Blog: Stressed out - the cost of shifting risk from institutions to individuals

by Shelagh Young, DHI Engagement Lead

Do you do a good day’s work after a poor night’s sleep? Do financial worries stop you focusing on the other things that matter in life - on family and friends, on your health or your job? 

Stress and anxiety have been the leading causes of lost working days in the UK for some time. But, despite increased productivity being seen as an essential component of economic growth, the impacts of stress and anxiety on the productivity of people who feel well enough to still go to work is comparatively less well measured or understood. 

Last month we reported that more than one in four Scots are losing sleep over their finances. In July the ONS reported the weakest annual growth since the first quarter of 2013 (excluding the Covid-19 pandemic period) and the weakest productivity output of worker per worker since 2009.

Are these two dismal facts related?

We think so. The research charity Centre for Mental Health calculates that mental health related  presenteeism, defined as being present at work but not fully functioning, costs the UK economy at least £21.2 billion a year in lost productivity. 

In the light of this it is obvious that government needs to lead on reducing stress and anxiety in order to boost wellbeing and therefore productivity. It cannot offload all of this responsibility onto employers, especially as not everyone is employed. Employers can rightly be held to account for reducing work-related stress and anxiety but the wider causes are not theirs alone to solve.

One of these sources of stress is the impact of what the Institute and Faculty of Actuaries (IFoA) calls The Great Risk Transfer. This is best described as a shifting of the burden of risk, such as ensuring our workplace pensions yield sufficient returns to keep us out of poverty in retirement,  from institutions to individuals. The IFoA argued that significant changes relating to pensions, work, health and insurance are placing more of the burden of risk on individuals with potentially socially and economically undesirable outcomes. 

We will be exploring our  research on this topic in a forthcoming lecture at the University of Edinburgh Business School. This work, which was supported by the IFoA,  found that the changes the IFoA identified were often poorly understood by the people most affected and not always their top priorities. For example, while the IFoA included precarity at work in its exploration of risk transfers, our research revealed greater front of mind concerns about precarity in housing.

We found that most people had a very partial understanding of the financial risks they were facing but that did not mean they were unaffected by financial risk-related stress. We heard a lot about the stress of coping with financial responsibilities and that was before the cost of living rose so dramatically. This matters because stress is not just a problem of presenteeism or individual unhappiness. Chronic stress causes long-term and profound health problems including weight gain, heart disease and strokes. All of these are a major concerns when it comes to costs to the public purse. 

We will be following up on our work around risk soon to find out more about what could be done to enable people to cope better. But the one thing we know already is that, while actuaries are professionally trained in risk-management, most of the rest of us are not. We need people to stay healthy enough to be at work but we also want their minds on their jobs for the sake of productivity. It is simply not good enough to design and implement policies that overload people with ever greater and more complex responsibilities which mean, as the FT described it earlier this year, we all need to be actuaries now.

ENDS

Click here to book for our upcoming event in partnership with the University of Edinburgh Business School.

Press release: Is trust a must for a brighter economic future?

“Trust plays a crucial role in a successful economy.”  says Charlie Woods, the author of the latest David Hume Institute Discussion Paper launched today ahead of an on-line event on Thursday 23 May at 1.30pm. Is this being overlooked by business and political leaders who are seeking solutions to weaker than desired economic performance?

DHI Director, Susan Murray, will be joined in this webinar conversation from New York by Dr David M. Bersoff, from the Edelman Trust Institute, Charlie Woods, the paper’s author, and leading mediator John Sturrock , who works to build trust in negotiations.

David will share the global context on trust from the 2023 Annual Trust Barometer to help explore the relevance of trust to the economy and the labour market.

At a time when the majority of Scots are concerned about household finances, think Scotland is heading in the wrong direction economically and are pessimistic about our economic future, are we paying sufficient attention to the potential of increasing trust to boost economic performance?

David Hume Institute Director Susan Murray says:

“Research shows a strong relationship between levels of trust in society and economic performance with more trusting societies generating more income per person than others. Thinking differently about what helps boost economic performance might reveal we have been looking for too long in the wrong places to find the Holy Grail of a more productive Scottish workforce.”

The webinar is free to watch here.

ENDS

Notes to Editors

• For media enquiries contact Shelagh Young, David Hume Institute, shelaghyoung@davidhumeinstitute.org

• The Discussion Paper: Is Trust an undervalued ingredient for a thriving economy? Is available here

• The 2023 Annual Trust Barometer can be found here

• The David Hume Institute is an independent think tank based in Scotland. The charity was established in 1985 to increase diversity of thought on the economy and related public policy. Find out more on our website

Blog: Budgeting to save a global asset

Ahead of the UK budget Shona McCarthy, Chief Executive of the Edinburgh Festival Fringe Society, reflects on the latest Understanding Scotland economy insights and asks our leaders to lift their heads up from the ongoing crises and take a longer view.

While both UK and Scottish Governments have much to do to address current suffering, the key to sustainable economic growth and wellbeing includes investing in our cultural capital. 

A report by the Lords Communications Committee recently stated that creative industries should sit at the heart of the UK’s economic growth plan and criticised senior politicians for failing to spot its potential.

