COVID-19 Labour Market Insights - May 2022 - Skills Development Scotland

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COVID-19 Labour Market Insights - May 2022 - Skills Development Scotland
COVID-19 Labour Market Insights
May 2022
Contents
    Introduction
                   Introduction                           3
                   Overview                               3

    Scotland’s Economy
                 Gross Domestic Product                   4
                 Growth Forecasts                         4

    Headline Labour Market Indicators
                Employment Rate                           5
                Economic Inactivity                       5
                Unemployment                              6
                Youth Unemployment                        6
                Unemployment benefits                     7
                Job postings                              8
                Job postings by Local Authority           9

    Spotlights
                   Labour Shortages                       10
                   Spotlight on Retail                    11
                   Inflation and the cost of the living   12

    SDS Response
               Support for Individuals and businesses     12
COVID-19 Labour Market Insights                                                                                                            3

Introduction             Summary of key points
This COVID-19 Labour     Scotland’s economy and labour market face                   even contraction (in March 2022 UK GDP contracted
Market Insights report   significant headwinds such as inflationary                  by 0.1 pp) alongside rising inflation. Real incomes are
                         pressures, worker shortages, supply chain                   set to fall by 3.25 per cent this year, making 2022 the
provides evidence on
                         challenges and the cost-of-living crisis.                   weakest year on record for income growth. This comes
the economy and
                         Economic growth is forecast to be subdued and               at a time when 4 in 10 households in the UK report
labour market focusing
                         output may contract over the mid-term.                      difficulty paying energy bills, with a similar proportion
on Scotland’s
                                                                                     buying less food.
businesses, people,      Labour shortages remain a dominant issue for
sectors, and regions.    Scottish businesses                                         Cost burdens spiked in April for Scottish firms
It summarises the key    Scotland’s employment rate increased by 1.4 pp to           with businesses reporting accelerating
challenges alongside     75.6 per cent, however, the number of people in             inflationary pressures
the ongoing response     employment remained below pre-pandemic levels. The          Businesses reported a further increase in output prices
from SDS.                supply of people in the labour market has been              in response to record-high input prices such as fuel,
                         impacted by high levels of economic inactivity, Brexit      material, energy and staff costs. The rate of input and
                         and demographic challenges, with labour shortages           output price inflation in Scotland outpaced the rest of
                         remaining a dominant issue for businesses in Scotland.      the UK. Insight suggests we could see Scottish firms
                         According to the RBS report on jobs, May 2022 marked        continue to offset the squeeze on their margins with
                         the fifteenth consecutive decrease in the availability of   higher prices for consumers, which may exacerbate the
                         workers, with businesses attributing this to a              cost-of-living crisis.
                         reluctance among workers to switch roles and
                         challenges in finding suitably skilled candidates.          Whilst businesses optimism remains high in
                         Demand for workers also remains exceptionally high,         Scotland, there is growing concern around
                         with just under 69,900 job postings in April 2022 (82       inflation and growth of the economy
                         per cent higher than April 2021).                           Business optimism remained high but dipped in April as
                                                                                     a result of concerns around rising inflation. Scottish
                         The cost-of-living crisis is set to continue in the         business confidence was lower than that of the UK
                         medium term for Scotland and the UK                         overall. Whilst Scotland’s private sector business
                         Inflation reached 9 per cent in May 2022 and is             activity increased for the fourteenth consecutive month
                         projected to peak at 10.4 per cent towards the end of       in April 2022, indicators suggest Scotland’s economy is
                         this year, marking the highest rate seen since 1982.        slowing down, with the UK facing possible contraction
                         The global economy faces turbulent times, with factors      in the remainder of the year.
                         such as supply chain challenges, and the conflict in
                         Ukraine impacting global economic forecasts.
                         Economic commentators report that the UK faces a
                         period of ‘stagflation’ with slow economic growth or
COVID-19 Labour Market Insights                                                                                                                                         4

