Becoming a Fair Work Nation: consultation analysis

3. Challenges

This chapter examines the challenges to adopting and delivering Fair Work in Scotland. Different aspects of challenges for Scotland were explored in the consultation. For example, Q4 asked respondents to consider challenges in their sector; Q6 explored barriers resulting from the current economic context. There was some overlap between responses to these questions, which was taken into account in the analysis.

The chapter begins with an overview of challenges to implementing Fair Work which were raised at either question, followed by a description of the additional challenges highlighted by respondents which relate directly to the current economic circumstances. Most of the challenges raised apply across multiple different sectors, but sectoral-specific challenges are also mentioned where appropriate.

This chapter then outlines how respondents feel the barriers to Fair Work can be overcome in their sector. In addition to sector specific suggestions, Chapter 4 examines what specific actions need to be taken by the Scottish Government, local authorities, public bodies and employers to maximise Fair Work opportunities and overcome barriers. In Chapter 6, the analysis of Q11 explores what respondents feel they and their organisations can do to help Scotland become a Fair Work Nation.

Challenges

Q4. What are the main challenges to adopting fair work practices in your sector?

Over three quarters responded to Q4 (73 out of 95, 77%). The responses have been grouped into common themes, with the most common being the cost to organisations of adopting fair workpractices, a lack of organisational knowledge and capacity to implement Fair Work, outdated organisational cultures, and short-term funding in the third sector. Although several challenges were mentioned, this does not necessarily mean that all respondents have experienced these challenges. Please note that where respondents raised challenges to adopting fair workpractices in relation to equality and diversity matters these have been drawn together in Chapter 5 - Equality and diversity.

Cost

The most common challenge identified at Q4 was the cost of adopting fair workpractices. Several respondents, especially representative/membership associations, public bodies and local authorities, including SLAED, Scottish Retail Consortium and the Supplier Development Programme, highlighted the financial impact of paying the real Living Wage, providing more training and development opportunities, adapting the workplace for employees with additional needs, offering flexible working, or creating management capacity to implement Fair Work practice. Such costs are seen as a major barrier, especially for smaller and medium-sized organisations and those in the third sector. Ways in which the Scottish Government could address some of these cost barriers are described in Chapter 4. Respondents noted that resource constraints are compounded by the challenging economic climate, with factors such as the COVID-19 pandemic and EU exit placing further pressure on organisations' finances. These economic factors are discussed in more detail later in this chapter.

"Most charities operating in the third sector openly endorse and value the objectives listed in Fair Work. However, some third sector bodies could be financially struggling and unable to fully implement all goals shared by Fair Work." - Advice Direct Scotland

"While Fair Work practices are of significant benefit to both employees and organisations, there is sometimes an up-front cost for organisations and this must be taken into account. For example, the payment of the real Living Wage or the introduction of a four-day working week could both be costly and difficult to implement in the short term, particularly for small social enterprise businesses and start-ups. Additional training costs in order to implement Fair Work practices may be required." - Social Enterprise Scotland

Lack of knowledge about Fair Work

Some respondents, mainly public bodies and local authorities, such as COSLA and other organisations, including STUC, identified knowledge gaps as a challenge; describing a lack of awareness among employers of fair workpractices, the benefits Fair Work can achieve, or how to implement Fair Work. Ways in which the Scottish Government and others can increase knowledge of Fair Work are described in Chapters 4 and 6.

"In relation to employability work a challenge is to ensure that businesses readily understand what is meant by Fair Work and can support the needs that individuals have to ensure their experience of work is fair, flexible and sustainable." – COSLA

"Lack of knowledge and understanding of the benefits of Fair Work which leads to some resistance." - South of Scotland Enterprise

Organisational capacity

Some respondents referred to organisational capacity as a barrier to adopting Fair Work practices. Most of the respondents who expressed this view were public bodies, local authorities, trade unions or representative/membership associations. Examples include a lack of time, skills and expertise. Respondents felt this is especially true for small and medium-sized organisations and public sector bodies.