Investment in culture, which makes up a tiny 0.8 per cent of the Scottish Government budget, has been steadily declining year on year, comparative to other UK nations. This is despite its obvious pre-pandemic economic contribution. The sector has been hit hard by the loss of European funding which has not been replaced at the same level by the new UK Government funds. A rumoured injection of £8.6m for Edinburgh Festivals in today’s budget will be a welcome boost.

In 2019 the creative industries employed over 90,000 people in Scotland with the previous year’s economic contribution measured at £4.6 billion in GVA and £4 billion in exports. But as the sector tries to recover from the debt and ravages of covid, sustaining this contribution and growing the culture and creative sector over the coming years, will require similarly sustained investment, something which does not look likely in the current climate.

Of course governments should be responsive to the electorate’s priorities. It’s no surprise that in the recent Understanding Scotland survey, people in Scotland placed the cost of living and anxieties about NHS performance high on the list when asked to name the issues that most concern them. But we also know from Creative Scotland research across Scotland that 84% believe that it is right that there should be public funding of arts and cultural activities in Scotland. 98% of the Scottish population engaged in cultural activity during lockdown. 93% believes that creative activity is essential for children and young people’s learning and well-being. Alongside addressing immediate concerns is it too much to ask that our political leaders keep their eye on the long game? 

Current challenges and the way governments respond will have long-term economic consequences. In the same Understanding Scotland survey over 60% of Scots said they were cutting down on leisure spending in response to rising costs. In terms of income this could be a knockout blow for those venues and creative practitioners already placed in jeopardy by the impact of the pandemic. As far as the Edinburgh Fringe is concerned I fear there is a sense that it will always be there. The Fringe began as a platform for inclusion and freedom of expression. And it is the very nature of its openness and inclusivity that has caused it to grow organically over 75 years to include more artists, more creatives, more voices from every walk of life and every nation. As we have seen with the plight of the Film Festival this year, we can’t afford to just take it all for granted.

It is astonishing to think the ticket-selling collective of Edinburgh’s Festivals in August are now equivalent in value to a FIFA world cup, and second only to the Olympic Games every single year. 

If cities were bidding now to host what Edinburgh delivers every August, there would be enormous competition.

If the arts were treated like a major sporting event, at least £100m of UK government investment would be on the table to cover the cost and supporting infrastructure. Even comparing, to the much smaller, Eurovision Song contest the UK Government pledged £10m to support the winning city.  

The Edinburgh Festivals are a UK asset, valued world wide which we need to treasure. The arts are a vital part of the UK economy and we need everyone to help us survive. 

ENDS

This article was published in The Scotsman on 15th March 2023

Blog: Shan Saba's view from the west

Shan Saba, Director of Scotland’s leading recruitment agency Brightwork Staffline, Founder, Scotland Against Modern Slavery and Board Member of the Refugee Survival Trust reflects on the latest Understanding Scotland Economy insights.

According to the latest Understanding Scotland Economy research people in the west of Scotland are more likely to believe that Scotland is moving in the wrong direction than those in the north and east.

We already know that growing up in Glasgow can be bad for your health so is that why optimism dwindles the further west you live? Or should we be asking if those poorer life chances sharpen people’s wits leading to a less positive but possibly more realistic picture of our future? As a "Weegie", perhaps I am better placed than those who are not from Glasgow to comment.

There is certainly little to celebrate in the fact that eight out of the ten most income-deprived areas in Scotland are all on the west coast (according to the Scottish Government SIMD 2020). Understanding Scotland shows that 46% of people living in Scotland’s most deprived neighbourhoods would not be able to meet an unexpected living expense of £100. This highlights how fragile personal economic situations have become and how people are responding. The research also records a rise in people looking to change jobs or increase their working hours in order to earn more money. 

Is this good news for our fragile labour market which has certainly been affected by difficulties in recruiting across several sectors in recent times?  It is hard to be sure. The dust has not yet settled from the storms caused by Brexit, the Covid pandemic, and the ongoing cost of living issues. The initial labour shortages caused by the departure of European workers translated into higher wages and improved working conditions in manufacturing, agriculture, and hospitality. It has even led to a relaxing of the UK government's stance on immigration. For example, social care workers have been added to the shortage occupation list. 

International students' numbers have had a considerable impact on UK immigration and the world of work. These students have eligibility to work in the UK, although with restricted hours, and they are now much more common in those sectors that were badly affected by the initial labour shortages. It is not uncommon to see African, Indian, and Pakistani nationals being bussed to work in manufacturing and distribution sites across Scotland, which makes me wonder what those Brexiteers who campaigned on an anti-immigration platform think of what has been achieved?

So what about those UK workers that Boris Johnson had proudly said would get up and take on the jobs that needed doing? In certain areas of Scotland, we have seen a slight increase in the availability of "home-grown" workers becoming available due to downsizing or redundancy, and sadly, people who desperately need to top up their income by taking on second or even third jobs to cover their increased household costs.

Overall the news is not great. Firstly because these people alone are not enough to fill the gaps and perhaps more importantly, because labour exploitation has been recorded at its highest level in Scotland since records began in 2002. Desperation can lead people to take on work that is undocumented, and the nature of that work is exploitative at its core.

A quick search on social media for cash-in-hand jobs will bring up plenty of options that can allow you to earn some quick cash with ease. Given the high numbers of people that this survey reveals to be in a seriously precarious economic position, there will undoubtedly be many who are at risk of becoming exploited.