Scotland’s Economy - Gross Domestic Product (GDP)
Scotland’s economy was hard hit by COVID-19, leading to                    growth in consumer-facing and other services.2
the largest annual fall of Scottish GDP on record. Annual                  Output in the services sector, which accounts for three-quarters of
GDP is estimated to have grown 7.4% in 2021 after a fall of 10%            the economy increased by 0.7% in February, with output in the
in 2020.                                                                   consumer-facing services increasing by 2.1% in total.
                                                                           Output in the production sector increased by 0.3% in February,
Quarterly GDP estimates                                                    whereas output in construction is estimated to have fallen 0.1%
Scotland’s GDP in Q4 (October to December 2021) is estimated to            over the same period.
have grown by 1.6% compared to the previous quarter, revised
                                                                                  UK GDP fell by 0.1% in March 2022 (revised down
up from the previous estimate of 1.3% in March 2022.
                                                                                   from 0.1% growth in February) and is now 1.2%
Monthly GDP estimates                                                                        above pre-pandemic levels.3
Output increased by 0.4% in February 2022, now above the pre-                    Scotland’s March GDP estimate will be released on 1st
pandemic level of February 2020 by 1.3%, driven by strong                                            June 2022.

Scotland’s Economy – Growth Forecasts
Whilst Scotland’s GDP is now 1.3% above pre-pandemic levels,               Scotland’s growth forecasts have also been downgraded, in March
economic commentators report that the UK is facing a period of             2022 the Fraser of Allander Institute projected 3.5 per cent GDP
‘stagflation’ with slow economic growth or even contraction                growth for Scotland (down from 4.7% forecast in December 2021)
predicted along with rising inflation.                                     with moderate forecasts projected for 2023 and 2024. The Office
                                                                           of Budget Responsibility also forecast growth of 3.8% in the mid-
The Bank of England’s Monetary Policy Committee May report                 term.5
expects UK GDP growth to slow sharply over the year reflecting             The Scottish Fiscal Commission are due to publish forecasts for
the impact of the sharp rise in global energy and goods prices on          Scotland’s GDP at the end of May 2022.
household incomes and businesses’ profit margins. In an attempt
to curb inflation, the Bank of England raised interest rates in early      GDP growth forecasts
May to 1%, its highest level since the recession in 2009.4
                                                                           GDP %                             2022-23             2023-24             2024-25
                                                                           Increase
The Bank of England estimate that quarterly UK GDP growth was
0.9% in 2022 Q1. The economy is expected to slow with UK GDP               FAI (Scotland)                    3.5                 1.5                 1.4
projected to fall in 2022 Q4. Growth is expected to be broadly flat        OBR (UK)                          3.8                 1.8                 2.1
in 2023.

1 Scottish Government. First Estimate of GDP: 2021 Q4 (March 2022).          4 Bank   of England. Monetary Policy Committee Report (May 2022)
2 Scottish Government. GDP Monthly Estimate: February 2022 (April 2022).     5 Office  of Budget Responsibility. March 2022 Economic and Fiscal Outlook (March 2022).
3 ONS. GDP Monthly Estimate, UK: March 2022 (May 2022).
COVID-19 Labour Market Insights                                                                                                                     5

Employment Rate (16-64)1                                                        Economic Inactivity (16-64) 1
           The 16-64 Scottish employment rate has                                       The 16-64 Scottish economic inactivity rate has
           increased sharply.                                                           decreased slightly but remains high.
  • The employment rate in Scotland increased by 1.4 pp to                      • The economic inactivity rate in Scotland decreased by 0.7
    75.6% (53,000 people) in the period covering Jan to                           pp to 21.9% (-24,000 people) in the period covering Jan
    Mar 2022, compared to the previous quarter.                                   to Mar 2022, compared to the previous quarter.
  • The employment rate remains higher than at the same                         • The economic inactivity rate is now lower than at the same
    point in 2021, having increased by 1.3 pp (42,000                             point in 2021, having decreased by 0.3 pp (-12,000
    people).*                                                                     people).