"SMEs rarely have dedicated HR and training resources, presenting additional challenges and costs in developing a Fair Work approach." – SLAED

"Years of austerity and underfunding have starved the public sector of policy expertise and capacity. This limits the potential of the public sector to fully engage in the implementation, monitoring and enforcing of Fair Work practices." – STUC

Organisational culture

Challenges around organisational culture were mentioned by some as a barrier to implementing Fair Work. Responses focused on ingrained, traditional or out of date practices such as the inappropriate use of zero-hour contracts and fire and re-hire practices, as well as a lack of opportunities for employees to influence decision making. Respondents felt that practices like these can be perpetuated by individual managers or leaders who resist change or fail to see the benefits of Fair Work for their organisations.

"Some organisations will also have a traditional management structure and switching to a more democratic workplace, where employee voices are heard, will require a change in mindset. There may need to be a cultural shift in some businesses and third sector organisations, to adapt to new ways of working." – Social Enterprise Scotland

"Lack of management skills leading to lack of consistency in application of policies and in some sectors lack of fair policies. Lack of approved collectivism in certain sectors meaning worker have no voice." – Individual

"Use of zero-hour contracts, involuntary insecure hours and jobs allocated through online platforms ('the gig economy'), which are characterised by lower levels of social protection, skills progression and productivity, and are less likely to exhibit the Fair Work dimensions." – Public Health Scotland

A small number of respondents identified sectors in which they felt elements of organisational culture do not align with fair workpractices. These include retail, construction, hospitality, social care, early learning and childcare, and the sex industry (including lap dancing clubs and escort agencies). Respondents explained that these sectors have historically offered lower pay, less secure jobs and limited opportunities for progression. Some also noted that roles in these sectors often do not lend themselves to flexible or remote working. A few respondents, however, were keen to point out that approaches can vary between sectors, employers and even among different departments within the same organisation.

Short-term funding

The short-term nature of third sector funding was identified as a challenge by a few respondents. They felt that short-term funding encourages the use of zero-hour contracts, contributes to job insecurity and makes long-term planning difficult. Respondents such as SCVO, Glasgow Disability Alliance and the Scottish Sports Association provided detailed descriptions of the difficulties caused by short-term funding in their responses. Later in this chapter is an overview of how this barrier could be overcome.

"Short- and medium-term funding for projects and roles creates uncertainty for managers and staff, and the absence of longer-term multi-year financing compounds this… An environment is created that undermines job security for employers that wish to provide Fair Work and their workers." – SCVO

"Funding and procurement undermine aspirations to offer secure work and must be addressed if the Scottish Government's Fair Work aspirations are to become a reality for all of the sector's employees." – Scottish Sports Association

"The main challenges in the community and third sector in delivering Fair Work are around short term and insecure funding. The community and third sector are well placed to support the effective voice, opportunity, fulfilment and respect aspects of Fair Work. However, living with the uncertainty of funding and constant fears and challenges around funding security, combined with the inequalities in power relationships with funders and policy makers undermines both the respect and the security aspects of Fair Work." – Glasgow Disability Alliance

Promoting Fair Work through public sector commissioning

Opportunities associated with promoting Fair Work through public sector commissioning are discussed in Chapter 4. However, a few respondents identified challenges with an approach which involves public sector commissioning, including the additional burden that it places on public bodies. In addition, they highlighted a risk that making fair workpractices a pre-requisite for public contracts could exclude some small organisations, who may be unable to implement fair workpractices, from public procurement.

"In seeking to promote Fair Work through procurement, Local Government is being asked to undertake an additional, and unfunded, regulatory role." – COSLA

"Fair Work could become one pressure too many for businesses already facing unprecedented challenges, therefore focus should be on incentivising and encouraging rather than punishing and excluding. Not allowing grants or limiting tenders to those who are not [real] Living Wage employers could be seen as a punishment, and it would be better to work with those employers to seek to introduce more fair working practices, rather than them losing out on funding that could help them achieve these aims in the longer term." – SLAED

"Any policy of strictly mandating payment of the [real] Living Wage through procurement and grants that is introduced by the Scottish Government could potentially exclude many small businesses from local authority supply chains." – Glasgow City Region

