Europe 2020: Scotland's National Reform Programme 2018

Chapter 4: Employment

The Scottish Government has a central role to play in ensuring that people have the skills, support and opportunities to realise their full potential. In particular, the Scottish Government shares the European Commission’s continued concern over youth employment and the long-term impacts that the recession has had on our young people.

This chapter sets out the action the Scottish Government is taking to boost youth employment, improve young people’s skills, support labour market participation and promote fair work. These actions cover the third Country-Specific Recommendation ( CSR) to the UK to address skills mismatches and provide for skills progression, including by strengthening the quality of apprenticeships.

Europe 2020 headline target:

Seventy-five per cent of the EU population aged 20-64 should be employed. Europe 2020 highlights that the improvement against this target should include greater involvement of women, older workers, and better integration of migrants into the workforce.

Current Scottish Performance

Table 2 sets out Scotland’s current performance against the Europe 2020 employment target.

Table 2: Current Scottish Performance Against Employment Indicators

Indicator	Current Level	Change Over Year	Reference Period
Employment rate (population aged 20-64)	77.3%	1.0% pt increase	2017
Female employment rate (population aged 20-64)	73.7%	0.9% pt increase	2017
Male employment rate (population aged 20-64)	81.1%	1.1% pt increase	2017

Year Of Young People

The Scottish Government is committed to giving young people a stronger voice in policy making and co-designing improvements to services which affect their lives. We want to ensure that all our young people feel and believe that they are valued, wanted and vital to our country’s future and that their voices are heard and listened to.

For this reason the Scottish Government has designated 2018 as the Year of Young People ( YoYP) – making Scotland the first country (that we know of) to dedicate a year to its young people.

The YoYP will celebrate the very best of Scotland and its young people through a programme of cultural and educational events and activities, co-designed with young people themselves, held across Scotland. It aims to inspire Scotland through its young people, celebrating their achievements, valuing their contribution to communities and creating new opportunities for them to shine locally, nationally and globally.

Below are a number of initiatives currently being undertaken in Scotland to help support our young people to realise their full potential no matter what background they come from.

Supporting Youth Employment

The cost of youth unemployment is significant, both to young people themselves and to the wider economy. Being unemployed while young can affect future earnings as average wages remain lower throughout the person’s working life, even if the person is not unemployed again. It can also increase the chances of being unemployed again. Other consequences of being unemployed when young can emerge later in life, and include lower life satisfaction and happiness, poorer health, a higher risk of depression and lower job satisfaction. The longer the initial spell of unemployment, the greater the negative effect.

Developing the Young Workforce – Scotland’s Youth Employment Strategy

The Scottish Government remains ambitious about its plans to increase youth employment and to reduce youth unemployment and is continuing to implement the recommendations of the Commission for Developing Scotland’s Young Workforce in our Youth Employment Strategy: Developing the Young Workforce ( DYW) ^[6] . Through this, the Scottish Government aims to reduce youth unemployment levels by 40% by 2021. The strategy further aims to create an excellent, work relevant education offer to young people in Scotland, giving them the skills and qualifications needed to succeed in the labour market.

The third annual report on the progress of DYW was published on 9 January 2018 ^[7] . It highlighted the progress made to expand vocational provision for young people in the senior phase, including a significant expansion of Modern and Foundation Apprenticeships; establishing 21 regional DYW employer groups across Scotland; creating new national standards for work placements and careers education in schools; investing in earlier introduction for careers advice in schools. The report also noted the achievement of the programme’s headline target, to reduce youth unemployment by 40% by 2021, four years ahead of schedule.

Tackling inequality is an important part of the Scottish Government’s commitment to improving the options for young people as they progress through their education. An Equality Impact Assessment ( EQIA) was undertaken for the DYW Youth Employment Strategy which underpins the DYW Programme, updated and published on 14 December 2017 ^[8] . Through the Modern Apprenticeship Equality Action Plan and Scottish Funding Council Gender Action Plan for colleges and universities, the Scottish Government has set out how it will tackle gender imbalances and support those who face additional barriers through their education and training.

Actions to Support Youth Employment

Over the two-year period from January-March 2014 (baseline) to January-March 2016, youth unemployment has fallen by 9,000 from the Strategy’s baseline figure of 52,000. As a result the Scottish Government is refocusing activity across its youth employment and apprenticeship programmes on young people who need the most support.

In 2018-19 the Scottish Government will continue to invest in Community Jobs Scotland ( CJS) by providing funding of up to £6.1 million to support 700 job training opportunities, with support for up to 12 months for 16-29 year olds facing the greatest barriers to employment, and continuation of support for CJS employers to pay the Living Wage.

