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

Appendix D: Relevant policy

D.1 National Policy

D.1.1 Fair Work Framework^[56]

The Fair Work Convention published the Fair Work Framework in 2016. It sets out a vision that 'by 2025, people in Scotland will have a world-leading working life where fair work drives success, wellbeing and prosperity for individuals, businesses, organisations and society'.

The framework defines Fair Work through five dimensions: effective voice, opportunity, security, fulfilment, and respect. These dimensions support positive outcomes for employers, workers and society through balancing rights and responsibilities in the workplace. The reinforcing synergies within these five dimensions nurture a workplace where the benefits of productive and innovative work are shared, while society benefits from the potential transformation towards inclusive economic growth.

The five dimensions of Fair Work are as follows:

Effective voice:

• Effective voice requires a safe environment where dialogue and challenge are dealt with constructively and where workers' views are sought out, listened to and can make a difference. Workers want a voice not only to resolve problems but also to engage and participate constructively. Voice can therefore improve the experience of work as well as improving organisational performance.
• The Framework cites evidence that shows workers rate collective voice exercised through a trade union most highly in relation to concerns over pay, discipline and grievance. Trade unions can also increase job security and equality and deliver wide ranging individual and collective benefits.
• The Framework cites evidence that worker voice can reduce absenteeism and turnover and enhance output and organisational commitment.

Opportunity:

• Meeting legal obligations by ensuring equal access to work and equal opportunities in work sets a minimum floor for Fair Work. Being proactive in ensuring opportunity for all can highlight current practice, signal areas of change and intervention, and produce a range of benefits for workers and employers.
• Opportunity for all can support social mobility, diversity within organisations (which in turn supports diversity of ideas), improved recruitment, retention and reputation, and reduced labour market and inequality, and related costs of inefficient resource allocation.
• Access to employment opportunities and the likelihood of being in work in Scotland varies by age, race and ethnicity, ability, location and gender.
• The Framework reports there is evidence to suggest that union equality and learning representatives are in a unique position to access and support disadvantaged workers to access opportunities.

Security:

• The Framework sets out security of employment, work and income are important foundations of a successful life. Security as a dimension of fair work can be supported in a variety of ways: by building stability into contractual arrangements; by having collective arrangements for pay and conditions; paying at least the Living Wage; giving opportunities for hours of work that can align with family life and caring commitments; employment security agreements; fair opportunities for pay progression; sick pay and pension arrangements.
• The Framework states: 'Where people feel secure, this can increase their willingness to adapt and change, their commitment, the chances of them 'going the extra mile' and can also increase employer-worker trust. Stability of work can support more workplace learning, better skills development and fulfilment in work. Security and stability in work can also reduce worker turnover and minimise recruitment, selection costs and lost training costs.'

Fulfilment:

• Workers who are fulfilled in their jobs are more likely to be engaged, committed and healthy. Providing fulfilling work can also benefit employers, since work that is fulfilling allows workers to produce high quality goods and services and is more likely to support creativity. Indicators of fulfilling work are generally associated with higher productivity and innovation.
• The Framework cites evidence that an individual's experience of their day-to-day work directly affects their engagement levels and also their personal effectiveness.

Respect:

• Fair work is work in which people are respected and treated respectfully, whatever their role and status. Respect at work is a two-way process between employers and workers. It includes dignified treatment, social support and the development of trusting relationships. It means being open, mutually accountable, transparent and responsive to the concerns of others.
• The Framework cites evidence that respect for and valuing of workers' contribution can impact positively on their commitment, effort and wellbeing and can also support a high performance culture.

Fair work is considered crucial to supporting worker behaviours and attitudes that can create positive outcomes for individuals, employers and society:

"By creating the conditions in which workers' skills and abilities are supported and developed, by promoting opportunities for skills and abilities to be deployed and by creating the motivation for workers to take up those opportunities, fair work as outlined here facilitates the discretionary efforts of workers that underpin high productivity, performance and innovation – all of which can contribute to healthier, wealthier and more inclusive societies".

