Europe 2020: Scottish national reform programme 2017

Chapter 3: 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 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 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 ^[8]

Indicator	Current Level	Change Over Year	Reference Period
Employment rate (population aged 20-64)	75.5%	0.1% pt decrease	2016
Female employment rate (population aged 20-64)	71.3%	0.8% pt decrease	2016
Male employment rate (population aged 20-64)	80.0%	0.6% pt increase	2016

Scotland's 20-64 overall employment rate is above 75%.

Supporting Youth Employment

The cost of youth unemployment is significant. 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. To achieve this we are continuing to implement the recommendations of the Commission for Developing Scotland's Young Workforce ( DYW) in our Youth Employment Strategy ^[9] to reduce youth unemployment (excluding those in full-time education) by 40% by 2021.

Our Youth Employment Strategy's second annual report, published on 14th December 2016, highlights the progress we are making in growing vocational provision for young people in the senior phase of school education, including a significant expansion of modern and foundation apprenticeships; establishing a network of regional DYW employer groups across the country; creating new national standards for work placements and careers education for schools; a work placement standard for colleges launched on 28 September 2016; investing in the earlier introduction of careers advice; and over 360 businesses taking up the new Investors in Young People Accolade.

As part of the Scottish Government's equality and inclusive growth agenda the DYW Programmes include reducing gender imbalance in subject groups of college courses and improving positive destinations for looked after children. We are continuing to work with Skills Development Scotland and other partners to implement the Equality Action Plan for Modern Apprenticeships, to ensure the programme addresses gender imbalances and is open to all by increasing the number of trainees who are disabled, have been in care or are from a minority ethnic background.

Actions to Support Youth Employment

Over the two-year period from Jan-Mar 2014 (baseline) to Jan-Mar 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 2016-17 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 ( SERI). 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's Modern Apprenticeship ( MA) programme is designed to be responsive to employer needs. 25,818 MA starts were delivered in 2015-16, and the target to deliver over 25,500 MAs in 2015/16 was exceeded. The Scottish Government delivered over 128,000 new opportunities in the last parliamentary term. Employers are satisfied, with 84% saying that MA participants are better able to do their jobs after completing the MA programme. The Scottish Government has set a target of delivering 30,000 MA places each year by 2020.

In 2016, the Scottish Government announced a £59 million investment of European Social Funds for the Youth Employment Initiative ( YEI) to support young people in South West Scotland into secure and sustainable employment. We are also working with partners to ensure that European Social Funds ( ESF) support investment in activity which promotes inclusive growth. ESF is 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 11,650 EF training places being delivered this year (2016‑17) and another 9,000 to be delivered in 2017-18. More than 59,000 training places have been delivered through EF since its launch in 2013, supporting individuals towards and into work, with 69% of leavers achieving a positive outcome from April 2015 to March 2016.

Promoting Fair Work

Building on the Economic Strategy, Scotland's Labour Market Strategy, published in August 2016 ^[10] 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.

Box 1: The Scottish Business Pledge

The Scottish Business Pledge, 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 ^[11]
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

Up to March 2017, over 340 companies across a range of sectors from banking to hospitality 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 sectorial challenges and how they might be addressed.

Women's employment

The Scottish Government is working with the Equality and Human Rights Commission ( EHRC) 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.

The Scottish Government will work with large employers to help women who have had career breaks back into the workplace. Equate Scotland has been awarded funding of up to £50,000 to deliver the first stage of activity to support women to return to work. This 12-month project will provide at least 40 women with support to re-enter the STEM (science, technology, engineering and maths) sector by offering one to one guidance, career clinics and access to webinars and three-month paid placements with a STEM employer. The placements will focus on life sciences, digital skills and engineering. However, STEM is not the only sector where women experience barriers to re-entry, and the Scottish Government will look to develop returner programmes in other sectors where a need is identified. These projects will both help women update skills and knowledge and smooth the transition back into the workplace for both women and employers.

Disabled people's employment

Making sure disabled people have access to decent incomes and fairer working lives is one of the key ambitions at the heart of the new disability delivery plan - A Fairer Scotland for Disabled People ^[12] - published in December 2016.

The Scottish Government has a clear action on reducing by at least half the employment gap between disabled people and the rest of the working age population and will work with disabled people's organisations and partners to develop a timetable to achieve that aim. 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 (16+), they make up just 11.2% of the private sector workforce and 11.6% of the public sector workforce. We will work with both sectors to look at target setting and how we can redress the imbalance.

We want to give young disabled people the opportunity to reach their full potential and recognise the challenges they can face 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 SCVO and Inclusion Scotland's pilot programme by providing disabled people with 120 employment opportunities in the third and public sectors and in politics between 2017 and 2021.

We will use new powers over employability to support disabled people into employment. Our transitional service from April 2017 through Work First Scotland will allow us to take a fairer approach to that support and will help 3,300 disabled people.

Employment Powers

New devolved powers on employment support will be exercised from 1 April 2017, when a one-year transition arrangement for those with greater need will be 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 disabled people. 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. From April 2018 the Scottish Government will introduce 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, the First Minister announced a review of enterprise and skills support in Scotland to help make further progress on productivity, equality, sustainability and wellbeing. In response to recommendations from the first phase report, work continues to ensure the best model of business support for Scotland. A range of actions aim to optimise an enterprise support system designed around, and able to adapt and grow with, the needs of businesses, supporting start-ups through to high growth and international firms - as well as community and social enterprises - to scale-up and grow.

• In 2016 the male employment rate was 80% of the Scottish population aged 20 - 64
• In 2016 the female employment rate was 71.3% of the Scottish population aged 20 - 64
• At August 2016, 90% of Scotland's young people aged 16 to 19 were in education, training or employment
• 25,818 Modern Apprenticeship starts delivered in 2015-16
• 11,650 Employability Fund training places delivered in 2016-17 and another 9,000 will be delivered in 2017-18
• More than 59,000 training places delivered through the Employability Fund since its launch in 2013
• 84% of employers said Modern Apprentice participants were better able to do their jobs after completing programme
• The Scottish Government has set a target of delivering 30,000 Modern Apprenticeship places each year by 2020
• Scotland's youth unemployment level has halved over the last year to 32,000
• Youth unemployment rate (8.9%) is the third lowest youth unemployment in the EU
• Over a 2 year period, youth unemployment (excluding those in full-time education) fell in Scotland by 9,000 from baseline figure of 52,000 in January to March 2014

Updated April 2017