Fair Work action plan: becoming a leading Fair Work nation by 2025

3. Our vision: Scotland is a Fair Work nation by 2025

Scotland to be a leading Fair Work Nation by 2025, where fair work drives success, wellbeing and prosperity for individuals, businesses, organisations and society.

Strategic context

The Scottish Government shares this vision with the Fair Work Convention, the independent body that advises government on Fair Work. In 2016 the Convention published its Fair Work Framework defining Fair Work as work that offers effective voice, respect, security, opportunity and fulfilment; and that balances the rights and responsibilities of employers and workers and can generate benefits for individuals, organisations and society.

Our vision is measured and demonstrated through the Fair Work and Business National Outcome in our National Performance Framework, which helps us develop the necessary legislative and operational structures to help us set and achieve the vision for the type of nation we want to be. In addition, each of the actions within this plan have indicators and are mapped to a measurement framework to ensure the intended outcomes are being realised.

Fair Work is underpinned by the principles of equity and equality of opportunity for all regardless of any individual or group characteristics. As such, fair work practices are crucial at both individual level for worker and employer outcomes, and at a strategic level for Scotland’s economic performance. By achieving equality of opportunity for all to access and progress in work, Fair Work can drive productivity, release untapped potential and inspire innovation.^[26]

Achieving our vision is a journey which demands a continuing culture and values shift in our approach to work and workplaces. Many employers are at the forefront of this transition and have demonstrated the strengths of a Fair Work approach.

Fair Work is relevant beyond the workplace and supports positive outcomes in all parts of society. This is why Fair Work is central in our ten year NSET, our second Tackling Child Poverty Delivery Plan Best Start, Bright Futures, and our fourth National Planning Framework.

Why is Fair Work important?

EU Exit, Covid-19, and the ongoing cost of living crisis are placing huge burdens on employers. While the unemployment rate remains close to the historic low, Scotland’s economic inactivity rate is higher than the rest of the UK (23.8 per cent compared with 21.7 per cent) and many sectors are continuing to experience chronic labour shortages.^[27]

Despite the very tight labour market, real earnings from employment are declining because of high rates of inflation. The cost of doing business has increased dramatically, with consequential costs passing to consumers and customers. This can exacerbate existing structural inequalities in the labour market, primarily in-work poverty, particularly for disabled people, women and people from racialised minorities. These issues cut across all the dimensions of Fair Work, but they also highlight why Fair Work is now more important than ever, and can offer a solution to addressing these challenges.

Case study:

Peter Facenna, Managing Director at Allied Vehicles Group, said: “Paying the living wage is important to Allied Vehicles because we want to make sure our staff feel valued – especially in times like now, when the cost of living is rising. We want to look after our staff both from the local community, which is one of Scotland’s most deprived areas, and from further afield. It’s important for us that we do everything we can to help ease our employees’ worries about money and about the cost-of-living crisis.”

Kenny Preston, Machine Operator at Allied Vehicles Group, said: “The living wage has made a huge difference personally to myself and family as I am the only income in my household, my wife is the carer for our son who has additional support needs. While there is a cost-of-living crisis, knowing Allied Vehicles has committed to being a living wage employer helps to take the burden from a lot of people with regards to utility bills, food, fuel and rent or mortgages. Things are tight just now for a lot of people, and it shows that Allied Vehicles are prepared to go that extra mile investing and showing faith in the workforce.”

Evidence

The Warwick Institute for Employment Research^[28] has examined the relationship between good work and productivity. It identified evidence of positive impacts on productivity across several dimensions of good work including pay and benefits; health, safety and psychosocial wellbeing; job design and the nature of work; and work-life balance.

It is widely evidenced that poor-quality work can be bad for both physical and mental health and this can have knock on effects for worker productivity. The OECD^[29] found strong evidence of a negative relationship between job stress and at-work productivity and a positive relationship between job rewards and productivity.

The Fair Work Framework^[30] is clear that the best decisions for workers and employers are those made collaboratively. As labour market and workplace needs evolve, everyone should have the right to continue to be able to get and keep a good job and to progress in their career and build the foundation for a secure and satisfying retirement.