D.1.2 National Strategy for Economic Transformation (NSET): Delivering Economic Prosperity^[57]

The National Strategy for Economic Transformation outlines an ambition for a successful economy by 2032.

Driving this transformation is a vision to create a wellbeing economy. This recognises that 'every citizen holds Scotland's economic potential in their hands' and that not every citizen is currently afforded the same opportunities.

This vision identifies an ambition for Scotland's economy to be 'fairer' by 2032.. Through 'ensuring that work pays for everyone through better wages and fair work, reducing poverty and improving life chances', the strategy seeks to not only grow the Scottish economy but to enable equality of opportunity and reward, as well as celebrating quality of life.

To achieve the vision of a wellbeing economy, the strategy sets out five programmes of action, including 'a fairer and more equality society'. This seeks to:

• 'Reorient our economy towards wellbeing and fair work, to deliver higher rates of employment and wage growth, to significantly reduce structural poverty, particularly child poverty, and improve health, cultural and social outcomes for disadvantaged families and communities.'

This strategy is aligned with Scotland's National Performance Framework, Tackling Child Poverty, Covid Recovery Strategy, and existing commitments within the five programme areas. Contributions to 'a fairer and more equality society' include:

• A Fairer Scotland for Disabled People: Employment Action Plan;
• Fair Work Nation;
• Fair Start Scotland;
• No One Left Behind;
• Culture Strategy for Scotland; and
• Community Wealth Building.

D.1.3 National Performance Framework (NPF)^[58]

The National Performance Framework is Scotland's wellbeing framework setting out a vision for a more successful, sustainable, and inclusive Scotland.

Within the National Performance Framework, there are 11 National Outcomes aligned with the United Nations Sustainable Development Goals and reflect the aspiration of the Scottish population.

The Fair Work and Business National Outcome measures progress towards Scotland's vision for 2025. This outcome measures progress towards the Refreshed Fair Work Action Plan (RAP) vision and guides the development of necessary legislative and operational structures to achieve a just and fairer Scotland. Performance against this outcome is measured through indicators, including the following:

• Pay gap
• Contractually secure work
• Employee voice
• Gender balance in organisations
• Employees on the living wage
• The number of businesses
• High growth businesses

D.1.4 Developing the Young Workforce: Scotland's Youth Employment Strategy^[59]

The Youth Employment Strategy sets out how the Scottish Government will implement the recommendations from the Commission for Developing Scotland's Young Workforce with the ambition to improve youth employment levels beyond pre-2008 levels.

The strategy prioritises equal access to work relevant educational experience for all young people, despite the barriers they may face. The active role of employers in shaping the education system to generate a talented pool of future employees is also recognised.

Scottish Government and Local Government implementation plans are set out for schools, colleges, apprenticeships, and employers, demonstrating the importance of providing young people with the knowledge to make informed career choices throughout their school studies and beyond.

D.1.5 Tackling Child Poverty Delivery Plan 2022-2026^[60]

The 'Best Start, Bright Futures' delivery plan sets out a vision for tackling child poverty in Scotland, following the foundations of the 'Every Child, Every Chance' publication in 2018.

The plan recognises that an action cannot drive change in isolation, but cumulative impacts across sectors will bring about change for children and their families.

To successfully tackle child poverty, the plan will support families with children through holistic and people-centred services to access financial, emotional, and practical assistance. All parents, regardless of gender, race, or status, will be able to access high quality skills and ultimately good quality employment supported by childcare services.

The Plan sets out three parts, each of which contain key actions in achieving Scotland's offer to families as follows.

Part A: Providing the opportunities and integrated support parents need to enter, sustain and progress in work

• A strengthened employment offer to parents
• Connectivity and childcare to enable access to employment
• Transforming our economy

Part B: Maximising the support available for families to live dignified lives and meet their basic needs

• A transformational approach to people and place
• Enhanced support through social security
• Income maximisation
• Access to warm and affordable homes

Part C: Supporting the next generation to thrive

• Best start to life
• Supporting children to learn and grow
• Post school transitions

D.1.6 Covid Recovery Strategy^[61]

In response to the inequality and disadvantage both exacerbated and exposed by the Covid pandemic, the Scottish Government published the Covid Recovery Strategy.

