Covid Recovery Strategy: for a fairer future

5. Good, green jobs and fair work

A strong sustainable economy goes hand in hand with a fair and equal society. This understanding will be at the centre of a new 10 year National Strategy for Economic Transformation which we will publish later this year. This will set out the longer term steps to deliver a green economic recovery, with a focus on innovation, entrepreneurship and the ways in which we will support Scottish businesses, create and sustain new, good, green jobs and build the industries of the future.

Alongside the impacts of EU Exit, the pandemic has exacerbated and reinforced existing job market inequalities. These include persistent gender employment and pay gaps – a disproportionate share of caring responsibilities and unpaid household work is borne by women^[35] – a disability employment gap that widened in 2020, and gaps in employment rates for minority ethnic people, particularly minority ethnic women.^[36]

The economy has already regained a lot of the ground that was lost because of the pandemic, supported by our approach which has sought to mitigate broader harms of the virus where possible. Looking forward we recognise that many individuals, businesses and other organisations remain acutely affected and want to ensure that all of Scotland can benefit from a broad-based recovery.

The pandemic resulted in an unprecedented shock to Scotland’s economy and job market with economic activity in Scotland and the UK falling by record rates as necessary public health measures required many businesses to close or change the way they operated. This had significant implications for employment, with at its peak, around one in three jobs in Scotland supported by the Coronavirus Job Retention Scheme (CJRS).^[37]

The impact of the pandemic has been felt unevenly across the economy, with sectors like Accommodation & Food Services, characterised by public-facing jobs, seeing substantial and sustained use of the CJRS. These areas of the economy are also often low paid and can offer more precarious forms of work (e.g. temporary contracts) and are vulnerable to sudden changes, a particular issue for young people but also women, disabled people and minority ethnic groups. Self-employment has also been hit hard during the pandemic and parents, especially women, have had to juggle child-care responsibilities during school closures with work. More recently there is evidence of labour shortages across the economy (e.g. HGV drivers, hospitality) as the fast pace of business re-opening leads to strong demand for staff amid some labour supply challenges (e.g. reduced migration).

Case Study: working with business to mitigate the impacts of labour shortages

• Across the economy, sectors that are crucial to recovery have been experiencing labour shortages which are subsequently impacting on the provision of services and delivery of goods. Analysis indicates the pandemic and EU Exit have exacerbated long-term recruitment and retention issues, presenting a ‘perfect storm’ of challenges.
• Whilst immigration is reserved the Scottish Government has called for the UK Government to make emergency changes to the UK immigration system to combat the acute post-Brexit labour shortages exacerbated by the pandemic. These include the introduction of two temporary worker schemes, scrapping immigration surcharges and significantly reducing fees and administrative costs.
• Our approach to mitigating labour shortages is to work in partnership with businesses across Scotland so that we have a clear plan to help people move into and stay in good jobs both now and in the future.
• To achieve this, we are working with business organisations to promote Fair Work which will benefit business and make organisations more attractive to workers, delivering targeted upskilling and retraining interventions, and providing a range of employability support to help people to enter into or progress in sectors where there are employment opportunities.

Since March 2020 businesses have benefitted from more than £4.3 billion in direct business support. This is in addition to the essential support for jobs and individuals provided by the UK Government, principally through the CJRS.

In addition to this, we have also committed more than £1.7 billion to building a stronger, more resilient and sustainable economy.

Many sectors of the economy have worked with us over the past 18 months to understand how they can operate safely and transition to new working practices which will be suitable for a post-pandemic economy. This work, guided by the recommendations of the Advisory Group on Economic Recovery, and the gradual removal of restrictions, has helped parts of the economy return to or exceed the levels of productivity they saw before the pandemic. Joint approaches have already delivered significant benefits in the tourism and farming, fishing, food and drink sectors.

Businesses have been – and in some cases continue to be – badly affected by the pandemic, including through the labour market challenges created by rapid reopening and Brexit. We recognise the steps companies have taken in every sector of the economy and every part of our country to keep workers and customers as safe as possible, and that many businesses, while operating again, have taken on debt in order to do so.

