Building Community Wealth in Scotland: consultation analysis

4. Workforce pillar

The workforce pillar of CWB is focused on driving Fair Work practices and creating meaningful labour market opportunities in local communities that support wellbeing through actions such as:

• anchor organisations and employers committing to Fair Work practices;
• payment and promotion of at least the real Living Wage;
• providing appropriate channels for effective voice;
• action to create more diverse and inclusive workplaces;
• seeking to recruit locally and from groups often excluded from the labour market;
• support for skills development, in work progression and employee wellbeing, including for those at risk of potential exclusion from labour market in the future.

The Scottish Government is limited currently in what it can do in terms of legislation to advance the workforce pillar given that employment law is a reserved area, therefore there no legislative proposals in relation to this pillar.

The consultation paper explains that, as part of early engagement on CWB legislation, stakeholders have suggested a focus on the following areas:

• taking further steps to encourage anchor organisations to pay at least the real Living Wage and become Living Wage accredited;
• anchor organisations should develop and commit to local or regional fair employment charters, these could include a focus on seeking to recruit locally and from groups that are often excluded from the labour market.

Question 4: Employment law is reserved to the UK Parliament. Are there other devolved areas where the law could be changed to advance the workforce pillar of Community Wealth Building?

Responses to Question 4 by respondent type are set out in Table 7 below.

Percentages may not sum to 100% due to rounding

Half of respondents, 50% of those answering the question, thought there are devolved areas where the law could be changed to advance the workforce pillar of CWB. However, a substantial proportion of respondents, 38% of those answering, did not know.

Please provide a reason for your answer. In your response you may wish to consider the stakeholder suggestions outlined above which have arisen from early engagement.

Around 125 respondents provided a comment at Question 4. The analysis below considers some of the general points made by these respondents, then moves on to consider views on the stakeholder suggestions set out above, and concludes by looking at other proposals for change.

Views on the workforce pillar

The workforce pillar – and in particular Fair Work and the real Living Wage – were highlighted as central for CWB in Scotland. This included reference to CWB as a significant opportunity to achieved better recognition and protection for Scotland's workforce, and the potential for Fair Work to support wider economic priorities.

Respondents also highlighted the range of existing activity that is making a contribution to the workforce pillar of CWB. This included respondents noting that they are real Living Wage employers, and/or referring to having contributed to wider actions to support Fair Work in Scotland, such as through the Fair Work Action Plan. Beyond their direct contribution, respondents also cited a wide range of other policy developments and other activity that has supported the workforce pillar, including some of those referenced in the consultation paper.

Views on stakeholder suggestions from early engagement

Encouraging anchor organisations to pay at least the real Living Wage

There was widespread support for efforts to encourage more employers – including specifically anchor organisations – to pay at least the real Living Wage. Around half of the comments at Question 4 made positive reference to the role of the real Living Wage.

This included specific support for the forthcoming requirement that public sector grant recipients pay at least the real Living Wage, and suggestions that this should include all recipients of public contracts. There was also support for continuing expansion of the role of conditionality in public contracts to promote the real Living Wage and support the workforce pillar of CWB. A number of respondents highlighted the proposal for more anchor organisations to be encouraged to pay at least the real Living Wage. This was seen as an important element in anchor organisations – and particularly public sector bodies – taking a lead role in relation to the real Living Wage and the workforce pillar more widely.

However, there was some concern that additional powers may be required to achieve real change in access to at least the real Living Wage, including to support enforcement. It was proposed that payment of at least the Living Wage should be mandatory in Scotland, although it was suggested that this would require support and guidance for employers around how the change would be monitored and enforced. It was also recommended that all adults over the age of 16 should be eligible for at least the real Living Wage.

These comments appeared to be linked to a view that additional financial support may be required to support wider uptake of at least the real Living Wage. For example, it was suggested that some employers may currently aspire to pay at least the real Living Wage, but are unable to afford to do so. This was seen as a particular issue for smaller private businesses and third sector organisations that may struggle to afford the real Living Wage as a result of continuing impacts of the Covid pandemic and rising inflation.