The strategy prioritises the security and resilience of communities, businesses, society, and the economy. It sets out a vision to:

1. Address the systemic inequalities made worse by Covid;

2. Make progress towards a wellbeing economy; and

3. Accelerate inclusive person-centred public services.

Accompanying this vision are the following outcomes:

• Financial security for low-income households;
• Wellbeing of Children and Young People; and
• Good, green jobs and fair work.

The 'good, green jobs and fair work' outcome sets out how a strong sustainable economy in Scotland will go hand in hand with a fair and equal society. As part of Scottish government's ambition to deliver a green economic recovery, the outcome aims to support innovation, entrepreneurship, new, good, green jobs and build industries of the future.

The strategy outlines the unprecedented shock to Scotland's economy and job market brought about by the pandemic. The impact has been felt unevenly however, with sectors such as Accommodation and Food Services more severely affected. Self-employment has also been hit hard. More recently there is evidence of labour shortages across the economy amid labour supply challenges (eg reduced migration). Some businesses continue to be badly affected by the pandemic, and many have taken on debt in order to keep workers and customers as safe as possible.

Scottish Government is determined to do all it can to help rebuild a labour market that supports a more productive economy, including by embedding fair work so increasing productivity. Commitments set out in the strategy include a number of measures set out in the RAP and ARES.

D.1.7 Ambition Opportunity Place: Scotland's Third National Planning Framework (NPF3)^[62]

The National Planning Framework (NPF) is a long-term plan for Scotland which sets out where development and infrastructure is needed in the country and acts as a spatial expression of the National Strategy for Economic Transformation. The current NPF sets out a spatial strategy with four aims for the country to become: "a successful, sustainable place; a low carbon place; a natural, resilient place; and a connected place".

It is a strategy for the whole of Scotland, bringing together plans in economic development, regeneration, energy, environment, climate change, transport and digital infrastructure to provide a vision of how Scotland should evolve over the next 20 to 30 years.

Under the "successful, sustainable place" objective, the Framework aims to create high quality, diverse, and sustainable places that promote well-being and attract investment. Within this, business is a key focus and it is discussed how places should provide opportunities for business investment and growth to stimulate innovation and diversification of industry. It emphasises that business activity is key to the economy of Scotland and that growing businesses and sectors across the country is a priority to boost future development.

D.1.8 Revised Draft National Planning Framework 4 (NPF4)^[63]

In January 2023, NPF4 was approved by the Scottish Parliament and is planned to be adopted and published in February 2023, replacing NPF3. It builds upon NPF3 and sets out spatial principles, regional priorities, national developments and national planning policy for Scotland.

NPF4 is intended to support the development of sustainable, liveable and productive places across Scotland. To achieve productive places, policies aim to attract new investment, build business confidence, stimulate GDP, export growth and entrepreneurship, and facilitate future ways of working. Overall NPF4 aims to support creating a globally competitive, entrepreneurial, inclusive and sustainable economy, with thriving and innovative businesses, quality jobs and fair work for everyone.

NPF4 also places greater emphasis on rural businesses and the rural economy, with Policy 29 intending to "encourage rural economic activity, innovation and diversification" and to ensure rural communities and businesses are supported.

D.1.9 State of the Economy: Office of the Chief Economic Advisor^[64]

This report, published by Scottish Government, sets out an overview of economic indicators and the economic outlook in Scotland, as of October 2022.

A significant deterioration in the medium term economic outlook is set out, driven by inflationary pressures impacting both households and businesses. Economic activity, uncertainty, expectations and confidence were also impacted by the UK mini budget in 2022.

Business surveys for August and September 2022 indicate contracting business activity. However unemployment is near record lows.

D.1.10 Employability Shared Measurement Framework^[65]

Scottish Government's Employability Shared Measurement Framework aims to create a shared understanding of how the impact of employability services is measured for the people and areas they aim to support.