Case study: working together to help people facing long-term unemployment

• This year, supported by up to £27 million, Fair Start Scotland will continue to provide pre-employment and in-work support for people to secure and remain in work.
• We are providing over £8.65 million for the Parental Employability Support Fund this year and will invest at least a further £15 million across 2022-24 to help low income families. We are exploring the creation of a bespoke Lone Parent offer and a ‘guarantee approach’ for holistic employability services.
• Our No One Left Behind approach will move away from multiple, inflexible national programmes offering time-limited support and move towards more localised commissioning and delivery approaches that offer holistic packages of person-centred support.
• The Young Person’s Guarantee will ensure that every person aged between 16 and 24 – particularly disabled people, those with experience of the care system, and people from low socio-economic groups – will have the opportunity to study, take up an apprenticeship, job or work experience, or participate in formal volunteering.

The Scottish Government’s ability to directly effect change in the labour market is limited as long as employment law remains reserved. But we are determined to do all we can through our fair work, skills and employability interventions to help rebuild a labour market that supports a more productive economy more rewarding working lives targeting support in a way which reduces inequalities. We will also ensure people are supported to develop the green skills needed for a transition to net zero, as set out in the Climate Emergency Skills Action Plan (CESAP).

As the labour market recovers post pandemic, the Scottish Government’s approach will:

• Simplify investment in skills and training: ensuring people have support throughout their lives to manage economic change, including developing the green skills needed for a just transition to net zero;
• Embed fair work so increasing productivity;
• Enhance equality of opportunity for all to access and progress in work.

Over the next 18 months, to support good, green jobs and fair work we will:

Support the creation of more jobs

• Work with regional partners to ensure that every region has a Regional Economic Partnership (REP). Building on the foundations laid by the City Region and Growth Deals programme, these will encourage strategic collaboration between key economic actors within regions, to make long term, place based decisions to enable sustainable, inclusive prosperity. Although membership of REPs is decided by regional partners, the Scottish Government encourages them to include private sector members, along with FE/HE, Skills Development Scotland, our enterprise agencies, and the voluntary sector. By having this wider participation REPs can act as strategic leads to address skills and labour market challenges, along with other key economic drivers. We will support the development of regional economic strategies and recovery plans, and help REPs to take ownership of investment prospectuses, attracting new public and private sector investment. We will lead a review of Regional Policy in Scotland which will report in April 2022.
• Help businesses to create green employment and opportunities through investment in equipment and premises, and research and development via the Green Jobs Fund, and work with our agencies and other stakeholders to design and implement a skills guarantee for workers in carbon-intense sectors and deliver this as part of the Green Jobs Workforce Academy.
• Work proactively to support delivery of our Manufacturing Recovery Plan ensuring measures to support diversity are included in the strategic support programme for regions and sectors encouraging progressive leadership practice.
• Support delivery of our Construction Recovery Plan published in October 2020. Work with Scottish Futures Trust and Construction Scotland on development of a Construction Accord this year in line with our priorities. The Accord will comprise a shared vision for the industry as a vibrant part of the Scottish economy, including a strong commitment to fair work.
• Publish our Zero emissions affordable homes strategy based on greater use of offsite construction. This will set out how we will work with partners to identify the scale and nature of job opportunities in offsite construction and associated training and skills needs as well as embed Fair Work First in new industry developments. We will work with Skills Development Scotland to create flexible learning offers to ensure that the required skills are available. This will include creating an online training route through the National Construction Skills Academy.
• Work with our partners on the Affordable Housing Supply Programme to build on the excellent work they already do using the modern apprenticeships programme to train the workforce of the future.
• Publish a Retail Strategy later this year to help the sector in Scotland adapt, innovate and thrive and become an exemplar in sustainable and inclusive prosperity, including offering secure, well-paid and rewarding employment.
• Establish a Women’s Business Centre, backed by £50 million across this Parliament, supporting the provision of accessible, relevant advice and support to women led businesses. As part of this funding, we will support 100 women per year to develop pioneering business ideas.
• Publish a new 10 year national strategy for economic transformation setting out plans for strengthening Scotland’s economy through national and regional action and working with businesses, education providers and enterprise and skills to address sector specific recruitment and retention challenges, including current and emerging skills and labour shortages.

