Will Highland Wages Be forced Up As Competition For Workers In Energy Projects And Construction Converge

27th October 2025

There are several signs that wages could be driven up in the Highland region (and the wider Highlands & Islands) of Scotland but it's not a guarantee.

The scale/timing of any wage rise depends on a number of factors.

What the evidence suggests

Evidence pointing to upward wage pressure

Tight labour market
The employment rate in Highland (ages 16-64) is 76.0% in the year ending December 2023, up from 71.5% the prior year.

The unemployment rate in Highland is just ~2.5% for ages 16+ for the same period.

Scotland-wide evidence suggests recruitment difficulties are present in key sectors (including construction, engineering, energy) — employers report skill shortages and low applicant numbers.

These conditions (high employment, low unemployment, skill shortages) are classic "tight labour market" signals that often lead to upward pressure on wages.

Investment and future demand

The Skills Development Scotland report Workforce North
A shared mission to grow and expand our workforce states that the Highlands & Islands are set to benefit from over £100 billion in investment in the next 10-15 years, driven by renewables, transmission etc.

The same report estimates that at peak they will need an additional 16,250 people.

The regional economic strategy for Highlands & Islands highlights that "housing quality, affordability and availability supports population and economic growth" is a key goal.

This suggests a rising demand for labour (especially in "growth" sectors) and supporting services/infrastructure (such as house building) which could push up wages for in-demand roles.

Lower current earnings relative to national average

According to the regional economic strategy document, the median (gross) annual pay in the Highlands & Islands region in 2023 was £27,079, which is about 91% of the Scottish level.
highlandsandislandsrep.scot

From labour market profile data: the gross weekly pay for full-time workers in Highland for 2024 is £728.2 versus Scotland's £739.7.

These differential-gaps mean there is both room and incentive for wages to rise (either catching up or for employers competing to attract scarce skills).

Reasons wage increases are not guaranteed

Rural/geographic/remoteness issues

The Highlands & Islands region is large, sparsely populated, with significant remote/rural areas, many small settlements and islands.

Such geography can limit labour supply in specific localities, but it also limits employer capacity, transport/commuting, and may mean firms expect lower wages because cost structure is different.
So while demand may rise, moving wages up in remote locations may be harder.

Housing/other cost constraints

One of the strategy goals is improving housing quality, affordability and availability. But if housing stock lags and cost of living rises (housing, transport) then employers may face pressure not just on wages but on other benefits (relocation, allowances) which can constrain wage growth.

The document notes that wages/incomes are lower and the region faces higher costs (fuel, transport) due to geography.

Hence, wage increases might be offset by rising living costs or may be moderate.

Sectoral/skill splits

The labour shortage evidence specifically points to certain sectors (construction, engineering, energy) rather than across the board.

If wages rise, it may be localized to those "hard to fill, high demand" roles rather than all workers.

Also, many roles in the region may be lower-wage (tourism, hospitality, care) and wage pressure there may be weaker unless there is large structural change.

Productivity / employer margin pressures

For wages to sustainably rise, firms must be able to absorb higher wage costs (through productivity, price increases) or they risk margins being squeezed.

In regions with constrained growth or cost pressures (transport, geographic) productivity gains may be harder to achieve, which can limit how much wages can be raised.

The regional strategy acknowledges the region's economy is still challenged in some respects (modest growth, remote infrastructure etc) — for example: "The economic outlook for Scotland has improved but growth is still expected to be modest in 2024."
skillsdevelopmentscotland.co.uk

How likely and how big are wage rises in Highland?

It is quite likely that wages will increase more than they otherwise would in the Highland region, particularly in sectors where there is acute demand (construction, energy/renewables, infrastructure) and where workers are mobile or in short supply.

The magnitude of wage increases is likely to be moderate in the near term, rather than dramatic across the board. I would expect something like a slightly higher rate of growth compared to national average rather than a wholesale wage leap.

The timing will matter: As the investment programmes ramp up (housing, infrastructure, renewables) the wage pressure will increase. Possibly we may see more noticeable rises in the next 2-5 years.

For workers in "ordinary" roles (non-specialist) the effect may be smaller. For specialist/technical roles, relocation, or roles in high demand the wage uplift could be more substantial.

Geographical variances will be large. In more remote islands/locations it may be harder for wages to rise because of labour mobility, transport limitations, etc. In more accessible/investment-heavy zones (e.g., around Inverness, areas with large infrastructure) the effect will be stronger.