Author: Ian McConnell
SCOTLAND’S tourism sector is encountering “particular challenges” in recruiting staff, a key survey shows, with a falling number of migrants coming to the UK to work cited as a possible reason.
The latest quarterly economic survey produced by Scottish Chambers of Commerce, in conjunction with Strathclyde University’s Fraser of Allander Institute, shows 48% of firms north of the Border experiencing some difficulty when attempting to recruit.
Scottish Chambers observed such challenges were particularly pronounced in retail, tourism and construction, with all sectors reporting a sharp rise in recruitment difficulties compared with the previous quarter. Figures from the Office for National Statistics have shown a plunge in net immigration of people from other European Union countries to the UK since the Brexit vote in June 2016.
Scottish Chambers, publishing its survey today, says: “It’s possible that some of the employment issues in tourism are driven by the falling number of migrants coming to the UK seeking work, with migrants historically forming a significant proportion of the overall tourism labour market.”
Professor Graeme Roy, director of the Fraser of Allander Institute, highlighted the fact that Brexit-related uncertainty continued to hamper growth in Scotland.
Growth in the UK as a whole has been dragged down by uncertainty around Brexit.
Mr Roy said: “Uncertainty about the terms of the UK exit from the EU continues to make business planning and investment decisions difficult, and acts as a general headwind on growth.”
He emphasised this lack of clarity about the exit terms made it “difficult for businesses to develop the necessary contingency plans”.
However, he added that the outlook for the Scottish economy was “still one of cautious optimism”, citing Fraser of Allander’s forecasts of 1.2% growth this year and 1.3% expansion in 2019. The survey signals solid growth in sales revenue across the Scottish construction, manufacturing, tourism, retail and wholesale, and financial and business services sectors in the second quarter
Mr Roy declared: “We expect, reinforced by the findings of this survey, that the Scottish economy will pick up through 2018 and record faster growth than 2017.”
The Scottish economy, hit hard by the impact of the oil and gas sector downturn in recent years, grew by only 0.8% last year.
Mr Roy cited the survey’s findings that levels of investment had risen across most of the Scottish economy in the last year, apart from retail, following an extended period of weakness.
He said: “While weak business investment has been a feature of Scotland’s economy in recent times, the latest survey results show that – with the exception of the retail sector – levels of investment have increased significantly over the last year.
“This is a welcome sign given the key role that investment plays in boosting productivity, and in turn improving long-term economic prosperity.”
Neil Amner, who chairs Scottish Chambers’ economic advisory group, said: “The results for the second quarter of 2018 continue to illustrate that, whilst Scottish firms may be cautious, the economy, particularly in financial and business services, is maintaining levels of resilience in an uncertain policy environment.”
On the recruitment front, he added: “Internationally, we must ensure that firms are able to seamlessly attract talent to the UK, especially for our developing sectors such as fintech (financial technology).”
He also declared that maintaining “the effective and efficient cross-border supply chains”, which enabled many Scottish manufacturing businesses to thrive, was also “key to ensuring future trade prosperity”.
Mr Roy notes the survey finding that firms across all sectors are reporting increasing concerns about rising costs for raw materials and overheads, and highlighted the impact of these price increases on profit margins.
Various surveys have highlighted upward pressure on the cost of imported materials for companies arising from sterling’s weakness.