Scotland’s low unemployment rate does not include more than 350,000 people who are involuntarily out of work but classed as economically inactive, according to the Centre for Cities.
The urban policy research unit's annual economic assessment argues that while official figures currently show Scotland’s jobseeker rate at 3.6%, the actual ‘hidden’ unemployment rate is more than four times higher at 14.9%.
This is because the official rate only includes those who are actively looking for employment and does not measure people who are neither in work, nor looking for a job, due to circumstances outside of their control.
Dundee has Scotland’s highest hidden unemployment rate at 16.3%, followed by Glasgow at 16.1% and Aberdeen at 15.6%.
Hidden unemployment in cities in Scotland:
| Cities |
Hidden unemployment rate, 2022 (%) |
Hidden unemployment ranking among UK urban areas (1=high) |
Official unemployment rate, 2022 (%) |
Official unemployment ranking among UK urban areas (1=high) |
| Dundee |
16.3 |
18/58 |
4.8 |
14/58 |
| Glasgow |
16.1 |
19/58 |
4.1 |
27/58 |
| Aberdeen |
15.6 |
21/58 |
3.9 |
31/58 |
| Edinburgh |
9.1 |
53/58 |
3.0 |
54/58 |
| Scotland average |
14.9 |
3.6 |
||
| UK average |
12.1 |
3.7 |
Source: ONS
Edinburgh, which is one of the UK’s best performing cities, has a much lower hidden rate at 9.1%, but this is still more than three times its official unemployment rate.
The hidden unemployment rate also clearly shows how the ongoing inactivity crisis is deepening regional divides across Britain, according to Centre for Cities.
While nearly every city and large town in Scotland has a rate higher than the national average, all but three of the UK's 13 urban areas with below average rates are in the south of England.
Overall, cities across Scotland are experiencing a job shortage: they account for 3.1% of all job postings, but 3.3% of all hidden unemployed in the UK.
The report stated that the UK Government should swiftly set out a levelling up agenda that tackles the reasons for why there is a lack of jobs and skills in urban areas outside the south east.
Centre for Cities chief executive Andrew Carter said: “Since the pandemic we have seen lots of headlines alluding to record-low numbers of job seekers but our Cities Outlook shows there is actually a jobs shortage, with a significant regional divide in involuntary inactivity rates.
“With Britain now likely to enter a recession, the UK Government must address its insufficient action on levelling up so far and act swiftly to create more opportunities that get people back into the labour force in Scotland.
“This will require setting out and implementing an agenda that delivers much-needed investments in skills and public services, while supporting job creation in struggling places.”
The involuntary inactivity rate is computed by discounting students, retirees and people looking after family from total inactivity figures. People in the involuntary inactivity category may leave the labour market and stop looking for a job if they are discouraged, believe there are no jobs - or no good jobs - available, or cannot work because of health issues.
Centre for Cities estimates around 350,700 people living in Scotland fall into this category.
Hidden unemployment is calculated by adding involuntary inactivity to official unemployment figures.
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