Addressing pay and employment gaps

We recognise that we cannot become a leading Fair Work nation without tackling the barriers that many face in trying to reach, remain and thrive in the labour market. Work to address this inequality was previously taken forward in our landmark action plans A Fairer Scotland for Women: Gender Pay Gap Action Plan,^[31] and A Fairer Scotland for Disabled People: Employment Action Plan.^[32]

This refreshed Fair Work action plan continues to acknowledge the existence of structural barriers and systems that create unequal conditions and opportunities for one group of people over another, and which tend to have their basis in the day-to-day operations of institutions, including education, transport and employment. Systemic racism, disablism, sexism, and ageism are still a real experience for many people.

Gender

Stereotyping from an early age drives occupational segregation that moves women especially, into industrial sectors dominated by lower pay and jobs that are regarded as ‘women’s work’ and under-valued, that is, the five C’s: catering, cleaning, cashiering, clerical, and caring.^[33] Even when women and men work in the same or similar jobs, or do work of equal value, women can face discrimination in pay systems, and fall foul to lower pay despite the fact that the Equal Pay Act has been in force for over 50 years. As women are still regarded as the primary caregiver in a household, they are disproportionately impacted by a range of discriminatory practices such as pregnancy and maternity discrimination – which assumes that motherhood detracts from a worker’s productivity or value – lack of access to affordable, high quality child care, and as unpaid carers for other adults, such as an older or disabled family members, women are prevented from accessing better paid, secure jobs and progressing to senior roles. These compounded factors make women more vulnerable to the impacts of the cost crisis, and drives the gender pay gap.^[34]

More generally, employment opportunities can be blocked by a lack of access to quality, fair paid and flexible work which accommodates caring and health commitments; by public transport systems that are inaccessible, irregular (especially in rural areas), and often unsafe (which impact on women especially who are the majority of users of public transport); and by recruitment processes that fail to take into account, understand, and appreciate someone’s cultural, language or communication needs.

Disability

Similarly, the stereotype of disabled people as passive recipients of care, rather than active contributors to our communities and economy also limit employment opportunities and can negatively shape attitudes of potential employers. The Scottish Government recognises the social model of disability (in which people are disabled by barriers created by society, not by their impairment or difference).^[35] To make a real change in the Fair Work landscape we therefore need the focus to shift from the individual to improving disabled people’s access to and experience of employment.

That is why the action we will take focuses on tackling structural barriers and discrimination which prevent disabled people from realising their full potential in the labour market, and deny employers a rich source of skills and talent. We are aware that the barriers and economic opportunities that exist in rural Scotland may be vastly different from those in Scotland’s towns and cities. For example, rural areas are more reliant than urban areas on small and micro businesses those areas would be more likely to benefit from improved support from organisations such as Business Gateway, which exist to encourage entrepreneurship. Although we are currently on track to meet our target to halve the disability employment gap by 2038, reducing it to at least 18.7 percentage points, it is clear that there is still significant work to be undertaken. This includes taking greater action to support disabled people who already are, or are at risk of becoming, economically inactive. Disabled people have the highest economic inactivity rate across all groups and yet while many economically inactive people indicate they do not want to work, disabled people who are inactive are more likely to say they do want to work.

Racialised minorities

As we outline in our new Anri-Racist Employment Strategy, labour market inequalities experienced by racialised minorities are also well evidenced in Scotland at a national level, as reflected in the disparity across employment rates and pay outcomes between racialised minorities and the white population.

Girls/boys Modern Apprenticeship frameworks – starts:

Social Services and Healthcare:

Boys = 368

Girls = 1875

Proportion of full-time employees in each industrial sector who are women:^[36]

Human health and social work = 73.1%

Construction = 12.7%

Caring, leisure, and other service occupations = 69.1%

Estimated proportion of full-time employees in each occupational group who are women:^[37]

Managers, Directors and Senior Officials = 34.8%

Construction: Technical

Across the UK, women are more likely than men to be in employment on a zero-hours contract^[38]

Women = 3.7%

Men = 2.6%

Overall women account for around three in five (57.7%) economically inactive people in Scotland.^[39]

The economic inactivity rate for disabled people aged 16 to 64 was estimated at 46.5%. This was significantly higher than the inactivity rate for non-disabled people (16.4%).

