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Scottish Economic Statistics 2002

chapter four: The Labour Market

Population

The total population of Scotland remained fairly stable in the last ten years, however its composition is changing. It is well documented that the population is ageing, and thus the structure of the labour market will undergo change in future years. In addition, the population of Scotland is projected to decrease, according to the 2000 based population projections produced by the Government Actuaries Department. They predict that Scotland's population will fall from 5.1 million in 2000 to 4.6 million in 2040, assuming that net migration will be zero in future years. This obviously has implications for the Scottish economy. Chart 4.1 compares Scotland's projected population to 2025 with the other UK countries. This shows that Scotland is the only country within the UK with a projected population decline.

Chart 4.1: Population projections to 2025 (2000 based),UK countries

Employment

Table 4.1 shows that in the spring of 2001, 73 per cent of all people of working age in Scotland were in employment. This reflected a fairly substantial increase of 48,000 more people in work than at the same time in 2000. Of this increase, 30,000 jobs were due to women entering employment. Chart 4.2 illustrates that the gap between the employment rates of males and females has closed quite significantly since the 1980's. However, as can be seen in table 4.2, many more women work part time. The proportion of males working part time in 2001 was only 8 per cent, compared with 43 per cent of females.

Chart 4.3 illustrates that in 2001, approximately three-quarters of employee jobs (76 per cent) were in the service sector, with only 2 per cent in agriculture and 22 per cent in production and construction. Ten years previously, 73 per cent of employee jobs were in services.

Chart 4.2: Employment rates by gender, 1984 to 2001

Self-employment

Almost 90 per cent of persons in employment in 2001 were employees. Another 9.3 per cent were self-employed. Chart 4.4 shows the trends in proportion of self-employed since 1993. This reached a low in 2000 but picked up again in 2001. Less than 5 per cent of women were self-employed compared with over 13 per cent of men.

Chart 4.3: Employee jobs by industry, 2000

Chart 4.4: Self-employed persons as a proportion of all employed, 1993 to 2001

Unemployment

There are two main measures of unemployment currently used in the UK, which give different estimates because of their different definitions. These are:

• ILO unemployment - The International Labour Organisation (ILO) definition of unemployment, which 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, which counts the number of claimants of unemployment-related benefits on the Benefits Agency administrative system. These are currently the Jobseeker's Allowance (JSA) and National Insurance credits, claimed at Employment Service 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.

Thus it can be seen that while a person might consider themselves to be unemployed, they might not necessarily claim an unemployment-related benefit for any number of reasons, and so the claimant count tends to be lower than the count under the ILO definition.

To calculate unemployment rates, it is possible to use different denominators. For ILO unemployment, the total number of economically active people is generally used and for claimant count, it is the total size of the workforce (see footnote to table 4.7). However, particularly at the local level, it is more appropriate to use an estimate of the number of economically active people living in the area rather than the workforce, and this is being done by the Scottish Executive when producing ward or Local Authority level claimant count statistics.

The number of unemployed in Scotland has been decreasing in recent years, as is evident from tables 4.1 and 4.7. In the spring of 2001, 145,000 people were unemployed under the ILO definition and there were 105,000 claimants of unemployment related benefits (3 month average April - June seasonally adjusted). The ILO unemployment rate had decreased from 7.6 per cent of the economically active population in 2000 to 5.8 per cent in spring 2001.

The unemployment rate in Scotland is still higher than in the UK overall. Chart 4.4 compares the quarterly claimant count rates and ILO unemployment rates for Scotland and the UK. The ILO rates for Scotland are more volatile due to the Scottish sample size in the Labour Force Survey, however, the downward trend is obvious.

Chart 4.5: ILO unemployment rates and claimant count rates, Scotland and UK, 1996 to 2001

A further way of measuring people who are of working age who are not working is Non-employment. This measure combines the number of working age people who are not in employment and are claiming income support, job seekers allowance or incapacity benefit. The denominator used is working aged population, as those claiming incapacity benefit would be less likely to be defined as economically active.

