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Output rises but so does unemployment

Scotland’s productivity grows four times faster than UK

scottish economyProductivity in Scotland has grown four times faster than the UK average and the economy is now performing at the same rate, according to new data.

However, unemployment in Scotland increased by 6,000 in the period October to November 2016, and now stands at 135,000. The Scottish unemployment rate is 4.9%, against 4.8% for the whole of the UK.

Employment also rose and Scotland now has the second highest employment rate out of the four UK nations. Scotland’s youth unemployment rate is at its lowest since records began.

Output per hour worked in Scotland – a measure of how much output the economy produces in each working hour – has grown 3.5% in 2015, compared to a UK figure of 0.9%.

Over the longer term, output per hour worked is now 9.4% higher in real terms than in 2007, prior to the recession. In 2015, UK productivity was only 0.1% higher than its 2007 level.

Scottish productivity has now effectively caught up with UK levels – increasing from 94.5% of the UK average output per hour in 2007 to 99.9% in 2015. 

Welcoming the productivity figures, Finance Secretary Derek Mackay said: “These figures show that Scotland’s productivity performance has grown around four times faster than the UK, providing further evidence of Scotland’s economic strength. Scotland is now matching UK levels of productivity.

“Output per hour worked in Scotland has grown 3.5% in 2015, compared to a UK figure of 0.9%, and is 9.4% higher than in 2007 before the start of the recession.

“This is very welcome news and – through our commitment in our Economic Strategy to supporting innovation, increasing skills and improving our infrastructure – we will continue to work to improve this further.

“The EU referendum result has led to some business uncertainty and we will continue to do what we can to address this, including taking forward our £500m Scottish Growth Scheme, by investing in our infrastructure plan and by supporting our universities and research base.

“We will also continue to support the Scottish economy by protecting our place in Europe’s single market – with the substantial benefits this will have for our economic well-being.”

Key figures in the annual Labour Productivity Statistics for the period 1998-2014

  • In 2015, Scottish labour productivity, as measured by output per hour worked, increased by 3.5% in real terms (inflation adjusted), following growth of 0.9% in 2014. Output per hour worked is now 9.4% higher in real terms than in 2007, prior to the recession.
  • Output per hour worked in nominal terms (not adjusted for inflation) was estimated to be 99.9% of the average UK value (excluding extra regio output). The gap between labour productivity levels in Scotland and the UK average has narrowed since the onset on the recession from around 5 or 6 percentage points prior to 2008 to less than 1 percentage point since 2013.
  • Labour productivity, as measured by output per job, increased by 2.1% in real terms during 2015 and is now 6.2% higher than in 2007. Output per job in nominal terms was 97.8% of the average UK value (excluding extra regio output).
  • The differences in growth rates between output per hour worked and output per job indicate changes in average working patterns. For example, in 2015 the number of ‘productivity jobs’ in Scotland increased by 0.1% while total ‘productivity hours’ decreased by 1.3%, indicating a decrease in the average number of hours worked per job.
  • This release contains new experimental estimates of labour productivity for broad industry groups. Further information is contained in an annex to the main publication.

> Labour Market Statistics for October to December 2016, published by the Office for National Statistics also published today show Scotland’s employment level increased by 8,000 over the quarter to 2,611,000 and there are now 47,000 more people in employment compared to the pre-recession peak.

They also show Scotland’s youth unemployment rate is the lowest since records began – the second lowest youth unemployment rate in the EU.

The employment rate has increased by 0.1 percentage points over the quarter to 73.6% – meaning Scotland has the second highest employment rate out of the four UK nations.

Other key statistics include:

• Labour market inactivity – those not in work and not actively seeking work –  has fallen by 8,000 over the quarter to 765,000, although it has increased over the year

• Scotland’s unemployment rate was down over the year by 0.9 percentage points to 4.9%

• 27,000 fewer people were unemployed compared with a year ago.  However, the unemployment rate rose by 0.2 percentage points over the quarter

• Scotland continues to outperform the UK on female employment and inactivity rates while the female unemployment rate is the same as the UK’s.

Minister for Employability and Training Jamie Hepburn said: “These figures are encouraging and show that Scotland’s labour market remains resilient. We are working to build an economy where everyone can share in the benefits of economic growth.

“It is therefore encouraging to note this rise in the number of people in work alongside some positive statistics on female and youth employment, where we continue to lead the UK. In terms of low youth unemployment rates, we are second only to Germany within the EU.”

> The latest publication of Quarterly National Accounts Scotland statistics was also announced today by Scotland’s chief statistician. This includes results for the third quarter of 2016 (July-September) and reports on a variety of economic statistics for Scotland, including components of GDP, the Index of Manufactured Exports (IME), households disposable income, and public sector revenues.

  • During the latest 12 months (October 2015-September 2016), the value of Scottish onshore GDP is estimated at £149.3 billion in total, or around £27,750 per person.
  • Scottish GDP is estimated at £157.6 billion during the latest four quarters, or £29,300 per person.
  • Analysis of the expenditure measure of onshore GDP shows that growth over the latest 12 months was driven by increases in the value of consumer spending and onshore exports. Government spending and capital investment also both increased over the period. There was a negative contribution to GDP growth from the widening of the onshore net trade deficit, due to the increasing value of imports.
  • Manufactured Exports make up around half of the total value of exports from Scotland to the rest of the world (excluding oil and gas). The Index of Manufactured Exports (IME) fell by 3.8% in volume terms during the third quarter of 2016. Comparing the most recent four quarters to the previous four quarters (4Q-on-4Q growth), the volume of manufactured exports fell by 5.3 per cent.
  • Over the year to 2016 Quarter 3, total consumer spending by the Household and NPISH sectors is estimated to have increased by 4.3% in current prices (unadjusted for inflation, not real terms)
  • Gross Disposable Household Income (GDHI) is estimated to have increased by 2.4% over the year to 2016 Quarter 3 (in current prices, not real terms). The Household Savings Ratio is 3.1 per cent in the latest quarter.
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