Think tank in pay growth warning amid ‘incomplete’ recession recovery

Published: Wednesday 20th January 2016 by The News Editor

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Pay growth in Scotland could be slower than the rest of the UK because of the job market’s “incomplete recovery” from the recession, a think tank has warned.

The Resolution Foundation said the labour market in Scotland still had a “long way to go” before it has fully recovered from its post-recession crash.

A total of 9,000 more jobs are needed before the employment rate returns to the level of 74.6% that it was at before the economic crisis, the report said.

England closed this “jobs gap” over a year ago, it added, but the think tank found Scotland, Northern Ireland and the South East of England have still to pass this milestone.

The think tank said: “Scotland’s incomplete recovery on jobs may lead to slower pay growth in the future relative to other nations and regions of the UK.”

It issued the warning as it published a new report on the condition of the labour market in Scotland.

The employment rate north of the border was higher than in England prior to the recession, but also suffered a greater fall.

While the UK has “continued to reach new employment rate peaks in 2015”, the think tank said “Scotland’s 2015 performance was less strong”.

The unemployment rate in Scotland averaged at 5.9% in 2015, compared to 5.5% in England.

“On many labour market indicators, Scotland remains below its pre-crisis level, though level with the UK average,” the think tank said

“The Scottish jobs recovery has disproportionately been made up of part-time workers, full-time work is below its pre-crisis level.”

Meanwhile, typical pay in Scotland is higher than it is in England for the first time on record, the report found.

Analysis by the think thank found wages in Scotland had grown faster than any other part of the UK over the last two years, with a typical worker now receiving £11.92 an hour, compared with £11.84 south of the border.

The report also claimed the UK Government’s new national living wage will have a ” less radical impact in Scotland than in many parts of the UK with a slightly smaller share of workers affected”.

Conor D’Arcy, policy analyst at the Resolution Foundation, said: ” Scotland enjoyed a significantly higher employment rate than England in the years running up to the financial crisis. But its relatively poor track record in recent years means that it has fallen back in line with England.

“This puts Scotland’s new-found pay advantage over England at risk and it’s vital that its job gap is closed sooner rather than later.”

A Scottish Government spokesman said: ” Recent job figures, including December’s annual population survey, have offered further evidence of Scotland’s growing economic strength with rising employment, a fall in unemployment and excellent news for youth employment.

“With a record level 92.9% of school leavers now heading to initial positive destinations, and an ongoing commitment to at least 25,500 modern apprenticeships every year – rising to 30,000 by 2020 – we are greatly encouraged by Scotland’s future skills.”

Published: Wednesday 20th January 2016 by The News Editor

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