Profile of Highland and Islands, Scotland

8/2/2019 Profile of Highland and Islands, Scotland

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Ambitious for Scotland

Population: 447,043

Area: 4,050,000 hectares

Main sectors of employment:public, tourism, primary

industries, manufacturing,construction

January 2011

Area prof i le for H i g h l a n d s a n d I s l a n d s HighlightsIn 2009, the population of the Highlands andIslands was 447,043. This represents anincrease of 3.14% since 2001 and compares to a2.48% increase overall in Scotland.

Unemployment in the Highlands and Islands hasbeen consistently below the Scottish rate

1. To

date the region has suffered less than eitherScotland or the UK as a whole from therecession which began in the latter part of 2008.

The female dominated sector of publicadministration, education and health is thelargest employment sector, accounting for 32.8%of jobs in 2008. Distribution, hotels andrestaurants, manufacturing, construction,transport and communications and agricultureand fishing also account for a higher proportionof employees in the Highlands and Islands thanin Scotland.

In 2008, the majority of workers (over 50%) wereemployed by companies with fewer than 50employees, which demonstrates the dominanceof employment within small businesses in theHighlands and Islands.

Business start-ups in the Highlands and Islandshave been slightly higher than in Scotland. In2008, there were 4.0 new start-ups per 1,000 ofthe population compared to 3.9 per 1,000 inScotland.

House prices have risen rapidly in recent years.The median house price in the Highlands andIslands area in 2008 was 117,750 compared to114,500 in Scotland.

_______________________________________1Please refer to the Unemployment Digest preparedby the Planning and Economics team on a monthlybasis for the latest unemployment data at:http://www.hie.co.uk/highlands-and-islands/economic-reports-and-research/

Highlands and Islands


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Introduction

This Area Profile for the Highlands and Islands provides recently available data from the mostreliable sources on:

Population structure Population change Migration Unemployment Economic activity Incomes Gross Value Added (GVA) Employment by sector Company size Business starts Educational attainment Destinations of school leavers House prices

Quality of life indicators

Comparisons are made with Scotland as a whole, and figures for Highlands and IslandsEnterprise (HIE) Area Offices are provided for key indicators.

Population

Tables 1(a) and 1(b) show the change in the resident population of the Highlands and Islandscompared to Scotland from 2001 to 2009.

Table 1(a): Resident Population: 2001 2009

2001 2009 Change(2001-2009) % Change(2001-2009)

Highlands & Islands 433,448 447,043 13,595 3.14

Scotland 5,064,200 5,190,000 125,800 2.48

Source: GROS Mid-Year Estimates

The population of the Highlands and Islands grew by 3.1% between 2001 and 2009, fasterthan the growth of 2.5% in Scotland. The Highlands and Islands experienced populationgrowth of 0.7% between 1991 and 2001, with job opportunities and economic diversificationthe main drivers of growth in the region.

Table 1(b): Resident Population by HIE Area Office: 2001 2009

2001 2009Change

(2001-09)% change(2001-09)

Argyll and the Islands 69,898 70,543 645 0.92

Caithness and Sutherland 38,426 38,113 -313 -0.81

Inner Moray Firth 133,561 144,375 10,814 8.1

Innse Gall 26,450 26,180 -270 -1.02

Moray 87,000 87,660 660 0.76

Orkney 19,220 19,960 740 3.85

Shetland 21,960 22,210 250 1.14

Lochaber, Skye & Wester Ross 36,933 38,002 1,069 2.89

HIE area 433,448 447,043 13,595 3.14

Scotland 5,064,200 5,190,000 125,800 2.48



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The regions growth has been particularly strong in the Inner Moray Firth (+8.1% between2001 and 2009) and in Orkney (+3.9%).

The population of Caithness and Sutherland and Innse Gall experienced a modest decline

between 2001 and 2009 (-0.8% and -1% respectively). Some small islands and remote areas,however, have experienced a continuation of more significant historical decline due, inparticular, to a decline in primary industries and crofting.

