Wages up to keep workers as Scottish businesses battle Brexit backlash - report

3 July 2019, 05:28

Many Scottish businesses have increased wages over the last three months in a bid to keep skilled workers while battling a Brexit backlash, according to a new study.

Retail was the only sector not to report such an increase in the second quarter of 2019 in the latest Scottish Chambers of Commerce (SCC) Quarterly Economic Indicator survey.

As well as an increase in wages, the majority of sectors reported rising cost pressures from raw material prices.

This was especially highlighted by 64% of manufacturing firms and 52% of construction firms in the survey.

Despite this, overall business confidence made a slight recovery north of the border.

Tim Allan, Scottish Business Advisory Group chairman and Scottish Chambers of Commerce president, said: "Businesses are weighing the costs of the chaos caused by more dithering over Brexit and the burden is severe.

"Our members are crying out for the return of some sanity as they undertake the important role of creating jobs and paying taxes.

"Scottish businesses need to see steps being taken to avoid a disorderly Brexit and a responsible consensus reached as soon as possible on the Brexit process with the European Union."

Mr Allan also said more than 80% of tourism firms are attempting to recruit staff - however nearly 70% of them are facing difficulties in doing so.

He added: "Since the initial cliff edge Brexit of 29th of March, the pressure on firms has eased slightly but the underlying trends point to an economy running on fumes.

"The majority of firms for all sectors in the survey are putting off investment and say this trend will continue over the summer months. All are desperate for some kind of resolution to Brexit before the October 31st deadline.

"A future government must be quick out of the blocks to work with the business community in tackling some of the most pressing problems holding back investment, growth and productivity."

Professor Graeme Roy, University of Strathclyde's Fraser of Allander Institute director, also said: "With unemployment at a near record low in Scotland, the survey is starting to pick up evidence of pay pressures on the rise.

"Many sectors also noted increasing recruitment difficulties. This seems to be a particular issue for some sectors.

"For example, among tourism firms, seven out of 10 recruiting firms reported challenges, with more than half of firms in manufacturing facing similar issues."

KPMG UK's latest quarterly Economic Outlook also indicated weak growth for the rest of the year.

Catherine Burnet, senior partner in Scotland, said: "It's clear that the combination of deepening political uncertainty at home and an apprehensive global outlook are taking their toll on the Scottish business community.

"Continued under-investment should be anticipated if greater clarity isn't provided on the future direction of the UK's global trading relationships.

"There are a number of immediate challenges ahead, but we also need to explore a range of long-term obstacles to growth, including productivity.

"An accelerated effort to develop trade-friendly solutions is essential, to avoid any significant long-term impact on Scottish economic growth."