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Source: Scottish Input-Output Tables and Multipliers 2003 The Global Connections Survey shows exports of about £15 million in the Motor Trades sector, which represent less than 0.1% of all Scottish exports and some 0.3% of all service sector exports in the economy. Scottish exports are dominated by manufacturing, which accounts for some 70% all goods and services exported. |
Tourism
Two national surveys provide the main data on tourism: the ONS International Passenger Survey ( IPS), which surveys visitors to the UK at the point of exit from the UK, and the United Kingdom Tourism Survey ( UKTS) which asks UK residents about trips they have made. The Office for National Statistics ( ONS) publishes information on international tourism. For domestic tourism, the UKTS data are collected on behalf of the National Tourism Boards.
Due to changes in the ONSIPS and the UKTS, statistics for 2005 are not directly comparable with previous years. Prestwick airport was introduced into the IPS sample in January 2005 and there was also a subsequent modification to the IPS system of calculating weights for contacts at UK regional airports. The new methodology prevents overestimates of traffic volumes to any particular UK region and additionally it prevents changes in traffic at remote locations in, for example, the south of England from affecting results in Scotland, and vice versa. Further details are available via the following link: http://www.statistics.gov.uk/about/methodology_by_theme/gini/Int_passenger_survey.asp
Following an extensive review of tourism data, the UKTS underwent a methodology change in May 2005, with the survey moving from a telephone survey methodology to a face-to-face survey methodology. The change was brought about as a result of doubts in the validity of the survey data produced by the telephone survey methodology. Further details on the new methodology and the reasons for this change are available via the following link: http://www.scotexchange.net/research_and_statistics/new_methodology.htm.
Table 3.8 shows the estimates for the volume and value of tourism in Scotland in 2005. It can be seen from this that half of overnight expenditure in Scotland was from other parts of the UK.
Further information on tourist trends and attitudes for Scotland is available from Tourism in Scotland 2005, which can be accessed via the following link: http://www.scotexchange.net/tis_summary2005updated.pdf.
Scottish Economic Statistics 2004 contained an article introducing an experimental Tourism Satellite Account for Scotland. From this, it was estimated that 5 per cent of employment in Scotland was related to tourist expenditure - equating to around 130,000 jobs. This covers all industries and is based on the ratio of tourist expenditure (including day visitors) to output in each industry. Around 99,000 of these jobs are due to overnight tourism. The figure of around 200,000 jobs that is often quoted relates to employment in tourism - related industries, that is all employment in selected industry types such as hotels, bars, restaurants, travel agencies, museums, libraries and sporting venues.
Further information on the profile of the Scottish Tourism-Related Sector, from the most recent Scottish Annual Business Statistics ( SABS) 2004 publication, can be accessed via the following link: http://www.scotland.gov.uk/Topics/Statistics/16170/Tourism2004.
The Scottish E-Business Survey ( SEBS) is carried out by Scottish Enterprise and Highland and Islands Enterprise, collates information on adoption of e-business applications and also attitudes to e-business and its perceived relevance to businesses. Analysis of this has been done for tourism related businesses and the results are published at http://www.scottish-enterprise.com/publications/sebs2005-tourism.pdf. This shows that the perceived importance of e-business continues to increase and this is reinforced by 85% of e-business adopters stating that they have found some benefit, particularly increased efficiency. The main barrier to e-business adoption is that organisations do not believe it to be relevant.
Access to the internet (71%) has continued to rise amongst Tourism organisations. Within the last 12 months, broadband adoption has also seen substantial increases as companies upgrade their existing dial up connections. 58% of connected Tourism companies now have broadband and 84% of dial-up or ISDN users plan to upgrade to broadband within the next 18 months. Although this level and rise in broadband adoption is in line with the Scottish average, Tourism organisations lag behind most other priority industries in their uptake of broadband.
Adoption of e-business technologies such as websites and Local Area Networks ( LANs) has shown a significant increase in 2005. Website adoption in particular is above average for businesses across Scotland. e-Business practices such as trading online have shown significant increases, again above the Scottish average.
Agriculture and fisheries
Agriculture accounted for 1.3 per cent of Scottish Gross Value Added in 2005, which was higher than the UK average of 0.8 per cent. Comparisons for the countries of the UK can be seen in chart 3.4 below. This also shows that agriculture accounted for just under 3 per cent of employment. More details on agriculture employment based on the annual agricultural census can be found in table 4.7.
The Scottish Executive Environment and Rural Affairs Department ( SEERAD) collect detailed information on farms' incomes and outputs. Table 3.9 summarises this data, details by type of farm can be found in the Economic Report on Scottish Agriculture ( http://www.scotland.gov.uk/Publications/2006/05/12103110/0). Total Income from Farming is calculated as net value added plus other subsidies minus the sum of hired labour, interest and rent. This was £578m for Scotland in 2006.
The number of Scottish-based sea-fishing vessels has fallen from almost 3,000 in the early 1990's to under 2,400 in 2005. This is largely as a result of decommissioning due to reduced fishing quotas. The corresponding number of fishermen employed has fallen from 9,420 in 1993 to 4,971 in 2005, which underlines the fact that it is the larger vessels employing several people that have been decommissioned. Chart 3.6 illustrates these trends, and shows the corresponding total landings of fish. Detailed information on Scottish fisheries can be found in Scottish Fisheries Statistics ( http://www.scotland.gov.uk/Publications/2006/09/19141352/0).
Chart 3.4: Agriculture in the economy, 2005
Source: June Agriculture Census & Labour Force Survey, Summer quarter 2005. Not seasonally adjusted.
Chart 3.5: Total income from farming production & other payments and subsidies, 1997-2006
Source: Scottish Executive, Environment and Rural Affairs
Notes:
1 From 2005 Other Payments and Subsidies includes Single Farm Payment ( SFP) which replaces most production related subsidies
2 In 2005 prices
Chart 3.6: The Scottish sea-fishing industry, 1996-2005
Source: Scottish Executive, Environment and Rural Affairs
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