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Depth of crisis emerges

Jobless tally leaps to 7% as lockdown takes its toll

Beehive Inn pub Grassmarket

Many businesses may not regain earlier levels of activity (pic: Terry Murden)

Scotland’s unemployment rate is thought to have risen from 4.1% in the last quarter to about 7% as 75,000 claimants joined the register last month, according to the latest government data.

Unemployment is rising from its pre-COVID-19 lows and could increase to more than 10% this year as various support schemes, particularly the Job Retention Scheme, unwind over the summer and some sectors struggle to regain previous levels of activity. Young workers are thought to have taken a particular hit.

“The impact on the economy and the labour market has been rapid and severe.” says  Scottish Government chief economist Gary Gillespie who suggests that economic output may not recover to pre-crisis levels until the start of 2023.

Latest business surveys have shown record falls in business activity in April, reflecting that an estimated 19% of businesses have been temporarily closed in Scotland.

“We also estimate that these closures (and wider knock on effects) have impacted over 750,000 jobs in Scotland between those furloughed and the self-employed that are unable to work,” says Mr Gillespie.

“Our updated economic modelling suggests a longer recovery phase is increasingly likely given the loss of productive capacity and the change in market conditions for many sectors of the economy.”

He adds: “The policy response has been unprecedented with over 10 million workers supported directly by the State across the UK, which has resulted in record borrowing levels to finance this support.

“The pace of unwinding this support and dealing with the debt overhangs will be crucial in influencing the path of the recovery.

Fiona Hyslop speaking

Fiona Hyslop: ‘deeply concerned’ (pic: Terry Murden)

“As our modelling shows, the Job Retention Scheme is playing a key role in reducing unemployment.

“Phasing the withdrawal of this support to match the recovery, alongside wider support, is crucial in ensuring we minimise unemployment and protect and support firms whilst the economy transitions and markets and business places change to the new norms which are emerging.”

Economy Secretary Fiona Hyslop said: “These figures show in stark terms the economic damage caused by the COVID-19 pandemic.

“I am aware that many people will be deeply concerned about their livelihoods as we start to emerge from lockdown, and the Scottish Government has been working tirelessly to keep businesses afloat and ensure as few people as possible lose their jobs.

It is critical that we now gradually reopen the economy

– Fiona Hyslop, Economy Secretary

“We have offered more than £2.3 billion to businesses to support them through this crisis, with £104 million having been awarded from the Scottish Government Business Support Fund alone, helping more than 2,500 businesses and 4,160 self-employed people in the space of just a month.

“It is critical that we now gradually reopen the economy, following the routemap out of lockdown that we have drawn up in close consultation with business organisations, trades unions and regulators.

“During this critical phase we will continue to work with employers so that they can safely get back to work and help the economy on its path to recovery.

“Given the scale of the challenge being faced by the Scottish economy in dealing with this crisis, the last thing our businesses need is the further economic turmoil that would occur under a no-deal Brexit. That is why we have repeated our calls for the UK Government to agree an extension to the transition period.”

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