                            Employment Rate                                                        Economic Inactivity Rate
                                                                                                          Scotland          UK
                                  Scotland           UK       75.5% 75.7%
                                                                                                          22.2%                   22.6%
                                    74.7%
                                                                       75.6%                                                               21.9%

                                    74.3%                       74.1%                                                                      21.4%
                                                                                                          21.4%                   21.2%

 Apr-Jun                     Jan – Apr-Jun
            Jul-Sep Oct-Dec Jan-Mar                           Oct – JanJan
                                                     Jul-Sep Oct-Dec
                                                                           –
                                                                        - Mar                             Jan – Apr-Jun Jul-Sep Oct-Dec
                                                                                 Apr-Jun Jul-Sep Oct-Dec Jan-Mar                 Oct – Jan Jan
                                                                                                                                           - Mar–
  2020       2020    2020    Mar
                             2021   2021              2021    Dec
                                                              2021     Mar
                                                                      2022                                Mar                    Dec
                                                                                  2020    2020    2020     2021  2021    2021    2021      Mar
                                                                                                                                         2022
                             2021                             2021     2022                               2021                   2021      2022

               Employment Rate: Longer-term trend                                       Economic Inactivity Rate: Longer-term trend

                                                             76.1% 75.7%        23.2%                 22.6%
 74.5%                                                                                                                           22.0%      21.9%
                                71.8%
                                                             75.4%     75.6%                         22.3%
 72.5%                                                                          21.5%                                                       21.4%
                                  71.2%                                                                                             20.8%

2007            2010            2013          2016          2019         2022   2007        2010        2013         2016        2019        2022

1 ONS. Labour Force Survey (17th May 2022).
*Figures may not sum due to rounding.
COVID-19 Labour Market Insights                                                                                                                                       6

Unemployment (16+)1                                                                       Youth Unemployment (16-24)1,2
             The 16+ Scottish unemployment rate has                                               The 16-24 Scottish youth unemployment rate has
             decreased further, remaining historically low.                                       decreased.

   • The unemployment rate in Scotland decreased by 0.9 pp                                • The youth unemployment rate in Scotland decreased by 2.1
     to 3.2% (-24,000 people) in the period covering Jan to                                 pp to 5.6% in the period covering Jan to Mar 2022,
     Mar 2022, compared to the previous quarter.                                            compared to the same point in 2021.

   • The unemployment rate is lower than at the same point                                • This equates to a decrease of 6,000 unemployed young
     in 2021, having decreased by 1.2 pp (-33,000 people).                                  people in Jan – Mar 2022 compared to the same period in the
                                                                                            previous year.

                              Unemployment Rate                                                              Youth Unemployment Rate
                                     Scotland            UK                                                               Scotland          UK
                                          4.9%                                                    12.8%
                                                                   4.1%
                                         4.4%                                      3.7%                                                                    9.7%
                                                                  4.1%             3.2%
                                                                                                   7.8%
                                                                                                                                                           5.6%

   Apr-Jun Jul-Sep Oct-Dec Jan-Mar                 Oct – Jan Jan
                            Jan – Apr-Jun Jul-Sep Oct-Dec    - Mar–
                            Mar                    Dec                                      Jan – Mar
                                                                                            Jan-Mar 2021 Apr-Jun 2021 Jul-Sep 2021 Oct-Dec 2021      Jan- Mar
                                                                                                                                                    Jan   – Mar
    2020    2020    2020     2021  2021    2021    2021      Mar
                                                           2022
                            2021                   2021                                     2021                                                     2022
                                                                                                                                                      2022
                                                             2022

                Unemployment Rate: Longer-term trend                                             Youth Unemployment Rate: Longer-term trend

                                                                                                                     20.4%
                                     7.8%
 5.5%                                                                   3.9%              14.0%                                                  10.3%         9.7%
                                    7.2%                                           3.7%                             16.5%
  5.0%
                                                                        3.3% 3.2%          11.7%
                                                                                                                                                        6.6%
                                                                                                                                                               5.6%
2007              2010            2013            2016           2019              2022   2007        2010         2013              2016        2019          2022

1 ONS,   Labour Force Survey, (17th May 2022).
2Please   note: Youth Unemployment should only be compared to the previous year.
COVID-19 Labour Market Insights                                                                                                                                                                                        7

