Scottish economic bulletin: June 2026

Labour Market

The labour market has weakened over the past year with the number of payrolled employees falling to its lowest level since January 2023.

Employment, Unemployment, and Inactivity

• The Labour Force Survey (LFS) shows Scotland’s unemployment rate remained relatively low in the 3‑months to March at 4.4% (UK: 5.0%), albeit had risen by 0.7 percentage points (p.p) over the quarter and 0.1 p.p over the year (UK: +0.5 p.p).
• Alongside this, the employment rate fell 1.1 p.p over the quarter to 73.7%, while the inactivity rate rose 0.5 p.p. to 22.7%. Over the past year, the employment rate has fallen 0.8 p.p. and the inactivity rate has risen 0.7 p.p, indicating a weakening in labour market conditions compared to last year. ^[16]

• This weakening is also reflected in Pay as you Earn (PAYE) Real Time Information data which shows that the number of payrolled employees (2.44 million) has fallen 0.6% (c. 2,400) over the year to April and its lowest level since January 2023.^[17]
• Nonetheless, Scotland’s Claimant Count unemployment rate (3.7% in April) also remains low relative to the UK as a whole (4.4%), albeit the number of claimants of unemployment related benefits rose 2.6% (c. 2,800) over the month to 109,700, its highest level since November 2024. Over the past year, the number of claimants has risen by 4.3% (c. 4,500).^[18]

Recruitment Activity

• Business surveys indicate that demand for labour and recruitment activity remains relatively subdued as businesses contend with rising costs and subdued demand.
• The RBS Growth Tracker shows that following a slight improvement in private sector staffing levels at the start of the year (following a general pattern of falling staffing levels over 2025), the latest data for April indicated a renewed fall in headcounts with the index falling to 48.6, (50 indicates stable employment levels).^[19]

• ONS Textkernel data indicates that recruitment activity has been continuing to stabilise in April with the number of online vacancies in Scotland rosing 1.1% annually, largely unchanged from last year.^[20]
• Looking ahead, this stabilisation is also seen in BICS data, with the share of businesses expecting employee numbers to stay the same rising moderately from 63.4% for May to 64.1% for June, while the shares of businesses expecting employee numbers to decrease (9.8%) or increase (13.8%) has fallen.

Earnings

• In response to the labour market loosening over the past year and lower levels of inflation, the pace of earnings growth had slowed notably towards the end of 2025 and into the new year, however latest data for April shows a renewed pick-up over the month.
• Nominal median monthly PAYE pay in Scotland (£2,659) grew by 5.6% on an annual basis in April, up from 4.7% growth in March. In real terms, adjusting for annual inflation of 2.8%, real earnings grew by 2.7%, notably above the 0.7% average growth of the prior six months. ^[21]