If improved public health Scotland-wide is our goal, then maybe the West Coast pessimists are the modern day equivalent of canaries in coal mines. They might be warning us that there is nothing healthy about a toxic mix of in-work poverty and growing labour exploitation.

Press release: Scots’ pessimism about economic conditions remains

• Almost nine in ten (88%) Scots think that economic conditions are worse than they were a year ago. While two thirds (66%) of Scots say economic conditions will get worse in the next 12 months, this figure has dropped from 81% expressing the same sentiment in November 2022, starting what could be the beginning of an upswing in public opinion on the topic

• A majority (55%) of people believe Scotland is heading in the wrong direction. This is the first time a majority of people have expressed this opinion since Understanding Scotland began

• A quarter (25%) of people are not confident they would be able to pay for an emergency expense of £100 without having to take out a loan or borrowing money, pointing to an alarming level of financial precarity in Scottish households
  

This iteration of the Understanding Scotland Economy series, produced in partnership between the David Hume Institute and the Diffley Partnership, gathered economic attitudes and insights from more than 2,000 members of the Scottish adult population. 

Fieldwork was conducted the week prior to Nicola Sturgeon’s resignation, with results providing a snapshot of public opinion at the outset of ongoing SNP leadership campaign rather than following the announcement of the First Minister’s resignation. 

The new Understanding Scotland polling reveals a mixed picture of public opinion on the economy: while overwhelming pessimism coupled and evidence of harsh financial realities for households persists, people’s predictions for the next year appear less dire than in previous waves of data collection. 

Scotland’s Challenges...

The majority of people (52%) identify healthcare and the NHS as one of the three most important issues facing Scotland today. This is followed closely by the cost-of-living crisis (45%). There has been increased interest in education and schools as a key issue (cited by 15% of respondents compared to 9% in November 2022), correlating with coverage of strike action in the media recently. Interest in other topics covered in the media, such as gender recognition reforms is limited: only 6% of respondents view this as one of the top three issues facing Scotland. 

Scots continue to struggle to make ends meet. Almost six in ten (58%) of people report dissatisfaction with their income covering the cost of living, and 46% are dissatisfied with their ability to meet household bills. Most people continue to report taking action to reduce spending both in and out of home, 60% report not turning the heating on when they otherwise would have done to save money and 61% cutting down on leisure activities in response to rising prices and inflation. One in five (20%) have cut down on meal/portion sizes to save money.

Additionally, labour market activity continues to be shaped in reaction to rising prices: one in five (20%) of people have changed or looked at changing jobs to earn more money, 12% have taken on more hours or paid work, and 7% have tried, unsuccessfully, to take on more hours/paid work. 

Felt unequally...

Financial fragility is not felt equally by the population. While a quarter of Scots are not confident that they could pay an emergency expense of £100 without having to borrow or take out a loan, this rises to over a third (36%) of households with children and 46% of households in the most deprived areas. For an emergency expense of £500 uncertainty in the ability to pay out of pocket rises to 45% of all households, 60% of households with children, and 66% of households in the most deprived areas. 

In response to the cost of living crisis, people are being forced to engage in risky financial behaviours which could lead to increased financial fragility in future: over four in ten (42%) have taken money out of savings to cover higher costs, 41% put less money than usual into savings (with an additional 5% having stopped paying into a pension), all while a similar proportion (43%) reduced their donations to charity. With a quarter (25%) of people using credit cards when they otherwise would not have done and almost a fifth (18%) using ‘buy now pay later’ payment plans, the debt accrued during the cost-of-living crisis could extend its impact on the most financially vulnerable in Scotland. Nonetheless, just over half (52%) of people have hope that their own financial situation will, at the very least, not worsen in the next year.

This wave of Understanding Scotland paints a picture as Scotland gets set to welcome a new First Minister: the cost-of-living crisis continues to impact everyday behaviours, and healthcare and rising prices remain top of the public’s priorities. Nonetheless, amidst widespread disillusionment, a slight glimmer of reduced pessimism for the future in terms of the economy can be found. 

Mark Diffley, Founder and Director of Diffley Partnership, said: “It is clear that the ongoing cost of living crisis is still being felt acutely, and unequally, across Scotland. As we have seen in previous surveys, the impacts of the crisis go beyond immediate financial concerns and continue to have impacts on employment, health and levels of anxiety. A new question on being able to deal with unexpected bills reveals significant unevenness in financial resilience, illustrating that while 4 in 10 of the population would not be confident of meeting an unexpected bill of £500, this rises to two-thirds (64%) of those who live in Scotland’s most deprived communities.”

Susan Murray, Director of the David Hume Institute said: 

“The survey shows a significant number of Scots continue to be unable to cope with the everyday cost of living and are losing sleep over their finances. Even more are unable to cope with an unexpected bill or emergency costs. These results should not be taken lightly. If people are too tired or stressed to concentrate at work, the economy as well as individuals suffer. Living in acute stress affects people’s health and public spending, with the NHS likely to bear the brunt.” 

Understanding Scotland is a quarterly survey tool measuring the most important facets of our lives and decision-making in Scotland: our society, economy, and environment developed by Diffley Partnership and Charlotte Street Partners. Understanding Scotland: Economy is produced in partnership with the David Hume Institute.