The purpose of employability provision delivered through the No One Left Behind approach is to support people facing disadvantage in the labour market towards and into sustainable and fair work. This sits against a backdrop of partners working together to support a wider transformational change in how services are designed and delivered. In order to be successful, five key themes have been set to achieve:

1. Reach: Employability services are reaching all those who need support to progress towards, move into and sustain fair work.

2. Progression: To enable an individual 's progression towards fair work and sustained employment. Considering aspects such as improving well -being, confidence and motivation, maintaining or re -engaging with support, and developing aspirations and skills.

3. Skills Alignment: People are being supported to develop skills, knowledge and experience that are needed now, and in the future.

4. Experience of Services: People are treated with dignity and respect, and experience support, which is accessible, aligned with other services and responsive to their needs.

5. Value of Services: Making the best use of resources invested in employability, maximising value for participants and contributing to local and national policy ambitions.

D.1.11 Race Equality Framework for Scotland 2016 to 2030^[66]

This framework sets out the Scottish Government's approach to addressing racism and inequality between 2016 and 2030. Through showing leadership in advancing race equality and addressing barriers faced my racialised minorities, the Scottish Government will assist racialised minorities in realising their potential.

The key principles underpinning this ambition involve:

1. Creating awareness of how race equality benefits the whole of society;

2. Developing a detailed understanding of racial inequality and racism;

3. Promoting policy and practice that is evidence based;

4. Complementing mainstreaming approaches with lawful positive action;

5. Valuing capabilities and capacities; and

6. Looking at race equality from intercultural and intersectional perspectives.

The Framework was created to prioritise the needs and experiences of Scotland's racialised minorities. It outlines how Scottish Government will work in partnership with government agencies and key stakeholders to address opportunities for progress through six themed Visions as follows.

• Overarching work: 'our Vision for a fairer Scotland is that by 2030 Scotland is a place where people are healthier, happier and treated with respect, and where opportunities, wealth and power are spread more equally. The Race Equality Framework aims to ensure that this vision is achieved equally for people from all ethnicities, helping to build a Scotland where we all share a common sense of purpose and belonging.'
• Community cohesion and safety:' We build good race relations and community cohesion across all communities, and all minority ethnic individuals feel safe, protected and included, and experience less racism.'
• Participation and representation: 'Minority ethnic participation and representation is valued, effective, fair and proportionate at all levels of political, community and public life.'
• Education and lifelong learning: 'Everyone has the opportunity to learn in an inclusive environment without disadvantage in relation to racial inequality or racism.'
• Employability, employment and income: 'Minority ethnic people have equal, fair and proportionate access to employment and representation at all levels, grades and occupation types in Scotland's workforce and experience fewer labour market, workplace and income inequalities.'
• Health and income: 'Minority ethnic communities in Scotland have equality in physical and mental health as far as is achievable, have effective healthcare appropriate to their needs and experience fewer inequalities in housing and home life.'

The Scottish Government recognise the importance of monitoring and maintaining progress on the Framework and aligning the Framework to the National Performance Framework to further mainstream race equality.

D.2 Partnerships

D.2.1 No One Left Behind Delivery Plan^[67]

The No One Left Behind is a collective approach to delivering employability services which are flexible, people-centred and responsive.

In 2018, the Scottish Government and Local Government agreed on a collaborative partnership for employability. This was followed by the publication of an Employability Action Plan setting out the framework to deliver 'No One Left Behind'.

The principles which underpin the No One Left Behind approach:

• Dignity and respect, fairness and equality and continuous improvement
• Provides flexible, and person-centred support
• Is straightforward for people to navigate
• Integrated and aligned with other services
• Provides pathways into sustainable and fair work
• Driven by evidence including data and experience of others
• Support more people to move into the right job, at the right time

Progress has been made through the Disability Employment Action Plan^[68], Shared Measurement Framework^[69], the Scottish Approach to Service Design^[70] and Fair Start Scotland extension^[71].

D.2.2 Fair Start Scotland^[72]

Fair Start Scotland, our national employment support service, launched in April 2018 and has been supporting people with significant barriers towards and into sustainable work.

