17 Feb 2026
Ann Frances Cooney, employment expert and partner at DWF, has commented on the latest labour market figures in Scotland:
"In the context of sustained economic pressure, the latest figures for Scotland highlight a mixed labour market picture, with movements across employment, unemployment and inactivity. The estimates for October to December 2025 indicate that over the quarter, the employment and unemployment rates increased while the economic inactivity rate decreased.
The headline figures for the period show the employment rate in Scotland was estimated at 74.8%, up 0.4% over the quarter. By way of comparison Scotland’s employment rate was below the UK rate of 75%. The estimated unemployment rate in Scotland was 3.8%, up 0.1% over the quarter. Scotland’s unemployment rate was below the UK rate of 5.2%.
The early seasonally adjusted estimates for January 2026 from HMRC Pay As You Earn Real Time Information indicate that median monthly pay for payrolled employees in Scotland was £2,612, an increase of 4.8% compared with January 2025. The sustained financial pressures facing employers should not be underestimated, as employees seek higher pay to offset rising living costs while businesses contend with increasing operating expenses of their own.
The year ahead is likely to bring considerable change for the employment landscape as the Employment Rights Act 2025 begins to take practical effect. With expanded worker protections now being embedded into day‑to‑day operations, employers are reassessing workforce strategies, adopting a more cautious stance on recruitment and workforce planning in light of heightened compliance requirements and rising employment costs. In this environment, employers should also be preparing for greater trade union visibility and engagement, as strengthened rights are likely to encourage increased collective activity and a renewed focus on employee representation."
