The Impact of Welfare Reform in Scotland - Tracking Study

Appendix 5 Labour Market Context

It is important to set this research in the context of a constrained labour market. In 2008 the UK economy entered a period of economic recession after nearly 16 years of growth in Gross Domestic Product (Campos et al., 2011). As a result, the labour market contracted and employment fell; relative to previous recessions, this fall in employment was due less to redundancies and more to recruitment freezes, which were particularly concentrated amongst those under 25 (Oxford Economics, 2010).

Figure A5a shows the employment rate in Scotland and the UK since 2003. The impact of the recession on employment can be clearly observed, with a substantial drop in employment rates after the second quarter of 2008. The drop, from a higher peak, was more pronounced in Scotland (4.7 percentage points over the following two years) than in the rest of the UK (2.8 percentage points over the same time period). Recovery began in the second quarter of 2010, although it has been uneven, particularly in Scotland, and employment in the last quarter of 2013 was still some way off pre-recession levels.

Figure A5a: Employment rate (16-64), Scotland and UK, 2003-2013

Figures are seasonally adjusted.
Source: Scottish Government (2014), Chart 1

The unemployment rate over this same period mirrors the changes in the employment rate (Figure A5b). As with the employment rate, the unemployment rate in Scotland showed a similar pattern to that of the UK, but with greater extremes, increasing by six percentage points after the second quarter of 2008, before falling unevenly since the latter part of 2010.

Figure A5b: Unemployment rate (16+), Scotland and UK, 2003-2013

Figures are seasonally adjusted.
Source: Scottish Government (2014), Chart 2

However, the overall increase in the employment rate during the economic downturn was not shared equally among all occupational groups. Figure A5c shows that, prior to the recession, those in elementary occupations were already considerably more likely to be unemployed than those in professional or managerial occupations. However, Figure A5c also shows that this gap widened as a result of the recession, with only a slight increase in unemployment among those in professional and managerial occupations, but a much larger increase among those in elementary occupations. Figure A5c also shows large increases in employment for those in the 'Process, plant and machine operatives' and 'Sales and customer services' occupational groups over the same time period.

Figure A5c: Unemployment by selected occupational groups, UK, 2003-2013

Figures are not seasonally adjusted.
Source: Office for National Statistics, Unemployment by Previous Work and Status, table UNEM02

The above figures on unemployment by occupation are not produced separately for Scotland, but figures on claimant count by occupation sought can provide some insight into the relative distribution of unemployment across the occupational classification. Figure A5d shows that those seeking elementary occupations were a falling proportion of the total Jobseeker's Allowance claimant count prior to the recession, but this proportion increased sharply towards the end of 2008, and remained high until the beginning of 2013. An even steeper increase was seen in the proportion of claimants seeking a sales or customer service role, from around a tenth at the beginning of 2008 to over two fifths by 2013. Conversely, the recession has had only a limited impact on the proportion of claimants seeking jobs in the 'Process, plant and machine operatives' group. The majority of those on benefits (including those not on JSA) are likely to be seeking lower skills jobs such as elementary or sales jobs where there is high competition.

Figure A5d: Proportion of claimants seeking selected types of occupation, Scotland, 2005-2014

Figures are not seasonally adjusted
Source: Claimant count data, via NOMIS

The larger numbers of claimants seeking elementary and sales and customer service roles is not reflected in a concomitantly larger amount of vacancies in these occupations. Table A5a combines two data sources to illustrate the number of JSA claimants seeking each type of job vacancy. The number of vacancies is presented using data from the 2013 Employer Skills Survey, conducted by the UK Commission for Employment and Skills. Data on the average number of claimants seeking each type of occupation in 2013 is drawn from claimant count data (an average is taken across all months to give an average for the calendar year 2013).

Table A5a shows that, for some occupations, the number of claimants is roughly equal to the number of vacancies (i.e. 'Caring, leisure and other services staff'), or even lower in the case of professional occupations. However, there are over five times as many claimants seeking an elementary position as there are vacancies, and almost seven times as many claimants seeking a job in sales or customer service as there are vacancies of this type. Thus, not only do those seeking these two types of occupation comprise the majority of JSA claimants, but they also face the most competition.

Table A5a: Vacancies and JSA claimants, by occupation type, Scotland, 2013

Sources: UK Commission's Employer Skills Survey 2013, Underlying data tables, Table T54; Claimant count - occupation, accessed via NOMIS

It is also well documented that certain groups may face particular barriers in the labour market as a result of the recession and more generally. For example, young people in particular have been negatively affected by decreasing employment as a result of the recession (Oxford Economics, 2010). Young people, especially those from disadvantaged backgrounds, may experience a range of barriers including a lack of experience and qualifications (Hollywood et al., 2012). Both disabled people and those with caring responsibilities (especially lone parents) face significant inequalities together with high economic inactivity rates e.g. lack of qualifications, potential discrimination from employers, low self-belief, lack of financial incentives, lack of policy integration, joined up thinking in service provision, and difficulties finding sustainable employment (McQuaid et al., 2013). Others, such as people from ethnic minority communities may also face a range of barriers (Scottish Government Social Research, 2010; Sosenko et al., 2013).

The participants interviewed were spread across rural, urban and city areas of Scotland and so each will be differently affected by their specific local labour market conditions. Hence opportunities and competition for relevant jobs will differ to some degree for each participant.