"We believe that the primary effect of [requiring public sector grants recipients to pay at least the real Living Wage] will be, effectively, to concentrate the Scottish Government's grant support for businesses on those larger organisations which can afford to meet Living Wage requirements, at the expense of SMEs and early-stage businesses where cashflow concerns are greater… given the range of potential unintended consequences and the very short timescale for businesses to understand and prepare for any new regulation, we believe that this proposal should, at the very least, be postponed for a year and consulted on separately" – Caithness Chamber of Commerce

Lack of enforcement and monitoring

A few respondents pointed to the voluntary nature of fair workpractices as a barrier to their implementation. Respondents felt this was particularly challenging in sectors or roles where there was a lack of trade union representation, and thereby little co-ordinated activity to encourage employers to adopt fair workpractices. A small number also highlighted the limitations of the available employment and monitoring data.

"The growth of economic sectors in which trade union density is low has left large parts of the economy unorganised. This means that trade unions are often not present in workplaces to properly enforce good working standards and conditions, including essential health and safety functions." – STUC

"There is insufficient monitoring and enforcement in workplaces, which makes it harder to monitor success or failure of Fair Work goals." – Scottish Women's Convention

Profit imperative

Private sector businesses' need to make a profit was another challenge noted by a small number of respondents. It was felt that some employers perceive Fair Work as having a negative effect on their profits, rather than an opportunity to enhance productivity.

"Businesses run to please shareholders and provide dividends often at the expense of long-term viability of the business and/or good employment conditions." - Heriot-Watt University (Centre for Research on Employment, Work & the Professions)

Bureaucracy

A few respondents commented on the bureaucracy involved with applying fair work practices. They suggested it can be time-consuming for organisations to engage with the many accreditations and initiatives linked to the five Fair Work dimensions.

"There is a myriad of pledges e.g. business pledge, young person's guarantee, disability confident employers etc, and campaigns. Most of the heritage sector are SMEs and the time it takes to engage with these pledges is problematic." – Historic Environment Scotland

Challenges in the current economic context

Q6. What do you believe are the barriers to delivering Fair Work given the current economic challenges in Scotland?

The vast majority responded to Q6 (87 out of 95, 92%). In addition to the challenges outlined above, respondents identified barriers to delivering Fair Work that relate specifically to the current economic context. The most common themes were the impact of the COVID-19 pandemic and the UK's exit from the European Union (EU). Respondents also described challenges presented by low wages and the increased cost of living, from skills and labour shortages, and the difficulties faced by organisations dealing with multiple competing priorities. There is some overlap between the challenges outlined at Q6 and the opportunities at Q3, particularly in relation to COVID-19 and skills and labour shortages. This highlights that a challenge for some organisations can represent an opportunity for Fair Work for others.

COVID-19

The impact of the COVID-19 pandemic was the most prevalent theme in comments about economic challenges. This theme was most commonly discussed by public bodies, local authorities, third sector organisations and representative/membership associations. Respondents highlighted the financial impact of the pandemic for organisations, through costs caused by enforced closures, staff furlough and measures to mitigate against the virus. This has created a challenging financial climate, particularly for organisations in the hospitality, tourism and retail sectors. Respondents reflected on this context in relation to the costs of introducing fair workpractices, arguing it could prevent or deter employers from investing in fair workpractices such as the payment of the real Living Wage and training and development opportunities. A few respondents including STUC claimed that some employers used the pandemic as an excuse for negative employment practices, including zero-hour contracts and firing and re-hiring. The discussion of COVID-19 in Chapter 2 illustrates how this could be reframed as an opportunity for some organisations.

"The current economic challenges place significant financial barrier to employers seeking to deliver Fair Work, especially in the private and third sectors." – Stirling Council

"The past twenty months of the pandemic have been the most challenging and tumultuous period for Scotland's retail industry in decades." – Scottish Retail Consortium

A small number of respondents specifically highlighted the challenges facing different groups, particularly those with multiple identities, in the post pandemic jobs market.

