Scotland's unemployment rate hits record low

Louis Sears works at The Arch Inn in Ullapool

Scotland's unemployment rate has hit a record low, according to new figures.

The Office for National Statistics found that 3.1% of working age adults in Scotland were looking for work between November and January.

It also found that the average regular salary has risen by 6.5%. But with rising prices, the real spending power of average pay has fallen in the past year by 2.4%.

Meanwhile UK job vacancies have fallen for the eighth time in a row.

• UK job vacancies fall for eighth time in a row

• Scotland's workforce grows by 89,000 in a year

The figures show that Scotland has lower unemployment and higher employment than the rest of the UK.

A total of 88,000 were looking for work during the three months to the end of January - 3.1% of the working age population.

The unemployment rate hit a similar low between May and July 2022.

The number of people available for work increased, mainly due to young people entering the workforce.

But there was a record number of people across the UK who could not work due to long-term illness.

The statistics highlight a tightening jobs markets which is having an effect on businesses like The Arch Inn in Ullapool.

Pub owner Robert Hicks says they are facing rising costs and recruitment problems

Owner Robert Hicks told BBC Scotland they have taken the decision to stop serving food.

"Circumstances over the last 12 months - rising costs, ability to get the right employees - led us to question the viability of serving food, which really pains me but feels like the only sane thing to do at this point in time," he said.

Richard Lochhead, Scotland's employment minister, said: "The low unemployment rate across Scotland and close to record high employment rates for all 16 to 64 year olds are welcome but certain industries still face recruitment challenges."

He called for the devolution of powers from the UK government to help tackle the problems.

'Recruitment challenges'

"The UK government holds key powers over parts of employment law and has refused to devolve powers on migration, which could boost Scotland's workforce and tackle the recruitment challenges, many of which have been caused by the end of free movement and the hard Brexit imposed on Scotland by the UK government.

"I have repeatedly called on UK ministers to establish a joint taskforce on labour market shortages. An urgent rethink of UK government immigration policy is needed so there is increased access to the international labour and skills that Scotland needs for our economy and communities to flourish."

Secretary of State for Scotland Alister Jack said:"Today's figures reflect that, although we still face significant challenges, Scotland's labour market remains resilient. We have record numbers of people on the payroll and unemployment remains around historic lows.

"There is more to do to stabilise our economy and this week the Chancellor will set out the next steps in our plan to grow the UK economy, halve inflation and to cut debt.

"These will include measures to boost opportunity across the country, including expected support for Edinburgh's festival economy, which contributes more than £300m a year to the UK."

These look like the job numbers of our dreams. Record low unemployment, close to 3%, rising employment and falling "inactivity" - those who are not available to work due to family caring roles, full-time studies or long-term ill-health.

They are all on the preferable side of the numbers for the UK as a whole. And they are all the more impressive because they come at the start of a year which was forecast to feature a very long recession. Recessions usually mean a worsening labour market.

But it doesn't feel like the time to celebrate. These job numbers signal an economy that's stalled, and one reason is that its capacity is constrained: there aren't enough workers to help companies and the economy grow.

That's partly due to Brexit, cutting off the supply of migrant labour, and partly the after-effects of Covid.

That shortage of workers means wages are pushed up, and companies can pass on to customers their higher pay bills, plus energy and other costs. That fuels price inflation.

And for all that average pay inflation is a healthy-looking 6.5% over the year, it's trailing behind price inflation, so workers' real spending power has fallen by 2.4% - and more for public sector workers.

The Budget this week is overshadowed by the battle against inflation.

It will also feature measures to increase the labour supply, of those who could be working or could be working longer hours. There will be incentives, for parents facing childcare bills, for doctors facing punitive tax on their pensions, and maybe a widening of the occupations for which work visas are issued.

We can also expect some use of the benefits system to push more people into work.