 Unemployment Benefits – Trends 1,2
People claiming Universal Credit (March provisional data)
                                                                                                     483,305                   451,187 The number of people claiming Universal Credit in Scotland
                                                     373,526
                                                                                                                                                         increased from around 373,500 in April 2020 to just under
                                         264,117                                                                                                         451,200 in April 2022 (21%).1 The number of people
 152,087                                                                                                                                                 claiming Universal Credit increased by 5,300 (1%) between
                                                                                                                                                         March 2022 and April 2022.
                                                                                                                                                         Changes were made to the eligibility criteria for Universal
               April

                                                       April

                                                                                                   April

                                                                                                                                               April
   January

                                           January

                                                                                        January

                                                                                                                                  January
                        July

                                                                 July

                                                                                                             July
                               October

                                                                         October

                                                                                                                     October
                                                                                                                                                         Credit during the COVID-19 pandemic which resulted in a
                                                                                                                                                         marked increase in the number of claimants over this
                                                                                                                                                         period.3
                       2019                                     2020                                        2021                       2022

Claimant Count
                                                       185,659                                             203,943
                                                                                                                                                         The seasonally adjusted claimant count declined by around
                                         111,057
                                                                                                                                 124,638 40% from a high of 222,300 in August 2020 to 124,600 in
100,616
                                                                                                                                                         April 2022. Most of this change has occurred over the past
                                                                                                                                                         year, including a decrease of 2,000 or 2% between March
                                                                                                                                                         2022 and April 2022.
               April

                                                        April

                                                                                                    April

                                                                                                                                                 April
   January

                                           January

                                                                                         January

                                                                                                                                     January
                        July

                                                                  July

                                                                                                              July
                               October

                                                                          October

                                                                                                                       October

                       2019                                     2020                                        2021                            2022

 Redundancies 4
                                    redundancies in the three months to                                                                                  The number of people who were made redundant in
             6,000**                                                                                                                                     Scotland decreased to 6,000 in the three months to March
                                    March 2022 in Scotland
                                                                                                                                                         2022 from 10,000 in the previous quarter (-34%) and is
              2.7**                 per 1,000 people (2.5 per 1,000 in the UK)                                                                           28% lower than the three months to March 2021.
    **Estimates           are based on a small sample and should be used with
    caution.
1 Department       for Work and Pensions (May 2022).                                3 Department for Work and Pensions, Universal Credit:
2 ONS,       Claimant Count (May 2022). *Experimental                               background information and statistics, (February 2022).
statistics.                                                                         4 ONS, Labour Force Survey (May 2022).
COVID-19 Labour Market Insights                                                                                                                                                8

 Job Postings in Scotland1
 Job postings in Scotland remain exceptionally high                                                                         Job Postings
 In April 2022, the number of job postings was 82% higher than pre-
 pandemic levels (March 2020). There was a marked increase from the                                                84,359
                                                                                                                                                                 75,729
 start of 2022 with a month-on-month acceleration of job postings to                                                     69,864
 March. Scotland has seen a higher percentage increase in job postings                            60,411

 over the past year (88%) than the UK overall (40%).                                                                                                50,737                47,340
                                                                                                 41,932         38,325 37,056                                   38,740
 April 2022 saw the first dip in postings so far this year (-17%                                33,037 32,783                                       29,183
                                                                                                                        27,031
 or 14,495 postings). It is too early to tell if this recent decrease in job                                  32,943
                                                                                                                                                                          25,957
                                                                                                  28,316
 postings signals cooling demand. This also follows a trend of seasonal                                                                             27,240      28,507
                                                                                                                                                                          24,213
 decline in job postings across the months of March and April.
                                                                                                                       12,423
 Across 28 of 32 local authorities in Scotland, job postings decreased in
 April 2022 compared to the previous month.                                                        Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
                                                                                                                        2019        2020          2021          2022
 The CIPD2 found that employers are increasingly focusing on upskilling
 existing staff (39%) and advertising more jobs as flexible (38%) to                              Job Postings in Scotland, April 2022
 tackle recruitment challenges.
                                                                                                  Permanent and Temporary*
 The highest demand in April 2022 is for vacancies in                                                 9,688,
 occupations such as:                                                                                  19%                                               Permanent
   • Care workers and home carers;
   • Other administrative occupations;                                                                                                                   Temporary
   • Nurses;                                                                                                                         42,674,
   • Customer service occupations n.e.c.; and                                                                                         81%
   • Programmers and software development professionals.                                          Full Time and Part Time*