We are hosting a free public event to discuss the findings of the report, further details can be found here 

Consultation response: Scottish Parliament Charities Bill

Response to the Scottish Parliament Social Justice and Social Security Committee Call for views on the Charities (Regulation and Administration) (Scotland) Bill

February 2023

We strongly support updating Scottish charity law to enable OSCR to create an open, publicly searchable register of charity trustees.

Why do we support the update?

The David Hume Institute regularly measures the diversity of Scotland’s top leaders. For the first time in 2022 our analysis included the leaders of the top 300 charities by income, as they are major influencers and lobbyists who impact on all parts of our society.

Increasing diversity of thought is in everyone’s interests as it helps avoid the pitfalls of group think (where similar people think or make decisions as a group, resulting in unchallenged decision-making) and improves risk management and productivity. More equal societies have higher productivity and high productivity allows more investment to create more equal societies. 

The top 300 charities by income represent just 1% of the total charities in Scotland and control over £10 billion each year - 73% of the sector's total annual income

As a micro organisation we do not have capacity to respond to every question in the call for views. However, the points below are relevant to the call for views and draw on our research from 2022, Scotland’s top charity leaders - how diverse are they?

We’re talking big money

• The charity sector in Scotland has an annual income of over £13.17 billion and 208,977 staff.  This means the Scottish charity sector is of a similar size to the NHS in Scotland.

The requirement for transparency has declined since the advent of SCIOs

• Since the introduction of SCIO’s in 2011, there has been a rapid growth in SCIO registrations. Companies House requires a higher level of public transparency for directors of companies with charitable status than OSCR currently requires for trustees.

Image from of OSCR data from Scotland’s top charity leaders - how diverse are they?

Transparency should go hand in hand with the benefits of charitable status

• Along with charitable status comes a legal duty to deliver public benefit.  Many charities receive public funding and tax benefits relating to their legal status.  Strengthening legislation to increase transparency and accountability would help maintain and build on high levels of public trust in the charity sector. 

• Increased transparency will enable diversity monitoring of charity trustees and help highlight risks related to limited diversity of thought. 

Update Scottish charity law to stop lagging behind Charity Commission and Companies House

• The Charity Commission and Companies House already require annual declaration of trustees and directors 

• The Charity Commission’s research into the experience of charities in England and Wales, finds that eight out of ten of charity trustees agree that ‘the rules and regulations trustees have to comply with are important, and are not too much of a burden’.   

• OSCR’s digital annual return means reconfirming those in control of the organisation could be quick and easy as part of this process. Every registered charity in Scotland should already have a record of their trustees and prepare an annual report and accounts. The choice of what information is in the public domain should not depend on the charity's commitment to openness and transparency.

The bill needs to go further

• It is important that the proposed bill enables OSCR to collect and correlate details of other trustee or director positions (those with significant control) held by individuals within charities on the updated Scottish charity register. This information should be publicly available and searchable via the charity register.

• Ensuring it is possible to search for individual trustees in the Scottish Charity Register in a similar way to Companies House, would aid public understanding of individuals’ with potential conflicts of interest.

Blog: The lifeblood of our economy is in peril

5th December 2022

Guest blog from Shona McCarthy, Chief Executive of the Edinburgh Festival Fringe Society, reflecting on the latest Understanding Scotland economy insights and what they means for the arts, culture and society.

Shona wants to see more people supporting and advocating for the arts. Here she explains what we stand to lose if the sector is not better protected during these turbulent economic times.

Photo: Edinburgh Festival Fringe Society, Andrew Downie 2018

In hard economic times it often feels as if people think investment in the arts is an unaffordable luxury.  Our sector is almost always the first to experience disinvestment in times of crisis but often the first to be looked to when thoughts turn to rebuilding hope, optimism, prosperity.  The Edinburgh Festivals are a fine example of this belief in the power of the arts to boost the national mood and forge cultural links internationally. They were established, by the British Council amongst others, to heal the human spirit and reconnect people across Europe, after the horrors of the second world war.

A thriving and inclusive creative sector is not a luxury or added extra in the UK, it is an essential part of the best of who and what we are, and is vital economically, socially, internationally, and culturally.

In 2019 the creative industries contributed £115.9bn in Gross Value Added (GVA)  to the UK economy. That’s 6% of the UK’s total GVA, more than the combined contribution of aerospace, automotive, life sciences and oil and gas and equivalent to 70% of the GVA generated by the financial and insurance sector.

Our sector also created jobs at three times the UK average employing two million people across the UK and supporting a further 1.4 million jobs across the supply chain. So the arts and creative industries are a route to opportunity, employment as well as life enhancement.

Our social and cultural contributions are similarly immense. Great strides have been made in recent years to address inequity in the arts and creative sector. We have worked hard to remove barriers to those who have historically found it most difficult to find a foothold or even aspire to a career in this field. There is still much to do in terms of where the arts are positioned in our schools and education system, to fully understand the transferable skills gained from early exposure to the arts that enhance employability, creative thinking and success in any sector.

We are known the world over for our cultural identities and freedom of speech and expression, for the innovation and originality of our voices in the arts. Creativity, whether expressed through music, literature, performance, visual art or other activities, forms our biggest soft power asset.

We cannot afford to lose these assets built over many years. Having just about survived two years of pandemic-related disruption, we have to face the evidence that audiences are not planning to return in sufficient numbers in 2023 to generate the income needed to cover all the costs that are rising so rapidly. There are no cultural recovery funds to draw on. Our sector is teetering on the edge and, therefore, risks becoming increasingly unappealing as a career choice.  Without support, belief, investment and recognition of our value, the arts sector is set to lose vital talent and skills in the short-term, and become the privilege of only those who can afford it as either practitioners or audience members for the longer-term.