There was some concern that the additional cost burden associated with the real Living Wage being made a condition of public sector contracts could result in unintended consequences for some. This included reference to potential for the change to undermine the economic viability of contracts for some suppliers, without additional support. In this context, it was suggested that public grant funding and procured contracts should incorporate an 'uplift' to ensure suppliers are able to pay at least the real Living Wage. Wider financial support for employers to implement the real Living Wage was also proposed.

Other points raised in relation to access to at least the real Living Wage are summarised below.

• Respondents referred to existing Living Wage initiatives as potential models to encourage more employers to pay at least the real Living Wage, such as the Living Wage Places programme cited in the consultation paper.
• Concerns were raised around modern apprenticeship rates of pay, including how these are linked to age. It was suggested that insufficient apprenticeship pay could undermine efforts to achieve Living Wage objectives.
• There was thought to be a need to improve public awareness of the real Living Wage and other Fair Work practices, to enable employees to affect workforce change.
• A central system for public sector suppliers to register as Living Wage employers was suggested.
• It was suggested that additional support is required for third sector organisations, to enable uptake of at least the real Living Wage. In this context, there was support for the recent Scottish Government commitment to progress Fair Funding (including at least the real Living Wage) across its support for the third sector.

Respondents also highlighted the potential role of Living Wage accreditation, and wished to see further promotion and other actions to encourage wider uptake. This included calls for further steps to encourage anchor organisations to become Living Wage accredited, rather than 'only' paying the Living Wage. As noted above, it was suggested that this would be a way for anchor organisations to take a leadership role in relation to the Living Wage.

There was also support for Living Wage accreditation being made a condition of public funding and contracts. Some saw this as having potential to support wider efforts to promote implementation of the Living Wage, and adoption of Fair Work practices more widely. It was suggested that the Scottish Government should provide an update on implementation of the requirement that all of its suppliers are Living Wage accredited, including any learning or advice that might be useful for other public sector bodies.

Commitment to local or regional fair employment charters

A number of respondents expressed specific support for the second stakeholder suggestion set out in the consultation paper – use of fair employment charters as a means of supporting the workforce pillar of CWB. This included specific support for the role of charters in contributing to Fair Work First, and wider economic priorities. It was suggested that these priorities should be key guiding principles for local and regional charters.

Several examples of local and regional Fair Work charters were referenced, including some with a particular focus on the role of anchor organisations through anchor networks. It was suggested that anchor organisations should have a lead role in ongoing development of fair employment charters. Concerns were also repeated around the capacity of private and third sector employers to implement the real Living Wage and other Fair Work practices. It was suggested that care will be needed to avoid excluding organisations from accessing the support they need to fully implement Fair Work practices.

In terms of the content of fair employment charters, there were calls for guidance to ensure that charters are sufficiently bold and ambitious, including good practice examples. Respondents referred to a range of specific areas as potential priorities for charters, but most commonly identified local recruitment and recruitment from marginalised groups.

In addition to the focus and content of charters, it was also suggested that the Scottish Government must ensure accountability for delivery against identified priorities. This included reference to the importance of monitoring and assessment.

Other issues raised

Fair Work First

Fair Work First guidance was highlighted as a key element in ongoing efforts to improve access to Fair Work and address low wages. However, there was a call for the guidance to be further strengthened. Specific suggestions included requiring no use of zero hours contracts, and support for union access to workplaces. A Fair Work Enforcement Unit was also proposed to monitor Fair Work standards across public bodies and local authority spending, based on Fair Work First guidance.

Concerns were raised around the potential financial and resourcing implications of Fair Work First guidance. It was suggested that the additional cost of a Fair Work First approach for local authorities should be taken into account in Scottish Government funding allocations, and there were calls for additional support for third sector organisations.

Other current policy and approaches

A range of other current policy priorities and approaches were also cited as supporting the workforce pillar of CWB, including several of those set out in the Bute House agreement.

For example, there was support for continuing use of conditionality in public funding and contracts to support the workforce pillar, including calls for Fair Work principles to be incorporated across all public funding streams. A number of respondents saw scope to further expand use of conditionality, both in terms of scope (for example, applying across all public funding and all recipients of public contracts) and requirements placed on suppliers (for example, requiring a sustainability strategy and anti-sexual harassment policy). It was also suggested that conditionality could have a role across other sectors, such as grants issued by the third sector and publicly funded business support services.