 For the first time, there were more vacancies than unemployed                                            6,344,
 people in the labour market in March 2022.3 The ONS produce a                                             12%                                               Full Time
 ratio of the number of unemployed people to vacancies each month,
 in March 2022, this decreased to a historic low of 0.98 unemployed                                                                                          Part Time
 people to every vacancy. While this measure provides an indication of                                                                44,937,
 the scale of the labour shortage challenge, it does not include the pool                                                              88%
 of people who are employed and move jobs.
 1 Burning Glass Technologies (May 2022). Burning Glass   3 ONS.   Number of unemployed people per vacancy. (April *Please note, the total number of temporary and permanent job
 gathers insights from online job postings.               2022)                                                    postings and full time and part-time may not sum to Scotland’s
 2 CIPD Labour Market Outlook: Spring 2022 (May 2022)                                                              total as some postings do not specify this information.
COVID-19 Labour Market Insights                                                                                                                                       9

Job Postings by Local Authority in Scotland1
Job postings across almost all local                     decrease between March and April 2022          Job postings by Local Authority
authorities remain considerably                          (39% or 352 job postings). Other local
                                                                                                                  April 2022
higher than twelve months ago,                           authorities with large percentage
reflecting the increase in demand                        decreases
for workers as businesses respond
to an uptick in activity following the                   were; North Lanarkshire (32% or 767 job
pandemic.                                                postings); Glasgow City (30% or 7,411                        128               17,137
                                                                                                                      Job Postings (April 2022)
                                                         job postings); and City of Edinburgh
Job postings April 2021 – April                          (30% or 5,297 job postings).
2022:
                                                         The fall of postings in Orkney was                    Highland
The local authorities with the highest                   concentrated in Nursing and Midwifery
                                                                                                          (4,526 job postings)
percentage increase in job postings were                 Professionals (-60), and Caring Personal
Orkney Islands (427% or 453 jobs);                       Services (-31). Orkney Islands is sensitive                                                   Aberdeen City
Aberdeen City (222% or 4,945 jobs); and                  to changes due to a lower number of job                                                    (7,176 job postings)
East Renfrewshire (195% or 146 jobs).                    postings in relation to larger local
In Orkney, this increase was largest in                  authorities.
postings for Information Technology and
Telecommunication Professionals (+43),                   Local authorities experiencing a
Customer Service Occupations (+19),                      continued rise in job postings were
and Nursing and Midwifery Professionals                  Aberdeen City (51% or 2,433 job
(+14).                                                   postings), Inverclyde (6% or 27 job
Only North Lanarkshire and                               postings), Argyll and Bute (4% or 30 job
Clackmannanshire saw a decrease in job                   postings), and Moray (3% or 20 job
postings in April 2022 compared to April                 postings). In Aberdeen City, the largest
2021 (-20% or 414 jobs, and -3% or 224                   rise in postings was concentrated in
jobs respectively).                                      Teaching and Education Professionals
                                                         (+164), and Other Administrative
Job postings March 2022 – April                          Occupations (+151).
2022:
                                                                                                           Glasgow City
                                                                                                       (17,137 job postings)                        City of Edinburgh
Despite having the largest percentage                                                                                                             (12,339 job postings)
increase in job postings over the year,                                                                                        Interactive Map
Orkney Islands also saw the sharpest
1 Burning Glass Technologies (May 2022). Burning Glass
gathers insights from online job postings.
COVID-19 Labour Market Insights                                                                                                                              10

