Scottish Economic Bulletin: November 2026

Labour Market

Unemployment has fallen to 4.3%, but real median earnings growth remains weak.

Employment, Unemployment, and Inactivity

• The Labour Force Survey (LFS) recorded Scotland’s unemployment rate at 4.3% in the three months to August (UK: 4.7%) which had fallen 0.4 percentage points (p.p.) over the quarter but rose 0.6 p.p. over the year.



• Alongside this, the employment rate fell 0.4 p.p over the quarter to 74.0% and is 0.4 p.p lower compared to last year, while the inactivity rate increased by 0.8 p.p over the quarter to 22.6% and is 0.1 p.p lower on an annual basis.^[17]



• PAYE Real Time Information data indicate a gradual softening in the labour market over the past 2 years. The number of payrolled employees in Scotland stood at 2.45 million in September, 0.2% below its level a year earlier (down 4,000 employees). Although payroll employment increased marginally over the month (up 1,000 employees), it remains below the levels seen through most of 2025. ^[18]
• The most recent sectoral breakdown shows that employment was lower in July 2026 than in July 2025 across a number of industries. The largest falls were in accommodation and food service activities (down 6,200 employees) and wholesale and retail trade (down 4,700 employees). Employment growth was strongest in education, administrative and support services, and health and social work, though these gains were insufficient to offset losses elsewhere (overall -5,500 employees). Mining and quarrying experienced the largest percentage decline (4.9%), although this represented a fall of only around 800 employees.



• Scotland’s claimant count unemployment rate increased to 3.8% in September (UK: 4.4%). The number of people claiming unemployment-related benefits increased by 1.7% (1,800 people) over the month and by 7.3% (7,500 people) over the year, bringing the total claimant count to 110,000 people. This is the highest level since November 2024.^[19]

Recruitment Activity

• Recruitment activity has also remained subdued. ONS Textkernel data shows that the annual percentage change in new online job adverts was negative in six of the eight months for which data is available in 2026. However, the rate of decline has eased in each of the last three months, improving from -13.7% in June to -1.1% in September, suggesting a modest short-term stabilisation in labour demand.
• Although PMI survey evidence points to subdued hiring activity over much of the past 18 months, recent data has been more positive. The employment index has remained above 50 (50 = stable employment levels) for four consecutive months, reaching 52.1 in September. This indicates continued growth in private sector staffing levels. ^[20]



• Looking a month ahead, BICS data points to a broadly stable labour market, with 65% of businesses expecting employee numbers to remain unchanged in November and slight increases in both the shares of businesses expecting the number of employees to increase (11.4%) and decrease (12.6%). In the context of the loosening labour market over the past year, businesses remain cautious in their recruitment activity.

Earnings

• Against a backdrop of softer labour market conditions and lower inflation, real earnings growth eased through late 2025 before stabilising during the first half of 2026. However, the latest data indicates further moderation in the pace of pay growth across August and September.^[21]



• Nominal Median monthly PAYE pay in Scotland (£2,698) grew by 4.0% over the year to September, accelerating from 3.7% in August. However, with inflation also increasing in September, real earnings growth remained unchanged at 0.6%. This is notably below the average annual rate recorded since the start of the year (1.5%).