Press Story

Scotland outperforms rest of UK in pay between 2009 – 2015.
However, pay in Scotland has fallen in real-terms by 12%.
If pay had risen in line with expectations, the Scottish economy would be £11.6bn larger than it is today.
New powers for the Scottish Parliament mean productivity, pay-growth and earnings will more directly impact to the Scottish Government’s budgets.

Pay rise for working Scotland would boost economy, thinktank says

Wages in Scotland fallen 12% in real-terms over the last five years, according to fresh figures released today (Wednesday 23 March) by leading cross-party thinktank IPPR Scotland.

The analysis - which compares official Office for Budget Responsibility (OBR) 2011 predictions with today’s reality - shows that while average pay for Scottish workers rose by 8 per cent between 2009 and 2015, this is offset by an increase in inflation of 20 per cent over the same period.

Scotland’s record over this time is better than the wage growth in the rest of the UK, due to factors including higher productivity and trade union membership, but IPPR Scotland’s analysis shows private sector workers’ wages have dropped 13 per cent, and public sector workers’ pay has dropped 10 per cent, compared to inflation.

With greater powers coming to the Scottish Parliament, including significant devolution over income tax on earnings, boosting wage growth in Scotland will be one of the key factors in determining the size of Scotland’s budget in the years to come.

Today’s report comes following IPPR Scotland’s report earlier this month, New powers, new Scotland?, which looked at the new powers coming to the Scottish Parliament and set six challenges for the next Scottish Government. One of those challenges to the next Scottish Government was how to boost wage growth in Scotland.

Russell Gunson, Director of IPPR Scotland, said:

“Our figures show how important wage growth is to the size of the economy in Scotland. “It’s clear that wages and productivity rates in Scotland have performed better than the rest of the UK in recent years which is very positive. However, pay in Scotland today is 12% lower in real terms than it was five years ago, showing more needs to be done.

“With increased powers coming to Scotland, more of the financial benefits from increased productivity and wages in Scotland will come straight to the Scottish Parliament. Therefore, the opportunity will be there to offset some of the cost of the investment required today to attempt to improve productivity, through greater tax revenue down the line.

“As we look ahead to May’s elections, boosting productivity and boosting wages in Scotland needs to be one of the key priorities for the next Scottish Parliament. This will require investment in skills, infrastructure and reform, and action from across the private and public sectors.”

Contact:

Ash Singleton, a.singleton@ippr.org, 07887 422 7890

Russell Gunson, r.gunson@ippr.org, 07766 904 332

Notes to editors:

The report, Scotland's missing pay growth, is available here: http://www.ippr.org/publications/scotlands-missing-pay-growth

Russell Gunson, director of IPPR Scotland, is available for interview.