Labour Shortages
Labour shortages remain a dominant                                            but can work from home in Scotland.
issue for Scottish businesses, reported                                       Likewise, some Scottish businesses are
in almost all sectors.                                                        recruiting IT staff from overseas and
                                                                              offering increased wages.3
In early to mid-April, 35.2% of businesses
surveyed experienced staff shortages.1 Of                                     In April, the Scottish Enterprise Business
those, 69.6% reported staff working                                           Trends Survey echoed staff shortage and                     2 in 3
increased hours with 39.1% of businesses                                      recruitment challenges across sectors, for                     firms in
unable to meet demand.                                                        example, tourism and hospitality. These                accommodation and
                                                                              sectors face increased demand moving into
                                                                                                                                    food services reported
According to a Fraser of Allander institute                                   the summer season.3 The survey suggests
survey, over half of Scottish businesses                                      the sector's ability to meet this demand                  difficulty filling
experienced recruitment difficulties with                                     could be impacted by the lack of workers, as                vacancies.2
84% stating difficulty filling roles.2 When                                   businesses may need to adapt by
asked why recruitment was difficult,                                          temporarily closing or reducing opening
businesses stated that candidates did not                                     hours.
have the required skills or experience, there
was a lack of applications overall and in                                     Employment growth in Scotland was firmly
some cases, candidate wage expectations                                       below the UK average in April, according to
were higher than businesses could offer.                                      the RBS Purchasing Manager’s Index (PMI).4
                                                                              Compared with the other 11 UK areas,
In addition to recruitment challenges, one in
four businesses reported challenges
                                                                              employment growth in Scotland
                                                                              outperformed only Northern Ireland and the
                                                                                                                                         35.2%
retaining their existing staffing levels. The                                 North East of England, highlighting the                  of businesses in
increase in remote jobs in the labour market                                  challenge around the supply of workers in               Scotland reported
presents additional challenges in retaining                                   Scotland.                                               worker shortages
existing staff. Businesses have reported a                                                                                                 in April.1
loss of IT staff, who are being offered
higher wages by London-based employers
1BICS Wave 55 - April 2022 (May 2022)                               3   Scottish Enterprise. Business Trends Survey (April 2022).
2Fraser of Allander Institute. Scottish Business Monitor 2022 Q1.   4   RBS PMI Report (May 2022)
(May 2022).
COVID-19 Labour Market Insights                                                                                                                                           11