This measure of non-employment captures people who are not working and includes both people who are looking for work and those not looking for work. The rate for non-employment tends to be higher than both unemployment rates described above. In 1999, the rates for claiming income support, job seekers allowance and incapacity benefit were 7.5 per cent, 3.3 per cent and 9.5 per cent respectively with an overall rate for non-employment of 20.3 per cent.

Earnings

The average gross weekly earnings of full-time employees in Scotland in April 2001 were £404, representing a 6 per cent increase from the previous year. This figure was £40 per week (9 per cent) lower than the GB average.

Earnings in Scotland as a percentage of GB peaked in 1992 at 94 per cent. In April 2001, earnings in Scotland as a percentage of GB fell to 91 per cent.

The average gross weekly earnings of full-time manual employees in Scotland increased by 4 per cent in the year to April 2001, to a level still considerably below GB overall. In April 2001, the average earnings of full-time manual employees in Scotland were three-quarters those of full-time non-manual employees. This proportion was similar to GB as a whole. For full-time non-manual employees the percentage increase over the year to April was 6 per cent.

Women's average earnings increased by 8 per cent in Scotland last year - more than the average for GB. With average male earnings increasing by 5 per cent, the gap between earnings of men and women in full time employment narrowed over the year. However, women's average earnings in Scotland were, on average, still less than three-quarters those of men. This was similar to GB as a whole.

New Deal

Background

New Deal is a key part of the Government's Welfare to Work strategy. The initiative was created to help unemployed people into work by closing the gap between the skills employers want and the skills people can offer. New Deal gives Jobseekers aged 18-24, 25 plus and 50 plus, a chance to gain skills and experience and find work. In addition, New Deal for Lone Parents and New Deal for Disabled People offers the opportunity for lone parents and disabled people on health related benefits to explore work options. Partnerships between the Employment Service and a wide range of work, training and education providers are crucial to the success of the New Deal programmes. The delivery of New Deal is monitored and guided at both Scottish and UK levels by Advisory Task Forces whose members are drawn from a wide range of backgrounds - industry, education, voluntary sector, local authorities, finance, retail and trade unions.

The main New Deal programmes delivered by the Employment Service are:

• New Deal for Young People (launched April 1998). A mandatory scheme for people aged 18-24 who have been claiming Jobseekers Allowance for 16 months or more, to help them find work and improve their prospects of remaining in sustained employment. The programme is mandatory for eligible jobseekers.
• New Deal for the Long Term Unemployed aged 25 Plus (launched June 1998, enhanced April 2001). Designed to help those people aged 25 plus and claiming Jobseekers Allowance for 18 months or more, into sustained employment.
• New Deal for Lone Parents (launched October 1998). Assists lone parents back into work. Participation is voluntary.
• New Deal 50 Plus (launched April 2000). Designed to encourage and assist older people back into the workforce. Again, participation is voluntary.

Additional New Deal programmes exist for disabled people (New Deal for Disabled People), the partners of unemployed Jobseekers (New Deal for Partners) and for musicians (New Deal for Musicians), although presently these are relatively small client groups.

Future Initiatives

Since the introduction of New Deal, unemployment rates have fallen by 81% among young people (aged 18-24), and by 68% among the long-term unemployed, respectively compared with May 1997. Newer Government Welfare to Work initiatives such as New Deal Next Phase, Employment Zones, Action Teams for Jobs and the New Futures Fund are geared towards addressing barriers to employment among the remaining harder to help unemployed group, including basic skills deficiencies, drug misuse and problems arising from social deprivation.

Table 4.9 provides summary information on participation and effectiveness for the two mandatory programmes (New Deal for Young People, New Deal 25+) and the two largest voluntary programmes (New Deal 50+, New Deal for Lone Parents).

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