Figure 1 illustrates the population of the Highlands and Islands by HIE Area Office in 2009.

Figure 1: Population by HIE Area Office: 2009



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Age Structure

Table 2 shows the changing age structure of the Highlands and Islands (H&I) and Scotlandfrom 2001 to 2008.

Table 2: Distribution of Population by Age: 2001-2008 (% of total population)

Age GroupH&I

Mid 2001H&I

Mid 2008ScotlandMid 2008

0-4 5.4 5.1 5.5

5-19 18.6 17.3 17.3

20-44 32.0 29.2 33.9

45-64 26.8 29.4 26.7

65-84 15.3 16.8 14.6

85+ 2.0 2.2 1.9


The Highlands and Islands has an older age structure than Scotland, with a higher proportionof its residents than Scotland in each of the 45 years and older age bands. The maindifferential is in the 20-44 age group, which represented 29.2% of the Highlands and Islandspopulation compared with 33.9% of Scotlands population in 2008. Figures show a tendencytowards an ageing population and a resulting challenge for the area. This may proveparticularly challenging in more rural areas because dispersed settlement patterns and lowpopulation densities make the delivery of services more difficult. Parts of the area areattractive for retirement, but many young people leave to seek out Higher Education andemployment opportunities elsewhere.

Migrant Workers

Table 3 shows the number of applications for National Insurance (NI) numbers that weremade by migrants in the Highlands and Islands and Scotland from the financial year 2002/03to 2008/09. The figures for the Highlands and Islands are for the areas six main localauthorities.

Table 3: Applications for NI numbers

Total NI registrationsRegistrations per 10,000

economically active

Highlands & Islands 20,870 901.5

Scotland 246,110 962.1

Source: Department for Work and Pensions

Migrant workers have been almost as important to the Highlands and Islands economy as toScotlands since 2002/03 in easing tight labour markets as evidenced by the lowunemployment rates that most parts of the region still have despite this supplementary laboursupply.NI registrations have been particularly high in Highland some 22% above the Scottishaverage over the period as a proportion of the economically active population.

As shown below in Table 4, some 62% of migrant workers have come from the EU AccessionStates compared with 44% for Scotland.


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Table 4: Applications for NI numbers by World region (January 2002-March 2009)

World Area of Origin

EU

(%)

EU

AccessionStates (%)

Other

European (%)

Africa

(%)

Asia and

MiddleEast (%)

The

Americas (%)

Australasia

and Oceania(%)

HighlandsandIslands

14 62 2 4 7 5 6

Scotland 17 44 2 7 18 5 6

Source: Department for Work and Pensions

Unemployment

Figure 2 shows the unemployment rate for the Highlands and Islands compared to Scotlandfrom December 2006 to December 2009. The rates are based on the Claimant Count, whichis a measure of people who are claiming Jobseekers Allowance.

Figure 2: Unemployment Rates: 2006-2009

0.00.20.40.60.81.01.21.41.61.82.02.22.42.6

2.83.03.23.43.63.84.04.24.4

Dec-06

Mar-07

Jun-07

Sep-07

Dec-07

Mar-08

Jun-08

Sep-08

Dec-08

Mar-09

Jun-09

Sep-09

Dec-09

Highlands and Islands

Scotland

Source: NOMIS

Unemployment in the Highlands and Islands has remained significantly below the Scottishaverage over the past three years, with a widening differential since the recession began inthe second half of 2008. It can be explained by the fact that the region is more reliant that therest of Scotland on public sector employment and less on financial and business servicessector. Therefore it experienced less of the recessionary impacts in comparison to otherareas of Scotland. In addition, a strong tourism sector has ensured employment levels haveremained high over the past two years. The areas December 2009 unemployment rate of

2.9% compared with average rates of 4.1% for both Scotland and Great Britain.


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There is significant seasonality of unemployment in most parts of the Highlands and Islands,due mainly to the importance of tourism to the area, although related also to the agriculturalcycle and the difficulties of outdoor construction work in the winter.

