Europe 2020: Scottish National Reform Programme 2016

Chapter 2: Employment

Building a labour market that provides sustainable and well-paid jobs, whilst addressing long-standing barriers to employment and economic opportunity, is vital for reducing inequality and delivering inclusive growth.

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 actions being undertaken in Scotland to boost youth employment, improve young people's skills, support labour market participation and promote fair work. These actions cover the third CSR to the UK to address skills mismatches by increasing employers' engagement in the delivery of apprenticeships and reduce the number of young people with low basic skills. This chapter also covers actions that support Europe 2020's 'Youth On The Move' flagship initiative.

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 in 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 ^[12]

Indicator	Current Level	Change Over Year	Reference Period
Employment rate (population aged 20-64)	76.4%	1.4% pts increase	2014
Female employment rate (population aged 20-64)	72.7%	1.6% pts increase	2014
Male employment rate (population aged 20-64)	80.4%	0.6% pts increase	2014

Scotland's 20-64 employment rates for both females and males increased over the year to 2014.

Supporting Youth Employment

The Scottish Government recognises that the legacy of the global economic downturn has been to exacerbate a number of labour market challenges which existed prior to the recession - including youth unemployment and underemployment. That is why we continue to take direct action to tackle unemployment and ensure that people who are out of work or under-employed - particularly young people - have access to the right training, skills and education opportunities.

Developing the Young Workforce - Scotland's Youth Employment Strategy

The Scottish Government's approach to improving Scottish education, training and employer engagement with young people is set out in our 7-year programme, Developing the Young Workforce - Scotland's Youth Employment Strategy ( DYW). ^[13] DYW is a 7-year programme which aims to ensure that young people have access to a broader range of learning options, improve and extend careers advice and work experience, and ensure that skills and training provision is shaped and supported by employers.

The first DYW annual report ^[14] was published in December 2015 and set out progress in year one, showing positive progress with the introduction of a careers service earlier in school, improved connections between businesses and schools and colleges through employer-led DYW groups, and new opportunities for school pupils to undertake learning - for example new Foundation Apprenticeships - while still at school.

Actions to Support Youth Employment

The Scottish Government's vision is to have a world-class vocational education system in Scotland. To support the ambitions laid out in Developing the Young Workforce, we have taken a multi-faceted approach to supporting youth employment. This includes:

• A Modern Apprenticeship ( MA) programme ^[15] designed to be responsive to employer needs. 25,247 MA starts were delivered in 2014-15, and we have exceeded our target to deliver over 25,000 MAs each year, with more than 101,000 new opportunities delivered since 2011. Employers are highly satisfied, with 96 per cent saying that MA participants are better able to do their jobs after they completed the MA programme. The Scottish Government has set a target of delivering 30,000 MA places each year by 2020.
• In addition to high levels of support for new apprentices, through the Modern Apprenticeship programme the Scottish Government has also maintained the Adopt an Apprentice initiative to give apprentices affected by redundancy the best chance of completing their apprenticeship. Employers willing to take on a redundant apprentice receive a payment of £2,000 with employers in the oil and gas industry receiving £5,000. Through this initiative we have been able to support more than 2,225 apprentices back into work up until Q3 2015-16.
• Opportunities For All ^[16] is the Scottish Government's commitment to an offer of an appropriate place in learning or training for all 16-19 year olds who are not in education, employment or training. Showing progress towards this commitment, figures to March 2015 show that 91.7 per cent of school leavers were in a sustained positive destination (that is were participating in learning, training or work nine months after leaving school) , up from 90.4 per cent in 2014. Sustained positive destinations have continued to rise year on year from 84 per cent in 2007-08.

Youth Employment Scotland Fund

The Youth Employment Scotland Fund ( YESF) ^[17] has incentivised 10,000 additional and sustainable job opportunities for young people aged 16-29 across Scotland. A total of £25 million was available for YESF from the Scottish Government and European Social Fund. The programme, administered by Local Authorities ( LAs), supported businesses with a threshold of 400 employees, including social enterprises and third sector employers, who were eligible to apply to the LA responsible for delivering the YESF in their area. The programme was available for jobs starts from 1 April 2013 to 30 June 2015. An evaluation of the programme is underway, with a final report expected in Spring 2016.

Scotland's Employer Recruitment Incentives have been refocused so that they remain relevant in an improving labour market. Scotland's Employer Recruitment Incentive ran from June 2015 to March 2016 to contribute to the additional costs of employing those young people who will continue to face barriers to employment. The programme will run again in 2016-17 with a focus on tackling structural issues in the youth labour market with a focus on support groups such as disabled young people, care experienced, ex-military and young people with criminal convictions.

Employability Fund

To support activity that will help to develop the skills needed to secure a job or progress to more advanced forms of training, Skills Development Scotland will provide 11,650 training places in 2016-17 through the Employability Fund, ^[18] working with Local Employability Partners. Since its introduction in 2013-14 the Employability fund has delivered over 40,000 training places, with 66 per cent of those participating reporting a positive outcome in 2014-15.

Employment Powers

From 1 April 2017, powers over some contracted employment services for disabled people and those at risk of long-term unemployment will be devolved to Scotland. ^[19]

The focus initially for the launch of our new service will be on the most disadvantaged people in the labour market, including those with a disability but we will continue to develop the service until 2020. To provide a good quality employment support service with reduced financial resources, we are developing better alignment and integration with existing services. This creates a real opportunity to provide targeted support to help people enter sustainable, fair employment.

Promoting Fair Work

As well as helping people to enter and remain in employment, a central priority of the Scottish Government is to encourage the private sector to adopt fair and inclusive workplace practices. A central part of Scotland's Economic Strategy is the Scottish Government's Fair Work agenda, encompassing job security, fair reward and opportunities for personal and workplace development. A key initiative working as part of the Scottish Government's Fair Work agenda is the Scottish Business Pledge, outlined in Box 2.

Fair Work Convention

A Fair Work Convention was established following the recommendations of the Working Together Review. ^[22] The Convention has been tasked with providing independent advice to the Scottish Government on matters relating to innovation and productive workplaces, Fair Work and the Living Wage in Scotland to support the Scottish Government's objective to reduce inequality and promote diversity and equality. Following a period of extensive stakeholder engagement, the Convention will develop, promote and sustain a fair employment and workplace framework and advise the Scottish Government on issues relating to Fair Work which are within the scope of the current devolution settlement.

Box 2: Scottish Business Pledge

The Scottish Business Pledge, ^[20] launched in May 2015, is a shared mission between the Scottish Government and businesses, 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 ^[21]
2. Not using exploitative 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

Up to February 2016, over 220 Scottish companies had signed up to the Scottish Business Pledge. The Scottish Government's Programme for Scotland 2015-16 sets out a commitment to continue raising awareness of the Pledge and encouraging more businesses to choose this route to productivity and business growth; fostering a business-led Pledge network to provide opportunities for companies to come together to learn from each other; and working with trade and business bodies to explore sectoral challenges and how they might be addressed.