DWF comments on latest Scottish labour market statistics

Ann Frances Cooney, employment expert and partner at DWF, has commented on the latest labour market figures in Scotland. I have placed the commentary below and attached an image of Ann Frances for your use.

Ann Frances Cooney says: “The latest figures signal a change in trajectory for Scotland’s labour market over the past year, with conditions becoming more challenging overall.  The estimates for February to April 2026 indicate that over the year, the unemployment and economic inactivity rates increased while the employment rate decreased.

The headline figures for the period show the employment rate in Scotland was estimated at 74.3%, down 0.7% over the year.  By way of comparison Scotland’s employment rate was below the UK rate of 75%.  The estimated unemployment rate in Scotland was 4.3%, up 0.1% over the year.  Scotland’s unemployment rate was below the UK rate of 4.9%.  Taken together, this points to a mixed position relative to the UK, with stronger unemployment outcomes offset by some slippage in overall employment levels.

The early seasonally adjusted estimates for May 2026 from HMRC Pay As You Earn Real Time Information indicate that median monthly pay for payrolled employees in Scotland was £2,669, an increase of 5.3% in normal terms compared with May 2025.  This reflects some continued resilience in pay growth, set against an environment where employers are still managing elevated cost pressures and adjusting to recent increases such as the National Living Wage.

The Employment Rights Act 2025 is now moving into its delivery phase, with April’s reforms beginning to take effect in day‑to‑day workplace practices and further changes expected later this year.  As employers work through the practical implications, many are reassessing how they structure their workforce and approach future hiring, particularly against a backdrop of higher employment costs and tighter regulatory expectations.  At the same time, strengthened statutory rights are likely to support increased trade union activity and engagement, meaning both unionised and non‑unionised employers should be alert to a more active and evolving employee relations landscape.  This comes at a time when inflation has remained steady at 2.8%, providing some stability in the cost outlook while underlying pressures continue to persist, and emerging questions around future political leadership may also shape employer sentiment as the policy direction continues to evolve.”