Fair Work Convention Construction Industry Inquiry report: SG response

The Future of Construction

13 – Collective Agreements and New Ways of Working

FWC Recommendation 13

Employers should better engage with existing collective agreements, and unions and trade associations should be prepared to work together to ensure collective agreements support new ways of working and equality, covering elements like flexible working, mental health and maternity issues. The Scottish Government should facilitate unions, employers and trade associations to work together to support effective modernisation within the industry through the collective bargaining structures that already exist

SG Response

Status: Accepted

Response:

SG are supportive of strong trade unions in Scotland and as such encourage trade union recognition as a mechanism for effective voice in line with the Fair Work Convention’s Framework. Our commitment to promoting it is made clear through the inclusion of an employee voice indicator, measured by collective bargaining coverage, within the National Performance Framework.

Regulation 19 of the Public Contracts (Scotland) Regulations 2015 includes the requirement to comply with collective agreements and provides the legislative framework to back up compliance with guidance.

Implementation / Progress:

Guidance will be reviewed in relation to fair work practices in consultation with trade unions and employers.

CLF will be used to facilitate this process for construction: however, this may take longer than the suggested timeframe.

The draft practical guidance was shared with public, private and FWC stakeholders on 30 October 2023 for their feedback. We plan to have this in place by end March 2024. Once updated we will update the Client Guide to Construction Projects as appropriate.

14 – Net Zero Workforce Strategy

FWC Recommendation 14

The Construction Leadership Forum should support development of an effective workforce strategy to facilitate the transition to net zero carbon economy. Workforce planning must consider how to support workers through peaks and troughs in demand.

SG Response

Status: Accepted

Response:

CLF, its members and working groups are fully engaged in the development process for the Just Transition plan for the construction sector.

Implementation / Progress:

Discussion papers were published in May 2023, with further engagement taking place through the summer with CLF members and the wider sector, co-ordinated by BE-ST in conjunction with the CLF Net Zero Working Group. This has led to the development of a report with recommendations including around the theme of ‘building a skilled labour force’.

The key outputs of this work will be built on during a further phase of engagement with industry and other stakeholders in February and March 2024 as part of a five-day ‘Big Conversation on Construction in Scotland’, led by SEDA and partners including BE-ST.

15 – FW through Public Funding

FWC Recommendation 15

All public funding supporting the transition to net zero should include fair work conditionality and drive fair work in the industry.

SG Response

Status: Accept for SG

Response:

Since 2019 we have been leveraging employers’ commitment to fair work through our Fair Work First policy, applying Fair Work principles to public sector grants, other funding and contracts where it’s relevant and proportionate to do so.

Fair Work is a core element of our approach to supporting a just transition. In 2022 we consulted on how funding can be linked to supporting a fair transition to net zero.

This will consider the role of an organisation’s assessment of climate risks, carbon management plans and the role of Just Transition Plans.

Fair Work First conditionality requires recipients of public sector grants to pay at least the real Living Wage and provide appropriate channels for effective workers’ voice. This is applied to grants awarded on or after 01 July 2023.

While public bodies are responsible for their own procurement decisions, the Scottish Government expect public bodies to promote fair work in all relevant procurement processes. Statutory Guidance asks contracting authorities to consider whether it is relevant and proportionate to include questions on Fair Work First including payment of the real Living Wage before undertaking a procurement exercise. We continue to engage across the public sector to encourage Fair Work First including the real Living Wage in procurement across the whole of the public sector in Scotland.

The Client Guide to Construction Projects also links to the Fair Work First guidance.

Implementation / Progress:

On 06 December 2022 we announced the strengthening of our conditionality approach, and now public sector grants awarded on or after 01 July 2023, require recipients to pay their workers at least the real Living Wage and provide appropriate channels for effective voice.

16 – Direct Employment and Upskilling

FWC Recommendation 16

Public sector bodies and construction employers at all parts of the supply chain should increase their use of direct employment and support upskilling and retraining to support high quality careers in the industry and improve attraction and retention. Support for direct employment should also reinforce a commitment never to use umbrella companies.

SG Response

Status: Accept for SG, we cannot enforce the use of direct labour, as employment law is reserved.

Response:

While employment law is reserved, through use of community benefits in procurement and with the support of CITB we encourage and achieve skills and training in public contracts.

We caution against inappropriate use of ‘umbrella companies’ in our statutory and non-statutory guidance. The increase in use of direct employment can be explored via the Construction Accord.

Many companies do realise the advantages of direct employment but the sometimes sporadic nature of bringing contracts to market can present problems in retaining staff.

We can encourage use of direct labour, we cannot enforce it.

Implementation / Progress:

While SG do not often procure construction, we are including robust Fair Work requirements in our Civil Engineering Frameworks which are expected go live in 2024.

We will ask the CLF Fair Work working group to consider how direct employment could be further increased.