Fair Work in modern and graduate apprenticeships

Part Three: Conclusions and recommendations

Fair Work First asks public bodies and employers who deliver procured public services in Scotland, or who receive Scottish Government grant funding, to commit to delivering five key criteria of fair work in line with the Fair Work Framework (2016). The overall aim of this research was to explore opportunities to embed Fair Work First principles in the MA and GA offer. The research Fair Work First addresses the issue of a limited evidence base on the awareness and views of employers, apprentices and other key stakeholders of fair work and the Fair Work First criteria, of how these Fair Work First principles may align with the distinctive characteristics and context of the apprentice role, and of potential implementation issues in adopting Fair Work First criteria in relation to apprenticeships.

Key findings and conclusions are set out below organized in terms of the research objectives.

Do the Fair Work First principles need to be adapted to Modern and Graduate apprenticeships in Scotland?

Employers who employ apprentices are already acting in line with a key criterion of Fair Work First (investing in workforce development). In the context of apprenticeship funding, therefore, the importance of the application of FWF to apprenticeships is primarily around the conditions under which they are employed. Despite the generally low to moderate levels of awareness of fair work and Fair Work First among our research groups as whole, both are broadly and positively supported. The general principles of fair work and Fair Work First are seen as relevant to apprentice workplaces, and just as apprenticeship systems in Scotland are seen as a 'good product', so is fair work and FWF. There was no pushback or challenge from any of the research participants - stakeholders, employers or apprentices - on the general orientation of Fair Work First and on its application in relation to Graduate and Modern apprenticeships in Scotland.

Stakeholders told us that the Fair Work First criteria reflect key main elements of good employment practices - investing in people's skills and training, providing contractual security, paying workers the same rate for the same job, providing channels for voice in the workplace and appropriately rewarding people for their work. This is a strong and consistent theme across and within the different research groups canvassed by this research. In this sense, the Fair Work First principles for stakeholders are associated with 'good work'. This was consistent with the views of employers of different size (large, SME and micro), sectors and who operate in different local labour markets but echo the view that Fair Work First embodies key elements that are consistent with their values, policies, HR practices and procedures.

Similarly, apprentices (both GA and MA) were positive and supportive of fair work and FWF. They could identify the importance of the specific Fair Work First principles to their own experience and that of their peers; how these principles manifest themselves in the practices of their employers and how applying the Fair Work First principles would provide assurance to new apprentices about the quality of their training and of their employer.

Concerns arose, however, in relation to the Fair Work First criteria of paying the RLW, and focused on three issues: cost/affordability, impact on differentials and the need to differentiate between training and job performance.

Not surprisingly, unlike the other Fair Work First principles, the problem of the 'affordability' of the RLW was raised by stakeholders and by a range of large, SME and micro-employers. This reflected concerns about the increased staff costs arising from not just the RLW (for apprentices) but the knock-on effects of this on differential pay rates (and variations) for other employees and staff. It also reflected concerns about its negative impact for employers in a number of apprenticeships (e.g. personal services, hospitality and retail) in what are typically characterised as low-pay sectors.

For employers and apprentices, the balance between training and job performance was a legitimate discussion in relation to apprentice pay. Employers can accept simultaneously that current apprentice training rates are too low, producing unfairness where apprentices are doing the same job as others earning more, while also understanding that the balance between training and performance differed in different apprenticeships.

While some stakeholders feared that the introduction of Fair Work First and specifically the criterion around the RLW would have a negative impact on the overall numbers of apprenticeships available in Scotland, many employers reported paying at or above the RLW. Many apprentices are in work prior to beginning an MA framework.