Looking after family and/or home accounted for 22.6% of economically inactive women in 2021.

Whereas, only 7.9% of inactive men state this as their reason for inactivity.^[40]

The employment rate for 50 to 64 year olds had decreased over the last two years to 68.1% in 2021.

The employment rate for the minority ethnic group (aged 16 to 64) was estimated at 62.1% in 2021. This is significantly lower than the rate for the white group (73.9%). The ethnicity employment rate gap was 11.7 percentage points in 2021.

In 2021, the unemployment rate for the minority ethnic group was estimated at 6.5%^[41] while the unemployment rate for the white group was estimated at 3.8%.^[42]

Tackling labour market inequalities is not only necessary for creating a fairer and more equal society, it can also help boost Scotland’s economic performance. The strong correlation between equality and economic growth has long been acknowledged.^[43] People in unequal societies are unable to live up to their potential, which can cause weaker demand today and lower growth in the future.^[44] Evidence suggests that income inequality has a large and significant negative impact on economic growth,^[45] potentially harming its pace and sustainability.^[46]

Action to tackle structural inequalities is taking place across government. From early years and childcare addressing stereotyping in children’s play and in early learning settings to careers advice in schools tackling occupational segregation in subject choice and post school destinations. All policy areas have a part to play in breaking down prejudice and improving opportunities for protected groups. Information on the work being taken forward across government can be found at Annex B.

As part of the governance around the plan implementation, we will give consideration to developing a space in the governance structure to enable a strategic focus to monitor activity across government that addresses the wider drivers of pay and employment gaps experienced by women, disabled people, workers aged over 50, and people from racialised minorities.

Accessing and enjoying Fair Work is also determined by the support that comes prior to entering employment, including our devolved employability support service Fair Start Scotland and the No One Left Behind strategic partnership approach with local government. These services will continue to take a person-centred approach to supporting individuals towards and into work, recognising and addressing the specific challenges faced by women, disabled people, workers over 50, and people from racialised minorities.

Equality VS Equity

The need for an intersectional approach

Intersectionality describes people who are in possession of a combination of equality characteristics, who may face multiple barriers and compounded discrimination in the labour market (for example, disabled women, or people from racialised minorities aged over 50).

We recognise that this, along with other factors such as being a parent or having other caring responsibilities, can compound and further hamper the rights of all workers to enter, sustain, and progress in a safe, diverse, and inclusive labour market. Whilst we continue to acknowledge and take action on discreet issues and barriers for respective equality groups, we have also sought to identify, data allowing, where intersectionality highlights synergies on which we can take collective action.

In 2021, the ethnicity employment rate gap for women was estimated at 23.1 percentage points, while the gap for men was estimated at -1.5 percentage points (p.p.).^[47]

The disability employment gap on the other hand, was estimated to be larger for men at 36.8 per cent compared to women at 26.2 per cent in 2021.^[48]

In 2021, there was a minority ethnic employment rate gap for 25-34 (18.9 percentage points).

In Scotland, a non-disabled white person is almost twice as likely to be in employment (81.7% employment rate) than a disabled person from a minority ethnic group (43.7%).

Also in 2021 the estimated employment rate for young disabled people was significantly lower than their non-disabled peers (37.1 per cent vs 58.3 per cent for those aged 16-24). Since 2016, the employment gap for disabled young people has decreased from 23.4 p.p. to 21.2 p.p. driven primarily by an increase in the rate of employment enjoyed by young disabled people.^[49]

Equality VS Equity

There are three elements to providing an intersectional approach within the plan:

• Information and guidance – we will promote an intersectional approach to data collection and policy development across the labour market through the creation and/or signposting of guidance, including our action to create and promote a centralised access hub of Fair Work resources for employers;
• Delivery – within our actions – where possible, we will take a targeted approach to address compounded inequality that is already well-evidenced for particular intersects, such as racially minoritised women or young disabled people;
• Exploration – we recognise that the evidence base of intersecting inequalities is limited, and is symptomatic of the systemic inequality that we are committed to dismantling. Some of our actions will therefore seek to build on our evolving evidence base, and look at the impact of multiple intersects to inform interventions across the labour market.