"Young people finding employment is now more difficult due to people being furloughed. This means that more skilled and experienced workers are going for the same jobs as young people. There is also a lack of options available, so people are being forced into the wrong career paths for them in order to gain employment" – Young Scot

"[Black, minority, ethnic] BME women, young women and low-paid women are at particular risk of Covid-19 job disruption" – Child Poverty Action Group in Scotland

"The UK Disability Arts Alliance 2021 Survey Report provides stark learning of the impact of the pandemic on disabled people and organisations in arts and culture, with half of respondents suffering from less or no work as a result of the pandemic, and a third describing themselves as precariously employed or on a zero hours contracts." – Culture Radar

EU exit

EU exit was another theme identified in some comments about barriers to delivering Fair Work in the challenging economic context. Respondents, mostly public bodies, local authorities, third sector organisations and representative/membership associations, suggested the UK's exit from the EU has contributed to several challenges. These include supply chain pressures, cost of living increases and labour market shortages; and such costs and pressures detract employers' attention from, and make it more difficult to, implement fair workpractices.

"Businesses and organisations are also responding to the impact of the UK's exit from the EU and may have competing priorities or may not view Fair Work as a top commitment." - Sight Scotland and Sight Scotland Veterans

"To compound matters, wholesalers are now being hugely disrupted by the wider supply chain issues caused by [EU exit] and other factors." - Scottish Wholesale Association

"[EU exit] and the erosion of what has been a mainstay of our workforce, the EU labour market along with the UK Government's current migration policy has disrupted our sector on many levels to the point that the biggest crisis facing our industry during the summer of 2020 was not the pandemic, it was the intense challenge to recruit within all sectors of the industry. This coupled with an acute skills shortage across many areas of the tourism industry has created a new wave of challenge for the sector in terms of labour; our ability to attract talent is already constrained by a long-standing perception of the sector around pay and work-life balance, particularly within the hospitality sector" – Scottish Tourism Alliance

Low wages and the increasing cost of living

Some participants, including public bodies, local authorities and third sector organisations, reflected on low wages and the rising cost of living. Respondents explained that increasing financial pressures for households can reduce workers' willingness or ability to advocate or negotiate for Fair Work approaches to be adopted.

"The Scottish Government should remain aware of the impact of rises in the cost of living on workers' abilities to seek redress for their rights. In circumstances where employment may be the only way for workers to remain able to pay their essential bills, any increases to this pressure will reduce their likelihood to challenge poor working practices." - Citizens Advice Scotland

A few respondents identified specific sectors, including wholesale and retail, agriculture, forestry and fishing, hospitality, repair of motor vehicles, early learning and childcare, and social care, where low wages are particularly prevalent. Other respondents, such as the NASUWT, in the education sector, commented that wages have been increasing at a slower pace than inflation, and this has contributed to rising living costs.

Skills and labour shortage

A shortage of skills and labour in several sectors including social care, hospitality, agriculture and creative arts was another issue identified by some respondents. They reported this was partly a due to EU exit and the COVID-19 pandemic, and a few felt that people were moving to other sectors or places in the UK in search of higher wages or job security. This has increased demands on workers remaining in those sectors, lower fulfilment, reduced opportunities for flexible working and, ultimately, reduced wellbeing among the workforce.

"A high level of vacancy across the sector could have a detrimental effect on working conditions, requiring extended periods of overtime or irregular shift patterns. This could result in higher levels of workplace stress in the sector and would also have an impact on the wellbeing of the workforce." - Scottish Social Services Council

"The main challenge that the hospitality industry currently faces in adopting fair work practices is a sector-wide labour shortage. While there are plentiful opportunities for nurturing the workforce, this is limited by difficulties in attracting people into the sector initially." – Compass Scotland

Other economic challenges

Other less commonly reported challenges include climate change and the need for organisations to transition to net zero (identified by a few respondents), as well as the supply chain crisis, globalisation, automation and an ageing population (each mentioned by a small number of respondents).

Competing priorities

Several respondents reported that the cumulative impact of economic challenges is that many organisations cannot afford and/or do not have time to adopt fair workpractices. There was a common view that organisations have several other competing priorities to address, with many focused primarily on survival currently, and have little capacity to address the Fair Work agenda.

