Following the pessimistic reports on employment earlier this week, today’s unemployment figures didn’t come entirely as a surprise, although they appear to be worse than expected.
The number of Scots looking for work rose by 1,000 between April and June, the first time the total has gone up since last autumn. It means that some 209,000 are unemployed in Scotland. The number claiming Jobseeker's Allowance last month also went up – by 2,600, to just under 144,700.
Across the UK as a whole, the number of people on unemployment benefit showed the biggest increase in more than two years, rising by 37,100 to 2.49 million. Again, the number claiming Jobseeker's Allowance rose by 37,100 in July to 1.56m, the biggest increase since May 2009. It means the claimant count has risen for five months in a row and is now at its highest since February 2010.
Curiously, almost all of the UK's net gain in employment in for the quarter was found in Scotland. The latest survey reports that there were 24,000 more Scots in jobs, out of 25,000 for the whole of the UK. Scotland therefore finds itself in the paradoxical position where employment and unemployment are rising simultaneously, with the situation in Scotland slightly better than elsewhere in the UK.
Alex Salmond, the first minister, pointed out that the recession had been both shorter and shallower in Scotland compared with the UK as a whole, adding that “the action taken by the Scottish government has had a positive impact. We accelerated capital investment at the height of the recession and over the year to March workforce construction jobs were up by 19,000, or 11.6 per cent, in Scotland – compared to a fall of 5,200, or 0.2 per cent, across the UK.
“Our no compulsory redundancy policy for staff under our responsibility is helping to boost consumer confidence, and our commitment to the social wage – including the council tax freeze, no tuition fees, free prescriptions and free concessionary travel – is giving Scots households maximum protection at a time when other bills and inflation are on a sharply rising curve.”
But the general secretary of the Scottish Trades Union Congress, Grahame Smith, said that the organisation “had argued that the weak labour market recovery in Scotland through 2011 could not be sustained and, unfortunately, today’s statistics prove us correct.
“The two major concerns are the sharp rise in people claiming Jobseeker's Allowance in the month to July and the surge in ‘underemployment’. With minimal growth in the economy over the last nine months, steeply declining real incomes, collapsing consumer confidence, austerity spreading across key export markets and public spending cuts just beginning to bite, the prospects for the Scottish labour market are grim.”
In the view of Scottish secretary Michael Moore, “the first increase in unemployment since autumn last year is a reminder of the challenging economic circumstances we face. The UK government's priority is to continue to support the economy by reducing the deficit and putting in place measures to encourage growth in the private sector. We are creating a new model of economic growth, driven by investment and exports, and more evenly balanced across the UK and sectors.”
The chancellor, George Osborne, described the figures as “disappointing”, but not surprising given what was going on in the world economy and with world markets. He said the government was continuing in its efforts to help create new jobs, including the announcement of 11 new “enterprise zones” in England which will, it is hoped, boost local economic growth and create more than 30,000 new jobs by 2015.
Nationally, the Confederation of British Industry described the rising unemployment as a “cause for concern”, but said that many new jobs were being created in private sector. Its deputy director general, Dr Neil Bentley, said that there was “some cause for optimism in that over half a million net new jobs were created by the private sector in the last year, and total numbers employed also rose in today's figures.
“Addressing the persistently high level of youth unemployment has to be a priority,” he added, “with numbers of 18 to 24-year-olds out of work continuing to rise. Businesses are committed to getting young people into work, with many already offering apprenticeships, training opportunities and work placements. But the government must do more to prioritise private sector growth, which is the best way to create jobs.”
Today also saw the release of the latest figures on retail sales in Scotland, showing slightly better results than expected. Sales in July were 0.2 per cent higher than a year ago, when they had fallen 1.4 per cent. Food sales picked up after a tough time in June with clothing and footwear, while lower than 2010, showing an improvement mainly as a result of clearance sales.
Richard Dodd, head of media at the Scottish Retail Consortium, said that the general return to sales growth was “positive news for Scottish retailers but it shouldn't detract from the underlying weakness in consumer spending. Shoppers continue to feel the impact of high levels of inflation and low wage growth as households' real incomes shrink. The VAT increase and the effects of cuts have also dented consumer confidence.”
The figures were gathered by KPMG, whose head of retail in Scotland, David McCorquodale, pointed out that “July's modest increase compared with the same month last year will come as some relief for Scottish retailers. But, given the level of inflation and the increase in the VAT rate, customers are actually buying fewer goods than a year ago.
“Despite more people choosing to holiday at home rather than spending time, and money, abroad, the three-month average remains weak. Pay freezes for Scotland's workforce, coupled with inflation in energy bills, are clearly having a detrimental effect on consumer confidence as economic uncertainty reigns. This is evidenced in the continued struggle in the big-ticket item market but the relative strength in the value sector. Few retailers are particularly optimistic about the outlook, although many expect inflationary pressures to decrease in the latter part of the year.”
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