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Reports in detail

Our region in detail

Want to scratch under the surface of the Highlands and Islands? See the numbers that are driving our social and economic priorities - our population, skill sets, business base and cost of living.

Our geography

The Highlands and Islands stretches from Shetland in the north, to the Kintyre peninsula in the south, and from the Outer Hebrides in the west to Moray in the east. 

It accounts for just over half of Scotland’s landmass but less than 9% of its population. 

The region has a complex geography, incorporating the UK’s highest mountains, a fjord-like coastline, and around 100 inhabited islands.  

Of the population of 470,000, 62% live in remote areas; 23% in large settlements (13% in Inverness, the only city); and around a fifth on an island. 

The region has the lowest population density in the UK, and one of the lowest in Europe.

Our people

Trends and statistics

Population trends

With a population of 469,365 in 2018, the Highlands and Islands is characterised by population sparsity, an ageing population and net out-migration of young people.  Following a period of strong growth between 2001 and 2011 (7.8% compared with 4.7% for Scotland), population growth slowed to 0.5% between 2011 and 2018, lower than the 2.6% for Scotland.

The trend of low of population growth is expected to continue, with the region’s total population projected to be largely unchanged by 2040 and Scotland’s population projected to grow by approximately 5% by 2040.

Nearly a quarter (23%) of the region’s population are aged 65+, up from 19% in 2008, and projected to be 31% by 2040.  For Scotland, the 65+ age group accounts for 19% of the population, up from 16% in 2008 and projected to be 25% by 2040. 

The working age (16-64) population is expected to fall and make-up a lower share of the total population by 2040 (54% compared to 61% in 2018), while the share of the population under 16 is expected to remain relatively stable (15% by 2040 compared to 16% in 2018).

Reflecting this, the dependency ratio – the number of dependents (under 16s and over 65s) per 100 people of working age (aged 16-64) – which increased from 57 in 2008 to 65 in 2018, is projected to be 85 by 2040.

As the number of deaths exceeds births, the region increasingly relies on positive net migration to maintain and grow its population.  

 

Young people

Net out-migration of young people is a long-standing and significant issue as young people move out of the region to pursue education and career opportunities in the rest of Scotland and further afield.

HIE’s research on the attitudes and aspirations of young people aged 15-30 illustrates an increasing commitment to staying in the region (55% want to stay in the region up from 43% in 2015) .  Around three in five (59%) believe that young people who leave will return to the region when the time is right. 

Almost two-thirds (64%) would like to work in the Highlands and Islands in future but cite a number of economic and social factors that need to be in place to facilitate this. The top four economic factors cited by young people were good pay levels, high quality jobs, a low cost of living and opportunities for career progression, and quality of life, availability of affordable housing and access to good healthcare the top three social factors.

Skills - school-leavers

School leaver attainment in the Highlands and Islands is broadly similar to the national average.  In 2017-18 around a fifth of pupils in the region and across Scotland achieved at least one award at SCQF Level 7 (Advanced Higher). SCQF Level 6 (Higher) was the highest level of qualification achieved for around two-fifths of leavers and SCQF Level 5 (National 5) for just under a quarter of leavers.

At 95.4% (compared with 94.4% for Scotland), school leavers in the region in 2017-18 were more likely to go on to a positive initial destination of further or higher education (FE or HE), training, voluntary work or employment.  They were more likely than average to enter employment (33.8% versus 22.7% nationally), but less likely to enter higher education (36.3% compared with 41.1% across Scotland).  

In 2017-18, the vast majority (80%) of FE students from the region were studying within the Highlands and Islands.  HE students from the region were more likely than FE students to be studying at institutions elsewhere in Scotland (54% compared to 20%). Around a third (34%) were based within the Highlands and Islands and a further 12% were studying through the open university so likely to be based within the region.

Modern Apprenticeships

Modern apprenticeship (MA) starts increased by 22% to 2,788 between 2012-13 and 2018-19. This represents 10% of all MA starts in Scotland.  

Employment rates

In terms of the wider labour market, economic activity (8.3%) and employment rates (78.9%) in the Highlands and Islands are higher than nationally (77.4% and 74.1% respectively in 2018). They have remained relatively unchanged over the last decadeSelf-employment is also higher (11.3% versus 8.4% nationally), and a greater proportion of people in the Highlands and Islands work from home: 15.5% compared to 10.8% nationally. 

Following the long-term trend, unemployment in the region is lower than for Scotland (2.4% in July 2019 compared to 3.2% nationally).

The strong labour market participation in the Highlands and Islands is driven by high employment rates for both men and women (80.8% and 77.1% respectively in 2018).  The employment rate for 16-24-year olds (67.1%) is also above the national average (57.2%), reflecting the greater proportion of school leavers from the region going directly into employment. 

Levels of self-employment are more prevalent amongst men (14.7% versus 7.8% of women in 2018) and women in the region are more likely than both men in the region and women nationally to be employed part-time (46.8% in 2018 compared to 11.0% and 41.3% respectively). 

Skills workforce

Mirroring the pattern for Scotland, there has been a marked increase in the skills levels of the working age population in the Highlands and Islands over the last 10 years. More than two-fifths (42.5%) have a qualification at NVQ Level 4 or above, up from around a third (31.6%) in 2008. This is broadly in line with the levels across Scotland (44.2% up from 33.0% in 2008). Fewer in the Highlands and Islands (7.0%) than nationally (9.7%) have no qualifications.