Unemployment by Gender

Figure 3 illustrates the male and female unemployment trends for the Highlands and Islandsfrom December 2006 to December 2009.

Figure 3: Male and Female Unemployment Rates: 2006-2009

0.00.20.4

0.60.81.0

1.21.41.61.8

2.02.22.4

2.62.83.03.23.4

3.63.84.0

4.24.4

Dec-06

Mar

-07

Jun-07

Sep-07

Dec-07

Mar

-08

Jun-08

Sep-08

Dec-08

Mar

-09

Jun-09

Sep-09

Dec-09

Male

Total

Female

Source: NOMIS

The trend in female unemployment in the Highlands and Islands has broadly followed themale trend over the past three years with a rate of less than half the male rate (as elsewherein the UK). Over the past ten years, many of the new jobs that have been created have beenpart-time or otherwise relatively well suited to the female labour force.

Economic Activity Rate

Table 5 shows the economic activity rates for the Highlands and Islands and Scotlandbetween January and December 2008. These figures are based on the Annual PopulationSurvey a residence based labour market survey. The percentages are of all people ofworking age, except the unemployment rate, which is a percentage of those economicallyactive. This measure of unemployment is more comprehensive than the Claimant count,however not available regularly for local areas.


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Table 5: Economic Activity: January 2008-December 2008 (working age population)

Highlands & Islands Scotland

Number % %

PersonsEconomic activity rate 220,200 84.3 79.6

Employment rate 213,300 81.6 75.6

% who are employees 183,800 70.4 67.5

% who are self employed 27,500 10.5 7.7

Unemployment rate 7,000 3.2 5.0

Males

Economic activity rate 122,800 88.2 83.1




Unemployment rate 3,400 2.8 5.3Females

Economic activity rate 97,300 79.9 75.9




Unemployment rate 3,500 3.6 4.8

Source: Annual Population Survey

The economic activity rate in the Highlands and Islands in 2008 was over 84% (almost fivepercentage points higher than in Scotland), with a similar differential for both male and femaleactivity rates. This illustrates positively the growing economic activity in the region.

Self employment was considerably higher than in Scotland, with again a similar differential forboth males and females. This high rate of self employment reflects the importance of activitiessuch as agriculture / crofting, fishing, building trades and small scale tourism provision to theHighlands and Islands economy that are characterised by high levels of self employment.

The female unemployment rate of 3.6% was higher than the male rate of 2.8%, contrastingwith the Claimant Count female to male differential and suggesting a relatively high proportionof females interested in working who were not eligible for unemployment benefit.

Income

Table 6 shows the median gross weekly earnings in the Highlands and Islands and Scotlandin 2009.

Table 6: Median Gross Weekly Earnings (): 2009

H&I ScotlandH&I as a proportion of

Scotland

Median gross weekly payfor all employee jobs

350.0 385.4 90.8%

Source: Annual Survey of Hours and Earnings (work place based)

In 2009 the average weekly pay for all employee jobs in the Highlands and Islands wasaround 9% lower than the equivalent for Scotland. The data is based on the Annual Survey of


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Hours and Earnings and should be used with a degree of caution due to the low sample sizesfor smaller geographies.

These relatively low earnings in H&I reflect (i) industrial structure, including a high

dependence on tourism and low share of Scotlands financial and business services; (ii)occupational structure, including a relatively low proportion of managers and professionals;and (iii) a high dependence on small businesses (see Figure 5 below) with relatively lowproductivity.

Gross Value Added (GVA)

Gross Value Added (GVA) is a measure of the income generated by a sector from theproduction of goods and services after the deduction of costs incurred in the productionprocess (excluding wages and capital investment costs).

Table 7 shows the GVA per full-time employee (FTE) for the Highlands and Islands local

authorities, H&I and Scotland in 2007. The figures for the regions should be treated asindicative as there is likely to be quite a high margin for error in GVA statistics as suggestedby large year-to-year fluctuations.