Ensuring there can be an effective employee voice was also highlighted as relevant to the workforce pillar, and there was support for the importance of providing appropriate channels for this voice. This included reference to research highlighting the importance of effective employee engagement for business growth and innovation. Current examples of positive approaches to employee engagement and developing effective voice were also cited.

The No One Left Behind (NOLB) policy agenda was also identified as particularly relevant to Fair Work and CWB. This included examples of current employability initiatives that specifically incorporate the NOLB approach, and their positive impacts for Fair Work practices. It was suggested that NOLB is especially relevant to support for those who are furthest from the labour market.

Reserved powers-related suggestions

Living Wage and other work-force levers

A number of respondents noted their broad agreement with the need for further change to improve access to Fair Work practices, and to support the workforce pillar of CWB. This included specific reference to rates of pay, and concern that a substantial proportion of workers in Scotland do not currently receive at least the real Living Wage. Respondents cited evidence around the proportion of staff paid the Living Wage, and uptake of Living Wage accreditation, including data indicating that a proportion of Scotland's local authorities and health boards are not Living Wage accredited.

It was also suggested that a number of anchor organisations and other employers are experiencing difficulties in filling vacancies, especially 'entry level' positions. In addition to contributing to CWB, wider promotion of and access to at least the real Living Wage and other Fair Work practices were seen as an important step in overcoming these recruitment challenges. However, there was some concern around scope for widening access to Fair Work practices without additional support for employers.

In terms of achieving the required scale of change, some were of the view that the most effective 'levers' – such as increasing the Living Wage - are reserved to the UK Government. There was concern that this could be a significant barrier to progressing the workforce strand of CWB, with some expressing scepticism around the scope for the Scottish Government to achieve meaningful change with the powers available.

Others suggested that existing policy, guidance and legislation offer significant scope to further advance the workforce pillar of CWB. These respondents wished to see a focus on using available tools, including the employment powers available to anchor organisations. There was thought to be a need for a mapping exercise to identify existing opportunities to further support CWB, before any further legislative change. The potential value of a focus on desired outcomes as a means of motivating organisations to achieve change was also highlighted, for example in relation to securing more well-paid and fair jobs for local people, and improving support for local businesses.

Other reserved powers-related suggestions

Relatively few respondents suggested specific changes to employment law or other powers reserved to the UK Government. However, there was a view that devolving further aspects of employment law to Scotland could offer significant benefits in terms of supporting the workforce pillar and delivering the Fair Work agenda. It was suggested that the potential to deliver the Fair Work agenda and support CWB provides a strong argument for the Scottish Government to pursue further devolution.

In terms of specific reserved powers, it was suggested that greater influence over Universal Credit and other working-age benefits would enable more effective support for sustainable transitions from welfare into work. This included specific reference to the barriers facing those with health and disability-related needs, and potential for associated benefits to support CWB. It was also suggested that greater influence over benefits offered potential benefits in enabling further exploration and piloting of Universal Basic Income.

Other suggested changes

Respondents identified a number of policy areas within the Scottish Government's competence where it was suggested that change could better support the workforce pillar of CWB. This included some highlighting the relevance of other CWB pillars to workforce, such as the spending and inclusive ownership pillars. In this context, there was a perceived need for greater clarity around how the CWB approach links with other relevant public sector legislation such as equalities, procurement and the Fairer Scotland Duty to advance wellbeing.

Discussion of potential changes to better support the workforce pillar included reference to a number of specific sectors as potential priorities. These were primarily highlighted as sectors where low pay and staff recruitment/retention are known to be ongoing issues, and where margins may not be sufficient to support investment in skills development and Fair Work practices. Sectors mentioned by respondents included health and social care, childcare, hospitality and catering, cleaning, retail, agriculture and fishing. It was suggested that the real Living Wage and other Fair Work practices offer potential to address workforce issues in these sectors.

A range of specific population and workforce groups were also cited as potential priorities for the workforce pillar of CWB. This included a number of respondents suggesting a particular focus on those facing significant barriers to employment and who are furthest from the labour market, including those with protected characteristics. Other specific groups identified as potential priorities included young people, people with learning disabilities, those with adverse childhood experiences, asylum seekers and refugees, and migrant workers (including those at risk of modern slavery).