Support individual moving into jobs

• Simplify and strengthen our lifelong learning offer to ensure people – particularly those most in need of upskilling and retraining support - have access to the skills support they need to help navigate a fast changing economy, including as we make the transition to net zero. We will accelerate this work in 2021-22 by reviewing the performance of our existing skills investments – including independently evaluating both our Flexible Workforce Development Fund (FWDF) and Individual Training Accounts (ITAs) programmes – ensuring our services remain responsive to the people using them and to the evolving labour market.
• Invest £200 million specifically in adult upskilling and retraining opportunities. This includes our current investment through ITAs and FWDF as well as up to £20 million this year through the National Transition Training Fund (NTTF), which is designed to help retrain and reskill workers in areas of the economy particularly impacted by the pandemic and the transition to Net Zero, enabling future skills transitions. Future investment will be guided by the results of the above review of our lifelong learning offer.
• Creating a new Digital Skills Pipeline which will create new, free and modular provision to support people to progress all the way from beginner level to advanced, alongside up to £4 million for digital initiatives as part of the National Training Transition Fund, and £100 million already committed to investing in digital support programmes over this Parliament.
• Continue funding key transition projects via our Energy Transition Scotland programme, including the £62 million Energy Transition Fund (ETF), and recognise the particular challenges faced in the North East from the transition to Net Zero through the North East Economic Recovery and Skills Fund.
• We will also work with partners, communities and other stakeholders to take forward a ten-year £500m Just Transition Fund for the North East and Moray.

Provide targeted support to those most affected

• Establish a scheme to remove the barriers many disabled people face in attaining leadership positions, building on the success of the Minority Ethnic Leadership and Development Programme.
• Refresh A Fairer Scotland for Disabled People – Employment Action Plan during 2021-22 to ensure that disabled people’s experiences directly feed in, and that the impact Covid is having on disabled people on the labour market is recognised.
• Launch a new version of the Workplace Equality Fund by winter 2021 to support employers increase diversity in the workforce, with up to £800,000 committed to the fund in 2021-22.
• Take forward work under our Gender Pay Gap Action Plan to tackle the drivers of the gender pay gap in Scotland. We will support 2,000 women transition back to work following a career gap through the Women Returners’ Fund, backed by up to £2 million this year.
• Develop an ethnicity pay gap strategy which will support employers to evidence how different minority ethnic groups are represented in an organisation, across different pay bands. Development work is underway and we aim to publish this strategy in the Spring of 2022. Crucially, it will also help employers to understand if there are unfair disparities and help drive strategies for the recruitment, retention and progression of people from minority ethnic communities.

Create a Fair Work Nation

• Progress our vision of Scotland as a leading Fair Work Nation by 2025: including making payment of the real Living Wage to all employees a condition of public sector grants by summer 2022 and launching a consultation on fair work this autumn.
• Introduce Fair Work standards as a condition to public sector heat and energy efficiency contracts as set out in our response to the Just Transition Commission’s recommendations.
• Apply Fair Work First to our zero emissions affordable homes strategy and apply these criteria to grants, other funding and contracts awarded by and across the affordable housing sector. This will help to tackle the gender pay gap and the disability pay gap, contributing to our efforts to eradicate child poverty by supporting families with children to gain more income through employment.
• Ensure that all providers in the private and third sectors delivering funded Early Learning and Childcare (ELC) receive a sustainable rate that enables payment of the real Living Wage to all staff delivering funded ELC. We will work with local government to strengthen the process for setting sustainable rates for Early Learning and Childcare (ELC) to ensure they are in place for August 2022. We will also establish a Living Wage and Fair Work Implementation Group by the end of 2021, to explore implementation challenges for providers delivering funded ELC and to support the wider childcare sector with the promotion of fair work practices to support staff retention.
• Provide leadership across health and education sectors supporting full implementation of fair work principles working with NHS Boards and the Scottish Funding Council to remove barriers to achieving Living Wage accreditation in advance of the 2025 ambition.
• Work with local government to deliver the key foundation pillars set out in the Independent Review of Adult Social Care in Scotland. We remain committed to ensuring staff delivering direct adult social care are paid at least the real Living Wage with additional funding of £64.5 million this year. We will also work with COSLA on the establishment of minimum standards for procurement decisions, with a requirement for ethical commissioning taking into account factors like fair work, terms and conditions and workforce and trade union recognition and representation.
• Publish a Fair Work statement on race for employers that considers the fair work principles specifically through the lens of race equality. It is designed to help employers think about the specific issues in relation to race in the workplace and where the fair work dimensions could be considered to address those issues. It contains helpful advice and examples that employers can refer to in order to improve minority ethnic representation and retention in their workforce.
• Work with local authorities to ensure a Community Wealth Building plan which sets out objectives to protect and create good quality local employment opportunities is in place as part of wider recovery plans.