We will also continue to support employers to recruit young people who face the biggest barriers to employment, through Scotland’s Employer Recruitment Incentive. Since July 2015 to end December 2016 a total of 1,317 employers have participated in the programme and 1,533 young people have been supported into a sustainable job or Modern Apprenticeship.

The Scottish Government has substantially increased the number of new apprenticeships in Scotland from around 10,500 in 2008 to 28,000 in 2018-19 and remain on track to achieve 30,000 new apprenticeship starts by 2020.

26,262 Modern Apprenticeship starts were delivered in 2016/17 exceeding the target of 26,000 starts.

As well as growing the Modern Apprenticeship programme, the Scottish Government is committed to enhancing and widening our apprenticeship offering, ensuring that more people than ever before can benefit from work-based learning. The expansion of Foundation and Graduate Apprenticeships is key to delivering this vision, as is the additional support we’re offering to rural areas, and to key sectors.

Our commitment to equality of opportunity in apprenticeships is set out in Skills Development Scotland’s ( SDS) Equalities Action Plan ( EAP), which was published in December 2015. This publication makes clear the interventions we will make to increase the numbers of underrepresented groups in apprenticeships and to tackle gender segregation where it exists. SDS published its EAP Year 1 update in July 2017. ^[9]

The Scottish Government is investing £59 million of European Social Funds ( ESF) into the Youth Employment Initiative ( YEI) to help support young people in South West Scotland into secure and sustainable employment. We are also working with partners to ensure that ESF support investment in activity which promotes inclusive growth. ESF are being distributed across Scotland to tackle poverty, promote equal opportunity, develop skills and get people, including young people into training or work.

The Employability Fund ( EF) remains a key element of the Scottish Government’s efforts to boost employment levels in Scotland, with a further 9,000 EF training places being delivered this year (201718) and another 9,000 to be delivered in 2018-19. More than 70,000 training places have been delivered through EF since its launch in 2013, supporting individuals towards and into work, with 71% of leavers achieving a positive outcome from April 2016 to March 2017.

Promoting Fair Work

Building on the Economic Strategy, Scotland’s Labour Market Strategy demonstrates how a labour market that is fair and inclusive, and that provides sustainable and well-paid jobs, is key to tackling income inequality and addressing wider issues, including health, crime, deprivation and social mobility. It sets out a vision for a strong labour market that drives inclusive, sustainable economic growth characterised by growing, competitive businesses, high employment, a skilled population capable of meeting the needs of employers, and where fair work is central to improving the lives of individuals and their families.

The Scottish Business Pledge

The Scottish Business Pledge is a values-led partnership between Government and business, with the goal of boosting productivity, competitiveness, employment, fair work, and workforce engagement and development. By making their Pledge, companies demonstrate their commitment to shared values and to deliver them through their actions and future plans.

The Pledge has nine components:

1. Paying the living wage

2. Not using zero hours contracts

3. Supporting progressive workforce engagement

4. Investing in youth

5. Making progress on diversity and gender balance

6. Committing to an innovation programme

7. Pursuing international business opportunities

8. Playing an active role in the community

9. Committing to prompt payment

The Scottish Business Pledge has grown steadily since 2015 with more than 500 companies across a range of sectors signing up to the Scottish Business Pledge at June 2018.

On 22 March 2018, a review of the Scottish Business Pledge was to announced to focus on boosting the scale and impact of the Business Pledge.

Women’s employment

The Scottish Government is working with the Equality and Human Rights Commission to tackle pregnancy and maternity discrimination. The Minister for Employability and Training is chairing a working group whose remit includes:

• improving employers’ access to advice to ensure best practice;
• developing an industry-specific communications strategy around the benefits of positive pregnancy and maternity policies; and
• strengthening health and safety advice.

We have delivered on our commitment for a Returner’s Programme to assist women to re-enter the workforce following a career break. We have approved seven projects to date with a total value above £235,000. These projects will address the under-representation of women in the science, technology, engineering, mathematics, finance, security and manufacturing sectors; increase business start-up rates for women and the number of women in senior positions and also encourage men into childcare which will help to change the perception of caring as a ’women’s role’. One project specifically supports black and minority ethnic women back into the workplace.

Disabled people’s employment

In December 2016 the Scottish Government published a disability delivery plan, A Fairer Scotland for Disabled People ^[10] . At its heart was the ambition to make sure that disabled people have fair working lives which provide decent incomes.

We will also take a number of other actions to address the barriers to work. While disabled people account for 20% of Scotland’s population (aged 16 and above), they make up just 11.2% of the private sector workforce and 11.6% of the public sector workforce.

