Post-pandemic economic growth: UK labour markets

The Royal Society of Edinburgh (RSE), Scotland’s National Academy, in conjunction with the Young Academy of Scotland (YAS), welcomes the opportunity to respond to the UK Government’s Business, Energy and Industrial Strategy Committee’s Inquiry. We are well placed to offer supporting evidence to this consultation drawing on our varied expertise in economic and legal matters. Our working group formed to contribute to this inquiry included experts in public and labour market policy, the Scottish and UK economies and employment law.


The Covid-19 pandemic and Brexit have contributed to a labour and skills shortage across Scotland. However, some of the skill shortages in Scotland existed before the pandemic and Brexit, with these factors further exacerbating the issue.

There is no simple explanation for labour and skills shortages with the different sectors facing their own unique challenges alongside the impact of the Covid-19 pandemic and Brexit. Factors such as geographical location, graduates lacking in technical skills, and poor working
conditions have been cited as ongoing barriers to recruitment across certain sectors.

AI has the potential to help alleviate workforce shortages, particularly in low paid roles. However, this should be done in a way that creates new high-skilled, higher paid employment for people. This should not be done in a way that replaces people, opportunities for people to re-skill or up-skill. Obtaining meaningful employment should be at the heart of this process

In Scotland, there are two key issues with employment rights. One: workers’ rights are weaker when compared to the majority of other developed countries. Two: there are issues related to compliance and enforcement of workers’ rights, as evidenced by recent high-profile case with P&O ferries.

The RSE notes that the Taylor Review represented progress in workers’ rights with several of its recommendations. However, the RSE suggests that the Taylor Review is not without flaws, mainly due to its failure to draw fully on the wealth of existing research and analysis. In response, we recommend the high-quality analysis and proposals set out by the Institute for Employment Rights in their 2016 Manifesto for Labour Law as a resource which should be drawn from, in addition to the recommendations of the Taylor Review.

Similarly, RSE calls for more information on what has been done to implement the recommendations of the Taylor Review whilst suggesting that the report exhibits a lack of economic costing throughout. In response, the Review requires revision to account for the post-pandemic labour market, including the costs associated with an ageing population and the cost-effectiveness of any policy recommendations.

RSE notes regional disparities in the ageing population through differences in median age between remote, rural, and urban areas across Scotland. The divergence in demographic trends is likely caused by spatial location choices at the point of retirement but also by the challenges of maintaining adequate levels of service provision (in, for example, the social care system) in rural regions, which has a negative impact on economic and social resilience in local communities.

Download this Advice Paper