Coronavirus (COVID-19): measures to mitigate the labour market impacts - report

Executive Summary

Over £2.4 billion is invested each year in Scotland's enterprise and skills system. The need to fully realise the potential benefits from this investment by driving collaboration has never been greater. It is crucial that we build on the work of the Strategic Board in seeking alignment right across the system, including local authorities and private sector partners, to directly tackle the challenge our society will face over the next few years from a sharp rise in unemployment. This requires flexibility, both in terms of budgets and how services are delivered, recognising the unique challenges facing sectors and regions, and will have to consider new models of working and delivery whilst sharing best practice.

The economic fallout from COVID-19, as with past economic downturns, is expected to disproportionately affect young people, women and vulnerable groups including disabled people and those from ethnic minority groups. There are a range of measures currently in place right across the enterprise and skills system to help support young people entering the labour market, people looking to reskill or upskill, and those facing the threat of redundancy. There are a range of mechanisms and structures currently in place to support the labour market provided by a number of delivery partners. However, it is vital that we quickly build upon and scale up the measures currently in place, drawing on lessons from what has worked well and experiences from past downturns to meet this unprecedented challenge.

Actions Identified by the Sub-group

The immediate actions identified by the sub-group include measures that can help prevent a 'lost generation' by mitigating the expected rise in Scottish unemployment with interventions targeted both at individuals and businesses. Most individuals impacted by the economic downturn will want to take ownership of their approach and the Scottish Government, agencies and training providers need to ensure there are appropriate options open to them. However, there is a recognition that some groups fare worse during economic downturns, which is why the sub-group had a specific focus on under 25s.

The scale of the unemployment challenge we face will require all parts of society to work together as never before if Scotland is to recover swiftly and minimise the risk of long-term scarring effects as happened in the 1980s. Women are likely to be disproportionately affected as they tend to dominate sectors that have been hit hardest by the crisis. Therefore a number of recommendations identified by the sub-group will help women to either remain in work or find employment.

A partnership approach is required; with the business sector, trade bodies and the public sector working together to ensure there are opportunities to inspire our young people and a skills systems working hand-in-hand with business to deliver skilled workers that will enable them to flourish. Therefore each recommendation will require co-production to ensure it is tailored to meet both the needs of individuals and businesses. This will require a departure from the status quo but is essential if we are to maximise the impact from the collective investment across the enterprise and skills system.

The sub-group has identified a number of top priorities for immediate action:

1. Assistance to support employee retention, including:

• Work collaboratively with local government and the key national and regional business organisations such as the Chambers of Commerce/ the Federation of Small Businesses (FSB) to ensure an offer of support, informed by industry insight, which is integrated and accessible and tailored to meet business needs across Scotland.
• Coherent offer to business on preventative measures to retain employees through upskilling and reskilling, recognising the unique challenges facing different parts of Scotland.
• Various schemes to incentivise retention and employment.

2. Assistance for those facing redundancy, including:

• Scale up Partnership Action for Continuing Employment (PACE) to offer tailored support with a package of services co-designed by business i.e. skills assessment, job search and training advice to redundant workers and companies considering making redundancies, that maximises web resources, digitally delivered interventions and contact centre.
• Scale up resources and frontline advisers, in partnership with business organisations such as Chambers of Commerce and FSB and where possible, support from industry through secondments and volunteers, to enable individualised and tailored information, advice and guidance on Fair Work, upskilling/reskilling opportunities and support for moving back into employment.
• Reshape models of working across PACE and local authority, third sector and industry partnerships to secure commitment and flexibility to meet greater demand from employers of all sizes, and individuals seeking support directly (currently 18 PACE Partnership Boards).
• Adopt a supporting sectoral/regional specialist approach using local authorities' insights and intelligence.

3. Training to enable unemployed people to transition into employment: including:

• Introduce Apprenticeship Pathway Programmes for those encountering difficulty finding employer-led programmes or employment as an apprentice. Student bursary or industry aligned training allowance to attract apprenticeship candidates until industry place becomes available.
• Maximise the flexibility of college and university provision to meet the critical skills needs of employers and the future economic vision of Scotland, addressing key challenges and opportunities including; digital, automation, artificial intelligence (AI); the transition to a net zero carbon economy; health & social care; early years; construction; technical STEM-D. (Consistent with AGER, SE/HIE/SOSE economic growth plans).
• Scaling up of online learning from universities of high level skills for those in employment or those seeking employment targeted towards areas of critical skills demand from employers.
• Re-introduce Transition Training Fund to support training as pathway to a job.
• Support expanded use of virtual learning environment for off-the-job training - Foundation Apprenticeships SQA level 4/5; Level 6 in schools.

4. Helping vulnerable people into employment, including:

• Adapted delivery model for Developing the Young Workforce (DYW). Move from a pilot to full implementation of funded DYW dedicated regional school coordinators delivered through budgets controlled by DYW Regional Groups to provide a dedicated, long-term link between young people and teachers with employers.
• Short placement schemes re-introduced providing work experience for under 25s who have been out of work for six months to include essential employability skills, with employer subsidy.

• Scottish Government to lead Social Security Scotland, local authorities, Skills Development Scotland, Third Sector and businesses to review additional measures to support threat to long term unemployed and vulnerable groups, covering: scale up the provision of key worker support for at risk groups; options to extend industry-led work experience programmes; best models for intermediate labour market programmes; and industry led schemes to support vulnerable groups into meaningful work.

We have identified a number of actions focused on unemployment, but this needs to work alongside labour demand stimulus in order to succeed. Therefore the sub-group identified a number of actions which extend beyond the enterprise and skills system which would help support Scotland's recovery and therefore help mitigate the rise in unemployment. These actions were shared with the Advisory Group on Economic Recovery led by Benny Higgins and covered areas such as the continuation of the furlough scheme for the hardest hit sectors; acceleration of digital transformation of Small and Medium Enterprises (SMEs) and micro businesses; acceleration of infrastructure investment and the transition to a net zero carbon economy; promotion of shorter supply chain; and a tax/voucher rebate on Research & Development (R&D).

Further Actions

While the focus of the sub-group was on identifying practical actions that could be implemented quickly, during its work a number of further actions were identified. These included potential measures that could support the long-term unemployed and groups most at risk. Over the summer the sub-group will develop these ideas further and report back at the end of August.

This includes contributing to the review by the Scottish Funding Council (SFC) which is considering how best to achieve coherence and sustainability in the delivery of further and higher education during the COVID-19 crisis and beyond, with the initial recommendations presented to Ministers by the end of August. However, given the scale and immediacy of the challenge, SFC is working with colleges and universities to take action now around flexing provision to meet immediate demand.

Now is the time to accelerate reform in the enterprise and skills system to drive greater collaboration and alignment. We need to enhance structures and processes and ensure greater flexibility as we respond to the unprecedented challenge we face over the next few years. Adapting to change has never been more important and we need to act quickly to scale up the support on offer, particularly for young people and vulnerable groups so we can secure an inclusive recovery. The sub-group will continue to consider specific interventions for vulnerable groups as it continues the next phase of its work.