We underestimate the value of our creative output and the sophistication of our artistic expression at our peril. The Edinburgh Fringe is located here but this is not an issue just for Edinburgh or even just for Scotland.  The Fringe is a global marketplace for the whole of the UK, bringing some 63 countries to our stages as well as programmers, curators and screen commissioners from around the world to source new talent and work.

The Fringe is not like any other festival. It is to the performing arts what Venice Biennale is to visual arts, Cannes to film, and South by Southwest is to music. It has been going for 75 years, and with our sister summer festivals, our combined ticket sales are on a par with the Fifa world cup or an Olympic Games, but happen every single year, with nothing close to the investment.

So this is a plea for support. The creative and cultural sector is a critical part of our economy, but more importantly says more about who we are as people, than any other sector. If there is anything you can do to advocate, champion or directly invest in our cause, it would be very much appreciated.

 ENDS

 Link for further information on the Edinburgh Festival Fringe Society 

Consultation response: public finances in 2023-24

Response from the David Hume Institute to the Scottish Parliament call for views on Scotland’s public finances in 2023-24 and the impact of the cost of living and public service reform.

About our submission

DHI welcomes the opportunity to respond to the Finance and Public Administration Committee’s call for views on Scotland’s public finances 2023-24 and the impact of the cost of living and public service reform.

Central to our work are the people of Scotland, including those who are seldom heard; from different ethnic and cultural backgrounds; different genders, ages and abilities. 

We apply the critical thinking which has long defined DHI to encourage action to address the contemporary issues of our time. 

Our response draws on a range of previous research including:

• The Action Project - the largest multi generational research project in Scotland in recent years heard from over 5,000 people about their thoughts on action to help Scotland build forward better.

• Our 2022 briefing paper on open data, which sets out the lack of progress on open data in Scotland and the cost to the economy and public services.

Summary

We call on the Committee to recommend that the Scottish Government:

• Maintain the essential focus on commitments to reducing child poverty and the transition to net zero is critical to the economy

• Fully implement the Scottish Government’s 2021 benefit take-up strategy

• Recognise that there is little evidence that tax cuts will help with the cost of living or inflation

• Work to reduce levels of ‘inactivity’ amongst those who want to work by reducing barriers to work in order to increase the tax base.

• Fully realise the benefits of their own Open Data commitments to improve public services and boost the economy.

• Better utilise the sustainable procurement duty to deliver national outcomes

Consultation response: Scotland's Innovation Strategy

The David Hume Institute responded to the Scottish Government’s call for evidence on Scotland’s Innovation Strategy.

Our response is based on common themes from one to one interviews and a roundtable conducted in line with the Chatham House Rule in June 2022. Participants were from different backgrounds and areas of expertise. The response also draws on previous research conversations from the Action Project, see appendix 1 of the submission.

Key recommendations

1. Think long term and be brave

2. Have clarity of purpose

3. Lead by Example

4. Ensure data and facts underpin decision making

5. Play to our strengths but there is more than one game

Read the full submission to find our the detail of our recommendations.

New research reveals widespread economic anxiety in Scotland

Press release from the David Hume Institute & Diffley Partnership

25th May 2022

A new survey produced in partnership between DHI and the Diffley Partnership has revealed widespread anxiety about Scotland’s economic outlook. Amid surging prices, the new Understanding Scotland - Economy survey finds:

• A quarter of people have lost sleep due to stress over personal finances, rising to 3 in 10 people in the most deprived areas.

• Adverse financial conditions have pushed many to forego basic necessities, with 3 in 5 going without heating, and more than a fifth skipping or cutting down on meals to save money. 

• Rising prices also appear to be pushing people into more vulnerable circumstances, with a third of people eating into their savings, and a quarter taking on debt. The equivalent figures are even higher in deprived areas, at 36% and 32% respectively.

While concern is widespread, rising prices have not hit everyone equally: 23% of people in the most deprived areas say their finances have become ‘much worse’, compared to 13% in the most affluent areas. Parents and families are also feeling the squeeze, with 43% of households with children having taken on debt or borrowed money. In addition, three quarters of those unable to work due to sickness or disability, and four fifths of the unemployed also report feeling worse off.

While the present picture is concerning, most people expect things to get worse before they get better. The poll finds that 84% of people believe that economic conditions in Scotland have deteriorated over the past 12 months, and 77% expect this downward trajectory to continue. A similar picture emerges with regards to people’s personal finances, which 62% judge to have worsened over the same time period, and 59% expect this to continue over the coming year.

Mark Diffley, founder and director of Diffley Partnership said:

 “These are some alarming results with no silver lining in sight. Our polling finds extensive and, for some, acute anxiety over a cost of living crisis that is hitting people across all parts of society. A majority of people in all forms of work say that their incomes simply aren’t going far enough, and the picture is even more alarming for those out of or unable to work.”

Susan Murray, Director of the David Hume Institute said:

 “These findings draw attention to the urgent need for action to help those at the sharpest end of surging prices. A quarter of people across the country are losing sleep because of worry about their finances and over half of people are cutting back spending. The potential long-term impacts on the nation's health and economy are huge.”

