Labour Shortages in Scotland

CIPD Voice: Issue 33

This time last year, much of the labour market commentary focused on what impact the eventual withdrawal of the Job Retention Scheme would have on unemployment. There were fears that unemployment would spike and undermine a swift post-Covid recovery, although the CIPD’s research suggested the forecasts were too pessimistic. One year on, despite another pandemic wave, it is clear that these fears were largely unfounded. Instead, labour shortages rose to the top of employer and policy-maker agendas.

Scotland is no exception. Indeed, the first full Parliamentary session of 2022 on 11 January included a Scottish Government debate on labour shortages. This gave the CIPD an opportunity to highlight our research to MSPs. We were delighted to be mentioned in the Chamber in three separate contributions.

A Scottish or an industry lens?

When examining the challenges faced by organisations, as well as the policy levers that can contribute to solutions, it is important to look at matters through a Scottish as well as an industry lens. While it is true that there are sectors in which employment is more concentrated in Scotland (e.g. oil and gas or food and drink), by and large, the sectors experiencing labour shortages report the same issues with recruitment or retention no matter where they are based in the UK. 

We know this because as part of our Post-Brexit Labour Market report research we ran a series of focus groups in Scotland, Northern Ireland and the North of England, and found commonalities across sectors rather than geographies. That being said, some of the policy implications from our findings (e.g. around skills) depend on levers held by the devolved governments and administrations, but more on that later.

The six sectors we examined as part of this research were retail, transport and storage, food processing, hospitality, social care and construction. Unsurprisingly, all of them got a mention in the Scottish Parliament’s debate, with MSPs highlighting specific examples from their own constituencies throughout. MSPs from across the political spectrum agreed that the situation was serious. Where disagreements occurred was around the reasons for labour shortages. Both Brexit and Covid featured heavily in the contributions from SNP and Labour MSPs, while the Conservatives were more likely to highlight long-term skills gap issues.

CIPD research makes it clear that there is a range of factors at play. Labour shortages are certainly rising, but they are restricted to a narrower range of occupations and industries –  such as hospitality and transport and storage  –  than many suggest. The incidence of labour shortages in many low-paying sectors is no more prevalent than before the pandemic in the vast majority of cases. 

It is true, however, that both the pandemic and Brexit contributed to a drop in the stock of EU nationals in the labour market. With more restrictive immigration policy, it has become harder to replace this pool of talent, impacting on sectors with a higher proportion of migrant labour – hospitality, health and social care or food and drink being the three most cited examples in the Scottish Parliament. There are some encouraging signs of employers turning to upskilling or apprenticeships as a response to labour shortages, but matching domestic workforce expectations and preferences with vacancies is a continuing challenge.