Fife’s businesses are positively booming but workers are still feeling the pinch in their pay packets.
That’s according to a new report which reveals companies’ profits in Fife have grown by 25 per cent since the recession ended in 2009, while wages have grown by a mere 9.1 percent.
Author Thomas Kane, of 4-consulting, said: “There’s more focus on the growth of inequality in Scotland today but the figures for Fife show how stark the problem is.
“If the workers’ share of our economy continues to fall it will eventually erode the incentive for people to develop skills and further their education.
“We need to avoid falling into a trap of low productivity and low value jobs; in the long run this won’t help workers grow their wages or businesses grow their profits.”
‘Measuring Fife’s Economy’ also reveals that, while George Osborne hopes to balance the UK deficit by 2019, Fife has already achieved that goal and more, accumulating a healthy surplus of £700m.
That figure does include, however, a net increase in wages of around £1.4 billion from commuters living in Fife but working elsewhere, mostly in Edinburgh.
Proposed Council Tax reforms announced by the Scottish Government yesterday (Wednesday) include a local income tax charge which, according to sources, would “undoubtedly be a complicating factor for employers in Fife.”
Mr Kane warned: “If we want Fife to continue as one of Scotland’s economic engines we need to think carefully about how best to fund and deliver local services to make sure Fife can continue to make a big contribution.”
A vote to leave the European Union on June 23 could also impact on Fife more heavily than other regions because, while international exports account for 18 per cent of Scottish GDP, Fife’s figure stands closer to 24 per cent.
Latest data reveals that Fife businesses, which include major firms such as Diageo and Quaker Oats, exported £1.7 billion outside the UK in 2014 and 58 per cent of all goods were destined for the EU.
In the event of an exit, Fife businesses would face an increase in tariffs.
Mr Kane commented: “The Fife economy is an exporting heavyweight. Most of our businesses rely on international trade with Europe in some way and even exports beyond Europe are supported by trade deals brokered by the European Union.
“There’s costs and benefits to EU membership, but for Fife the balance of economic benefits is tilted towards remaining in the EU.”
Fife Chamber of Commerce said the report, by offering harder statistical information, backed-up perceptions of the current challenges in business and the wider community.
Eric Byiers, chairman, said: “ The report highlights the importance of manufacturing to Fife and the positive role exports play in the local economy.
“Progress in the manufacturing sector and developing new international markets will undoubtedly be hard work in the current climate so we need to celebrate the positive messages in the study and remind ourselves of the quality companies we have in Fife.”
He added: “The report also highlights the commuting links Fife has with the cities of Edinburgh, Dundee and Perth – as well as the accessibility we have with other parts of the Central Belt.
“It is vital that these connections are taken into account in the “City Deal” proposals currently being developed and that these include projects which benefit businesses and residents of Fife.”