Scottish economic bulletin: May 2025

Labour Market

Unemployment rose to 4.3% in the first quarter of 2025, while earnings continued a trend of positive real terms growth.

Employment, Unemployment, and Inactivity

• The labour market in Scotland remained resilient in the first quarter of 2025. For January to March, latest data from the Labour Force Survey (LFS) shows that the unemployment rate in Scotland rose 0.5 percentage points (p.p) over the quarter to 4.3%, although is down 0.2 p.p when compared to the same time in 2024. Scotland’s employment rate rose over the quarter by 0.4 p.p. and by 1.6 p.p over the year, to 74.5%. The inactivity rate fell by 0.8 p.p over the quarter and by 1.6 p.p over the year to 22.0%.^[10],[11]

• Wider labour market indicators also suggest continued labour market resilience in the start of 2025, albeit with indications of some loosening over the past year. Latest RTI data shows that there were 2.45 million payrolled employees in Scotland in April 2025, falling by 0.1% (or 2,600 employees) from March, and by 0.5% (or by 12,200 employees) annually.
• Scotland’s claimant count unemployment rate was at 3.6% in April, up by 0.1 p.p. from March but down by 0.3 p.p over the year. However, the number of claimants rose over the year by c. 1,800 to c. 107,300.^[12],[13]

Recruitment Activity

• Evidence on recruitment activity shows a mixed picture, with online vacancies up at the start of the year, and business surveys showing both a pick-up in recruitment intentions and an easing in conditions.
• Online vacancies data shows that recruitment intentions picked up in the first quarter of 2025, and were at their highest since July 2024. In April there were c. 47,600 newly advertised jobs online in Scotland, up by 14.5% when compared to April 2024. In the UK as a whole, online job adverts increased by 14.7% over the same period. However, newly advertised jobs online in Scotland had peaked at over 74,500 during 2022.^[14]

• The recent pickup in recruitment intentions in the start of 2025 is also reflected in some business survey data. In April, BICS data of businesses responding to employee expectations for May, shows that most businesses (63.4%) still expect employee numbers to stay the same. However, the share of businesses expecting employee numbers to increase has been on the rise in the start of the year, with 20.4% of businesses responding they expect an increase in May. Conversely, the share of businesses expecting employee numbers to decrease has fallen recently, and for May, is 11.5%.
• Wider business survey data further indicates businesses potentially shifting gear from lowering employment levels. RBS Growth Tracker data showed that businesses reduced staffing levels for four consecutive months between December and March, however they remained stable on balance in April.

Earnings

• Labour earnings have continued a trend of positive real terms growth, albeit at a slower pace than in 2024 following the recent pick-up in inflation.
• Nominal median monthly PAYE pay in Scotland was £2,533 in April, and grew by 5.8% on an annual basis. This is down from growth of 6.7% in March, and remains lower than the higher levels of nominal growth seen during most of 2023 and 2024. Taking into account the fall over the month in the nominal earnings annual growth rate and the increase in the inflation rate, real median weekly earnings grew by 2.2% annually in April, down from growth of 4.0% in March.^[15]

• Looking ahead, earnings growth is expected to further moderate. The Bank of England Decision Maker’s Panel (DMP) reported annual UK wage growth of 4.8% in the 3-months to April and anticipated year-ahead wage growth of 3.8%, suggesting firms expect the rate of wage growth to decline by 1 percentage point over the next year.^[16]