National Economic Forum: March 2022

Hosts: Richard Lochhead, Minister for Just transition, Employment and Fair Work

Facilitator: Louise Macdonald, National Director, Institute of Directors Scotland

Scribe: Naomi Magnus

Discussion group overview

NSET aims to make Scotland a fairer and more equal society by delivering higher rates of employment and wage growth, significantly reducing structural poverty, particularly child poverty, and improving outcomes for disadvantaged families and communities.

A fair and equal society and a wealthier, greener economy are mutually reinforcing. Economies that have stronger productivity growth also have higher wellbeing. The opportunity over the next ten years is to build a successful economic model that ensures work pays for everyone through better wages and fair work, reduces levels of child poverty and in-work poverty, particularly for women, and eradicates low pay. We can improve life chances, and achieve equality of opportunity for all to access and progress in work whilst delivering a just transition to net zero.

The Child Poverty Delivery Plan published on 24 March confirmed the Scottish Government’s ambition to reduce child poverty to less than 10% by 2030, by lifting at least 140,000 children out of poverty. This will only be achievable through a combination of fair employment opportunities for priority families, wraparound services that make employment accessible and practicable, and measures to reduce the impact of the cost of living crisis.

Discussion will explore how we work together to achieve these aims, joining the dots between our interventions focussed on fair work, productivity and investment, and  use all means at our collective disposal across the public, private and third sectors.

Background

The labour market has shown strong performance post-pandemic over the past quarter, with high employment and low unemployment. Inactivity has risen, in part due to older workers choosing to leave the labour market, and a number of sectors face enduring labour shortages. There are emerging signs of negative economic effects stemming from the war in Ukraine, but even before these, enduring disparities remained in the experience of work for various labour market groups, preventing workers and businesses achieving their potential. 14.4% of workers in Scotland still earn below the hourly real Living Wage, and 68% of children in Scotland in relative poverty live in working households (160,000 children)[1]. The Gender Pay Gap in Scotland is 11.6% for all workers (3.6% for full time workers)[2] and Scotland's Disability Employment Gap is 33.4%. The pay gap for minority ethnic workers compared to their white counterparts is 13.7%2. 

The Scottish Government’s vision, shared with the Fair Work Convention, is to make further progress in tackling these disparities so 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. This is a stepping stone towards the ambition of NSET.  

In NSET, the Scottish Government commits to 10 actions across two projects:

Project 14: tackle poverty through fairer pay and conditions

Key actions include:

• apply Fair Work conditionality to grants, requiring payment of real Living Wage, and channels for effective workers’ voice by summer 2022, and determine how these conditions can be applied to non-departmental public bodies.
• deliver on the commitment to require payment of the real Living Wage in Scottish Government contracts from October 2021.
• deliver sectoral Fair Work agreements, in partnership with industry and trades unions, that deliver payment of the real living wage, better security of work, and wider fair work first standards. We will also promote the benefits of collective bargaining to achieve higher standards of pay, better security of work and greater union representation
• build on the findings from the Business Purpose Commission Report in Spring 2022, to inform how businesses can deliver positive impacts on prosperity, wellbeing and environmental sustainability.

Project 15: eradicate structural barriers to participating in the labour market

Key actions include:

• set out how we will support parents to increase their incomes from employment as part of cross-government action to deliver upon the ambitious targets set through the Child Poverty (Scotland) Act 2017
• simplify the employability system by implementing No One Left Behind
• ensure that Every Contact Counts in delivering an aligned and integrated offer of support for those seeking to move towards, into or progressing within the labour market
• take further steps to remove barriers to employment and career advancement for disabled people, women, those with care experience and people from minority ethnic groups
• build on the principles of the Young Person’s Guarantee, developing an all age guarantee of support for those most disadvantaged in the labour market
• establish a Centre of Expertise in Equality and Human Rights

Alongside the commitments in NSET, the Fair Work Action Plan also sets out a range of actions, including support for business and employers such as Fair Work First Guidance and the Fair Work Employers’ tool. The Plan will be refreshed this year, alongside and aligned with the refresh of the Gender Pay Gap Action Plan, the Disabled People’s Employment Gap Action Plan and a new Ethnicity Pay Gap Strategy

The Business Purpose Commission for Scotland is a joint initiative between the Scottish Government and the Scottish Council for Development and Industry (SCDI) to consider creative ways in which the purposeful business agenda can be nurtured in Scotland. The Commission has been gathering evidence since September 2021 and will report in late Spring 2022.

The Centre of Expertise in Equality and Human Rights will work across the economy portfolio, to embed equality and human rights within the economic policy-making process.

The Child Poverty Delivery Plan sets out a commitment to increase our employability ambitions through No One Left Behind and through working with a range of partners, including Local Government, DWP, employer networks and the third sector, to provide opportunities and support that ensures at least 12,000 parents can enter and sustain fair employment opportunities. 

Achieving the goal of Fairer Prosperity, tackling in-work poverty and helping more people into work requires collective action on fair work, successful employability interventions, and investment in skills, as well as a partnership approach with businesses and stakeholders in all sectors to build on fair work as an asset for productivity growth.

Evidence shows a significant, strong positive correlation between employees' satisfaction with their company, wellbeing at work and employee productivity[3]. Fair Work helps to create a more committed, better skilled and adaptable workforce, and supports higher levels of recruitment and retention. A Gallup study looking at data from over 23,000 business units has demonstrated that those with the highest engagement scores (top 25%) averaged 18% higher productivity than those with the lowest engagement scores (bottom 25%). There are important connections to make to connect gains in productivity and investment with sustained Fairer Prosperity outcomes.

Suggested discussion questions

• how can all cross-sector businesses play a part in delivering the fairer prosperity actions in NSET and what support do you think is needed to help businesses – especially Scotland’s SMEs – to further tackle barriers for disadvantaged groups?
• what do you see as the barriers in your own sector to the pursuit of fair work and closing the gender, race and disability pay and employment gaps?
• how do government and businesses work together to ensure that gains from productivity and investment are channelled into sustained Fairer Prosperity outcomes?
• how can we maximise the impact of the levers that Government has through conditionality and what role can accreditation and the Scottish Business Pledge play to further Fairer Prosperity outcomes?
• how can the Scottish Government, local government, employers and the third sector work better together to increase fair working opportunities for parents of priority families? What are the practical barriers to achieving more and what are the solutions that can help us achieve this?
• what do you consider to be the main risks and opportunities to achieving Fairer prosperity over the lifetime of NSET?