THE negative impact on wages and employment from the recent downturn in the North Sea oil and gas industry is spelt out in a new report today.
However, all is not doom and gloom for the Aberdeen economy as the study from the Institute for Fiscal Studies (IFS) confirms the area it is still outperforming other parts of Scotland.
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IFS researchers say that average monthly earnings in the North-east fell from 30% above the rest of the UK outside London in 2015 to just 14% above last year.
Meanwhile, the employment rate in the North-east dropped by around 3% between 2013-15 and 2020-22.
But the IFS points out that the employment rate of 75% in the North-east in 2020-22 remained above the Scottish average – and substantially higher than in the west central region surrounding Glasgow (71%).
In addition, average monthly earnings in the North-east remained well above the level in the rest of Scotland – and most of the other parts of the UK.
The IFS says that employment and earnings in Scotland grew substantially faster than in the rest of the UK during the 2000s, but since 2014 Scotland has seen slower growth.
In 2014 the employment rate in Scotland was 1% higher (74% v 73%), but by 2021 it was around 1% lower (74.7% v 75.5%).
And, while average monthly earnings rose by almost 5% in real terms between 2015 and 2022 in the rest of the UK outside of London, they grew by just 1.5% in Scotland.
David Phillips, an associate director at the IFS and one of the authors of the report, said: “The complex regional patterns and trends in employment and earnings pose something of a policy conundrum for the Scottish Government, especially given the limited funding it has available.
“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 outsize contribution their earnings make to supporting local economies and devolved tax revenues.
“On the other hand, it remains the case that the areas with lowest earnings and employment are concentrated in Central and South-western Scotland, despite improvements in performance in some of the more-deprived areas around Glasgow in recent years.
“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.”
