Monthly economic brief: June 2022

Labour Market

Scotland’s labour market remains tight but there was further growth in payrolled employees in May.

Official labour market statistics, payrolled employment and claimant count

• The latest labour market statistics for February to April 2022 in Scotland show there were 2.686 million people in employment (rate of 75.5%, up 1.6 percentage points over the year), 90,000 people unemployed (rate of 3.2%, down 1.2 percentage points) and 752,000 people economically inactive (rate of 21.9%, down 0.7 percentage points).^[6]

• Pay As You Earn (PAYE) Real Time Information estimates indicate the number of payrolled employees in Scotland continued to increase in May, rising by 7,000 over the month to 2.42 million. The rate of growth over the month eased slightly to 0.3%, however remains in line with the average monthly rate of growth over the past year.
• The number of payrolled employess is now 47,000 higher than at the end of the Furlough scheme in September 2021 and 37,000 more than the pre-pandemic level in February 2020.^[7]

• Scotland’s Claimant Count (the number of claimants of Job Seekers Allowance and claimants of Universal Credit claiming principally for the reason of being unemployed) also continued its downward trend in May, falling 2.8% over the month to 115,700; a claimant count rate of 3.8%.
• Overall, the claimant count has fallen 48% from its peak in August 2020 and 26.9% since September when the furlough scheme ended. However, it remains 3,200 (2.8%) higher than its pre-pandemic level in February 2020.^[8]

Demand and supply of staff

• Business surveys signalled that labour market tightness continues to persist in May with high vacancy rates and falling candidate availability.
• The latest Report on Jobs signalled that overall demand for staff (vacancies) continued to grow in May (73.4, down from 76.3 in April) and although the rate of expansion slowed over the month, it remained high compared to historical standards.^[9]
• Supply side challenges in the labour market have also continued with candidate availability (labour supply) continuing to fall. The rate of contraction in May for permanent candidate availability was the fastest in the PMI time series for Scotland and faster than in the UK as a whole.

• More recent online vacancies data also signal that strong demand for staff continued throughout June, with weekly online job vacancies 34% higher than in February 2020. However, the volume of weekly online job postings fell consistently over the last month and to its lowest rate since the start of the year.^[10]
• The strength in demand for staff, coupled with low unemployment, falls in candidate availability and challenges in recruiting the necessary staff, meant upward pressure on starting salaries remained elevated in May, though the Report on Jobs salaries index eased back to its lowest rate since October 2021.
• Labour shortages continue to affect a range of sectors with 38% off all businesses experiencing a shortage of workers in June. The overall share has picked-up since the start of the year and remains most notable in accommodation and food services (44%), construction (43%), and the arts, entertainment and recreation (43%) sectors.^[11]

Earnings

• Nominal mean earnings annual growth has been on an upward trend since the end of the furlough scheme in September, following significant volatility during the pandemic.^[12]

• Latest data show mean monthly nominal pay fell by 0.3% over the month in April 2022 (UK: -1.9%), and grew 3.5% (UK: 4.9%) annually to £2,596 (UK: £2,825).^[13]
• The pace of annual nominal earnings growth in April was similar to annual growth rates in 2019. However, adjusting for inflation, which rose to 9% in April, real mean earnings fell 5.1% in April on an annual basis, the third consecutive month of negative annual growth.