Table 7: GVA per FTE (): 2007

Manufacturing Construction Services

Argyll and Bute 43,804 41,930 27,731

Innse Gall 28,865 46,513 24,047

Highland 61,512 29,819 22,169

Moray 77,987 51,385 45,221

Orkney 67,454 48,063 17,312Shetland 47,349 48,932 21,901

Highlands & Islands 63,173 38,000 26,685

Scotland 62,030 47,762 35,582

Source: Scottish Executive, Scottish Annual Business Statistics, 2007(adjusted from all employees to FTE employees)

There are significant differences in GVA per full-time equivalent employee between theHighlands and Islands local authority areas, especially for manufacturing and construction,which will be due largely to the composition of those sectors in each area and, forconstruction, the types of contract (i.e. their labour intensity).

GVA per FTE employee is particularly high in Moray (77,987) and Orkney (67,454) for

manufacturing; in Moray (51,385), Shetland (48,932) and Orkney (48,063) forconstruction; and in Moray (45,221) for services.

The GVA per FTE employee for the Highlands and Islands is slightly higher than Scotland inmanufacturing but lower than Scotland in construction and services.

Employment by Sector

Figure 4 illustrates the distribution of employment by sector in the Highlands and Islands andScotland in 2008. The figures are based on the SIC 2003 and provide a broad picture ofindustry categories in the area.


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Figure 4: Employment by Sector: 2008

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Agric

ulturean

dfishin

g

Energy

and

wate

r

Man

ufacturin

g

Constru

ction

Distribu

tion,

hotels

and

resta

urants

Tran

sporta

ndcom

munica

tions

Banking

,fina

ncean

dins

uran

ce,etc

Publi

cad

mini

stration

,edu

catio

n&heal

th

Othe

rservice

s

%o

femployees

Highlands and Islands Scotland

Source: Annual Business Inquiry (NOMIS)Note: These figures exclude the self-employed. Actual employment will be higher, particularlyin primary industries and tourism.

In seven of the nine sectors, the Highlands and Islands has a higher proportion of

employment than Scotland - public administration, education and health (32.8% comparedwith 30.0% in Scotland), distribution, hotels and restaurants (24.9% to 22.2%), construction(6.9% to 5.9%), transport and communications (6.1% to 5.1%), agriculture and fishing (2.3%to 1.7%), manufacturing (8.9% to 8.7%) and other services (5.5% to 5.4%).

The Highlands and Islands has a lower proportion of its employment than Scotland inbanking, finance and insurance (11.8% to 19.1%), and in energy and water (0.9% to 1.8%).

The region has a high dependence on public sector employment, particularly in the islandareas, and on tourism, which is highly seasonal in most areas.

Employment by Gender

Figure 5 shows the percentage of male and female employees by sector in the Highlands andIslands in 2008.


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Figure 5: Employment by Gender and Sector: 2008

0

10

20

30

40

50

60

Agricultureandfi

shing

Energy

,water

and

man

ufactu

ring

.

Constru

ction

Distribu

tion,

hotels

and

restau

rants

Tran

sporta

ndcommunica

tions

Banking

,fina

ncean

dinsurance,

etc.

Publi

cadm

inistr

ation

,edu

catio

n&he

alth

Othe

rservice

s

%o

femployees

Male

Female

Source: Annual Business Inquiry (NOMIS)Note: These figures exclude the self-employed. Actual employment will be higher, particularlyin primary industries and tourism.

The public administration, education and health sector employs almost half (47.0%) of theHighlands and Islands female workforce.

The other main sector for female employment is distribution, hotels and restaurants (25.8% ofthe regions female workforce).

The sectors of most importance to the male workforce are again distribution, hotels andrestaurants (23.8% of male employees), public administration, education and health (17.1%),banking, finance and insurance (13.2%), manufacturing (13.1%) and construction (12.7%).