ENDS

Notes to editors:

1. Designed by the Diffley Partnership, the survey received 2,203 responses from a

   representative sample of the adult population, aged 16+, across Scotland. Invitations were

   issued online using the ScotPulse panel, and fieldwork was conducted between the 5th - 9th

   May 2022, and received 2,170 responses from the adult population, aged 16+, across

   Scotland. Results are weighted to the Scottish population (2020 estimates) by age and sex.

2. About Understanding Scotland: Understanding Scotland is a high-quality quarterly survey

   that delivers insights into Scottish behaviours and attitudes towards society, the economy

   and the environment. The survey fills a vital gap in research, providing the socioeconomic

   insights and indicators needed for effective decision-making, with regularity and timeliness.

Blog: Scotland’s declining population – a crisis looming?

Blog by Eric Hildrew, Communications Lead, David Hume Institute

28 April 2022

As demographers, you might think Esther Roughsedge and Michael Anderson deal firmly with hard facts, however as they were keen to stress at our recent event on Scotland’s changing populations, predicting future population size is a practice laced with uncertainty. In the 1930s, it was estimated that Scotland’s population by the first quarter of the 21st century could be as low as 1.5m (fewer than now live in the central belt alone), though thankfully methods of projection have also improved since then.

So the headline of recently released figures from National Records Scotland – that Scotland’s population will peak at 5.48m in 2028 before declining, making Scotland the only UK nation to forecast a downturn – should be treated with caution. If accurate, a 1.5% decline would put Scotland in the company of Italy, Slovenia, and Finland (all predicting similar reductions) but significantly more stable than either Iceland (predicting 30% growth in population) or Latvia (23% decline).

Graph courtesy of National Records Scotland.

What is more certain is that whether births, deaths, and migration combine to decrease or grow Scotland’s overall population, the age profile of the country is going to change dramatically. In just 23 years’ time, Scotland is expected to have almost a quarter less children and almost a third more over 65s. The proportion of working age people is also expected to decline, particularly in the 30-and-under age-range.  The Scottish Government established a population taskforce in 2019 to investigate barriers to having children in light of the country’s steadily declining birth rate, but current estimates don’t predict a significant change in this trend is on the horizon.

To complicate this picture, we don’t know exactly how these changes will be distributed across our towns, cities and rural areas, but we do know that population decline will affect some areas more than others, with west, south west Scotland and the islands likely to see steeper a drop than central and eastern areas. On a more granular level, specific council areas are likely to see significant decline while others nearby grow, creating markedly different pressures and life experiences for residents. 

Graph courtesy of National Records Scotland.

These changes have huge implications for local, national, and UK governments. From the size of Scotland’s tax base and the UK Government block grant, to education, housing and social care provision, matching resources with demand will be an ongoing challenge. Much like climate change and inequality, population change is an underlying structural issue which outlives any  election cycle or immediate crisis. 

Scotland’s slow but steady population growth this century has been fuelled not by babies but by migration, specifically (until Brexit) from the EU though also from the rest of the UK. Other countries have tried incentivising couples to have more children, but there is little evidence to suggest this approach works. Uncertainty about future circumstances such as home ownership and job security is unlikely to be assuaged by modest cash incentives or tax breaks. 

Instead, an effective adaptation strategy will need to reconsider outdated attitudes to ageing and older people, ensuring that they stay economically and physically active for longer as well as being offered better options to combat loneliness, isolation, and declining health. The delivery of effective social care must be seen as an investment, not a cost. 

Scotland has been shaped by outward and, more recently, by inward migration. As the trajectory of our population growth begins to diverge from that of other UK nations, so must our ability to implement a devolved migration policy which fits the needs of our labour market and which encourages movement of labour to those parts of Scotland most affected by population decline in the years to come.

Population change is inevitable, but its consequences are not.

Blog: Prioritising priorities for economic recovery

Blog by Susan Murray, Director, David Hume Institute

20th April 2020

We are moving into a new phase of the Covid-19 public health crisis and thoughts are turning to the foundations for economic recovery.

The sudden and dramatic disruption of the shutdown, triggered an economic shock far bigger than anything we have in recent years. In a webinar, Adair Turner said the number one priority should be increasing consumption to help GDP return to pre-coronavirus levels. Many economists are emphasing the need to make this a V-shaped shock, a sharp decline followed by a quick sustained economic recovery.

But the shutdown has also provoked much reflection on how we are living our lives, both individually and collectively.

Post-pandemic we will still have a climate emergency.  The world’s resources are still finite.  Encouraging those that have money to spend unsustainably might not be the best way forward.

There is a chance to think about established norms.  For instance, will long complicated global supply chains still be desirable?  

Food security has fallen off the Government’s radar in recent years but an increasing number of people have taken action to grow their own food according to figures from the Royal Horticultural Society. Is this a sign of loss of trust in supply chains?

Acting locally doesn't have to be a substitute for thinking globally, it can be an ally. 

The Scottish Government was the first in the world to sign up to the Sustainable Development Goals.  Now more than ever before, these goals need to underlie decision making and ensure that it is not just the industry that shouts the loudest or has the best lobbying that secures public funding.

Scotland would not be alone in considering this as a chance to rethink the path ahead. A group of 180 political decision-makers, business leaders, trade unions, campaign groups and think tanks urged the EU to adopt green stimulus measures. Amsterdam has already shown leadership in announcing it is working with economist Kate Raworth, author of Doughnut Economics on delivering a “Doughnut City”.  