"A fundamental barrier is uncertainty. Farming businesses are faced with a very uncertain economic future, with [EU exit], Climate Change, biodiversity, new support schemes, much of which is driven by political policy decisions. Compounding this is the power imbalance in the supply chain where producers have a very minor influence on margin share… hence the barrier is at what level can farmers risk investing in staff when there is such uncertainty?" - National Farmers Union Scotland

"Many businesses will be struggling to survive and will not be in a position to invest the required time and resource to implement such a change." – Individual

"Often organisations want to work towards having a fair workplace but don't have the finances to facilitate that but also don't have the time to focus and learn what needs to be done correctly." - Radiant and Brighter Community Interest Company

Overcoming sector-specific challenges

Q5. Please explain how you think these challenges might be overcome, including your ideas on any specific interventions and support needed in your sector?

Three quarters responded to Q5 (71 out of 95, 75%). Respondents identified a range of solutions to the challenges they identified; most apply across multiple sectors. These solutions are listed below, and further details are provided in Chapter 4 which covers actions for the Scottish Government and others, and in Chapter 6 which include ways in which respondents and their organisations can help Scotland become a Fair Work Nation.

• Increased funding from the Scottish Government could help to address low wages in parts of the public sector was suggested by several. Scottish Government could also provide incentives for businesses to implement fair workpractices in sectors such as manufacturing, agriculture, retail, hospitality and social care.
• Several also suggested activities to raise awareness among employers of Fair Work and its benefits, along with support and guidance to implement fair workpractices.
• Using Fair Work as a conditional requirement for public sector contracts awards was proposed by some respondents.
• Some respondents felt that steps should be taken to ensure that workers have adequate opportunities for training and development.

Approaches to address sector-specific challenges are discussed below. These themes cover the role of Scottish Government funding in some sectors, low wages in certain sectors, and calls for greater employee voice and trade union recognition and involvement.

Sectors funded by the Scottish Government

Comments about the important role of Scottish Government funding were identified in some responses, including SCVO. It expressed a view that moving from short-term to longer-term funding could help third sector organisations to implement fair workpractices. Longer-term funding would allow more effective planning and increase third sector organisations' confidence to implement fair workpractices. Examples identified in these responses included the ability to offer longer-term contracts, which would enhance more job security and make investment in training and development more feasible.

"A common concern among third sector organisations, particularly smaller, community-based organisations, is that due to the short-term nature of their funding they are unable to adopt Fair Work practices as fulsomely as they would like. There is therefore a need for all grant-makers and funders to ensure that their policies are enabling and supporting the full adoption of Fair Work practices by grantees, particularly through the use of full cost recovery." – Poverty Alliance

"Participants felt that if the third sector was properly resourced and valued, it could spend less time on locating and competing for funding, concentrating on working better collaboratively, 'pulling together a synergy of specialisms' which could be commissioned. In practice, this means a radical overhaul of the current system of short-term funding models (often via grants and one-year funding schemes) for third sector providers, in favour of long-term sustainable funding – which, in turn, would allow people within social care to be employed on permanent or longer-term contracts, with better career progression opportunities, more stability, and continued access to training and development." – Health and Social Care Alliance

Some respondents noted other organisations and sectors, including local authorities, childcare and social care, which are reliant on Scottish Government funding. They may require increased or more secure investment, grants or other forms of financial support to help them to meet the costs associated with adopting fair workpractices.

"The school age childcare sector needs to be permanently and well-funded to enable fairer work practice and the real Living Wage for staff. This should include support for raising managers and senior staff pay to much higher levels than that in light of degree level qualifications and the large responsibilities they carry." – Scottish Out of School Care Network

"Investing in the social work profession and in all aspects of social care". – The Scottish Association for Social Work

"Adequate and sustained investment in Local Government by Scottish Government is an essential." – COSLA

"Specific funding targeted at training for employees, either provided internally in large organisations or by local colleges. Funding to train managers in equality practices to ensure the Fair Work [practices] are inherent throughout the organisation. Funding to support Fair Work practices would be essential, the application of the Living Wage effectively eroded the lower pay scales within the organisation this has a significant impact on the pay structure and staffing costs." – Falkirk Council

Low wages in specific sectors

Low wages were highlighted by respondents as of particular concern in some sectors. In the social care sector, for example, stakeholders welcomed Scottish Government investment, noting it has enabled pay increases. However, they felt more could be done to recognise the value of workers in this sector, enhance job security and address recruitment and retention issues. Similar issues were also identified by a few respondents in the early learning and childcare sector. It was also noted that the workforce in both sectors is predominantly female.