Suggestions for change across specific policy areas are summarised below.

Education and skills

The wider education and skills agenda was highlighted as a devolved legislative area that aligns closely with the workforce pillar of CWB. Respondents noted the importance of access to a diverse and skilled workforce to support CWB priorities, including through expanding access to professional learning and development, such as through apprenticeships and professional skills academies. It was also suggested that a more place-based approach focusing on local needs would further support CWB, including a role for community anchors in enabling local skills development.

Specific proposals for change in relation to education and skills included:

• Supporting small businesses and community organisations to recruit apprentices from local talent pools, and access opportunities for skills development. This included proposals for consideration of current access to funding, and provision of advice and guidance for small community employers regarding the benefits of investing in people.
• Statutory targets for numbers of apprenticeships.
• Removing age-related criteria applied to apprenticeships, both in terms of funding allocation and rates of pay. This included proposals for a specific focus on access to apprenticeships for those with a disability and/or who are care experienced.
• Additional support for professional learning and apprenticeships in rural areas, reflecting wider concern that rural areas are typically disadvantaged in education and skills funding allocation.
• Greater flexibility around use of the Apprenticeship Levy to enable funds to be used to support the workforce pillar.

A number of respondents also discussed the role of employability support in relation to the workforce pillar. This included concern that the current employability support landscape, and in particular the range of funding streams for different sectors and stages, is overly complex. A need to streamline current provision and funding, and to improve awareness of the funding and support available were both suggested, with proposals for a particular focus on support for those furthest from the labour market, a group that often requires longer-term support to overcome barriers to employment.

Business support

Dedicated support for businesses to encourage and incentivise implementation of Fair Work practices was suggested by some. These respondents noted the extent to which businesses may face challenges in implementing the Living Wage and other Fair Work practices, including access to the resources, skills and knowledge required. It was suggested that financial support would be required – as noted earlier in relation to the real Living Wage – but there was also thought to be a need for advice and practical support. It was also suggested that anchor organisations should set out clear expectations for Fair Working practices when engaging with or providing support to local businesses. More broadly, there were calls for greater encouragement of collaborative working between businesses and the third sector, including employability social enterprises.

Volunteering

Volunteering was highlighted as having an important role for Scotland's workforce, including specifically in relation to Fair Work. There was thought to be a need for clearer recognition of volunteering in the approach to the workforce pillar of CWB.

In addition to reference to the contribution of volunteering to community wellbeing and resilience, respondents highlighted the particular role of third sector and community organisations in providing skills development and training, and building confidence for those looking to access the labour market. Volunteering was identified as offering a pathway into (or back into) employment, and an opportunity for retirees to contribute to CWB. The importance of volunteer trustees in providing governance for community anchor organisations was also noted. Research was cited identifying measurable benefits for wellbeing and employability associated with volunteering.

Some also wished to see CWB policy recognise that community organisations are facing unsustainable challenges and pressures, in part due to the enduring impact of the Covid pandemic and cost of living crisis. It was suggested that the sector requires legislation and funding that invest in and protect volunteers working with community organisations.

In terms of specific proposals for change, it was noted that volunteering is not specifically acknowledged in the Fair Work Action Plan. There was also a call for the Action Plan to incorporate the principles of the Volunteer Charter, along with a commitment to Employer Supported Volunteering (as recognised in Scotland's Volunteering Action Plan). Some respondents provided significant further detail around potential approaches to facilitate volunteering and maximise the contribution this can make to CWB. Other proposals included:

• Further development of knowledge and practice of third sector governance to better support the workforce pillar.
• A role for procurement legislation and additional funding and support for the third sector, with a particular focus on volunteering as a key part of the workforce pillar of CWB.
• Legislative changes around employer support for their employees' volunteering activity. It was suggested that this could include a duty on public bodies to allow staff a minimum number of volunteering days each year to support local third sector and community organisations.

Equalities

The importance of equalities legislation for CWB, and specifically for the workforce pillar, was highlighted. This included reference to the duty on public bodies in Scotland to advance equality, and the particular importance of employment for this duty. As a general point it was suggested that improving the commonality of data sets and reporting across large employers in Scotland would enable more accurate reporting of progress in addressing inequalities in the labour market.

