Scottish Jobs and the World Economy

In an earlier post I sought to establish the number of jobs that could be said to depend on economic links with the rest of the UK (rUK). That work suggested that almost 1 million jobs – 962,000 – were linked to the UK through rUK owned firms operating establishments in Scotland, exports to rUK, and through the jobs linked to the UK public sector, UK grant support and UK government purchasing contracts.

In this post I seek to establish the jobs in Scotland due to the Scottish economy's integration with the world economy, including integration with rUK: the globalisation effect if you like.

Method

In seeking to achieve this I ignore links via the public sector and focus largely on the private sector, with the exception of education, which has to be included because of its significant export activities. I again use the Scottish Government's input-output tables for 2009 but use 2014 workforce data for export jobs and 2013 data for jobs in rUK and foreign owned firms. As with the earlier post, I make an adjustment to remover the overlap between non-Scottish owned activities that are also exporters. Finally, I estimate secondary effects differently. In the present work I include only the domestic jobs that are the consequence of the indirect domestic supply links to the non-Scottish owned and exporting firms. (Technically, the Type 1 multiplier relation). I therefore ignore the potential further boost of the secondary spending in the Scottish economy due to the additional incomes generated by the non-Scottish links. But, in so doing I also ignore the favourable competitive price effect of the price and wage adjustments that would see domestic activity increase to some extent as non-Scottish activity reduced. The scale of these last two effects is much less certain, while the indirect supply link is more robust. The estimates are therefore slightly more conservative – lower - than in my previous post.

Estimates

Table 1 Scottish Jobs and Globalisation

Type of Job	Direct	Indirect	Total
rUK owned firms	313,000	138,000	451,000
rOW owned firms	286,000	114,000	400,000
Exports to rUK	283,000	125,000	408,000
Exports to rOW	100,000	40,000	140,000
Total	982,000	417,00	1,399,000

The estimates for each category are included in Table 1 above. So, about 1 million jobs are directly linked to the global economy outside Scotland and a further 400,000 are generated through supply links as local firms supply the exporters and the non-Scottish owned firms based in Scotland.

Total Scottish employment minus the public sector (Administration and Health but including education) is 2,113,000, hence the percentage of total 'private' sector employment in Scotland due to globalization, or external links, is 66% or two-thirds. Interestingly, about 40% or 859,000 jobs are dependent on trade and ownership links to the UK, while the remaining 26% are linked to the wider world economy.

In conclusion, the Scottish economy is significantly linked into the world economy with around two-thirds of jobs dependent on such links. Moreover, it is trade and ownership links to the rest of the United Kingdom that dominate these global links with the number of dependent jobs more than one and a half times greater than those linked to the rest of the world.