Fair Work action plan 2022 and Anti-Racist Employment Strategy 2022: business and regulatory impact assessment

1. Introduction

1.1 Purpose

The Scottish Government commissioned AECOM to undertake a series of impact assessments on the Refreshed Fair Work Action Plan (RAP)^[1] and the Anti-Racist Employment Strategy (ARES)^[2]. These include the following:

• Equality Impact Assessment (EqIA);
• Children's Rights and Wellbeing Impact Assessment (CRWIA);
• Fairer Scotland Duty Impact Assessment (FSDA);
• Island Communities Impact Assessment (ICIA);
• Data Protection Impact Assessment (DPIA); and
• Business and Regulatory Impact Assessment (BRIA).

The RAP merges and updates the existing Fair Work Action Plan, A Fairer Scotland for Women: gender pay gap action plan and a Fairer Scotland for Disabled People: Employment Action Plan, as well as incorporating actions from the ARES. The changes to public sector grant conditionality proposed in the Bute House Agreement are also assessed through actions from the RAP, despite being screened separately.

This report presents a full assessment of the business and regulatory impacts of the actions within the RAP and ARES based on existing evidence and qualitative findings from stakeholder engagement. Costs and benefits have not been quantified as this sits outside the scope of this commission. However, they have been assessed qualitatively. The definition of business and regulatory impacts include private businesses and other organisations such as third sector organisations. In taking a human rights-based approach, this report also identifies where there is a contribution or alignment to human rights legislation. This report has been updated and expanded from a screening report produced in October 2022.

To inform the impact assessments for the RAP and ARES, AECOM conducted a period of stakeholder engagement between October 2022 and January 2023. This included engagement with Short Life Working Groups on disability, gender and race, equality organisations and businesses through survey responses and one-to-one discussions.

The feedback and findings of this engagement have contributed towards completing a full BRIA on the RAP and ARES.

1.2 Refreshed Fair Work Action Plan 2022

Following the publication of the Fair Work Framework in 2016^[3], the Scottish Government published the Fair Work: Action Plan^[4] in 2019, setting out the strategic approach of the Scottish Government to help achieve the vision of becoming a Fair Work Nation by 2025.

The Fair Work Framework defines Fair Work as 'work that offers effective voice, respect, security, opportunity and fulfilment; it balances the rights and responsibilities of employers and workers, and can generate benefits for individuals, organisations and society'.

The 2019 action plan covered three broad themes aiming to: support employers to adopt Fair Work practices; deliver Fair Work to a diverse and inclusive workforce; and embed Fair Work across the Scottish Government.

Informed by the 2021 consultation: 'Becoming a Fair Work Nation'^[5] and the analysis of the responses, the Scottish Government developed a refreshed, integrated Fair Work Action Plan (RAP) to set out a strategic approach to support Scotland becoming a Fair Work nation by 2025. It includes actions and commitments to reduce the gender pay gap, at least halve the disability employment gap by 2038, and progress a range of actions to deliver the new Anti-Racist Employment Strategy:

• Fair Work: action plan^[6];
• A Fairer Scotland for women: gender pay gap action plan (2019)^[7];
• A Fairer Scotland for Disabled People: Employment Action Plan (2018)^[8]; and
• Actions supporting delivery of the strategy, A Fairer Scotland for All: An Anti-Racist Employment Strategy^[9].

The RAP will better enable the Scottish Government to align collective action across these agendas where there is clear synergy (e.g. real Living Wage, effective voice), addressing structural inequalities that perpetuate labour market inequalities through discrete actions. 

A Fairer Scotland for Women (2019)^[10] aimed to tackle labour market inequalities faced by women, with the key objective to reduce the gender pay gap for employees in Scotland by the end of the parliamentary term (May 2021). The action plan recognised that disabled women, older women, racialised minority women, women from poorer socio-economic backgrounds and women with caring responsibilities are particularly at higher risk of experiencing labour market inequalities.

A Fairer Scotland for Disabled People (2016)^[11] outlines five key ambitions as part of the Scottish Government's response to the United Nations Convention on the Rights of Persons with Disabilities, including 'Decent incomes and fairer working lives'. A key element of this was the commitment to at least halve the employment rate gap between disabled people and the rest of the working age population (the disability employment gap). Action to achieve this was outlined in A Fairer Scotland for Disabled People: Employment Action Plan (2018)^[12].

The refreshed Fair Work Action Plan identifies the need for continual development in the approach to work and workplaces, especially in a dynamic society facing challenges such as the Covid-19 pandemic and cost of living crisis.

It promotes the underpinning principles of 'equity and equality of opportunity for all regardless of any individual or group characteristic' and takes an intersectional^[13] approach to workplace inequalities recognising that no inequality sits in isolation.

The key objectives of the RAP are to:

• Increase the number of people paid at least the real Living Wage and on stable contracts;
• Work with employers, workers and trade unions to strengthen effective voice, through a range of appropriate channels;
• Support employers to adopt flexible working practices;
• Reduce the gender pay gap in Scotland by the end of this parliamentary term (May 2026), and maintain or, where possible, improve Scotland's position relative to the UK as a whole and international neighbours;
• At least halve the disability employment gap by 2038 (from 2016 baseline of 37.4 percentage points). Interim milestones:
  • By 2023 to achieve an employment rate for disabled people to 50%;
  • By 2030 to achieve an employment rate for disabled people to 60%; and
• Improve labour market outcomes for racially minoritised^[14] people and increase the number and impact of actions taken forward by employers to address racial inequality.

The RAP sets out actions under four headline actions, which fall into the three broader themes. A breakdown of the RAP is shown in Appendix A.

• Public sector leadership;
• Our ask of employers and support available; and
• Support for people to prepare for, access and sustain fair work.

1.3 Anti-Racist Employment Strategy 2022

The Scottish Government developed an Anti-Racist Employment Strategy (ARES) to address the issues and disadvantage experienced by people from racialised minorities in the labour market in Scotland. The strategy is a call to action and supports and encourages employers to take an anti-racist and intersectional approach to identifying the structural and systemic barriers of racism. An intersectional approach recognises individuals with two or more protected characteristics are likely to face multiple barriers in the labour market.

The term "racialised minorities" is adopted throughout to show that it is systems and structures that do not work for those who are categorised on the basis of "race" and because of this, are sometimes treated differently or disadvantaged. The strategy defines racialisation as "the process by which groups of people are given racial identities and placed within the hierarchy based on their presumed superiority or inferiority to one another".

To meet the key objective of the ARES as outlined in the RAP – 'increasing action and impact of employer action to address racial inequality' – the ARES seeks to achieve the following outcomes:

• The number of people entering the labour market and staying in and progressing in an organisation is closer to and representative of that organisation's local population;
• The number of employers taking action to remove intersectional barriers in their workplaces has increased;
• The number of employers proactively creating safe, diverse and inclusive workplaces has increased; and
• The number of employers taking forward evidence-based actions to improve Fair Work conditions for workers from all backgrounds has increased.

The strategy actions are set out in Appendix B.