3. Labour Market
This section discusses trends in the demographic composition of the workforce, followed by a description of data related to future projections of occupational change; the age of the working population; the effect of withdrawal from the EU on the labour market; the effects of growing up in a negative labour market (recession and austerity); and the potential effects of this on young people.
3.1 Demographic composition of the workforce
The last decade has seen substantial change in the demographic composition of the workforce, with higher numbers of both older people and women in employment. Figure 6 shows that employment rates for 16-24 year olds decreased between Jan-Dec 2007 and Jan-Dec 2017, while the employment rate for 50-64 year olds increased from 64.4% to 69.6%.
Figure 6. Employment Rate by Age Group, 2004 to 2017, Scotland
Source: Office for National Statistics, Annual Population Survey, Jan-Dec 2004 to 2017
3.2 Future labour market projections
Occupational employment projections
The occupational employment structure of the UK is predicted to shift towards higher numbers in higher level managerial and professional occupations and service occupations, such as caring and leisure service occupations (see Figure 7). Numbers are expected to decline in administrative and secretarial occupations, skilled trade occupations, and process, plant and machine operatives.
Figure 7. Occupational change 2004-2024
Source: UK commission for employment and skills
The qualification profile of employment is expected to see a continued shift toward the workforce holding higher level qualifications (see Figure 8). By 2024 around 54% of people in employment in Scotland are expected to be qualified at RQF level 4, SCQF level 7 equivalent or above. The supply of skills is expected to continue to grow, with young people continuing to increase their level of qualification. A sharp reduction of 41% in employment in occupations requiring no or lower level qualifications is projected; as are small reductions in occupations requiring RQF level 2 (SCQF level 5) and RQF level 3 (SCQF level 6).[11,12]
There is some evidence that higher expectations and requirements from employers for more advanced qualifications may be driving the increase in young people educated to degree level. The percentage of Higher Education leavers who reported that their qualification was a formal requirement of their current post increased from 42% in 2011/12 to 54% in 2016/17.
Figure 8. Changing profile of employment by qualification level
Source: UK commission of employment and skills
Withdrawal from the EU - Effects associated with negative labour market impacts
There is a large amount of uncertainty about the precise effect Brexit will have on the UK labour market, but it is expected to be negative. Evidence from previous recessions has identified long lasting impacts associated with growing up in negative labour market conditions including depression, stress, anxiety, lack of confidence and associated health issues. It may therefore become increasingly important to consider the labour market conditions when understanding the health and wellbeing of children and young people in Scotland.[14,15,16]
Potential effects of the future labour market on young people
An unstable labour market and the potential for fewer work opportunities is likely to lead to increasing intergenerational inequalities in income and wealth. An unstable labour market could create an uncertain and frustrating working life for some younger people, who may lack financial stability. Today’s young people are the first generation where the majority do not believe that they will have had a better life than that of their parents.
‘Emerging adulthood’ is a life course stage that describes young adults who do not have children, do not live in their own homes, and do not have sufficient income to become fully independent from their parents. It is a stage of life that is likely to be prolonged in the future with rising housing costs, longer time spent in education and a longer time taken to find stable and good quality employment.
3.3 Key points
- Current employment trends are projected to continue, with continued growth of highly skilled work and service occupations, and decreases in all other low skilled work.
- An unstable labour market, with the potential for fewer good quality, permanent and full time work opportunities, could create an uncertain and frustrating working life for some younger people.
- Additional factors such as rising housing costs and employers’ requirements for a higher level of qualifications leading to a longer time spent in education are likely to lead to extended paths to financial security and independent household formation for a large proportion of young people.