Progress so far

We are continuing to build on work that has progressed so far, including:

• Increasing the number of accredited real Living Wage employers from 14 in 2014 to over 2,900 in 2022 – that’s proportionately 5 times as many as in the rest of the UK. Over 59,000 workers have seen a pay rise as a result of their employer gaining accreditation 91 per cent of workers are now paid at least the real Living Wage in Scotland.
• Supported the STUC to progress a mapping of existing collective bargaining arrangements and national agreements across Scotland. This research is helping to inform how we might extend collective bargaining in the initial key sectors identified in the previous Fair Work Action Plan, but also more widely in other under-represented sectors.
• Supported trade unions through the STUC to progress specific projects which deliver our Fair Work ambitions. These include outcomes which will ultimately help to increase collective and sectoral bargaining in targeted sectors; and which increase the leadership capacity of under-represented groups within affiliate unions and build their capacity in the promotion of workplace equality.
• In line with our Bute House Agreement commitment, we have introduced a requirement on public sector grant recipients to pay at least the real Living Wage and provide effective voice channels.
• The proportion of women (employees aged 18+) earning the real Living Wage or more has increased from 83.9 per cent in 2021 to 89.7 per cent in 2022, continuing the upward trend seen since 2018.
• The Gender Pay Gap for full-time employees is continuing the longer-term downward trend seen prior to the Covid-19 pandemic (3.7 per cent in 2022 compared to 7.2 per cent in 2019), and for all employees in Scotland (including both part-time and full-time employees) continues to be lower than the UK gap (12.2 per cent vs 14.9 per cent).^[50]
• The Disability Employment Gap is the lowest (31.2 percentage points (p.p.), 2021)^[51] since we set our baseline in 2016, and we are on course to meet the target of halving it to 18.7 p.p. by 2038.
• To achieve our ambition of halving the disability employment gap, it was estimated the employment rate of disabled people would need to increase, on average, by at least 1 percentage point every year (from 42.8 per cent in 2016). To help measure progress, we set interim milestones to increase the employment rate of disabled people to: 50 per cent by 2023; and to 60 per cent by 2030. In 2021 the employment rate for disabled people was 49.6 per cent, meaning we are making significant progress towards meeting our first interim target.
• We held the Public Sector Leadership Summit on Race Equality in Employment^[52] and National Conference on Race Equality in Employment to support and encourage employers to address the recommendations of the Scottish Parliament Equalities and Human Rights Committee’s inquiry report^[53] into race equality, employment and skills.
• Our Fair Work in Social Care Group, which updated its Terms of Reference earlier this year, has been key to progressing fair work in this sector, including the Scottish Government’s delivery of two uplifts in pay for the direct adult social care workforce in the last year.
• The Group has developed a set of minimum standards for terms and conditions reflecting fair work principles. We are investigating how these standards can be implemented within devolved powers and our work on introducing sectoral bargaining is progressing ahead of the National Care Service, in line with the recommendations of the Fair Work Convention.
• The Scottish Government has attached Fair Work First criteria to some £4 billion of public funding since 2019. This includes criteria to create more diverse and inclusive workplaces.