    Spotlight on Retail
    Rising prices have led UK retail sales to fall              Their research found that the UK retail
    sharply by 1.4% in March for the second                     sector faced several challenges including;
    consecutive month.1 The fall in retail sales was            reduced demand, increased competition from
    followed by the lowest consumer confidence                  the leisure sector, falling online retail sales, as
    index score recorded since records began in                 well as a continuing decline in the volume of
    1974. Research company GFK recorded a drop                  food sales.                                                                    Scottish Consumer
    of 7 pp in consumer confidence in April                                                                                                   Sentiment Indicator
    reflecting soaring inflation amid the cost-of-              SDS insight shows labour shortages,
                                                                                                                                              recorded its second-
    living crisis. The index fell a further 2 pp in May         recruitment and retention continue to be key
                                                                                                                                              largest fall in March
    to reach the lowest level of consumer                       challenges for the retail sector in Scotland.5                                         2022,
    confidence recorded by the research company                 CIPD survey data showed that common                                         with the largest fall seen at
    in 50 years.2                                               responses among retail employers to labour                                     the beginning of the
                                                                shortages were upskilling (38%), raising wages                                pandemic. Overall, the
    At a Scottish level, the Scottish Consumer                  (32%) and hiring more apprentices (24%).6                                  indicator dropped 4.4 points
    Sentiment Indicator recorded its second-largest                                                                                        in 2022 Q1 compared to the
    fall in March, decreasing by 4.4 points to 0.6 in           The FAI Scottish Business Monitor reports that                                  previous quarter.3
    2022 Q1, when compared to 2021 Q4.3                         the pressure of rising inflation continues to be
                                                                a challenge for Scottish firms in the year
    Whilst city centre footfall4 remains below pre-             ahead. The FAI report found that 48% of
    pandemic levels with a shift to online shopping,            Scottish businesses within the wholesale and
    consumer expenditure has been a key driver of               retail sector were expecting to reduce
    the economic recovery in the last 12 months                 operations due to rising energy prices, the
    and typically accounts for two-thirds of                    highest share of firms expecting to reduce                                            75%
    economic activity. However, with inflation at a             operations across all sectors surveyed.7                                       of retail and wholesale
    40-year high, and rising, household incomes                 Furthermore, the Scottish Chambers of                                          firms surveyed by the
    are facing a significant impact.                            Commerce found that in Q1 of 2022, retail and                                   Scottish Chambers of
    Deloitte also reported a historic drop in their             wholesale firms in Scotland reported negative                                      Commerce were
    measure of consumer confidence in levels of                 balances for all sales and investment trends,                                 concerned over inflation,
    disposable income (-23 pp), the lowest level                for the third successive quarter.8                                             a 5-year survey high.8
    recorded by their tracker since 2011.4
1 Financial Times – ‘Great cancellation…’ (April 2022)             5 The Deloitte Consumer Tracker Q1 2022 (May 2022)
2 GfK Consumer Confidence Survey (May 2022)                        6 SDS Sector Manager Insight, May 2022.
3 Scottish Consumer Sentiment Indicator Q1 2022 (May 2022)         7 CIPD Report Addressing Skills and Labour Shortages post-Brexit, (October 2021)
4 Centre for Cities. High Streets Recovery Tracker (May 2022)      8 Fraser of Allander Institute. Scottish Business Monitor 2022 Q1. (May 2022).
                                                                   9 Scottish Chambers of Commerce Quarterly Economic Indicator - Q1 (May 2022)
COVID-19 Labour Market Insights                                                                                                                                                                         12

    Inflation and cost of living: the impact on people and businesses
    Rising inflation is escalating the cost-of-living crisis in Scotland and the rest of the                                                                            Cost of living
    UK. Businesses are feeling the impact of price rises whilst households struggle with
    rising food and energy bills.
                                                                                                                                                                             9.0%
    The Consumer Prices Index (CPI) rose to 9.0% in                          main reason.                                                                         CPI inflation: April 20221
    the 12 months to April 2022, up from 7.0% the
                                                                             Research by the Food Foundation found that the                                     Inflation is forecast to peak
    previous month due to a significant increase in
                                                                             number of households cutting back on food                                                      at over
    the energy price cap in April.1 The Bank of
                                                                             increased by 57% in April from January 2022.6
    England Monetary Policy Committee’s May report                                                                                                                            10%
                                                                             Office of National Statistics reported that after                                             in Q4 20222
    expects inflation to peak at over 10% in Q4 2022
                                                                             the energy cap increase in April, 4 in 10
    due to a planned rise in the energy price cap in
                                                                             households in the UK were finding it difficult to                                     Business Outlook
    October. This rate of inflation would be the
                                                                             pay for gas and electricity.7 Fuel poverty already
    highest seen since 1982.2
                                                                             affects 1 in 4 in Scotland8 and Advice Direct                                                   1 in 3
    Rising inflation will hit poorer people in society                       Scotland reports two-thirds of Scottish people                                    Businesses expect to reduce
    the hardest. The National Institute of Economic                          surveyed were now worried about affording their                                    operations this year due to
    and Social Research predict that 1.5million                              energy bills.9                                                                   an increase in energy prices,
                                                                                                                                                              (up from 1 in 5 businesses)11
    households in the UK will now face food and
                                                                             Whilst business activity in Scotland’s private
    energy bills greater than their disposable income.
                                                                             sector increased at the fastest rate since May                                                  28pts
    They also found a total of 11.3 million                                                                                                                   Scottish Business Confidence
                                                                             2021, there was a further increase in output
    households were already struggling to make ends                                                                                                                    increased 12
                                                                             prices in response to record-high input prices
    meet.3                                                                                                                                                          (up from 11 pts)
                                                                             such as fuel, material, energy, and staff costs.10
    April’s inflation figures showed price rises at the                      The rate of input and output price inflation was
    fastest pace in over 40 years. Over the past year,                       stronger in Scotland than that recorded for the                                                 88%
    the price of groceries increased 5.9%, the                               UK as a whole. This also means increased cost of                                  of firms expect the prices of
    biggest spike in over a decade.4 Around early                            goods and services for Scottish consumers as                                      their goods and services to
    May, 88% of adults in the UK reported their                              businesses attempt to offset the squeeze on their                                 increase more than normal
                                                                                                                                                                     in the year ahead
    living costs had risen over the past month.5 Of                          margins.                                                                                 (up from 80%)11
    those, 92% reported a rise in food costs as the
1 ONS, Consumer Price Inflation, UK: April 2022 (May 2022).      6 Food Foundation. Food Insecurity Tracker. (May 2022)              11 Fraser of Allander Institute. Scottish Business Monitor Q1 2022 (May
2 Bank of England. Monetary Policy Committee Report (May 2022)   7 Financial Times. ‘Four in 10 Britons struggling…’ (April 2022)    2022)
3 NIESR. Sailing Treacherous Seas. (May 2022)                    8 House of Commons. Fuel Poverty in the UK. May 2022                12 Llyod’s Bank. Business Barometer. (April 2022)
4 Financial Times. ‘Cabinet split on plan…’ (April 2022)         9 Advice Direct Scotland. Cost of Living Crisis. May 2022
5 ONS. UK Economy Latest. (May 2022)                             10 Royal Bank of Scotland. Scotland PMI Survey Report. (May 2022)
COVID-19 Labour Market Insights                                                                                                                         13