While a reduction in the number of apprenticeships is in no-one's interest, there is little clarity from this or other recent research about the scale of this problem for employers and exactly how apprentice numbers would be negatively affected by adopting this measure. This position echoes earlier research on the introduction of the National Minimum Wage Apprenticeship Rate: as Behling and Speckhesser wrote, "…better information is needed about the value of the contribution of young people in- and post-apprenticeship, and further crucial parameters like employer costs for supervision and administration. This is needed in order to understand the true costs and benefits of apprenticeships for employers" (2013:ix).^[18]

More specific and nuanced assessment genuine affordability issues in applying the RLW to all apprenticeships is still needed. This should also address the types and levels of additional support that may be required by employers to offset the impact of the RLW. This is not simply a call for additional financial support for employers, given that there would be something of a paradox in such a response: supporting businesses to enable them to access public money for skills development - other than under stringent conditions relating to possible market failures - would not provide a level playing field for employers. It is, however, a call for greater sensitivity to context, for example, in relation to those businesses whose operations depend on constrained public funding in areas such as social care and early years. It is also a call for business support that identifies business model constraints in paying the RLW (for example, in low-margin, low value added businesses and sectors) that might benefit from a longer term approach to shifting business models away from those that deliver employment but not fair work.

In contrast to some employer and stakeholder concerns, GA and MAs were broadly supportive of the introduction of the RLW to apprenticeships in Scotland. Although most were not directly affected by low wages, the RLW was seen as a means of countering the problem of 'cheap labour' associated with some apprenticeships, which were seen as unattractive and exploitative. However, the benefits of the RLW need to be viewed alongside the attraction of other benefits of apprenticeships, since the absence of the RLW was not viewed by these apprentices as a factor that would have deterred them in their decision to undertake and apprenticeship.

Implementing the Fair Work First criteria

There was relatively little clarity or consensus on how best to embed Fair Work First within the apprentice role/offer. This is not particularly surprising given that beyond stakeholders in public agencies, further education, employers' organisations and trade unions, there was only a low level of awareness of fair work. Clearly, however, the process of embedding Fair Work First in the apprentice role/offer will be an important mechanism to raise awareness of fair work and the Fair Work First criteria among apprentices, and in shaping expectations among apprentices (including those who identify more strongly as employees) about the quality of their training and of their employer.

In terms of implementing Fair Work First, the greatest emphasis was placed on embedding it by working proactively with employers to increase their awareness of fair work and what would be expected of them by Fair Work First, specifically focusing on what employers will be expected to deliver to GA's and MA's in terms of their work experience and training to ensure consistency with the criteria. This would involve greater and continuing dialogue between The Scottish Government and its agencies, training providers, employers and unions; and promoting Fair Work First and its potential business benefits to employers.

The conditionality embedded in Fair Work First is aimed at using public spending to leverage change in employer practice. There was a general acceptance by most employers interviewed that it is not uncommon for external funding and support to come with a set of qualifying conditions or requirements, and in this sense, no respondent voiced opposition to conditionality in principle. Their central concern, however, was over the level and degree of conditionality that should be applied by public agencies implementing Fair Work First.

At the point of the research, a 'hard' approach to conditionality - for example, one that requires agencies or training agents to collate, monitor and report in detail on evidence of employer compliance - was not supported by most stakeholder and employers participating in the research, and was perceived as likely to act as a disincentive to employers taking on apprentices. This was widely felt to be a particular issue for SME and micro-employers who, unlike larger employers, lack the internal business supports necessary to routinely deploy and evidence these types of actions. There was strong support from employers and some other stakeholders for giving employers more time to adjust to the Fair Work First criteria. Overall, there was strong support for adopting a 'light touch' approach to conditionality: one that minimises additional administrative or procedural burdens on employers. Some employers spoke of the option of an accreditation system to allow employers to brand their organisations as fair employers, potentially delivering reputational benefits for these employers in retention and recruitment and making them more attractive to new apprentice entrants. Others, however, spoke of a cluttered accreditation landscape and were not supportive of further accreditation. Trade union stakeholders pointed to the possibility of a role for workplace unions in verification of Fair Work First criteria and enabling a relatively light touch but effective approach to ensuring alignment with the Fair Work First conditions.

Recommendations for the implementation of Fair Work First

A consideration of the evidence leads us to make the following recommendations set out below.

Recommendation 1: public bodies and agencies should increase efforts to champion fair work in apprenticeships

Leveraging fair work through Fair Work First should be a core influence on the apprenticeship system in Scotland and should be a central focus of agencies managing the delivery of MAs and GAs in Scotland. Fair work and Fair Work First are positively supported by stakeholders, employers and apprentices, and all groups identified fair work as consistent with good employment practices, and there is widespread acknowledgement of the potential benefits of Fair Work First to employers and apprentices.

