Income and employment: key points

Income, employment and health:

• Income and employment are key determinants of population health and health inequalities.
• Reducing poverty has direct benefits for children’s social and emotional development and adult’s mental health. 
• Reducing child poverty is also likely to have indirect positive health impacts for the children and their families.
• Good work can protect against poor health, be health promoting and reduce the risk of premature mortality but work which poses higher physical risk, 'job strain', is insecure or poorly paid can be actively harmful to health.

Welfare reform:

• Reforms to reserved Social Security since 2010 have been accompanied by increased employment, increasing health inequalities and rising child poverty.
• Anticipated positive impacts on health from welfare reform had not materialised by 2019.   

Poverty:

• Using the relative poverty after housing costs definition, the poverty rate in 2021-2024 in Scotland was 23% for children, 20% for working age adults and 15% for pensioners.
• In 2021-24, 680,000 working age adults in Scotland were living in relative poverty after housing costs.
• Most working-age adults and children living in poverty in Scotland live in a household where someone is in paid employment.
• Policies to offset increases in the cost of living were introduced in the Spring of 2022. Modelling the impact of these policies suggests they were progressive, but insufficient to fully mitigate against the negative health impacts associated with costs of living. These payments ended in 2024.

Unemployment and Economic inactivity:

• In general, working-age people who are unemployed or economically inactive have poorer mental and physical health than those in employment.
• People who are inactive due to long-term sickness and unemployed people have the poorest health among the working age population.
• In the period January-December 2024, the APS estimated there were 87,600 unemployed people and 608,000 economically inactive people aged 16-64 (excluding students) in Scotland
• Although the Labour Force Survey may be overestimating economic inactivity, other data sources suggest that the number of people not in work or looking for work due to long-term sickness has increased in recent years.   

Inequalities:

• Weekly incomes** varied from £248 in the poorest percentile of households to £1139 in the richest percentile of households (2021-24 data, adjusting for household size).
• In the 1990s, poverty rates were highest for pensioners and children (1 in 3) while 1 in 5 working-age adults were in poverty. By 2019-22, poverty rates were lowest for pensioners and highest for children, while working-age poverty remains largely unchanged.
• In 2018-20, households in the top decile in Scotland held on average £1.7m in wealth, while those in the bottom decile held on average £7,600 (2018-20 data, adjusting for inflation).  
• Labour market demand*** varied across Scotland, with demand especially low in Angus, East Ayrshire, Renfrewshire, Inverclyde, North Ayrshire and West Dunbartonshire (2025 data, ***measured by job openings relative to unemployed).

* After housing costs, taxes, benefits, child maintenance payments and parental contribution to students living away from home. 

**With the exception of working-age retired people, who have relatively favourable health, and students, who have poor mental health but good physical health.