We have engaged with stakeholders, including people with learning disabilities and autism, on how to halve the disability employment gap – and will continue doing this during 2018 and beyond. Later in 2018 we will set out next steps for taking forward action to reduce by more than half the disability employment gap, and in April 2018 we held a major Congress on Disability, Employment and the Workplace where the First Minister gave a keynote speech.

We want to give young people with disabilities the opportunity to reach their full potential and recognise the particular challenges they can face when entering the workforce. That is why we will pilot a new work experience scheme to help with this transition into permanent employment, and will offer the highest level of Modern Apprenticeship funding to disabled young people up to the age of 30. We will also build on the Scottish Council for Voluntary Organisations and Inclusion Scotland’s pilot programme by providing people with disabilities with 120 employment opportunities in the third and public sectors and in politics between 2017 and 2021.

In April 2018 we launched our fully devolved employment service Fair Start Scotland. We hope that people with disabilities will make up around a third of the 38,000 participants we hope will join the new service over three years of referrals; and July 2018 will see the launch of the single health and work gateway pilot in Dundee and Fife that will deliver enhanced support for disabled people in those areas.

Employment Powers

New devolved powers on employment support were exercised from 1 April 2017, when a one-year transition arrangement for those with greater need was put in place. This decision has been taken to allow the transfer of devolved powers to be efficiently and seamlessly transferred. Existing Work Choice providers will deliver Work First, which will deliver employment support for up to 3,300 people with disabilities. At the same time, Skills Development Scotland will deliver Work Able Scotland, a service for up to 1,500 clients with a health condition and at risk of long-term unemployment who want to enter work.

The Scottish Government’s focus is continuity support for those who are unemployed and with significant barriers to work, while building a Scottish programme of support from April 2018. In 2018 the Scottish Government introduced a fully devolved, distinctly Scottish employability service, creating a strong platform for future services, focussing support on those further from the labour market for whom work is a realistic prospect.

Review Of Enterprise And Skills Support

In May 2016 Scotland’s First Minister announced a review of enterprise and skills support in Scotland, to assess and maximise its contribution to productivity, equality, sustainability and wellbeing. The review identified ten recommendations in support of these aims, which are being taken forward through nine projects. The review is now firmly in its implementation phase,

with the establishment in November 2017 of an Enterprise and Skills Strategic Board to align and co-ordinate the activities of Scotland’s enterprise and skills agencies, and drive forward the projects that make up the Scottish Government’s Enterprise and Skills Programme. Taken together these projects will prompt improvement in Scottish productivity, with an increased focus on supporting and better reflecting business and user need.

Brexit: What’s at stake for Employment in Scotland?

The progress made by the European Single Market in dismantling the obstacles to trade in goods and services has been a key driver of growth and employment in Scotland and across the UK. Young people in particular have benefited enormously from the opportunities to study and work abroad, as well as, openness and dynamism of the Scottish economy provided by membership to the EU. The UK’s decision to leave the EU, European Single and Customs Union may impact the labour market and job opportunities in the following ways:

European Single Market and Trade: Attracting less foreign investment: Foreign Direct Investment ( FDI) is a key feature of the contemporary global economy and one from which Scotland has derived considerable benefits. Foreign companies investing in Scotland help to create jobs and stimulate economic activity. Presently EU owned firms employ about 122,000 people in Scotland.* The current uncertainty, and a changed future relationship with the EU, creates the risk that potential new investors will re-evaluate their investment projects and future flows of FDI will move elsewhere, thereby potentially harming job creation and productivity of firms.

Losing opportunities in sectors reliant on trade: The EU is the largest single market for Scotland’s international exports, with exports worth £12.7 billion in 2016 supporting directly and indirectly hundreds of thousands of jobs across Scotland. If the UK leaves the European Single Market and Customs Union, that is, becoming a third country outside the EU, trade is likely to become subject to much more restrictive trade agreements with the introduction of tariff and non-tariff barriers to trade. This negative impact will be felt across all sectors of the Scottish economy – in our trade in goods but also in our exports of services to the EU.

Losing opportunities at home and abroad for young people: Under EU rules Scots can study, work or retire in any EU country. Many young people in Scotland have taken advantage of this, studying abroad on the Erasmus Plus programme or seeking job opportunities in another EU country. Participation in Erasmus Plus programme has also brought considerable benefits to other sectors beyond higher education. It has been vital in equipping children and young people of all ages with the skills and competencies they need to thrive in an increasingly globalised world. All these benefits are put at risk by the prospect of the UK’s withdrawal from the EU.

These examples illustrate why the Scottish Government believes that the best option to protect jobs and maximise employment opportunities in the future, is through continued membership to the European Single Market.

*Source: Businesses in Scotland 2017, Scottish Government