Can Scotland grow the economy with better jobs?

As Scotland approaches the May 2026 election, voters face challenges that go beyond party politics. For many households, the immediate concern is the cost of living. Food, rent, mortgages and energy bills have risen sharply – in some cases more, over a few months. Voters are having to focus on making ends meet.

In addition, our population is ageing. Over the next 20 years, the number of people aged 75+ is expected to grow by 300,000, whilst the number of children and young adults is projected to fall. The former will considerably increase demand for health and social care. Already, demand for public services is rising rapidly- yet the necessary funding is not keeping pace. The squeeze on public spending is getting tighter.

Where will the money come from for Scotland?

A new Scottish Government has three options to fund public services and elevate living standards in the decades ahead:

1. cut public services or
2. raise taxes and/or
3. grow the economy so that tax revenues increase.

The third option is the most attractive- but also the most difficult.

Economic growth does not happen by accident. It depends on the viable businesses, a skilled workforce, and ample investment available to sustain a thriving growth.

Scotland has already identified sectors where it could build a stronger and more competitive ‘new economy’. Through strategies such as the National Strategy for Economic Transformation (2022) and the National Innovation Strategy (2023), policymakers have highlighted industries with global potential. These cover: health and life sciences; energy transition and renewable power; digital and data technologies; and advanced manufacturing. Within these sectors, some of the technologies likely to shape the global economy over coming decades are coming to the fore, such as precision medicine, robotics, hydrogen energy, and satellite deployment.

These create well-paid jobs and high-value exports. Many of these companies operate in global markets, bringing income into Scotland from around the world. They also tend to generate high productivity- the key driver of rising wages and tax revenues.

By contrast, large parts of Scotland’s economy remain concentrated in sectors such as hospitality, retail, and social care. These are vital to society, but often operate within very tight margins and relatively low productivity. Looking ahead, if we are to fund strong public services we need, the burgeoning of the ‘new economy’, with high-value sectors.

What workforce gaps are holding back Scotland’s net zero transition?

Beyond attracting these new companies, we need a workforce with the necessary skills. And here Scotland faces a serious challenge. While many relevant jobs require university degrees, thousands of highly skilled, technical roles are essential.

For example:

• electrifying rail infrastructure could require around 10,000 additional workers with electrical engineering skills, including projects involving ScotRail
• to meet net-zero climate targets, retrofitting homes to meet climate targets could require up to 140,000 skilled workers in the UK, and for 2.5 million Scottish homes it is estimated to require 22,500 additional workers by 2028 and over £33 billion in total investment
• the expansion of offshore wind and renewable energy could become one of the largest industrial opportunities Scotland has ever seen but failure to generate and manage supply chains poses a massive challenge.

These jobs are well paid and offer good career prospects. Many skilled technicians, engineers and specialists can earn £40,000 to £80,000 or more, often through Apprenticeships or technical training working in conjunction with industrial employers rather than traditional academic university routes.

Clearly, education, business and economic policy areas must work together. Organisations such as Skills Development Scotland,, along with colleges, universities and employers, have to play a critical, synergistic role in aligning training on/with the jobs that will be required in the future.

Skills alone are not enough; growing companies also need capital. One of Scotland’s long-standing economic challenges is that while it has become better at starting companies, it has a long way to go to scale them into global businesses. Many promising firms eventually relocate or sell early because they cannot access sufficient investment at home. Innovation funds linked to UK universities collectively manage around £3.4 billion in capital, but there is much less investment in Scotland – raised by companies, than, say, the Oxbridge-London triangle.

Without stronger investment commitment and risk-mindset for pipeline opportunities, Scotland risks producing brilliant ideas that ultimately create jobs and wealth somewhere else.

Economic growth is often discussed in abstract terms, but for voters the real question is simple: Will growth improve living standards across the country? Of course it will! Inclusive growth ensures new industries create opportunities not only for highly specialised researchers but also for technicians, engineers, tradespeople, skilled and frontline workers as well as their supported families.

Scotland needs well-funded public services, good wages, strong regional economies and well-paid high-quality work and living opportunities to sustain the next generation of workers. The opportunity NOW is to turn these strengths into inclusive, thriving economic growth, and to do so at pace.

Dr Janet Brown FRSE, Vice President for Education, the Royal Society of Edinburgh

Sandy Finlayson FRSE, Founder, MBM Commercial LLP

Dr Poonam Malik FRSE, Vice President for Economy and Enterprise, the Royal Society of Edinburgh

The RSE’s blog series offers personal views on a variety of issues. These views are not those of the RSE and are intended to offer different perspectives on a range of current issues.