Aquaculture sector - wider economic impacts: estimates

6. Induced Impacts

This section considered the economic impact that the staff of the Scottish aquaculture sector had in 2018 through the spending of their salaries and benefits.

6.1 Total Staff Costs

Employees in the Scottish aquaculture sector by spending their salaries and wages in the Scottish economy generate economic activity. This expenditure supports Scottish businesses and allows them to expand their employment and activities.

As estimated in the section on the direct impact of the sector, the total employment directly supported by Scottish aquaculture in 2018 was 6,260 and included:

• 1,800 in salmon production;
• 200 in production of other finfish;
• 300 in shellfish production
• 3,970 in aquaculture processing.

The survey data collected suggest that most of the employment in the sector is full-time and around 97% of the workforce being in permanent jobs. This evidence supports previous findings in other surveys of the sector, including the Scottish Fish Farm Production Survey 2018^[11] and the 2016 Seafood Processing Industry Report^[12]. Shellfish production has different employment patterns, with a larger share of the workforce being employed part-time^[13].

The level of pay in the aquaculture sector is not as directly linked to the output of the sector as other aspects of GVA are, such as profits. Figure 6‑1 shows the trend in both the production of salmon and the staff costs paid by salmon producing companies. This shows that despite significant fluctuations in annual production of salmon, the value of staff costs has continued on its trend of growth. This is because companies in the sector can find it difficult to recruit and therefore staff are retained during dips in production.

Source: BiGGAR Economics Analysis of Salmon Company accounts

To quantify the induced impact of Scottish aquaculture, it was first necessary to estimate the total annual staff costs paid by companies within the Scottish aquaculture sector. The companies taking part in the survey reported around £75.4 million in 2018 staff costs, including expenditure on temporary agency workers. Around 21% of this spending went to staff operating at the companies’ secondary processing facilities.

Staff costs were then scaled up based on the share of the salmon production. The approach followed to scale impacts is explained in detail in 11.2.2. Staff costs for processing of aquaculture for the companies for which survey data were not available were estimated by multiplying the remainder of employment in the sector by £24,300, an estimate of staff costs per head based on a 2018 study by Seafish^[14].

To estimate the total staff costs paid by the production of other finfish, the analysis considered the accounts of companies operating in this area and the value of staff costs reported. The staff costs per job of these companies were then multiplied by the number of people employed in the sector in 2018.

As emerged from the consultations, the shellfish sector is more reliant on part-time employment than finfish. To estimate the staff costs paid by the sector, the annual turnover for the sector as estimated by Marine Scotland^[15] was weighted by 58%, the share of turnover of staff costs and owner earnings according to recent evidence from Poseidon^[16].

The staff costs in each subsector was added up to estimate the total staff costs paid by Scottish aquaculture. In 2018, these costs amounted to around £185.2 million.

6.2 Pay in Context

In 2018 around 52% of the staff costs paid by the aquaculture sector in Scotland was paid by processing firms. The salmon farming sector paid around £77.3 million in staff costs, whereas the combined staff costs of other finfish and shellfish production was around £12.0 million or 6% of the total staff costs paid by the sector.

Source: BiGGAR Economics Analysis

Based on the direct employment supported by each subsector of Scottish aquaculture, it was possible to estimate staff costs per job. In 2018 salmon production had the highest staff costs – around £43,000 – followed by the production of other finfish (£33,000). The relative higher staff costs of the finfish sector reflected its highly skilled workforce. Shellfish had the lowest staff costs, around £18,400, which was consistent with the relatively larger share of employees working on a part-time basis.

Source: BiGGAR Economics Analysis

Scottish Sea Farms - Orkney

Providing employment and supporting rural economies

The contribution made by the industry in supporting employment and economic activity in the context of vulnerable rural economies is exemplified by Scottish Sea Farms (SSF)’ impact in Orkney^[17].

In 2018, SSF undertook a study into the economic impact that the company had in Orkney after ten years of operations. As part of this, the study compared the value of jobs that they directly supported to the average across the local and national economy. This found that average pay in the company, £37,215, was significantly higher than the average for Orkney, £26,260, and for Scotland, £27,404.

Source: Scottish Sea Farms, Impact Summary 2018

This report also highlighted the high skill level of the fish farm workforce. Courses which teach these skills are taught through local providers, such as Orkney college and each employee works towards their own personal development plan. The highly skilled nature of this work is one reason why the sector pays above average salaries.

In addition, it funds and engages in a series of local projects, including around £228,265 spent in grants benefitting local communities or activities forming the future workforce.

6.3 Economic Impact

It was estimated that in 2018 the staff costs of companies within the aquaculture sector generated around £57.1 million GVA and supported 1,190 jobs in Scotland. Details on the approach followed to estimate these impacts are presented in the methodological appendix.

Table 6‑1 Induced Impact from the Scottish Aquaculture Sector in 2018

	GVA (£ million)
Direct	38.2
Indirect	10.3
Induced	8.7
Total	57.1
	Employment
Direct	820
Indirect	210
Induced	170
Total	1,190

Source: BiGGAR Economics Analysis

The total induced economic impact split within the aquaculture sector broadly reflected the employment and total annual salaries paid across the sector. The processing sector generated around £30 million GVA as a result of spending in the broader economy from its employees and was the sector making the largest contribution through induced impacts. Salmon production accounted for around 42% of 2018 total induced GVA, equivalent to £24 million GVA. Other finfish production, including trout farming, and shellfish contribute around £4 million GVA in induced impacts.

Source: BiGGAR Economics Analysis

In 2018 the aquaculture processing sector accounted for 620 (52%) of the 1,190 jobs supported by the spending of staff employed within the sector. Around 42% of employment was supported by spending from employees in salmon production, 500 jobs. 80 jobs were supported by other finfish and shellfish production.

Source: BIGGAR Economics Analysis