Recommendation 2: relevant stakeholders, including the Fair Work Convention, should target the provision of information on fair work and Fair Work First specifically on SME employers and apprentices/young people

The need for better communications and dissemination of insights on fair work in general and specifically on Fair Work First was a strong theme throughout the research. Scottish Government, public agencies and training providers need to address the issue of communications about fair work and Fair Work First. There is an identifiable gap and lack of awareness among SMEs and apprentices. There is a need to proactively and urgently address the deficits in information among these groups. While information is already provided to apprentices by SDS and the Unite the Union Fair Work Apprenticeship Coordinator (funded by The Scottish Government), enhancing these mechanisms could address the knowledge and understanding of fair work among apprentices. The ongoing SDS/UNISON Scotland pilot to deliver a fair work module in schools also points to the role of careers information, education, advice and guidance in enhancing awareness of fair work among young people and, subject to evaluation of outcomes, might provide an opportunity to scale up the provision of information in the context of both schools and apprenticeship training.

Recommendation 3: development of specific Fair Work Guidance and best practice examples as these apply to apprenticeships

While the 2021 Fair Work First implementation guidance addresses a number of areas of information requested by stakeholders in this research, there is a need for the development of specific guidance on how Fair Work First relates to apprenticeship support, and specifically to the implementation issues in relation to the RLW, since this is an area that is underdeveloped in the 2021 guidance.

Recommendation 4: identify 'challenge' areas for paying the RLW to apprentices and develop or build upon existing collaborative structures to address challenges and highlight and disseminate good practice around the RLW

The scale of the affordability challenge for employers in paying the RLW to apprentices is simply unknown at the present time. Without detailed information on the scale of the challenge, the likely affected sectors and businesses, there is little robust evidence on which to base any targeting of support for businesses who would, in the context of a requirement to pay the RLW, withdraw from apprenticeship provision. Rather than dilute the commitment to paying the Real Living Wage in apprenticeships, a targeted approach is needed to identifying key affected businesses and exploration of the ways in which these businesses might be better supported to be able to respond to the RLW criteria in Fair Work First.

Recommendation 5: develop a robust evaluation of the implementation of Fair Work First as early as possible and use this insight/learning on an ongoing basis to support further adoption/implementation

There is a strong need for ongoing dialogue on the implementation of Fair Work First with relevant stakeholders, for strong advocacy on the benefits for employers and apprentices; and for ongoing learning (and dissemination of learning) on the efficacy of the current Fair Work First guidelines in supporting employers understanding and decision making in relation to apprentices.

Recommendation 6: develop 'light touch' but effective reporting and monitoring requirements to support Fair Work First and utilise workplace representation to support reporting and monitoring where present

Widespread though not unanimous support for 'light touch' conditionality might best be delivered through a phased and/or collaborative approach to Fair Work First implementation, working with employers in different sectors to address specific sectoral challenges and appropriate timescales for implementation, and relying on existing workplace or sectoral representation structures to provide appropriate verification of practice.

Recommendation 7: explore the lessons from flexible working arrangements operationalised during the COVID-19 public health restrictions to improve intelligence on the feasibility of guaranteed apprenticeships

There is strong support for improving access to apprenticeships for those experiencing labour market disadvantage alongside a strong policy commitment in this regard. However, there is insufficient understanding of how a guaranteed apprenticeship would operate across stakeholders at this point in time and hence there is no basis from the data gathered to make a recommendation on guaranteed apprenticeships. Greater specification of how guaranteed apprenticeships might operate is required for effective stakeholder consultation and consideration should be given to delivering such specification.

Recommendation 8: enhance joint employer/union activity around the governance of apprenticeships/Frameworks with specific emphasis on the delivery of the Fair Work First criteria

Many of the above findings and recommendations highlight the potential for a more 'social partnership' approach to the delivery of Fair Work First in relation to apprenticeships: the emphasis on communication; learning; shared experience and insight; the need for joint problem solving on challenging issues; the need for agreement on the balance between work proficiency and training in apprentice programmes and by extension affordability to the employer, and the scope for shared objectives and common ground in the delivery of apprenticeships – all of these are crucial to embedding fair work and Fair Work First in the apprenticeship offer.