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Chapter four: Labour Market
Population
The General Register Office for Scotland ( GROS) is responsible for the publication of population estimates for Scotland. In mid-2006, Scotland's population was estimated at 5,116,900; an increase of 22,100 on the previous year and an increase of 52,700 since mid-2001. 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. At present the average age of the population is around 40 and this is projected to rise to over 45 by 2031. These projected demographic changes will have implications for the labour market in Scotland.
There is also currently variation in geographic distribution of population across Scotland. For example in Dumfries and Galloway 24.2 per cent of the population are greater than working age whereas in West Lothian only 15.3 per cent of the population are greater than working age.
Box 4.1: The Labour Force Survey |
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The Labour Force Survey ( LFS) is a survey of households living at private addresses in the UK. 1 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 less than 10,000 are not routinely 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. The first calendar quarter microdata was published in May 2006, together with selected previous quarters. A complete back series of microdata products are currently being produced and should be available in 2007. 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 the 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 23,000 households. The boosted survey was called the Annual Local Area Labour Force Survey ( ALALFS) for the UK and called 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 no longer includes the extra boost in England due to funding constraints, however the Scottish boost remains. 1 NHS and Student Accommodation are also included. |
Map 4.1: Employment rates by Scottish Local Authority area, 2005-2006
Employment
The official source for estimating the number of people in employment is the Labour Force Survey ( LFS). In 2006 there were 2.5 million people aged 16 and above in employment. This is an increase of 8.2 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).
Gender and Age
Chart 4.1 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 11.2 per cent, whereas the number of males in employment has only increased by 5.6 per cent. Chart 4.2 shows that the proportion of people in employment has increased across most age bands. The greatest increase can be seen for those aged 30-49 years and the 50 years plus age group.
Chart 4.1: Employment, unemployment and economic inactivity rates by gender, Scotland, 1992-2006
Source: Labour Force Survey, Office for National Statistics
Calendar Quarter 2 (April-June), 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 4.2: Employment rate by age group, Scotland, Working Age, 2001-2006
Source: Labour Force Survey, Office for National Statistics
Calendar Quarter 2 (April-June), 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 (6.1%) than for males (1.0%) since 2001. The number employed on a part-time basis has also increased since 2001, but fallen slightly in the last couple of years before showing an increase again over the last year. This increase in part-time working has been greater for men than for women. Number of part-time men has increased by 20.9 per cent since 2001 whereas for women, the increase is 3.7 per cent. Overall in 2006 part-time workers accounted for a quarter of all people in employment.
Since 2001 self-employment has increased by 5.5 per cent. Female self-employment increased by 29.9 per cent but male self employment decreased by 2.3 per cent over the period. The majority (70.3%) of self employed workers are male.
Qualifications and Job Training
The proportion of people who had received on the job training in the last 3 months has marginally increased since 2001. Currently 28.1 per cent of people had received job related training in the last three months. This compares with 27.1 per cent in 2001. The proportion of people in the workforce who have a degree has also been increasing in Scotland. In 2006, 24.6 per cent of people in employment aged 25 to state pension age held a degree level qualification or above. This compares with 19.6 per cent in 2001.
Chart 4.3 shows that the proportion of working age people in employment who possess qualifications above SVQ level 4 ( i.e. degree level or above) 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 4.3: Working age people in employment by level of qualification, Scotland, 2001-2006
Source: Labour Force Survey, Office for National Statistics
Calendar Quarter 2 (April-June), Not Seasonally Adjusted
Note: This information relates to 93 per cent of all working aged people. Approximately 7 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 4.4 shows number of employee jobs by broad industry sector in 2005 and 1998. The highest proportion of employee jobs in Scotland, in both 2005 and 1998, were in Public Administration, Education & Health. Since 1998 the proportion of employee jobs has increased most in Public Administration, Education & Health and Banking Finance & Insurance. The proportion of employee jobs in manufacturing has decreased by the largest amount over the time period.
Chart 4.4: Distribution of employee jobs by industry 1998 and 2005
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 |
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For small areas, for example local authorities, even the annual LFS or APS has 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 counts of claimants of Jobseeker's Allowance (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 4.5 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 4.5: Claimant count and unemployment rate, Scotland & UK, 1992-2006
Source (1): Unemployment, Labour Force Survey, Office for National Statistics Calendar Quarter 2 (April-June), Seasonally Adjusted
Source (2): Claimant Count Rate, Office for National Statistics June 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 4.1 shows that there has been little change in economic inactivity for both males and females in the past few years.
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. 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.
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 2006, for full time employees were £432.00. Scotland was ranked 4th out of the twelve government office regions in the United Kingdom. In Scotland, in April 2006, median gross weekly earnings for full time employees were 96.6 per cent of earnings for the United Kingdom. Since April 2005 median gross weekly earnings for full time employees working in Scotland have increased by 5.7 per cent which was the highest increase out of the 12 regions in the UK and higher than the 3.7 per cent increase for the UK as a whole.
In April 2006, median earnings in Scotland were highest for those living in East Renfrewshire (£507.20) and lowest for those living in Moray (£383.80).
Gender Pay Gap
In April 2006, median full-time hourly earnings (excluding overtime) for women at £10.00 were lower than that for men at £11.13. That is female earnings were 89.8 per cent of male earnings giving a gender pay gap of 10.2 per cent. Table 4.20 shows that the gender pay gap in Scotland has been narrower than that for the UK since 2003.
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