Is this financial services job creation in Scotland sustainable?

In theory, everything is a-OK in Scotland's financial services industry. After a period of retraction in 2008-09, job numbers are approaching pre-crisis levels and most firms are hiring again. Is this sustainable though?

A slightly disconcerting report from Glasgow-based Centre for Public Policy for Regions suggests not.

Job levels in Scotland's financial services industry fell by 17% from 2008 to 2009, but have since managed to return to pre-crisis numbers. The output of the sector, however, (as the chart below shows) slid by 22% over the last three years, but has, well, stayed at this low level.

CPPR economist John McLaren says that these figures are concerning for a couple of reasons. Firstly, he says, the data doesn't show which sector within the broader financial services is doing badly - banking, insurance, pension funds - and it's something of a "black box".

"While employment seems to be rising again, it doesn't seem to be translating into any increase in Scottish GDP. That implies you are losing productivity. If that is the case, it (the sector) will presumably ultimately lose work and output will go down," he adds.

Theoretically, therefore, if firms are hiring and having nothing to show for it, sooner or later they'll simply stop.

This lack of output could also be down to the sort of financial services roles that are being created.

Pre-crisis, the two large Scottish banks - RBS and then-HBOS - would have been hiring a lot of corporate bankers, making (often reckless) loans that would have stimulated the economy. Similarly, fund management - another mainstay of the industry north of the border - was riding on the crest of a two-year recruitment spree and has since failed to return to hiring with any real gusto.

Now, with the exception of Tesco Bank, much of the banking recruitment in Scotland has centred around change management - ie, shrinking and shaking up the balance sheet - so the stimulating effect on the economy is small.

Similarly, another voluminous provider of new jobs has been the investment operations sector. While these are undoubtedly good for employment in Scotland, these positions are ultimately servicing companies with headquarters based elsewhere in the world.

Finally, within the loose parameters of 'financial services' jobs, there are hundreds of roles that were created in call centres. While these make up the numbers, they're not exactly high-end roles.