Have you heard the one about FDI data? – Daily business magazine

Office workers by Alex Kotliarskyi

Conflicting data on job creation is no laughing matter, writes Terry Murden


As any seasoned comedian will attest, it’s not just the good timing that makes a joke work, it’s the way you tell it. The same could be said of statistics and, in particular, data on foreign direct investment (FDI) and business creation, which are not necessarily all that they seem.

New figures from the Department for International Trade showed that 4,408 jobs were created in Scotland in 2021/22, a sharp increase from the previous 12 months (3,245) and the corresponding previous period (2,946).

That’s the good news. The even better news is that data released last month by Scottish Development International (SDI) showed that more than 7,500 planned actual living wage jobs had been generated by internal investment in FY21/22. In a matter of days, Big Four accountant EY published data indicating that more than 10,000 jobs were created through FDI in Scotland during 2021. Any more offers?

The timeframes are not directly comparable – the first two are for the fiscal year, the latter for the calendar year – but there is enough overlap to question why there is such a big difference, as the EY figure is more than double the data. of the DIT.

A DIT spokesperson told me that EY “may use a different methodology.” The Scottish government explained that apart from the slightly different time frame, the EY attractiveness survey also looks at “investor sentiment”. However, a key factor may be that the EY data includes investments from other parts of the UK (not yet foreign). In total, it is a messy set of figures that are used to build and measure an economic strategy.

While the government and its cheerleaders boast of Scotland’s success, and not without some justification, other data calls into question the regular repetition of Scotland’s second place in the foreign investment league table. A CEBR report in May showed that by 2021 it had fallen to fifth place, its 92 projects far behind London with 492, the South East (163), the West Midlands (145) and the North West of England (139). Scotland saw a 24% drop from the previous year, the second largest drop of any area of ​​the UK.

Another EY report published last month on the financial services sector showed that Scotland had fallen from second to fourth place behind London, the West Midlands and Northern Ireland.

Despite constant references in press releases to “high-quality jobs,” details about what kind of wages are paid are lacking. Scottish Development International refers to the 98% who pay a real living wage (an annual salary of at least £19,305), suggesting that the majority are at the lower end of the scale.

There are questions about other data related to the growth of technology companies. According to Dealroom research for the UK Digital Economy Council, there is a growing class of early-stage companies in Scotland set to become future tech giants.

His list of examples, recently published by the business media, turned out to be a bit short. It included the Parsley Box prepared food business, run by Chris van der Kuyl and Kevin Dorren. Not only is it not a tech business, but its value has plummeted from £84m at the IPO in March 2021 to currently stand at £16m after a series of setbacks. It may be getting better, but it will take a huge leap of faith to believe that it will soon be a tech giant.

Another on the list is Encompass Corporation, which has an office in Glasgow but is based in London and was created by two guys in Sydney, Australia.

Pocket FM was notable for having raised over £52m in the first quarter of this year, referred to as an Edinburgh company but appearing to have been confused with an India-based company of the same name. .

My late colleague Bill Jamieson regularly bemoaned the paucity of data on the Scottish economy and on this evidence there is a great deal of confusing and inaccurate information circulating which allows politicians and others to choose what they prefer to believe in making their case.

Sometimes even good news can be hard to digest. Scottish Trade Minister Ivan McKee was pleased with the FDI figures, saying: “These latest results are very encouraging and once again underline the strength of inward investment supply in Scotland…” before adding. .. “despite the significant challenges posed by the pandemic and Brexit.”

This is the closest we get to a Scottish government minister admitting that for all the insults and criticism the SNP level at Brexiteers, there has been no negative impact on the flow of investment or jobs in the UK. or Scotland. That is, if you believe the data.


tmurden@dailybusinessgroup.co.uk

Terry Murden has held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of the Daily Business.

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