You've never had it so good, although..

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peopleImage source, EPA
Image caption,
The UK is now effectively at full employment

Scotland has never had it so good. Exceptionally low unemployment. Record high employment. Jobs growth motoring nicely.

Only the south-east and south west regions of England have lower unemployment rates.

The concerning rise in economic inactivity - those not counting themselves as available for work - has diminished since the start of the year. That's before we were able to find out why it was.

Why is this happening? Judging by other indicators published in recent months, it has to do with a buoyant manufacturing and export market, helped by the fall in the value of sterling.

Tourism is an export, even if it doesn't look like one. And it has had a bumper year, from foreigners and staycationers.

Image source, EPA
Image caption,
Tourism has been a key driver of Scotland's buoyant export market

There are some signs that the shake-out of jobs from the oil and gas sector has at least levelled off, and that has almost certainly been a big driver of the relatively poor economic performance in the past couple of years.

As if to underline that point, the Scottish government has today announced it's winding up its Energy Jobs Taskforce, set up in January 2015.

There's much slapping on the back between ministers, employers and unions about a job well done, while its tasks are folded into mainstream arrangements.

The fall in inactivity may also have quite a lot to do with the benefits system. Though "fitness for work" assessments have been controversial, they have forced at least some people back into the job search who might otherwise be counted as "long-term sick" or otherwise unavailable for work.

Take also the case of parents. Jobs are becoming more available. Employers should be more willing to be flexible on hours in order to get the skills they need, while the real earnings from a sole breadwinner are being squeezed, there's more of a case for a parent (usually the mother) to go out to work. That's helped if childcare becomes easier or less expensive.

Squeezed pay

There's a "but". Of course there is. And that squeezed pay is part of it. According to the Office for National Statistics, average real earnings have declined in the past ten years.

More expensive imports have pushed up price inflation, now close to 3%. With pay up by 2.1% in the past year, you may already be doing the maths with your household budget.

And there's also the question of job quality and job security; routes out of minimum wage jobs are tougher and more people are having to make do in the gig economy, with its zero hour contracts, long hours and poor employment protection.

Bear in mind also that the jobs market is only one indicator of the economy's health. Others are looking a lot more peely-wally, and uncertainty looms larger than usual.

Bargaining power

Where does that leave us? With an exceptionally tight labour market. As a bit of churn in the jobs market is inevitable and a good thing as people leave jobs for better prospects elsewhere, we're now effectively at full employment. The ONS shows British vacancies have been rising steeply.

What does an economy need when it reaches that point? Migrant labour.

There's a problem there, called Brexit. And allied to the political push to cut immigration, there's the problem of sterling's weakness making British wages less attractive to migrant workers once they've been converted into their home currencies.

So if employers can't get workers from elsewhere, British-based workers have the bargaining power (or industrial muscle) to push up their pay. Or some of them do, at least.

That's clearly happening in the public sector, with both the Scottish and UK governments breaking through the 1% pay barrier, at least for some.

I heard of one interesting example recently. Lawyers who graduated seven to nine years ago found it very hard to get apprenticeships and secure posts.

But a lawyer with seven to nine years of experience is the bedrock of what makes a legal firm work. They have the experience to do much of the work, and are willing to put in the hours to get up the career ladder, but they aren't as expensive as partners.

Because of the sharp fall in recruitment with the crunch, there's now a shortage of them, so their pay is going up handsomely.

Across the economy, that process can lead to pay-led inflation - higher wages, so firms put up prices, so workers demand higher wages.

That's something for which the Bank of England will be watching closely, though there's not much sign of it yet. If it does become more of a concern, watch for an interest rate rise.

Anyone with a memory of the 1970s will see how badly that can go, if everyone wants to play catch-up. Just one of the problems is that it strongly favours those with most bargaining power.

The other direction for businesses and the public sector to go is by saying: if we can't get the skilled workers we need, we should get more from the ones we've got, by improving productivity. That would surely be a good outcome.

Either that, or invest in more automation, to replace workers. That's not necessarily bad, but it points to one of the big challenges across the world economy, of how to handle the rise of the robot.