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Employability and Skills: Taking forward our National Conversation

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Annex A Employability and Skills Scottish, UK and International Comparisons

1. As the Scottish economy emerges from the economic downturn, the major challenge will lie in tackling unemployment and its damaging effects, focusing on the long-term goal of restoring growth in output and raising Scotland's economic performance through increased levels of productivity and labour market participation.

2. The Scottish economy has historically grown at a slower rate than the UK and many other advanced economies. Chart 1 highlights that Scottish GDP growth has lagged behind the UK over the past decade. Indeed over the past 30 years the average annual growth rate of the Scottish economy has been 0.5 percentage points below the UK and 0.8 percentage points below Small EU countries 10. This has translated into lower levels of GDP per capita in Scotland compared to many of our competitors in the OECD.

Chart 1: GDP Growth - Scotland v UK

Chart 1: GDP Growth - Scotland v UK

Source: Scottish Government, ONS

3. The central challenge to raising Scotland's future economic performance and living standards within the economy is to improve our productivity performance. Productivity levels in the Scottish economy (based on output per hour worked) currently lie below a number of other OECD countries. Raising our productivity performance will enhance the competitiveness of Scottish firms and help to ensure that the Scottish economy is well-placed to seize the future growth opportunities which arise as the global economy recovers.

Chart 2: Productivity - Scotland v International Competitors

Chart 2: Productivity - Scotland v International Competitors

Source: OECD & ONS

Labour Market

4. In the three months to September 2009, Scotland had the highest employment rate of the 4 countries in the United Kingdom at 73.9%. This is 1.0 percentage point higher than the next highest country (England, 72.8%) and 1.3 percentage points higher than the UK average (72.5%). Several regions in England had employment rates above the Scottish average (East 77.2%, South East 77.0%, South West 75.7% and East Midlands 74.9%).

Table 1: Headline Labour Market Indicators by Government Office Region, Jul-Sep 2009

Employment
Age 16-59/64
Rate (%) 2

Unemployment
Age 16+
Rate (%) 3

North East

68.0

9.5

North West

70.8

8.6

Yorkshire & Humberside

71.2

8.7

East Midlands

74.9

7.5

West Midlands

70.0

10.0

East

77.2

6.5

London

69.0

9.0

South East

77.0

6.0

South West

75.7

6.6

England

72.8

7.9

Wales

69.2

8.7

Scotland

73.9

7.2

United Kingdom

72.5

7.8

Source: Labour Force Survey
1. Labour Force Survey is tabulated by region of residence.
2. Denominator = all persons of working age.
3. Denominator = Total economically active.

5. The employment rate in Scotland, using the European age definition (15-64), in 2008 was 72.1% which is 0.3 percentage points lower than the previous year. Compared to the other countries in the Organisation for Economic Co-operation and Development ( OECD) Scotland has maintained it position as having the 10th highest employment rate. Scotland's employment rate in 2008 remained above the UK, which had an employment rate of 70.8% (Chart 3).

Chart 3: Employment rate (15-64 years), International Comparisons, 2007 and 2008

Chart 3: Employment rate (15-64 years), International Comparisons, 2007 and 2008

Source: Organisation for Economic Co-operation and Development, Annual Population Survey

Current Skills Position

6. Scotland's investment in skills stands comparison with any other part of the United Kingdom. Qualification levels over the last 30 years, for example, have been higher than in the rest of the United Kingdom. Indeed, the UK Leitch Review of Skills highlighted Scotland as the only nation or region of the United Kingdom where the percentage of people with a Higher Education qualification outnumbers the percentage with a basic school leaving qualification.

7. Table 2 shows that Scotland is ranked 3rd in terms of percentage of the population with degree level qualification or above, behind the South East and London. Moreover, in terms of the population with SVQ level 4 qualification or above, Scotland is ranked 2nd behind London. Therefore, within the UK context, Scotland performs strongly, with only London and the South East in a stronger position.

Table 2: Highest qualification of working age population, UK Regions, 2008

% with degree or above

% with SVQ level 4 or above

% with mid level qualification ( SVQ level 1,2,3 or other)

% with no qualifications

North East

16.0%

24.1%

62.4%

13.5%

Yorkshire & Humberside

17.9%

25.2%

61.4%

13.4%

West Midlands

17.0%

24.7%

59.1%

16.1%

Wales

18.1%

26.8%

59.0%

14.3%

North West

17.3%

25.9%

59.2%

14.9%

East Midlands

17.0%

25.6%

61.1%

13.3%

Northern Ireland

18.6%

26.1%

51.8%

22.1%

Eastern

19.0%

26.3%

61.8%

11.9%

South West

19.3%

28.5%

62.5%

9.0%

Scotland

20.3%

34.0%

53.4%

12.6%

South East

23.1%

31.7%

59.3%

9.0%

London

32.7%

38.8%

49.1%

12.1%

UK

20.7%

29.1%

58.1%

12.8%

Source: Annual Population Survey, Jan-Dec 2008

8. In relation to skill attainment from an international perspective, the change on the previous year and relative position to 1999 can be summarised from the most recent Education at a Glance ( OECD).

