Writing in the Herald today, s1jobs’ managing director, Gavin Mochan, notes that Scotland’s labour market is proving quite resistant to growing economic challenges, with the overall picture remaining that of strong demand from employers.
Latest figures from the Office for National Statistics pegged the unemployment rates at 3.3% during the three months to the end of October, down 0.5 percentage points on pre-pandemic levels. However, this was an increase of 0.2 points on the previous three months.
Importantly, that rise is down to a decrease in the number of people who are economically inactive. The reality being that more people are in work.
Earlier in the year employers seemed unsure how to tackle staff shortages – higher salaries or flexible working didn’t seem to be helping them secure the labour needed. However, in more recent months, employers have been increasing starting salaries.
Early forecasts for November suggest that median monthly pay for employees in Scotland increased by 18.1% compared to February 2020 – the sharpest monthly increase since 2018.
Training their workforce to combat skills shortages is also becoming increasingly accepted. This expands talent pools and keeps costs under control at the same time.
A recent survey by Hays highlighted that 94% of employers in Scotland experienced skills shortages during the past 12 months, with one fifth having raised their training budgets to lessen the skills gap.
Businesses are under no illusion that these are necessary steps if they are to operate at full capacity and not resort to strategies like reducing opening hours or offerings due to being under-staffed.
Bigger businesses have not avoided these conflicts either. The number of working days lost across the UK to strike action in October reached 417,000 – the highest since November 2011. Disruption was most acute across transport, storage, information and communications.
The paradox is that hiring demand is still high despite definite signs of employers slowing their recruitment intentions. In addition, recruitment activity seems to be thwarting the Christmas contraction.
Hiring volumes in November 2021 were down about 13% on the previous month, but this year there were 44,000 jobs advertised in Scotland in November, a monthly decline of just 6%. Employers still need to expand their workforces, but with a market full of contradictions, the outlook to 2023 is uncertain. The only definite is that businesses who are serious about attracting and retaining staff will fare the best.