 

 

Salaries

Median gross weekly pay for all employees in the Highlands and Islands is around 90% of the Scottish average (£407.60 in 2018 compared to £453.30 respectively).

These figures point to the challenge of underemployment in the region with 34% of businesses employing staff with higher qualifications and skills than are required for their current role (35% in Scotland).  They also reflect the impact of out-migration of young people on the labour market, and the cyclical nature of employment for the large number of employees working in seasonal industries.

Compared to Scotland, the region has a lower proportion of employees in professional (15.4% versus 20.7% nationally in 2018) and associate professional and technical occupations (9.5% versus 13.4%), and a higher proportion of employees working in skilled trades (16.2% compared to 11.1%).

Our enterprises

What we do

Businesses

In 2018, there were 22,425 VAT registered enterprises in the Highlands and Islands (12.7% of the Scottish total), with 27,295 business sites.  As with Scotland, the regional business base is dominated by micro enterprises (0-9 employees) with 81.8% and 83.8% of sites defined as such. Most of the remainder (14.7% and 14.0%) are small businesses (10-49 employees). The majority of employees in the region work for an enterprise with fewer than 50 employees.

The sectoral profile of enterprises in the Highlands and Islands differs to that of Scotland. While still the most dominant industry, the region has a lower proportion of enterprises in the service sector (58% compared to 72% for Scotland), but a greater proportion in primary industries (25% versus 11%). The remainder of enterprises (17% in both the Highlands and Islands and Scotland) are in secondary industries.

A similar pattern is seen in terms of employment with 78% of employees working in the service sector, 14% in secondary industries and 7% in primary industries (compared to 83%, 13% and 4% across Scotland).

Within these industries, health is the most dominant employer in the region and Scotland (16.8% of all employees compared to 15.5% nationally). This is followed by accommodation and food services (broadly – tourism), with a notably higher proportion of employees working in this industry (10.3%) than across Scotland overall (8.0%). Retail accounts for just under one in 10 employees (9.3% versus 9.0% nationally).

The public sector is a key employer in the region, although employment in this sector has declined since 2009 within the region (from 32.5% to 26.1% in 2018) and nationally (29.3% to 25.5%).

Business and administration and support services, financial and insurance are under-represented in the region in terms of level of employment and professional, scientific and technical services and information and communication both in terms of employment and number of enterprises.

 

Social economy

The Highlands and Islands has a strong and diverse social economy with 1,196 social enterprises, 21% of the Scottish total. 

They contribute 7% of all GVA from social enterprises in Scotland and 8% of employment.

Business health

There are lower rates of both business births and deaths in the Highlands and Islands compared to Scotland. In 2017, there were 9.3 business births per 100 active enterprises in the region and an equal number of business deaths compared to 11.9 and 11.2 across Scotland. The rates are higher than in 2012, with the birth rates up from 8.8 regionally and 11.0 nationally and the death rates up from 8.7 and 10.5. Compared to the Scottish average, businesses born in the region have had a slightly higher survival rate over this period, with 47.9% of those established in 2012 still operating five years later (compared to 43.7% nationally).

The emergence of new sectors of activity such as life sciences and renewable energy across the region and especially cluster development within these sectors, is helping to increase productivity in the region and provide alternative employment opportunities.

 

Gross Value Added (GVA)

GVA for the region has been growing steadily in line with Scotland over the last decade (but remains slightly lower per head of population (£24,330) compared to Scotland (£25,485)); however, between 2016 and 2017 there was a slight decline for the Highlands and Islands, while Scotland maintained its level of growth. 

 

How we live

Households, community and cost of living

Well-being

Compared to Scotland overall, those living in the region have higher levels of personal well-being and life satisfaction compared to Scotland and the UK, with Orkney, the Outer Hebrides, Shetland and Highland ranked the top four local authorities in Scotland for happiness in 2018-19, and Orkney, the Outer Hebrides and Highland the top three for life satisfaction. 

 People living in the Highlands and Islands are more likely than those in Scotland overall to rate their neighbourhood highly as a place to live (76% compared to 57%).  They also have higher levels of satisfaction with their housing (58% very satisfied versus 51%) and a greater sense of belonging to their community (52% very strongly agree compared to 36% nationally).  Pride is particularly high among young people from the region – 87% are proud to be associated with their community, up from 78% in 2015. Increasing numbers are keen to be able to work in their home communities.

Improvements are steadily being made to digital and transport connectivity across the region.  However, people in remote rural Scotland typically require a 10-40% greater budget than elsewhere in the UK to meet an acceptable standard of living. Costs are enhanced by the longer distances people must routinely travel, particularly to work, and the inhospitable terrain and climate.

In addition, access to appropriate and affordable housing is a constraint to both population attraction and economic growth, and the region’s six local authorities have the highest levels of fuel poverty across Scotland.

However, the region has a lower proportion of children living in low income families, with 13.0% of 0-15-year olds doing so in 2016 compared to 16.8% in Scotland overall.

Community land ownership

In Scotland, community land ownership is concentrated in the Highlands and Islands, mostly within the Outer Hebrides (70%) and Highland (25%).  With increasing levels of both community land and asset ownership, opportunities are opening up for more localised and sustainable development.