In addition, one respondent said that staff tips should be protected to help supplement wages in the hospitality sector. In the agriculture sector, the National Farmers Union Scotland called for the Agricultural Wages Board to be discarded or modernised.

"Participants remarked that while the social care workforce is expected to act with dignity and empathy, as well as with some technical expertise and skill, this is not rewarded in the level of wage. People stressed that the sector needs to be better rewarded and supported in order to reduce the high staff turnover rate, noting that 20% of the workforce is experiencing in-work poverty… Without systematic and wide-spread change to value care work, and response to the intersectional inequalities in the current system, it is not likely to prompt substantive change." – The Health and Social Care Alliance Scotland

Employee voice and trade union involvement

Some respondents, including public bodies, local authorities, third sector organisations and trade unions, called for greater trade union involvement to help implement Fair Work. Suggestions varied, and included: a few calls for more negotiations and discussions between Scottish Government and unions; clear and robust support for unions; a call from Unite that unions should have access to sites and workforces where public money is being spent; and a call from Education Institute of Scotland into full trade union recognition from publicly funded education institutions. More generally, there were calls for employers to ensure employees are aware of and can participate in unions and representative bodies to enhance employee voice.

"The Scottish Government should work with ACAS, employer bodies and relevant trade unions so that those in more precarious work can be better supported and provided with increased stability," – Equality and Human Rights Commission

"Fair Work requires a cultural shift within employers/management teams that involves bringing the trade unions into decision-making processes in order for them to have a meaningful and mutually beneficial role" - Educational Institute of Scotland

Similarly, the STUC called for the introduction of sectoral collective bargaining agreements in areas where they do not exist including early years and childcare, social care, hospitality and tourism.

Improved rights and employment law

Employment law is a reserved matter and not in the power of the Scottish Parliament to legislate on. However several respondents took the opportunity at Q10 to outline how these issues could be addressed if Scotland was given full control over employment law. Respondents felt the elimination of zero-hours contracts should be a priority. Zero-hours contracts were described as insecure, exploitative and open to abuse, and some respondents felt strongly that they should be prohibited by law. A few added that Scotland could introduce legal measures to make employers incorporate a guaranteed number of hours of work into contracts to ensure income stability.

Some requested more clarity over the legal rights applicable under different types of employment status, and more protections for those categorised as workers or agency staff as opposed to employees.

"We would like to see all employment rights from day one including agency workers and the removal of the confusion over the employment status of employee/worker… zero hours contracts should be banned and the rules around self-employment should be made clearer. There are too many instances where workers are being asked to adopt self-employed status in order for employers to avoid paying national insurance, holiday pay, pensions and other payments when in fact the individual is carrying out the work on behalf of the company." – Unite Scotland

"Changes to employment status removing category of worker (e.g. removing third employment status) to end trade-off between security and flexibility, particularly when the reality is that gig work is often inflexible due to peak demands and unfair pay." – Heriot-Watt University (Centre for Research on Employment, Work & the Professions)

Reforms to the statutory sick pay model were also highlighted as a key priority by some respondents at Q10. Suggested improvements included: increasing the rate of statutory sick pay; obligating employers to provide sickness benefit for the first two years of absence; and removing the lower earnings limit for statutory sick pay.

Other priorities related to employment terms suggested by respondents at Q10 included:

• Reducing the working week; a few suggested to a four-day week, one suggested a maximum working week of 40 hours (instead of the current 48-hour limit).
• Making sure all employees are entitled to the same rights regardless of length of service (that is, the right to request flexible working arrangements and paid maternity/paternity leave are available from the first day of employment).
• Increasing the period which employees are entitled to full pay while on maternity/paternity leave.
• Introducing the 'right to disconnect' – defining boundaries by setting non-working periods of time which employers are forbidden to encroach on with work requests.
• Requiring all employers to give employees at least four weeks' notice of shifts and compensation if shifts are cancelled.
• Increasing the minimum annual leave entitlement.
• Establishing the right to bereavement leave and pay to all employees experiencing a close family bereavement.
• Introducing an annual entitlement to five days' statutory paid carers' leave.