There has been slower growth in employment and earning levels in Scotland since 2014 according to a new report from The Institute of Fiscal Studies (IFS).
Average monthly earnings grew by just 1.5% in Scotland between 2015 and 2022 compared with almost 5% in the rest of the UK (excluding London).
Meanwhile, employment is roughly 1% lower in Scotland than the rest of the UK at 74.7% versus 75.5%.
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The employment rate has dropped by 3% in these areas since 2013, while in the rest of Scotland it increased by 2%.
The report suggested this deterioration was driven by a decline in employment and earnings in the oil, gas and related sectors – high-paying sectors concentrated in these areas of Scotland.
Marek Zemanik, senior public policy adviser at the CIPD in Scotland and Northern Ireland, said the government needs to redirect oil and gas workers to the renewable energy industry.
Speaking to HR magazine, he said: “The IFS report provides further evidence that the sharp decline in the oil and gas sector in 2014 is something that continues to have an impact in the north east and Scotland as a whole.
“The transition to net zero provides an unprecedented opportunity to use Scotland’s strengths and ensure it leads to a boost in fair work.
“Our skills system in particular needs rapid change in order to ensure the offshore energy sector has the skills and expertise needed to continue to thrive.”
Oil and gas businesses who invest in training and upskilling will create higher job quality and a more agile business, according to Paul Devoy, chief executive of Investors in People.
Speaking to HR magazine, he said: “As industries go through cycles and declines, the key thing is that people have transferable skills so the businesses can evolve and employees are not dependent on one sector.
“Ensuring that you are investing in skills and training for employees is the right thing for both individuals and businesses.”
David Phillips, an associate director at the Institute for Fiscal Studies, said the complex regional patterns will create dilemmas for policy makers on how to use their limited funds.
He said: “‘On the one hand, it is likely to face political pressure to provide additional support to the North of Scotland to help make up for reductions in employment and earnings associated with the decline in the oil and gas industry.
“Moreover, it will want to keep the – often highly skilled and highly paid – workers from these sectors in Scotland, not least given the outsized contribution their earnings make to supporting local economies and devolved tax revenues.”
However, Phillips said central and south western Scotland still have the lowest earnings and also require funding.
He added: “This may suggest focusing general support for skills, employability and economic development on the traditionally struggling areas of Scotland, but providing targeted interventions to help workers in the oil, gas and other sectors to take up other opportunities in Scotland (for instance, related to the green energy transition).”
Zemanik said the government needs to focus on improving job quality.
One in 10 employees in Scotland (over 200,000 people) have said their work does not give them a stable or predictable income, according to a separate IPPR study.
He said: “The Scottish government needs to boost its support for apprenticeships and other vocational pathways, improve the lifelong learning offer and strive for a more flexible Scottish skills system that meets labour market demand.
“There are concerning gaps in fair work in Scotland – be it around job security, flexible working or employee voice.
“Investing in job quality should be a priority for businesses as an increasing amount of evidence shows that it can boost productivity, recruitment and retention, while supporting employees to live healthier and happier lives.”