According to data for June to August 2025, Scotland’s employment rate for people aged 16-64 fell by 0.6 percentage points over the quarter to 74.3%. This figure is now below the UK average of 75.1%.

During the same period, the unemployment rate in Scotland increased by 0.2 percentage points to 3.9%, though it remains below the UK-wide rate of 4.8%. The economic inactivity rate also rose, reaching 22.7%.

Despite the dip in employment, early estimates from HMRC for September 2025 show that median monthly pay for payrolled employees has continued to climb. The median pay was £2,600, an increase of 5.9% compared with September 2024.

Experts and the Scottish Government agree that businesses face significant challenges, but offer different outlooks on the market’s overall health.

Ann-Frances Cooney, employment & pensions partner at DWF, described a “challenging economic climate” where rising inflation and higher employer national insurance contributions are “intensifying financial pressures on businesses”. She added that with a broad package of new employment rights set to take effect, employers are focused on “future-proofing their workforce” and are looking to the upcoming Autumn Budget for “clearer policy direction and reassurance”.

The concern over national insurance was echoed by Business and Employment Minister Richard Lochhead, who labelled the UK government’s policy “damaging to business and jobs”. However, he characterised Scotland’s job market as “fairly stable” and pointed to the Fraser of Allander Institute’s recently upgraded growth forecast for Scotland’s economy in 2025 as a sign of strengthening conditions.

Mr Lochhead noted that the Scottish Government is working to create jobs but is doing so “without the powers needed to fully address the issues”.