The regions male workforce has a wider employment base than its female workforce, ofwhom 92.1% work in services.

Employment by Company Size

Figure 6 shows employment by company size in the Highlands and Islands compared toScotland in 2008 (excluding the self-employed).


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Figure 6: Employment by Sizeband: 2008

0

10

20

30

40

50

60

1-4

employees

5-10

employees

11-24

employees

25-49

employees

50+

employeesBusiness Sizeband

%o

femployees

Highlands and IslandsScotland

Source: Annual Business Inquiry (NOMIS)The average company size in the Highlands and Islands is significantly smaller than inScotland, with 41.7% of employees working in businesses that employed 50 or more peoplein 2008 compared with 57.0% of Scotlands employees.

This is due largely to the generally small size of most sub-regional economies (i.e. localmarkets are limited), the small proportion of head office employment, and the limited numberof major employers. Very few private businesses employ more than 500 staff.

Business Starts

Table 8 shows the number and rate of new business start-ups per 1,000 population in theHighlands and Islands and Scotland in 2008.

Table 8: New Business Start-ups by Area in 2008

Area Start-upsStart-ups per 1,000

population

Highlands & Islands 1,795 4.0

Scotland 20,028 3.9

Source: Committee of Scottish Clearing BankersNote: population base is taken from the 2007 Mid-Year Estimates (GROS)

In 2008, the Highlands and Islands had a slightly higher business start-up rate than Scotlandat 4.0 per 1,000 population.

In the first quarter of 2009 there were 20.5% fewer new business starts in the Highlands andIslands than in the average 2008 quarter, although in the second quarter there were 1.1%more. In the third quarter, the number of new business starts dropped by 24.9%.

Scotland also experienced a drop (17.4%) in new business starts in the first three quarters of2009 compared to the 2008 quarterly average.


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Educational Attainment

Tables 9 and 10 show SQA attainment in secondary schools at the end of S4 and S6 in2007/08.

Table 9: % S4 roll gaining 5+ awards at Standard Grade 1-2 by the end of S4

2007/08

Argyll and Bute 36

Innse Gall 39

Highland 38

Moray 37

Orkney 37

Shetland 49

Highlands and Islands 38

Scotland 34Source: Scottish Government

Table 10: % S4 roll gaining 3+ awards at Higher Grade A-C by the end of S6

2007/08

Argyll and Bute 33

Innse Gall 40

Highland 34

Moray 31

Orkney 38

Shetland 38Highlands and Islands 33

Scotland 30

Source: Scottish Government

All six local authority areas had higher attainment rates at Standard Grade than the Scottishaverage. Exceptionally high attainment rates were achieved in Innse Gall, Orkney andShetland.

School Leavers

Table 11 shows the destinations of school leavers from the Highlands and Islands andScotland in 2007/08.


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Table 11: School Leaver Destinations (%): 2007/08

Highlands & Islands Scotland

Total Number of Leavers 5,762 58,791Higher Education 30% 31%

Further Education 21% 25%

Training 2% 5%

Employment or Voluntary Work 36% 25%

Unemployed Seeking Work 8% 11%

Unemployed Not Seeking Work 2% 2%

Unknown 1% 1%

Source: Scottish GovernmentIn 2007/08, the Highlands and Islands had 9.8% of Scotlands school leavers.

The main differences between the Highlands and Islands and Scotlands school leaversdestinations were that 36% went into employment compared with 25% in Scotland (reflectingthe strength of demand for labour in the region and the lack of FE/HE opportunities). 21%compared with 25% went into Further Education, and 8% compared with 11% wereunemployed and seeking work.

A similar proportion went into Higher Education, although this proportion tended to berelatively high in areas with high levels of attainment at Higher Grade. Although the UHI isgrowing as a provider of Higher Education, the vast majority of school leavers take up degreecourses at universities elsewhere in Scotland, often staying away to start their subsequentcareers.

