The latest Scottish labour market data published today show jobs continuing to be created as unemployment rose. During May-July Employment in Scotland rose by just under 6,000 (5,627) over the previous Feb-April quarter. But unemployment also rose by just under 10,000 (9,689) over the quarter, taking the unemployment rate back up to 7.4% from 7.1%.
Employment certainly appears to have been undergoing a sustained recovery since the middle of last year in Scotland and the beginning of 2012 in the UK as a whole.
The chart below plots the performance of Scottish and UK employment during recession and recovery to the latest data point.
The recovery is clearly evident in both series. What is also clear, is that the scale of the recession in employment was less in the UK than Scotland - a drop of 2.3% compared to a fall of 4.5% in Scotland. Moreover, the jobs recovery has been smoother and less erratic in the UK than in Scotland. As a result of these two features UK jobs are now 1% above the pre-recession peak while Scottish jobs are 0.6% below.
But the picture on unemployment is less rosy as the next chart indicates.
Measured unemployment is only 37,000 below the level at the trough of recession while being 92,000 above the number unemployed before the recession started 5 five years ago in May-July 2008. The good news here is that my measure of 'real' unemployment is moving back closer to measured unemployment as the number of inactive workers has been falling since Aug-Oct quarter last year.
So why the discrepancy between employment and unemployment?
The discrepancy is due to a growing labour force.
The final chart shows the ratio of employment to the population that is aged 16 or over during the recession and recovery in both Scotland and the UK.
This ratio is still significantly below the pre-recession peak position in both Scotland and the UK at -3.0% and -2.8%, respectively. The recent pick up in Scottish job creation is clearly evident in the ratio while the ratio in the UK did begin to pick up from the end of 2011 it is still only one percentage point higher than at the worst of the recession.
It must, therefore, be concluded that both Scottish and UK labour markets remain weak despite the recent jobs recovery.
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