The service is entirely voluntary and offers personalised, one to one support, tailored to individual circumstances. Pre-employment support can last up to 18 months depending on the specific needs of the individual and up to 12 months in-work support is also available to participants and employers to ensure people remain supported during employment.

The service has supported over 51,000 starts since launch in April 2018 and there have been over 17,500 job starts with high rates of sustained employment for those who started work. 63% of people receiving support on Fair Start Scotland reported a long-term health condition and 45% were disabled.

D.3 Other factors

Individuals and businesses face ever-changing burdens dependent on the cumulative impacts of socioeconomic crises. Those relevant to today's populations include Covid, EU Exit and the cost-of-living crisis.

D.3.1 Covid

Covid-19 has an impact on Scotland's health, economy and society and progress towards Scotland's National Outcomes from the NPF.^[73] Emerging and exacerbated labour market inequalities are likely to generate poverty and human right impacts relevant to the Fair Work and Business outcome.

Structural changes in the labour market disproportionately impact protected characteristic groups. For example, young people are increasingly faced with early unemployment, while older unemployed adults are experiencing more long-term unemployment and are less likely to participate in upskilling.

The Covid Recovery Strategy (2021) further recognises the disproportionate impacts of the pandemic on the following vulnerable populations:

• Lower income households have been less able to save and have accumulated more debt;
• Young people are more likely to have been furloughed or lost their job;
• Women, disabled people, and racialised minority groups have faced persistent employment and pay gaps;
• Young people and low-income earners employed in customer facing businesses (such as retail, hospitality, tourism, and the culture sector) have suffered through the longest Covid restriction; and
• Lower income households faced challenges in home schooling through the financial impact of remote learning, especially in accessing digital technology.

D.3.2 EU Exit

Consideration must be given to EU Exit undermining trading and collaborative relationship, which Scottish society and businesses have traditionally relied on as efforts are made to rebuild, restore, and identify new markets and potential trade relationships.

D.3.3 Price Inflation

Since 2021, significant increases in consumer and producer prices have generated social, economic, and environmental vulnerabilities across for Scottish households and businesses. These price increases have been shaped by global events such as the Covid-19 pandemic and the war in Ukraine with impacts of supply chains, energy, and food; and possible UK specific effects relating to the EU Exit..^[74]

The Open Society Foundations poll of 21,000 people recorded that 70% of British respondents named inflation and cost of living as one of the top-three challenging currently facing their family, community and country. Further, online polling by Ipsos MORI revealed that 54% of British respondents expected their disposable income to decrease over the next year.

Further, the Joseph Rowntree Foundation published its annual 'Poverty in Scotland' report reflecting the results of a poll of 4,196 adults in Scotland undertaken between July and August 2022.

The report revealed that low-income households, single parents, and households with one or more disabled people are most vulnerable to the cost-of-living crisis.

Feelings of financial insecurity, food insecurity, social isolation and worsening mental health are evidenced through the following results:

• One-third of households have less than £250 in savings.
• Almost half (47%) of households have at least one debt.
• 65% of households have already cut back on an essential item.
• Three in four households have cut back on the basics.
• 18% of low-income households have skipped meals or reduced meal sizes and not heated their homes.

Household's increased chances of suffering from the current price inflation heightens vulnerabilities to changing legislation, in both positive and negative capacities.

In addition, the Quarterly Economic Indicator report^[75] for Q4 2022 states that businesses are also suffering due to price inflation. It notes that Scottish businesses were under "immense strain" during this period due to upfront costs which are affecting cashflow and profits. Additional cost pressures are adding to this burden, particularly with rising staff costs, which is leading the majority of businesses to raise prices.

Energy bills continue to be a significant cost pressure for firms. While the report states that the energy bills relief scheme has helped since it came into effect in October 2022, the lack of further support is a major cause for concern.

While uncertainty remains, it is likely that households and businesses will face a further increase in energy costs from 1st April 2023 due to recent announcements. Given wider economic challenges, this will affect those most in need and targeted support for those most vulnerable will be necessary according to the Scottish Chamber of Commerce.