In Denmark bold leadership from the government means companies which pay out dividends, buy back own shares or are registered in tax havens won’t be eligible for any of the aid programs.  Will other countries follow this lead?

Fears of the economic deficit must not be allowed to crowd out smart thinking. There are very strong reasons for not returning to business as usual so propositions aimed at taking us back to things as they were are particularly unlikely to constitute the best approach.

Constructing a positive way forward will involve embracing the complexity of our future choices.

The Scottish Government must hold strong to the UN Sustainable Development Goals and emissions reductions targets, and ensure any precious public money invested to reboot the economy, does maximum public good.

Blog: Can Scotland’s young people help bring home the harvest?

Blog by Susan Murray, Director, David Hume Institute

7th April 2020

The global economy is in sudden and severe recession.  Before Covid-19 everyone was talking about the labour market and migration.  Now, just a few weeks on, the debate is very different.  

Farmers are now desperately looking for people willing to harvest crops in Scotland. Recruitment websites have been set up to target redundant hospitality industry workers and farmers are trying Facebook posts to recruit workers.

Could young people who no longer have school work and exams come to the nation’s rescue to help bring home the harvest for everyone?

Until recently it was normal for people of all ages in Scotland to help with the harvest.  The legacy of this remains in the school holiday timings – an earlier summer holiday than England, a September weekend and in some parts of Scotland an extended October holiday. It was also normal for young people to have part-time jobs whilst still in education.  

Initially, any new recruits obviously won’t be as quick as the skilled migrants but thousands of young people will have been cooped up inside for weeks, surely there is a ready supply of labour?  Any new scheme would need to ensure it was in-line with government guidance on social distancing and correct health and safety but this would be a win-win.

There has been a steady decline in recent years of young people undertaking work while studying.  It used to be normal for young people to get Saturday and holiday jobs as soon as they were old enough.  Many had paper rounds from the age of 13 or worked in shops from 15 years old.  These jobs taught important life skills and encouraged independence, as well as ensuring a short distraction from the pressure of school work.

A recent report from UK Commission for Employment and Skills (UKCES) and London Economics “The Death of the Saturday Job” showed a stark decline in young people working while studying. Exam grades have become the sole focus for many young people, whilst employers bemoan the lack of transferable skills of new entrants. 

The stark decline of earning while learning in the UK has not been seen in other OECD countries like Germany, the Netherlands, Australia, Switzerland and Denmark. This lack of exposure to working environments means young people are not developing life and employability skills in the same way as their peers in other countries.  

Even for those young people already in work, an IFS report shows the under 25s and women will be most hit by the impact of Coronovirus shutdowns.

Encouraging available young people to help with the work that desperately needs doing could be the answer if we are to avoid losing a harvest and young workers to a post Coronvirus slump.  Having a daily purpose can help avoid depression and develop skills that lead to higher earnings in future.  

The evidence in both reports is compelling.  

Even without the immediate desperate need for farm workers in Scotland, youth employment – earning while learning - is important and should to be encouraged.  

Blog: The migration debate is moving on

Blog by Susan Murray, Director, David Hume Institute

20th February 2020

Confession:  I am a migrant.  Generations of my family have moved within the UK for work.  Like many migrants, I chose a place I wanted to live because of the quality of life and found a series of jobs that have enabled me to stay.

Many headlines yesterday on the latest UK migration policy announcement seem to forget migrants have choices.

I attended three events in the last three days related to different aspects of Scotland’s future labour market and migration.  The discussion in Scotland could not feel more different to the Westminster driven headlines. 

The panel at yesterday’s event included representatives from the farming and hospitality industries.  The audience included representatives from social care and other industries. All were completely dismayed by the latest proposals announced.  Frustration was voiced at the amount of time spent feeding data into the Migration Advisory Committee and to Home Office officials, as well as hosting UK Government Minister visits only to find the proposals show no sign of being listened to. 

Data and evidence seems to have been dismissed.  The numbers don’t add up.  And, the conversation, shut down.  

For instance, the figures for agricultural workers quoted at 10,000 is the number that is needed for Scotland alone.  NFU states the minimum number needed for the whole of the UK is 70,000.  

What has been proposed is not what was promised throughout the Brexit debate – an Australian points based system.  

Is that because the Australian system is a regional points based system with variations to target different needs across the country?  The Australian system has seen migration rise, not fall, as is the stated aim of the UK Government policy.

However, the hostile rhetoric means migrants that have choices and are already voting with their feet.  The fall in the pound means it is no longer so attractive for migrants to work in the UK as they can earn more other countries.

The General Teaching Council for Scotland has already seen significant drop in applications from European Countries. The numbers have “fallen off a cliff”.  

Only time will tell if the welcoming “Scotland is Open” message being promoted by the Scottish Government will cut through internationally over the hostile message from the UK Government.  If it doesn’t, Scotland with already low unemployment, will face stark challenges in many industries.

The work of the British Council in Scotland published this week on Soft Power shows this will become increasingly important.  

Valuing our values was at the heart of the discussion on Soft Power.  Scotland is respected across the world for its values, which are critical for building relationships and our international reputation.

Scotland is now campaign poster on the London tube, February 14 2020.