Reduction in Disability Employment Gap

• Fair Work in procurement:
  • In October 2021, we started routinely mandating payment of the real Living Wage in Scottish Government procurement contracts.
  • In May 2022 we published updated Statutory Guidance under the Procurement Reform (Scotland) Act 2014 to reflect this change and the extension of Fair Work First criteria to include provision of flexible working and oppose fire and rehire practices.
  • We have developed model invitation to tender questions to make it easier for public bodies to mandate the real Living Wage in relevant contracts.
• In 2021-23, we are funding Flexibility Works to support and promote the development of flexible and family friendly workplaces. We have also funded Timewise between 2020-22 to deliver the ‘Fair, Flexible Work Programme for Scotland’. This provided training to 70 intermediary ‘change agents’ that in turn supported 2,900 employers and 2,895 parents and carers with guidance and advice on how to adopt and request flexible working practices.^[54]
• In Early Learning and Childcare (ELC), we have a funding agreement with local government for the ELC expansion which enables local authorities to set sustainable rates for funded ELC that support payment of the real Living Wage to all workers delivering funded ELC, benefitting women who make up the majority of the work force.
• By the end of 2022/23, we will have met our commitment to invest £1 million in Apt – a Public Social Partnership (PSP) to ensure employers have the skills they need to attract, recruit and retain disabled people. Since 2020, the PSP has worked with around 160 employers, 54 of whom have benefited from in-depth support from Apt. Employers have reported: improved recruitment and retention processes; increasing confidence regarding issues relating to disability equality, including providing appropriate support for staff; and increasing employee awareness about the benefits a diverse workforce can bring to an organisation.

Increase of people in receipt of the Real Living Wage

• Community Wealth Building pilots promote Fair Work as central to the workforce pillar, through Fair Work and Anchor Charters. These agreements include actions to encourage employers to become living wage employers; seek to recruit locally and from groups that are disadvantaged in the labour market; provide secure employment and opportunities for progression and ensure workers are respected and have an effective voice.
• We have ensured that our activity to deliver a just transition to net zero consistently furthers our Fair Work ambition. In our £500 million North East and Moray Just Transition Fund every project has to demonstrate how they have delivered Fair Work, as part of their key performance indicators in the reporting cycle. We are also ensuring that access to Fair Work, and widening access to high value work more generally, is a priority when developing the upcoming Just Transition Plans and the next Climate Change Plan.
• We have placed Fair Work at the heart of the selection process for Green Freeports in Scotland. Applicants for Green Freeport status were required to set out how fair work practices will be embedded across the proposed area.
• The delivery of our new multi-year Workplace Equality Fund, through which we are currently supporting 13 projects with over £750,000 worth of funding. The fund is aimed at removing labour market barriers for certain priority groups including the over 50’s workforce, people from racialised minorities, disabled people, and women.
• We are funding See Me, Scotland’s national campaign to end mental health stigma and discrimination. Part of this funding supports their ‘See Me in Work Programme’, helping employers to tackle mental health stigma and discrimination in their organisation and create a mentally healthy workplace.
• In August 2022 we launched a new online mental health and wellbeing platform for employers, in partnership with Public Health Scotland and wider stakeholders, to help Scottish employers actively support and promote mentally healthy workplaces.
• In August 2021, we were the first country in the UK to publish an ambitious Women’s Health Plan which has an action to develop a menopause and menstrual health workplace policy for NHS Scotland, as an example of best practice and to promote equivalent efforts across the public, private and third sector.

Key objectives

While progress has been made to support workers access and sustain Fair Work, more needs to be done to ensure that we remove the barriers so that all workers can experience the benefits of Fair Work and achieve the outcomes as set out in our aims.

Dimensions of Fair Work

Effective voice

For individuals, the opportunity to have an effective voice is crucially important. Having a say at work is consistent with the broader suite of rights available to citizens in democratic societies.

Opportunities

It is a reasonable aspiration to want work that is fair – and for fair work to be available to everyone. Fair opportunity allows people to access work and employment and is a crucial dimension of fair work.

Security

Security of income can contribute to greater individual and family stability and promote more effective financial planning, including investment in pensions.

Fulfilment

Fulfilment can also arise from positive and supportive workplace relationships that promote a sense of belonging and this overlaps strongly with respect as a dimension of fair work.

Respect

Respect at work enhances individual health, safety and wellbeing. Dignified treatment can protect workers from workplace related illness and injury and create an environment free from bullying and harassment.