House Prices

Table 12 shows the median price of house sales and the percentage change between 2005and 2008 for HIE Area Offices, the Highlands and Islands and Scotland.

Table 12: Median House Prices (): 2005-2008

Change (2005-08)

2005 2006 2007 2008

Number %

Argyll and theIslands 78,000 77,050 112,000 100,000 22,000 28.2

Caithness andSutherland

69,250 75,000 86,000 81,500 12,250 17.7

Inner Moray Firth 103,000 125,000 140,000 140,000 37,000 35.9Innse Gall 65,150 39,375 80,000 82,000 16,850 25.9

Lochaber, Skye &Wester Ross

91,380 105,000 125,000 123,250 31,870 34.9

Moray 82,500 93,000 116,226 115,015 32,515 39.4

Orkney 80,200 86,125 95,500 95,500 15,300 19.1

Shetland 58,000 73,089 89,000 91,250 33,250 57.3

Highlands andIslands

87,250 96,888 120,000 117,750 30,500 35.0

Scotland 87,000 100,000 118,000 114,500 27,500 31.6Source: Scottish Government Communities Analytical Services Division


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In both 2007 and 2008, the median house price in the Highlands and Islands was higher thanthe median price in Scotland (+1.7% and +2.8% respectively). In 2008, the median price wassignificantly higher than the Scottish median of 114,500 in Inner Moray Firth (140,000:

22.3% higher) and in Lochaber, Skye and Wester Ross (123,250: 7.6% higher). Increasesbetween 2005 and 2008 exceeded the Scottish average of 31.6% in Shetland (+57.3%),Moray (+39.4%), Inner Moray Firth (+35.9%) and Lochaber, Skye and Wester Ross (+34.9%).In Caithness and Sutherland the median price increased by only 17.7% and in Orkney by19.1%.

Affordable housing is in short supply throughout the Highlands and Islands, and addressingthe shortfall is a high priority in all parts of the region.

Quality of Life

Table 13 compares the Highlands and Islands to Scotland on selected quality of life

indicators.

Table 13: Quality of Life

Source H&I Scotland

% of population rating localauthority area as a very goodplace to live

Scottish HouseholdSurvey (2005/06)

69 52

% of population perceivingvandalism/graffiti/damage toproperty as a problem

Scottish HouseholdSurvey (2005/06)

9 16

Crime rate per 10,000 population

Scottish Government

(2007/08) 575 749% of population living in mostdeprived 20% of data zones inScotland

Scottish Index of MultipleDeprivation (2006)

4.3 19.7

Pupils per primary classScottish Government(2008)

19.4 23.2

On all of the above indicators, Highlands and Islands residents have a significantly betterquality of life than the average Scottish resident, with indicators particularly favourable inisland economies. Indeed, a 2008 Bank of Scotland analysis ranked residents of Shetland ashaving the highest quality of life of any Scottish local authority area.

Summary

Positive trends in the Highlands and Islands over recent years include population growth thathas outpaced population growth overall in Scotland and a higher employment rate than inScotland and Great Britain.

The regions main employment sector is public administration, education and health, in whichfemale employees outnumber males. The agriculture and fishing, construction anddistribution, hotels and restaurant sectors are also proportionately more important in theHighlands and Islands than in Scotland, which is reflected in unemployment rates that aremore highly seasonal. Furthermore, the dominance of tourism in many areas, low payingindustries and higher winter unemployment rates give rise to income levels in the Highlands

and Islands that are below the Scottish average. Employment in small businesses is more


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prevalent than in Scotland, and business start-up rates are slightly higher. House prices havebeen increasing at a faster rate than the Scottish average.

Contact Information

If you have any queries about the information contained in this document, or any othereconomic issues, please contact HIE:

Heather Smith Research Assistant [email protected] Tel: (01463) 244320Kateryna McKinnon Economist [email protected] Tel: (01463) 244258Claire McDonald Senior Economist [email protected] Tel: (01463) 244228

Profile of Highland and Islands, Scotland

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