9. As regards Low/No qualifications; relative to OECD countries, Scotland is in the lowest quartile (ranked 23 out of 30); a positive position (Chart 4). The percentage of the population that had a lower secondary qualification stood at 14.7 per cent. This improved on the position in 2006 (15.3 per cent), and has fallen from 19.3 per cent in 1999. Of all the G8 countries, only the United States, Canada and the United Kingdom have lower proportions.

Chart 4: Low Level Qualifications

Chart 4: Low Level Qualifications

Source: Education at a Glance

Note: Estimate for Scotland sourced from LFS Apr-Jun 2007

10. As regards, Intermediate qualifications, relative to OECD countries, Scotland is in the second quartile for this measure (ranked 10 out of 31), with Germany, Japan and the United Kingdom the only G8 countries with higher proportions (Chart 5).

Chart 5: Intermediate Qualifications

Chart 5: Intermediate Qualifications

Source: Education at a Glance

Note: Estimate for Scotland sourced from LFS Apr-Jun 2007

11. As regards, Higher Qualifications, Scotland is in the second quartile out of the OECD countries (ranked 14 out of 31), with Japan, United States, Canada and the United Kingdom the only G8 countries with higher proportions (Chart 6). The percentage of the population that had a higher education has risen to 21.2 per cent. This improved on the position in 2006 (20.7 per cent), and has risen from 15.3 per cent in 1999.

Chart 6: Higher Qualifications

Chart 6: Higher Qualifications

Source: Education at a Glance, Estimate for Scotland sourced from LFS Apr-Jun 2007

Benefits

12. Benefit claimants are allocated to statistical groups to give an indication of the main reason why they are claiming benefit. As at May 2009, 17.6% of the working age population in Scotland were claiming one or more key DWP benefits, compared to 15.7% in Great Britain. The key benefits are: bereavement benefit, carer's allowance, disability living allowance, incapacity benefit, severe disablement allowance, employment support allowance, income support, jobseeker's allowance, and widow's benefit. Each person is classified according to the main reason why they are claiming benefit. Benefits are arranged hierarchically and claimants are assigned to a group according to the top most benefit they receive. In Scotland, 15.1% of working age clients were claiming key out-of-work benefits* as at May 2009, above the average for Great Britain (13.4%).

Table 3: Working age claimants by statistical group, May 2009

Statistical Group

England

Wales

Scotland

Great Britain

number

rate

number

rate

number

rate

number

rate

Total

4,885,030

15.3

363,670

20.2

570,030

17.6

5,818,730

15.7

Jobseeker

1,245,830

3.9

74,250

4.1

122,710

3.8

1,442,790

3.9

ESA and incapacity benefits

2,129,330

6.7

188,390

10.5

292,500

9.0

2,610,220

7.1

Lone parent

625,840

2.0

36,820

2.0

57,760

1.8

720,420

1.9

Carer

341,950

1.1

26,610

1.5

36,810

1.1

405,370

1.1

Others on income related benefit

158,290

0.5

9,050

0.5

15,860

0.5

183,200

0.5

Disabled

309,270

1.0

23,920

1.3

35,210

1.1

368,400

1.0

Bereaved

74,520

0.2

4,620

0.3

9,190

0.3

88,330

0.2

Key out-of-work benefits*

4,159,280

13.0

308,510

17.1

488,830

15.1

4,956,630

13.4

Source: DWP

Notes:

1. Rate covers the number of benefit claimants as a proportion of resident working-age population.

2. Claimants have been assigned to a statistical group according to a hierarchy.

If claimant receives ...

then allocated to ...

Jobseeker's Allowance

Jobseeker

Incapacity Benefit or Severe Disablement Allowance or Employment Support Allowance ( ESA)

ESA and incapacity benefits

Income Support with a child under 16 and no partner

Lone parent

Carer's Allowance

Carer

Other Income Support (including IS Disability Premium) or Pension Credit

Other on income related benefit

Disability Living Allowance, Attendance Allowance or Industrial Injuries benefits

Disabled

Widow's Benefit, Bereavement Benefit or Industrial Death Benefit

Bereaved

3. ESA replaced Incapacity Benefit and Income Support paid on the grounds of incapacity for new claims from 27th October 2008. Prior to this the "incapacity benefits group" referred to claimants of Incapacity Benefit (including credits only) or Severe Disablement Allowance including people claiming IS on the grounds of Incapacity. The ESA component of the data for the latest quarter is provisional.

* Key out-of-work benefits consists of the groups: job seekers, incapacity benefits, lone parents and others on income related benefits