Figures make optimistic reading, but much uncertainty remains

THE latest monthly figures from the Office for National Statistics are in and, considering the incredibly difficult circumstances under which the job market is labouring, the numbers make for rather optimistic reading.

At headline level, Scotland’s unemployment rate for the three months to February remained steady at 4.4 per cent, below the UK rate of 4.9%. Approximately 120,000 people in Scotland are out of work and looking for a job, accounting for about 7% of the 1.67 million unemployed people across the UK.

That the job market has remained so steady is in large part thanks to the ongoing furlough programme, which has provided a decent level of protection during the latest round of lockdown measures. Furthermore, the easing of restrictions enabled by the roll-out of vaccines is stimulating fresh hiring activity.

Job vacancies in Scotland are now at their highest since November 2019, with 50% growth in the number of jobs advertised between February and March. Some of the largest percentage increases have been in those areas most affected by lockdown – such as catering, sales and customer service – along with ancillary services, property, construction, administration and engineering.

This month-on-month increase in job ads has continued into April, with the first three weeks of the month up 9% on the same period in March. Permanent vacancies in the UK private sector increased at the sharpest rate for 32 months, while growth in short-term positions hit the highest rate since September 2018.

Average employee pay increased slightly, though this was driven in part by a fall in the number of those employed in lower-paying jobs. Median monthly pay in Scotland was 5.7% higher than the same period a year ago, with starting salaries rising for the first time in 2021.

But the employment story in the wake of Covid still has a long way to run. Among the potential plot twists is the continuing skills gap in certain industries that will require a coordinated effort between employers, government and education providers, particularly in relation to digital skills.

Uncertainty also remains over the future of the approximately 14% of employees in Scotland who remain on furlough.

With the expected rebound in economic activity gathering pace into the second quarter of this year, it is reasonable to assume that a substantial proportion of these people will return to work as restrictions ease. This could particularly prove to be the case in sectors such as hospitality and retail, which have been completely closed during lockdown.

But hospitality venues will remain under trading restrictions for an unspecified time to come, with indoor venues initially required to close by 8pm, and outdoor areas to shut by 10pm. Industry representatives have warned such conditions are not viable, with 24,000 jobs at risk. And following parade of high-profile retail closures of the past year, it remains unclear how many smaller shops will survive to reopen their doors. The extent of the damage will only be evident in the weeks and months to come as the economy reopens and government support winds down.