Respondents also cited evidence around the likelihood of people who share protected characteristics experiencing significant barriers to the labour market. This included specific reference to gender, disability and race as key factors linked to barriers to Fair Work. In this context, some saw scope for a more explicit focus on equalities and the impact of intersectionality on workforce diversity and inclusion. This included reference to addressing the gender pay gap, the disability employment gap, and the multiple barriers faced by many disadvantaged people, including disability, gender, ethnicity and sexuality.

Some wished to see a strengthening of equalities competences to support development of Fair Work charters, and to ensure that charters can identify tangible actions that employers can take to address current inequalities across labour markets. It was also reported that, in the absence of mandatory supported employment, funding constraints have led to gaps in provision of employment support for people with disabilities which have potentially widened the Disability Employment Gap. It was suggested that consideration should be given to making supported employment provision mandatory, with appropriate funding.

A number of specific equalities issues and groups were identified as a particular focus for the workforce pillar, including proposals for specific changes to legislation and policy. Disability was seen as a key focus for the CWB workforce pillar, particularly in terms of removing barriers that limits access to Fair Work. This included specific reference to making employment more accessible for those with learning disabilities, and calls for greater recognition of the barriers faced by those affected by other health conditions, including mental health and substance abuse. It was noted that health and disability are devolved areas of law, and offer opportunities to support Fair Work for disabled people.

Gender was also highlighted as a key factor for employment and Fair Work. This included reference to female-dominated sectors such as social care as failing to deliver on Fair Work, and to evidence around the scale of the gender pay gap in Scotland. Some suggested that funding and support is required beyond the employability stages, and CWB was seen as an opportunity to change long-standing workplace structures that disadvantage women. It was suggested that the approach to Fair Work should reflect the Gender Pay Gap Action Plan in recognising links with factors such as social security and violence against women. It was also proposed that more gender-sensitive approaches to learning and skills development are needed, that recognise the range of gender-related factors that can limit access to skills.

Childcare

Respondents also made suggestions relating to access to affordable and flexible childcare, which was seen as critical in enabling access to Fair Work and addressing gender inequality in the labour market, and as an area with scope for change to better support the workforce pillar. It was suggested that this should include a specific focus on access to childcare for children with disabilities and/or additional needs. Legislation should also support flexible working arrangements for parents, for example including tax benefits to incentivise employers and there should be consideration for subsidising childcare costs at a national level.

Better access to at least the real Living Wage and Fair Work across the childcare sector was thought to have the potential to address recruitment challenges.

Other policy areas

Other suggested changes included that:

• NOLB policy priorities should be reflected in the approach to commissioning employability and Fair Work projects, enabling more person-focused services that can achieve sustainable change for people. This reflected concern that commissioning does not currently allow projects sufficient time to work more closely with people, especially those who are furthest from the labour market. The extent to which funding is based on outcome only payments was also identified as a barrier to a more asset-based approach.
• The 'Anchors Agenda' can support local-level action with a long-term preventative focus on reducing health inequalities, including a particular focus on workforce development to improve the prospects of local people.
• Procurement legislation offers an opportunity to further support the workforce pillar, for example through wider use of conditionality in public procurement to require suppliers to implement Fair Work practices. This could include increasing the thresholds for regulated procurement to provide greater scope to support Fair Work, and a focus on procurement in sectors recognised as under-performing in terms of Fair Work.
• The sustainability agenda and related policy areas such as Net Zero and decarbonisation skills, Just Transition policies, and the circular economy can make a contribution to the workforce pillar of CWB. A number of ongoing projects were highlighted as examples of how this can be taken forward.
• Housing, specifically the supply of affordable housing, has the potential to further support the workforce pillar of CWB. This included concerns around the extent to which access to housing is a factor in the recruitment challenges facing businesses in Scotland.
• Additional support for employers should be provided as the Fair Work agenda is strengthened, to improve understanding and adoption of Fair Work practices. Use of devolved taxation powers can further support Fair Work, for example through a local payroll tax on low-pay employers and/or additional tax relief for Fair Work employers.
• Employee voice should be a legal requirement for employers of all sizes and that sectoral collective bargaining should be implemented in the social care sector.