LMI resources

        Regional Skills Assessments                            Sectoral Skills Assessments                       The Data Matrix interactive
        provide a coherent evidence                            provide a high-level evidence                     tool, offers data at Local
        base to inform future                                  base to inform future                             Authority level, covering over
        investment in skills, built up                         investment in skills, built up                    80 indicators covering Skills
        from existing datasets and                             from existing datasets and                        Supply, Skills Demand and Skills
        supplemented with regional                             supplemented by industry                          Mismatches.
        insight.                                               insight.
Support for Individuals                                                         Support for Businesses
Career Information, Advice and Guidance                                         Find Business Support
We have enhanced our service offers to individuals whose employment,            Enterprise and Skills agencies aligned offer to Scottish
learning or training has been affected by the pandemic, both online and         businesses and
through our dedicated helpline.                                                 workers.
Employment and Redundancy support
                                                                                PACE
We’ve partnered with local councils to promote four areas of local support:
                                                                                Scottish Government’s PACE service can support employers and
Financial support; Employability; Wellbeing support; Medium to long-term
                                                                                employees facing redundancy.
support and advice.
                                                                                Adopt an Apprentice
Green Jobs Workforce Academy
                                                                                Provides a £2,000 grant (£5,000 in the Oil & Gas sector) to support a
The Green Jobs Workforce Academy can help people take a greener
                                                                                redundant Modern or Graduate Apprentice to continue their
approach to their careers, from accessing training and learning new skills to
                                                                                apprenticeship.
finding a new job.
                                                                                Skills for Growth
National Transition Training Fund
                                                                                Advice for businesses on developing skills within teams or managing
Phase 2 of the National Transition Training Fund invests £20 million in a
                                                                                change – up to 2 days free consultancy.
series of sectoral projects offering upskilling and reskilling opportunities
focused on key and growth sectors.
                                                                                Digital Catalyst Fund
                                                                                Support for businesses and employees to fast-track advanced digital
My World of Work Job Hub
                                                                                technology skills.
Helping employers advertise opportunities through the SDS’s careers
website.
                                                                                Flexible Workforce Development Fund
                                                                                Administered by the Scottish Funding Council, apprenticeship Levy-
Online Learning Portal
                                                                                payers or SMEs can access up to £15,000 to create tailored training
Helping people develop their skills with free online courses from training
                                                                                programmes.
providers.
Contact us:
rsa@sds.co.uk
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