Scotland’s record low unemployment rate a ‘dreadful Catch 22’

Good for jobseekers but worrying for the economy – official figures show unemployment in Scotland fell to a record low in the last quarter.

Across the UK, the latest data showed there were more jobs available than people out of work for the first time since records began in the 1970s.

The number of people unemployed in Scotland hit 88,000, a record low since the current labour force survey series began in 1992.

Meanwhile the number of people who are “inactive” – neither in work nor seeking a job – was 21.9%; this is down 0.7%-points on three months before and reverses a rising trend in the wake of the pandemic.

The Office of National Statistics (ONS) said the unemployment rate for those aged 16 and over between January and March in Scotland this year was 3.2%, which was 0.9 percentage points down on the previous quarter.

As the employment market tightened, wages are up but still not in line with soaring inflation.

The ONS said average weekly earnings growth increased to 7% in March from 5% in February but that this was fuelled by one-off bonuses.

Regular pay growth however was 4.2% and well below the rate of inflation which could rise above 9%.

But Kevin Brown, savings specialist at Scottish Friendly, said: “Rising wages do pose a real risk to the economy and subsequently consumers.

“The Bank of England fears a highly competitive jobs market and demands from employees for pay increases to keep up with rising living costs, could lead to a dramatic and sustained wage/price spiral.”

Andrew Bailey, Governor of the Bank of England, warned that households could witness an “apocalyptic” shock from rampant inflation, particularly for food.

Brown added:“It is a dreadful Catch 22 for many hard-pressed consumers as they desperately need help to cope with rising prices but their household finances could end up being squeezed even tighter as a result.”