For the period of October to December 2024, the employment rate reached 74.2%, a 0.9% increase over the quarter, although still slightly below the UK average of 74.9%. The unemployment rate rose by 0.5% over the quarter to 3.8%, remaining below the UK’s 4.4%.

Early estimates for January 2025 show median monthly pay for payrolled employees in Scotland at £2,486, a 5.2% increase compared to January 2024. However, with rising employer National Insurance contributions, experts predict potential pay stagnation as employers seek to offset these increased costs.

Ann Frances Cooney, employment expert and partner at DWF, commented: “The forthcoming changes to employment law will undoubtedly lead to employers taking a cautious approach to recruitment over the coming months, with recruitment freezes and redundancies a likely reality.

“Labour intensive industries, such as retail and hospitality, are likely to face the greatest impact and will currently be strategising on how to retain essential talent whilst facing increased costs and further regulation.”

Looking at the UK picture, Kevin Brown, Savings Specialist at Scottish Friendly, said: “Employment data was largely in line with expectations in January. This will be tentative good news for policymakers, but it remains a headache.

“It suggests inflationary pressures remain strong, and it may take a March rate cut off the table. It comes at a time when the markets were already febrile after US CPI data showed inflationary pressures rising.

“Overall, UK employees are still seeing inflation-busting pay rises, but this masks some competing forces underneath. On the one hand, bumper pay settlements for public sector workers continue to support the figures, but there is weakness emerging in the private sector. Although the Government’s National Insurance rise doesn’t come into force until April, there are signs that companies are already cutting back on staff and pay rises. The next few months will likely see a tussle between these competing forces.”