We know from our recent work on Scotland’s labour market, Who Will Do the Jobs? that attracting migrants to work in Scotland will be essential to sustain public services. This is a discussion of hearts as well as minds.

 Understanding soft power and its ability to influence migration will be critical for this.

Thinking closer to home, Scotland already has net inward migration from the rest of the UK.  

People are moving here because of the better quality of life and progressive policies.  The latest Scotland is Now campaign aims to increase this further.

Having lived in Scotland for over 25 years, I love that our values are different from the south of England where I grew up – the daughter of a Scottish migrant.  I still appreciate the differences including small everyday demonstrations of community and kindness showing distinct values.

The climate emergency has focussed minds across the world on the importance of natural and social capital.

Scotland’s values, its natural and social capital will be increasingly important for the future of our economy and our prosperity.

Blog: Migration discussion needs open hearts and minds

Blog by Susan Murray, Director, David Hume Institute

27th January 2020

At the launch of the Scottish Government’s policy paper “Migration, helping Scotland Prosper” today, it is clear we need open hearts and minds for Scotland to flourish.

The policy paper clearly lays out Scotland’s distinct demographic challenges.  The David Hume Institute research report Who will do the jobs? (September 2019) is quoted and our Autumn events with Jonathan Portes, Michael Anderson and Graeme Roy discussed this complex issue in depth.

All the evidence shows migrants are critical to the Scottish economy.  They are an important part of our working age population which funds our public services. Many of Scotland’s rural communities are dependent on migrant workers.

However, too often in conversations we have seen recently elsewhere in the UK, evidence and reasoned arguments don’t matter.  Food can rot in the fields because migrant labour no longer feels welcome, as long as the individual’s idea of a prosperous post Brexit future prevails. The pigs in blankets shortage may have been considered amusing by some but it was another sign of labour supply issues.

The message today from the First Minister was clear – Scotland is open.  But do all our communities feel that way?  Some of the views from the recent citizen assembly show they do not. 

The Scottish Government policy paper clearly makes the case for a different approach to migration in Scotland. However, when it is published on the same day the Scottish Government launches a Hate Crime fund for places of worship, it’s an indication much more needs to be done to appeal to people’s hearts to create a welcoming and tolerant Scotland for everyone to prosper together.

Blog: Back to the Future, a DeLorean and David Hume

Blog by Susan Murray, Director, David Hume Institute

January 2020

In an Edinburgh living room, more than thirty-five years ago, some friends gathered in front of a fire. They talked late into the night about philosophy, economics and public policy.  

This happened again and again. More friends joined them each time. Agreement emerged on an idea.  There was a great need for more enlightened thinking.  Public policy needed research and analysis that was not led or framed by London-based organisations.

“Truth springs from arguments amongst friends.”  David Hume

From this dusty living room, the eminent Sir Alan Peacock, the businessman Sir Gerald Elliot and a few friends started the David Hume Institute. The name was chosen out of a deep respect for David Hume and his thinking. 

From the start, the Institute was non-partisan and independent, founded firmly in the philosophy of David Hume – examining the evidence and creating informed debate.

"A wise man proportions his beliefs to the evidence." David Hume

So, while the rest of us were watching the film Back to the Future with a time travelling DeLorean, Sir Alan Peacock and his friends were discussing a new enlightenment. 

If we had a DeLorean we could go back thirty-five years and be a fly on the wall for these initial conversations.  Professor Chris Carter of Edinburgh Business School interviewed Sir Alan about this time, and these recordings are probably as close as I will come to understanding the origins of the institute. What’s changed in those thirty-five years?  What would Sir Alan think of our library of research and analysis? 

If we were lucky enough to have a DeLorean, we could go even further back in time.  We could time travel back to David Hume himself.  What would be David Hume’s favourite paper? And what would he think about the uncertain times we live in?

Since I started with the Institute in mid November, I’ve had lots of conversations about the organisation.  There are many people with close connections and fond memories of events or a favourite piece of research.

One of my most memorable David Hume Institute events was in 2013 listening to economist Danny Gabay discuss the state of the economy, quantitative easing and the pitfalls of house price led recovery.  When I googled him to see if it might be possible to invite him back to Scotland in 2020, I discovered he passed away at the age of just 47. 

Sadly, time is often too short. However, as the turn of the year is often a time of reflection, if you are willing to share your reflections on the institute’s work, we would love to hear from you.  Please get in touch to let us know your favourite piece of research or most memorable event by emailing: director@davidhumeinstitute.com

New Report: Who will do the jobs in Scotland?

Current employment rates in Scotland are at a near-record high. However, Scotland’s population is ageing fast and there is a low birth rate.

By 2041, the pension-age population is projected to increase by 265,000, while the working-age population is only projected to rise by 38,000.

This report discusses the challenges facing Scotland with changes to migration patterns and a shortage of workers. What can we do to meet the labour supply challenges in Scotland. Who will do the jobs?

New Report: Scotland's Productivity Challenge

Scottish productivity has all but stalled in the last fifteen years and a turnaround is required if future living standards are to improve. This report makes recommendations for government, policymakers, business and trade unions, based on the conclusions of new research and case studies. It details five evidence-based stories of what has worked in comparable places and draws lessons from their experiences. In each case a ruthless focus on evidence, building consensus across the political divide, and developing strong and credible institutions were all necessary to turn things around.